AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER

among

JLL PHARMANET HOLDINGS, LLC,

PDGI ACQUISITION CORP.

and

PHARMANET DEVELOPMENT GROUP, INC.

Dated as of February 3, 2009

TABLE OF CONTENTS

Pages

Pages

Pages

     AGREEMENT AND PLAN OF MERGER, dated as of February 3, 2009 (this “ Agreement ”), among JLL PHARMANET HOLDINGS, LLC, a Delaware limited liability company (the “ Parent ”), PDGI ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of Parent (the “Purchaser“), and PHARMANET DEVELOPMENT GROUP, INC., a Delaware corporation (the “ Company ”). Capitalized terms used herein have the meanings ascribed to them in Section 8.14.

W I T N E S S E T H :

     WHEREAS, the board of managers of Parent and the respective boards of directors of the Purchaser and the Company have approved this Agreement and the acquisition of the Company by Parent upon the terms and subject to the conditions set forth in this Agreement;

     WHEREAS, pursuant to this Agreement, the Purchaser has agreed to commence a tender offer (the “ Offer ”) to purchase all of the outstanding shares of the common stock, par value $0.001, of the Company (the “ Company Common Stock ”), including the associated preferred share purchase rights (the “ Company Rights ”) issued pursuant to the Rights Agreement, dated as of December 21, 2005, between the Company and American Stock Transfer & Trust Company, as successor-in-interest to Wachovia Bank, N.A., as Rights Agent (the “ Rights Agreement ”) (which Company Rights, together with the shares of the Company Common Stock, are hereinafter referred to as the “ Shares ”), at a price per Share of $5.00 (such amount or any different amount per Share that may be paid pursuant to the Offer, the “ Offer Price ”), payable net to the seller in cash, without interest, subject to any withholding of Taxes required by applicable Law;

     WHEREAS, following the acceptance for payment of Shares pursuant to the Offer, upon the terms and subject to the conditions set forth in this Agreement, the Purchaser will be merged with and into the Company, with the Company continuing as the Surviving Corporation (the “ Merger ”), in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), whereby each issued and outstanding Share (other than Cancelled Shares and Dissenting Shares) will be converted into the right to receive the Offer Price, payable net to the holder in cash, without interest, subject to any withholding of Taxes required by applicable Law;

     WHEREAS, the board of directors of the Company (the “ Board of Directors ”) has, upon the terms and subject to the conditions set forth herein, (i) determined that the transactions contemplated by this Agreement, including the Offer and the Merger, are advisable and in the best interests of the Company and its stockholders, (ii) approved and declared advisable this Agreement and the transactions contemplated hereby, including the Offer and the Merger, and (iii) recommended that the Company’s stockholders accept the Offer, tender their Shares to the Purchaser in the Offer and, to the extent applicable, adopt this Agreement and approve the Merger (the “ Recommendation ”); and

     WHEREAS, Parent, the Purchaser and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Offer, the Merger and the other transactions contemplated by this Agreement and also to prescribe certain conditions to the Offer and the Merger as specified herein.

     NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, Parent, the Purchaser and the Company hereby agree as follows:

ARTICLE I
THE OFFER AND THE MERGER

     Section 1.1    The Offer .

     (a) As promptly as practicable (and in any event within seven (7) Business Days) after the date hereof, the Purchaser shall (and Parent shall cause the Purchaser to) commence, within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”), the Offer to purchase all the outstanding Shares at the Offer Price, subject to: (i) there being validly tendered in the Offer and not properly withdrawn prior to the Expiration Date that number of Shares which, together with the number of Shares (if any) then owned of record by Parent or the Purchaser or with respect to which Parent or the Purchaser otherwise has, directly or indirectly, sole voting power, represents at least a majority of the Shares outstanding (determined on a fully diluted basis) at the Expiration Date (the “ Minimum Condition ”); and (ii) the satisfaction, or waiver by Parent or the Purchaser, of the other conditions and requirements set forth in Annex A.

     (b) Subject to the satisfaction of the Minimum Condition and the satisfaction, or waiver by Parent or the Purchaser, of the other conditions and requirements set forth in Annex A, the Purchaser shall (and Parent shall cause the Purchaser to) accept for payment and pay for all Shares validly tendered and not properly withdrawn pursuant to the Offer as promptly as practicable after the Purchaser is legally permitted to do so under applicable Law. The Offer Price payable in respect of each Share validly tendered and not properly withdrawn pursuant to the Offer shall be paid net to the seller in cash, without interest, subject to any withholding of Taxes required by applicable Law in accordance with Section 2.2(c). In circumstances in which the stockholders of the Company do not have the right to seek remedies at law or equity, the obligations of Parent and the Purchaser under this Agreement are material to the Company’s execution of this Agreement and any failure by Parent or the Purchaser to comply with the terms of this Agreement shall enable the Company to seek all remedies available at law or equity to it and on behalf of the stockholders.

     (c) The Offer shall be made by means of an offer to purchase (the “ Offer to Purchase ”) that describes the terms and conditions of the Offer in accordance with this Agreement, including the Minimum Condition and the other conditions and requirements set forth in Annex A. Parent and the Purchaser expressly reserve the right, at any time, in their sole discretion, to waive, in whole or in part, any condition to the Offer or other requirement set forth in Annex A or increase the Offer Price or to make any other changes in the terms and conditions of the Offer; provided, however , that unless previously approved by the Company in writing, the Purchaser shall not (i) decrease the Offer Price, (ii) change the form of consideration payable in the Offer, (iii) reduce the maximum number of Shares to be purchased in the Offer, (iv) amend or waive the Minimum Condition, (v) amend any of the other conditions and requirements to the Offer set forth in Annex A in a manner adverse to the holders of Shares, or (vi) extend the Expiration Date in a manner other than in accordance with this Agreement.

     (d) Unless extended in accordance with the terms of this Agreement, the Offer shall expire at midnight (New York City time) on the date that is twenty (20) Business Days following the commencement of the Offer (the “ Initial Expiration Date ”) or, if the Initial Expiration Date has been extended in accordance with this Agreement, the date on which the Offer has been so extended (the Initial Expiration Date, or such later date to which the Initial Expiration Date has been extended in accordance with this Agreement (the “ Expiration Date ”).

     (e) If on or prior to any then scheduled Expiration Date, all of the conditions to the Offer (including the Minimum Condition and the other conditions and requirements set forth in Annex A) have not been satisfied, or waived by Parent or the Purchaser, the Purchaser may, in its sole discretion, without the consent of the Company cause the Purchaser to extend the Offer for successive periods of up to twenty (20) Business Days each, the length of each such period to be determined by Parent in its sole discretion, in order to permit the satisfaction of such conditions. The Purchaser shall extend the Offer for any period or periods required by applicable Law or applicable rules, regulations, interpretations or positions of the U.S. Securities and Exchange Commission (the “ SEC ”) or its staff. Notwithstanding the foregoing, Parent and the Purchaser agree that if on any scheduled Expiration Date, either the Minimum Condition or the HSR Condition (as such term is defined in Annex A), is not satisfied but all of the other conditions and requirements set forth in Annex A are satisfied or, in Parent’s and the Purchaser’s sole discretion, waived, then the Purchaser shall, and Parent shall cause the Purchaser to, extend the Offer for up to forty (40) Business Days in the aggregate, the length of such period to be determined by the Company in its sole discretion; provided , however , that this provision shall not require the Purchaser to extend the Offer more than twice and the Purchaser shall not be required to extend the Offer (i) beyond August 15, 2009 (the “ Outside Date ”), or (ii) at any time that Parent and the Purchaser have the right to terminate this Agreement pursuant to Article VII.

     (f) If necessary to obtain sufficient Shares (without regard to Shares issuable upon the exercise of the Top-Up Option or Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee) to reach the Short Form Threshold, the Purchaser may, in its sole discretion, cause the Purchaser to provide for a “subsequent offering period” (and one or more extensions thereof) in accordance with Rule 14d-11 under the Exchange Act of up to twenty (20) Business Days. Subject to the terms and conditions of this Agreement and the Offer, the Purchaser shall (and Parent shall cause the Purchaser to) immediately accept for payment, and pay for, all Shares that are validly tendered pursuant to the Offer during such “subsequent offering period”. The Offer Documents will provide for the possibility of a “subsequent offering period” in a manner consistent with the terms of this Section 1.1(f).

     (g) The Purchaser shall not terminate the Offer prior to any scheduled Expiration Date without the prior written consent of the Company, except if this Agreement is terminated pursuant to Article VII. If this Agreement is terminated pursuant to Article VII, the Purchaser shall (and Parent shall cause the Purchaser to) promptly (and in any event within twenty-four (24) hours of such termination), irrevocably and unconditionally terminate the Offer. If the Offer is terminated or withdrawn by the Purchaser, or this Agreement is terminated prior to the purchase of Shares in the Offer, the Purchaser shall promptly return, and shall cause any depositary acting on behalf of the Purchaser to return, in accordance with applicable Law, all tendered Shares to the registered holders thereof.

     (h) As soon as practicable on the date of the commencement of the Offer, Parent and the Purchaser shall file with the SEC, in accordance with Rule 14d-3 under the Exchange Act, a Tender Offer Statement on Schedule TO with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule TO ”). The Schedule TO shall include, as exhibits, the Offer to Purchase, a form of letter of transmittal and a form of summary advertisement (collectively, together with any amendments and supplements thereto, the “ Offer Documents ”). Parent and the Purchaser agree to cause the Offer Documents to be disseminated to holders of Shares, as and to the extent required by the Exchange Act. Parent and the Purchaser, on the one hand, and the Company, on the other hand, agree to promptly correct any information provided by it for use in the Offer Documents, if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by applicable Law, and Parent and the Purchaser agree to cause the Offer Documents, as so corrected, to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by the Exchange Act. The Company and its counsel shall be given a reasonable opportunity to review the Schedule TO and the Offer Documents before they are filed with the SEC, and Parent and the Purchaser shall give due consideration to the reasonable additions, deletions or changes suggested thereto by the Company and its counsel. In addition, Parent and the Purchaser shall provide the Company and its counsel with copies of any written comments, and shall inform them of any oral comments, that Parent, the Purchaser or their counsel may receive from time to time from the SEC or its staff with respect to the Schedule TO or the Offer Documents promptly after receipt of such comments, and any written or oral responses thereto. The Company and its counsel shall be given a reasonable opportunity to review any such written responses and Parent and the Purchaser shall give due consideration to the reasonable additions, deletions or changes suggested thereto by the Company and its counsel. In the event that Parent and the Purchaser receive any comments from the SEC or its staff with respect to the Schedule TO, they shall use their respective reasonable best efforts to (i) respond promptly to such comments and (ii) take all other actions necessary to resolve the issues raised therein.

     Section 1.2    Company Actions .

     The Company hereby approves and consents to the Offer, the Merger and the other transactions contemplated by this Agreement and represents that the Board of Directors, at a meeting duly called and held has, subject to Section 5.2(d):

     (i) determined that the Offer, the Merger, this Agreement and the transactions contemplated hereby are advisable and in the best interests of the Company and its stockholders;

     (ii) adopted this Agreement and approved the transactions contemplated hereby;

     (iii) resolved to recommend acceptance of the Offer and, if required, adoption of this Agreement and approval of the Merger by its stockholders; and

     (iv) taken all other actions necessary to exempt the Offer, the Merger, this Agreement and the transactions contemplated hereby from any “fair price”, “moratorium”,

     “control share acquisition”, “interested stockholder”, “business combination” or other similar statute or regulation (“ Takeover Statute ”).

     (b) Contemporaneous with the filing of the Schedule TO, the Company shall, in a manner that complies with Rule 14d-9 under the Exchange Act, file with the SEC a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule 14D-9 ”) that shall, subject to the provisions of Section 5.2(d), contain the Recommendation. The Company hereby consents to the inclusion in the Offer Documents of a description of the Recommendation. The Company further agrees to cause the Schedule 14D-9 to be disseminated to holders of Shares, as and to the extent required by the Exchange Act. The Company, on the one hand, and Parent and the Purchaser, on the other hand, agree to promptly correct any information provided by it for use in the Schedule 14D-9, if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by applicable Law, and the Company agrees to cause the Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by the Exchange Act. Parent, the Purchaser and their counsel shall be given a reasonable opportunity to review the Schedule 14D-9 before it is filed with the SEC, and the Company shall give due consideration to the reasonable additions, deletions or changes suggested thereto by Parent, the Purchaser and their counsel. In addition, the Company shall provide Parent, the Purchaser and their counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of such comments, and any written or oral responses thereto. Parent, the Purchaser and their counsel shall be given a reasonable opportunity to review any such written responses and the Company shall give due consideration to the reasonable additions, deletions or changes suggested thereto by Parent, the Purchaser and their counsel. In the event that the Company receives any comments from the SEC or its staff with respect to the Schedule 14D-9, it shall use its reasonable best efforts to (i) respond promptly to such comments and (ii) take all other actions necessary to resolve the issues raised therein.

     (c) Promptly after the date hereof and otherwise from time to time as requested by the Purchaser or its agents, the Company shall furnish or cause to be furnished to the Purchaser mailing labels, security position listings, non-objecting beneficial owner lists and any other listings or computer files containing the names and addresses of the record or beneficial holders of the Shares as of the most recent practicable date, and shall promptly furnish Purchaser with such information (including updated lists of holders of the Shares and their addresses, mailing labels, security position listings and non-objecting beneficial owner lists) and such other assistance as the Purchaser or its agents may reasonably request in communicating with the record and beneficial holders of Shares in connection with the preparation and dissemination of the Schedule TO and the Offer Documents and the solicitation of tenders of Shares in the Offer.

     Section 1.3    Directors .

     (a) After the Purchaser first accepts for payment Shares tendered and not properly withdrawn pursuant to the Offer, without regard to any “subsequent offering period”

(the “ Acceptance Time ”), and at all times thereafter, Parent shall be entitled to elect or designate such number of directors, rounded up to the next whole number, on the Board of Directors as is equal to the product of the total number of directors on the Board of Directors (giving effect to the directors elected or designated by Parent pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Parent, the Purchaser or any of their respective Affiliates bears to the total number of Shares then outstanding. After the Acceptance Time, the Company shall, upon Parent’s reasonable request, take all actions as are reasonably necessary or desirable to enable Parent’s designees to be so elected or designated to the Board of Directors, including promptly filling vacancies or newly created directorships on the Board of Directors, promptly increasing the size of the Board of Directors (including by amending the By-laws if necessary to increase the size of the Board of Directors) and/or promptly securing the resignations of such number of its incumbent directors, and shall cause Parent’s designees to be so elected or designated at such time. After the Acceptance Time, the Company shall also, upon Parent’s request, cause the directors elected or designated by Parent to the Board of Directors to serve on and constitute the same percentage (rounded up to the next whole number) as is on the Board of Directors of (i) each committee of the Board of Directors, (ii) each board of directors (or similar body) of each Company Subsidiary and (iii) each committee (or similar body) of each such board, in each case to the extent permitted by applicable Law and the Marketplace Rules of the Nasdaq Global Select Market (“ Nasdaq ”). After the Acceptance Time, the Company shall also, upon Parent’s request, take all action necessary to elect to be treated as a “controlled company” as defined by Nasdaq Marketplace Rule 4350(c) and make all necessary filings and disclosures associated with such status. The provisions of this Section 1.3(a) are in addition to and shall not limit any rights that Parent, the Purchaser or any of their respective Affiliates may have as a record holder or beneficial owner of Shares as a matter of applicable Law with respect to the election of directors or otherwise.

     (b) The Company’s obligations to appoint Parent’s designees to the Board of Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.3(b), including mailing to stockholders (together with the Schedule 14D-9) any information required by Section 14(f) and Rule 14f-1 to enable Parent’s designees to be elected or designated to the Board of Directors at the time or times contemplated by this Section 1.3. Parent shall supply or cause to be supplied to the Company any information with respect to Parent, the Purchaser, their respective officers, directors and Affiliates and proposed designees to the Board of Directors required by Section 14(f) and Rule 14f-1.

     (c) After Parent’s designees are elected or designated to, and constitute a majority of, the Board of Directors pursuant to Section 1.3(a), and prior to the Effective Time, the Company shall cause the Board of Directors to maintain at least three (3) directors who are members of the Board of Directors on the date hereof, each of whom shall be an “independent director” as defined by Rule 4200(a)(15) of the Nasdaq Marketplace Rules and eligible to serve on the Company’s audit committee under the Exchange Act and Nasdaq rules and at least one of whom shall be an “audit committee financial expert” as defined in Item 401(h) of Regulation S-K and the instructions thereto (the “ Continuing Directors ”); provided , however , that if any Continuing Director is unable to serve due to death, disability or resignation, the Company shall take all necessary action (including creating a committee of the Board of Directors) so that the

remaining Continuing Director or Continuing Directors shall be entitled to elect or designate another Person who satisfies the foregoing independence requirements to fill such vacancy, and such Person shall be deemed to be a Continuing Director for purposes of this Agreement. After Parent’s designees are elected or designated to, and constitute a majority of, the Board of Directors pursuant to Section 1.3(a), and prior to the Effective Time, in addition to any approvals of the Board of Directors or the stockholders of the Company as may be required by the Company Charter, the By-laws or applicable Law, any (i) amendment or modification of this Agreement, (ii) termination of this Agreement by the Company, (iii) extension of time for performance of any of the obligations of Parent or the Purchaser hereunder, (iv) waiver of any condition to the Company’s obligation hereunder, (v) exercise or waiver of the Company’s rights or remedies hereunder, (vi) amendment to the Company Charter or the By-laws, (vii) authorization of any agreement between the Company and any of its Subsidiaries, on the one hand, and Parent, the Purchaser or any of their Affiliates on the other hand, or (viii) taking of any other action by the Company in connection with this Agreement or the transactions contemplated hereby may, in each case, be effected only if there are in office one (1) or more Continuing Directors and such action is approved by a majority of the Continuing Directors then in office; provided , however , that the Company shall designate, prior to the Acceptance Time, two (2) alternate Continuing Directors that the Board of Directors shall appoint in the event of the death, disability or resignation of the Continuing Directors, each of whom shall, following such appointment to the Board of Directors, be deemed to be a Continuing Director for purposes of this Agreement. The Continuing Directors shall have, and Parent shall cause the Continuing Directors to have, the authority to retain such counsel (which may include current counsel to the Company or the Board of Directors) and other advisors at the expense of the Company as determined by the Continuing Directors, and the authority to institute any action on behalf of the Company to enforce performance of this Agreement.

     Section 1.4    The Merger .

     (a) At the Effective Time, upon the terms and subject to the conditions set forth in this Agreement and in accordance with the applicable provisions of the DGCL, the Purchaser shall be merged with and into the Company, whereupon the separate corporate existence of the Purchaser shall cease, and the Company shall continue as the surviving corporation in the Merger (the “ Surviving Corporation ”) and a wholly owned subsidiary of Parent.

     (b) The closing of the Merger (the “ Closing ”) shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York at 10:00 a.m., local time, on the date (the “ Closing Date ”) that is the third (3 ^rd ) Business Day following the satisfaction or waiver (to the extent permitted by applicable Law) of the conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing) or on such other date and time as specified by the parties in writing.

     (c) On the Closing Date, the Company shall cause the Merger to be consummated by executing, delivering and filing the Certificate of Merger (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL and other applicable Delaware Law. The Merger shall become effective

at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at such later date or time as may be agreed by Parent and the Company in writing and specified in the Certificate of Merger in accordance with the DGCL (such time as the Merger becomes effective is referred to herein as the “ Effective Time ”).

     (d) The Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL.

     (e) The Certificate of Incorporation of the Company as amended (the “ Company Charter ”) shall, by virtue of the Merger, be amended and restated in its entirety to read as the Certificate of Incorporation of the Purchaser as in effect as of immediately prior to the Effective Time, except that Article I thereof shall read as follows: “The name of the Corporation is PharmaNet Development Group, Inc.” and, as so amended, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended in accordance with the provisions thereof, hereof and of applicable Law, in each case consistent with the obligations set forth in Section 5.7.

     (f) The by-laws of the Purchaser, as in effect as of immediately prior to the Effective Time, shall, by virtue of the Merger, be the by-laws of the Surviving Corporation until thereafter amended in accordance with the provisions thereof, hereof and of applicable Law, in each case consistent with the obligations set forth in Section 5.7.

     (g) The directors of the Purchaser as of immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

     (h) The officers of the Company as of immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation and shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.

     (i) If at any time after the Effective Time the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments or assurances or any other acts or things are necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of either the Purchaser or the Company, or (b) otherwise to carry out the purposes of this Agreement, the Surviving Corporation and its proper officers and directors or their designees shall be authorized to execute and deliver, in the name and on behalf of either of the Purchaser or the Company, all such deeds, bills of sale, assignments and assurances and to do, in the name and on behalf of either the Purchaser or the Company, all such other acts and things as may be necessary, desirable or proper to vest, perfect or confirm the Surviving Corporation’s right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of the Purchaser or the Company and otherwise to carry out the purposes of this Agreement.

     (c) At the Company Meeting or any postponement or adjournment thereof, Parent shall vote, or cause to be voted, all of the Shares then owned of record by Parent or the Purchaser or with respect to which Parent or the Purchaser otherwise has, directly or indirectly, sole voting power in favor of the adoption of this Agreement and approval of the Merger and to deliver or provide, in its capacity as a stockholder of the Company, any other approvals that are required by applicable Law to effect the Merger.

     Section 1.6    Merger Without Meeting of Stockholders . Notwithstanding the terms of Section 1.5, if after the Acceptance Time and, if applicable, the expiration of any “subsequent offering period” provided by the Purchaser in accordance with this Agreement and/or the exercise of the Top-Up Option, Parent and the Purchaser shall then hold of record, in the aggregate, at least 90% of the outstanding Shares (the “Short Form Threshold”), the parties hereto agree to take all necessary and appropriate action to cause the Merger to become effective as promptly as practicable without a meeting of stockholders of the Company in accordance with Section 253 of the DGCL.

     Section 1.7    Top-Up Option .

     (a) The Company hereby grants to the Purchaser an irrevocable option (the “ Top-Up Option ”), exercisable once upon the terms and subject to the conditions set forth herein, to purchase at the Offer Price an aggregate number of Shares (the “ Top-Up Shares ”) that, when added to the number of Shares held of record by Parent and the Purchaser at the time of such exercise, shall constitute at least one (1) Share more than the Short Form Threshold; provided , however , that in no event shall the Top-Up Option be exercisable for a number of Shares in excess of the number of authorized but unissued Shares as of immediately prior to the issuance of the Top-Up Shares (giving effect to Shares reserved for issuance under the Company Equity Plans and the Company’s 2.25% Convertible Senior Notes Due 2024 (the “ Convertible Notes ”) as if such Shares were outstanding); provided further , that the Top-Up Option shall terminate upon the earlier of: (x) the fifth (5th) Business Day after the later of (1) the Expiration Date and (2) the expiration of any “subsequent offering period”; and (y) the termination of this Agreement in accordance with its terms.

     (b) The obligation of the Company to deliver Top-Up Shares upon the exercise of the Top-Up Option is subject to the conditions that (i) no provision of any applicable law and no Order shall prohibit the exercise of the Top-Up Option or the delivery of the Top-Up Shares in respect of such exercise, (ii) upon exercise of the Top-Up Option, the number of Shares held of record by Parent and the Purchaser constitutes at least one (1) Share more than ninety percent (90%) of the number of Shares that shall be outstanding immediately after the issuance of the Top-Up Shares, and (iii) the Purchaser has accepted for payment all Shares validly tendered in the Offer and not properly withdrawn. The parties shall cooperate to ensure that the issuance of the Top-Up Shares is accomplished consistent with all applicable legal requirements of all Governmental Entities, including compliance with an applicable exemption from registration of the Top-Up Shares under the Securities Act.

     (c) To exercise the Top-Up Option, the Purchaser shall send to the Company a written notice (a “ Top-Up Exercise Notice ”) specifying (i) the number of Shares that shall be held of record by Parent and the Purchaser immediately preceding the purchase of the Top-Up

Shares and (ii) the place, time and date for the closing of the purchase and sale of the Top-Up Shares (the “ Top-Up Closing ”). The Company shall, promptly after receipt of the Top-Up Exercise Notice, deliver a written notice to the Purchaser confirming the number of Top-Up Shares and the aggregate purchase price therefor (the “ Top-Up Notice Receipt ”). At the Top-Up Closing, the Purchaser shall pay the Company, in the manner set forth in Section 1.7(d) hereof, the aggregate price required to be paid for the Top-Up Shares, in an aggregate principal amount equal to that specified in the Top-Up Notice Receipt, and the Company shall cause to be issued and delivered to the Purchaser a certificate or certificates representing the Top-Up Shares or, at the Purchaser’s request or otherwise if the Company does not then have certificated Shares, the applicable number of Book-Entry Shares. Such certificates or Book-Entry Shares may include any legends that are required by applicable Law.

     (d) The Purchaser may pay the Company the aggregate price required to be paid for the Top-Up Shares either (i) entirely in cash or (ii) at the Purchaser’s election, by (x) paying in cash an amount equal to not less than the aggregate par value of the Top-Up Shares and (y) executing and delivering to the Company a promissory note having a principal amount equal to the balance of the aggregate purchase price pursuant to the Top-Up Option less the amount paid in cash pursuant to the preceding clause (x) (a “ Promissory Note ”). Any such Promissory Note shall be full recourse against Parent and the Purchaser and (i) shall bear interest at the rate of 3% per annum, (ii) shall mature on the first (1 ^st ) anniversary of the date of execution and delivery of such Promissory Note and (iii) may be prepaid, in whole or in part, without premium or penalty.

     (e) Parent and the Purchaser acknowledge that the Top-Up Shares which the Purchaser may acquire upon exercise of the Top-Up Option shall not be registered under the Securities Act and shall be issued in reliance upon an exemption for transactions not involving a public offering. Parent and the Purchaser represent and warrant to the Company that the Purchaser is, or shall be upon any purchase of Top-Up Shares, an “accredited investor”, as defined in Rule 501 of Regulation D under the Securities Act. The Purchaser agrees that the Top-Up Option, and the Top-Up Shares to be acquired upon exercise of the Top-Up Option, if any, are being and shall be acquired by the Purchaser for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof (within the meaning of the Securities Act).

ARTICLE II
CONVERSION OF SHARES IN THE MERGER; EXCHANGE OF CERTIFICATES

     Section 2.1    Effect on Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, the Purchaser or the holders of any securities of the Company, Parent or the Purchaser:

     (a)  Conversion of Company Common Stock .

     (i) Subject to Section 2.1(b) and Section 2.1(d), each issued and outstanding Share other than (i) any Shares (the “ Dissenting Shares ”) that are owned by stockholders (the “ Dissenting Stockholders ”) properly exercising appraisal rights pursuant to Section 262 of the DGCL, and (ii) any Cancelled Shares (as defined, and to the extent provided,

in Section 2.1(b)), shall thereupon be converted automatically into and shall thereafter represent the right to receive the Offer Price (the “ Merger Consideration ”), payable net to the holder in cash, without interest, subject to any withholding of Taxes required by applicable Law in accordance with Section 2.2(c).

     (ii) All Shares that have been converted into the right to receive the Merger Consideration as provided in this Section 2.1 shall be automatically cancelled and shall cease to exist, and the holders of certificates which immediately prior to the Effective Time represented such Shares shall cease to have any rights with respect to such Shares other than the right to receive the Merger Consideration in accordance with Section 2.2.

     (b)  Parent, Purchaser and Company-Owned Shares . Each Share that is owned, directly or indirectly, by Parent or the Purchaser immediately prior to the Effective Time, if any, or held by the Company immediately prior to the Effective Time (in each case, other than any such Shares held on behalf of third parties or Shares held in trust to fund Company obligations) (the “ Cancelled Shares ”) shall, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange for such cancellation and retirement.

     (c)  Conversion of Purchaser Common Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each share of common stock, par value $0.001 per share, of the Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. From and after the Effective Time, all certificates representing the common stock of the Purchaser shall be deemed for all purposes to represent the number of shares of common stock of the Surviving Corporation into which they were converted in accordance with the immediately preceding sentence.

     (d)  Dissenters’ Rights . Any Person who otherwise would be deemed a Dissenting Stockholder shall not be entitled to receive the Merger Consideration with respect to the Shares owned by such Person unless and until such Person shall have failed to perfect or shall have effectively withdrawn or lost such Person’s right to dissent from the Merger under the DGCL. Each Dissenting Stockholder shall be entitled to receive only the payment provided by Section 262 of the DGCL with respect to Shares owned by such Dissenting Stockholder. The Company shall give Parent (i) prompt notice of any written demands for appraisal, attempted withdrawals of such demands, and any other instruments served pursuant to applicable Law received by the Company relating to stockholders’ rights of appraisal and (ii) the opportunity to direct all negotiations and proceedings with respect to demand for appraisal under the DGCL. The Company shall not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisals of Dissenting Shares, offer to settle or settle any such demands or approve any withdrawal of any such demands.

     Section 2.2    Exchange of Certificates .

     (a)  Paying Agent . At or immediately prior to the Effective Time, Parent shall deposit, or shall cause to be deposited, with a U.S. bank or trust company that shall be appointed by Parent and approved in advance by the Company (such approval not to be unreasonably withheld) to act as a paying agent hereunder (the “ Paying Agent ”), in trust for the benefit of holders of the Shares, cash in U.S. dollars sufficient to pay the aggregate Merger Consideration in exchange for all of the Shares outstanding immediately prior to the Effective Time pursuant to the provisions of this Article II (such cash being hereinafter referred to as the “ Exchange Fund ”).

     (b)  Payment Procedures .

     (i) As soon as reasonably practicable after the Effective Time and in any event not later than the fifth (5 ^th ) Business Day following the Effective Time, the Paying Agent shall mail to each holder of record of Shares whose Shares were converted into the Merger Consideration pursuant to Section 2.1, (A) a letter of transmittal which shall specify that delivery shall be effected, and risk of loss and title to the certificates that immediately prior to the Effective Time represented Shares (“ Certificates ”) shall pass, only upon delivery of Certificates to the Paying Agent (and shall be in such form and have such other provisions as Parent and the Company may reasonably determine prior to the Effective Time) and (B) instructions for use in effecting the surrender of Certificates (or effective affidavits of loss in lieu thereof) or non-certificated Shares represented by book-entry (“ Book-Entry Shares ”) in exchange for the Merger Consideration.

     (ii) Upon surrender of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares to the Paying Agent together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Paying Agent, the holder of such Certificates or Book-Entry Shares shall be entitled to receive in exchange therefor an amount (after giving effect to any required Tax withholdings) equal to the product of (x) the number of Shares represented by such holder’s properly surrendered Certificates (or effective affidavits of loss in lieu thereof) and Book-Entry Shares multiplied by (y) the applicable Merger Consideration. No interest will be paid or accrued on any amount payable upon due surrender of Certificates or Book-Entry Shares. In the event of a transfer of ownership of Shares that is not registered in the transfer or stock records of the Company, any cash to be paid upon due surrender of the Certificate formerly representing such Shares may be paid to such a transferee if such Certificate is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer or other similar Taxes have been paid or are not applicable.

     (c)  Withholding Rights . The Surviving Corporation, Parent, the Purchaser and the Paying Agent shall be entitled to deduct and withhold from the relevant Offer Price or Merger Consideration otherwise payable under this Agreement to any Person such amounts as are required to be withheld or deducted under the Internal Revenue Code of 1986, as amended (the “ Code ”), or any other provision of Tax Law with respect to the making of such payment. To the extent that amounts are so withheld or deducted and paid over to the applicable Governmental Entity, such withheld or deducted amounts shall be treated for all purposes of this

Agreement as having been paid to such Person in respect of which such deduction and withholding were made.

     (d)  Closing of Transfer Books . At the Effective Time, the stock transfer books of the Company shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or Parent for transfer, they shall be cancelled and exchanged for the proper amount pursuant to and subject to the requirements of this Article II.

     (e)  Termination of Exchange Fund . Any portion of the Exchange Fund (including the proceeds of any investments thereof) that remains undistributed to the former holders of Shares for one year after the Effective Time shall be delivered to the Surviving Corporation upon demand, and any former holders of Shares who have not surrendered their Shares in accordance with this Section 2.2 shall thereafter look only to the Surviving Corporation for payment of their claim for the Merger Consideration, without any interest thereon, upon due surrender of their Shares.

     (f)  No Liability . Notwithstanding anything herein to the contrary, none of the Company, Parent, the Purchaser, the Surviving Corporation, the Paying Agent or any other Person shall be liable to any former holder of Shares for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate shall not have been surrendered prior to the date on which the related Merger Consideration would, pursuant to applicable Law, escheat to or become the property of any Governmental Entity, any such Merger Consideration shall, to the extent permitted by applicable Law, immediately prior to such time, become the property of the Surviving Corporation, free and clear of all claims or interests of any Person previously entitled thereto.

     (g)  Investment of Exchange Fund . The Paying Agent shall invest all cash included in the Exchange Fund as reasonably directed by Parent; provided, however, that any investment of such cash shall in all events be limited to direct short-term obligations of, or short-term obligations fully guaranteed as to principal and interest by, the U.S. government, in commercial paper rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively, or in certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital exceeding $10 billion (based on the most recent financial statements of such bank that are then publicly available), and that no such investment or loss thereon shall affect the amounts payable to holders of Certificates or Book-Entry Shares pursuant to this Article II. Any interest and other income resulting from such investments shall be paid to the Surviving Corporation on the earlier of one year after the Effective Time or full payment of the Exchange Fund.

     (h)  Lost Certificates . In the case of any Certificate that has been lost, stolen or destroyed, upon the making of an affidavit, in form and substance reasonably acceptable to Parent, of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent or the Paying Agent, the posting by such Person of an indemnity agreement or, at the election of Parent or the Paying Agent, a bond in customary amount as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such

Certificate, the Paying Agent will deliver in exchange for such lost, stolen or destroyed Certificate an amount in cash equal to the number of Shares represented by such lost, stolen or destroyed Certificate multiplied by the Merger Consideration.

     (i)  No Further Ownership Rights . All cash paid upon the surrender of Certificates in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares formerly represented by such Certificates.

     Section 2.3    Effect of the Merger on Company Stock Options and RSUs . Except for Company Stock Options and RSUs as to which the treatment in the Merger is hereafter separately agreed by Parent and the holder thereof, which Company Stock Options and RSUs shall be treated as so agreed, subject to any applicable requirements of Section 409A of the Code:

     (a) Each option to acquire Shares (each, a “ Company Stock Option ”) under the Amended and Restated 1999 Stock Option Plan (also known as the Amended and Restated 1999 Stock Plan) or the 2008 Incentive Compensation Plan (collectively, the “ Equity Plans ”), whether or not then vested or exercisable, that is outstanding immediately prior to the Acceptance Time shall, as of the Acceptance Time, become fully vested and be converted into the right to receive a payment in cash, payable in U.S. dollars and without interest, equal to the product of (i) the excess, if any, of (x) the Merger Consideration over (y) the exercise price per Share subject to such Company Stock Option, multiplied by (ii) the number of Shares for which such Company Stock Option shall not theretofore have been exercised. The Surviving Corporation shall pay the holders of Company Stock Options the cash payments described in this Section 2.3(a), subject to the collection of the applicable withholding taxes as set forth in Section 2.3(d), on or as soon as reasonably practicable after the date on which the Effective Time occurs, but in any event within five (5) Business Days thereafter.

     (b) Each restricted stock unit award (a “ RSU Award ”) under the Equity Plans that is outstanding immediately prior to the Effective Time shall be canceled at the Effective Time. In exchange for each such canceled RSU Award, the holder shall be entitled to a lump sum cash distribution payable by the Surviving Corporation in an amount determined by multiplying the number of Shares subject to such canceled RSU Award, whether vested or unvested, by the Merger Consideration (the “ RSU Consideration ”). The RSU Consideration for each cancelled RSU Award shall be paid to the holder of that canceled award on or as soon as reasonably practicable after the date on which the Effective Time occurs, but in any event within five (5) Business Days thereafter, subject to the collection of applicable withholding taxes as provided in Section 2.3(d). However, to the extent any RSU Award is subject to a deferred payment schedule pursuant to the applicable distribution provisions of Code Section 409A so that the RSU Consideration cannot be paid to the holder within such five (5) Business-Day period without the holder’s incurrence of a penalty tax and interest penalties under Code Section 409A, then the Surviving Corporation shall, within five (5) Business Days following the Effective Time, deposit the RSU Consideration for each such holder into a grantor trust that satisfies the requirements of Revenue Procedure 92-64 and that will accordingly serve as the funding source for the Surviving Corporation to satisfy its obligations to pay each such holder the held-back RSU Consideration to which such holder is entitled, together with accrued interest thereon, as that consideration becomes payable in one or more installments in accordance with

the deferred payment schedule applicable to that award. A separate account shall be booked under such grantor trust for each holder entitled to such deferred RSU Consideration, and that account shall be fully-vested at all times. However, the grantor trust shall at all time remain subject to the claims of the general creditors of the Surviving Corporation, and each RSU Award holder with an interest therein shall have only the rights of a general creditor with respect to his or her portion of the deposited funds, which shall be maintained and located at all times in the United States. Any interest, earnings or other proceeds earned in respect of the outstanding balance of the trust fund as a result of the investment thereof by the trustee at the direction of the Company or the trust fund beneficiaries, for the period commencing with the establishment of such trust fund in accordance with this Section 2.3(b) and continuing through the date of the final payment of that fund to the holders entitled to the deferred RSU Consideration, shall be for the benefit of the beneficiaries of such trust fund, who shall be entitled to participate ratably in such interest, earnings or other proceeds. The deferred RSU Consideration per cancelled RSU Award, together with all accrued interest, earnings or other proceeds thereon through the actual payment date, shall be distributed to the holder of that cancelled RSU Award upon the earliest to occur of (i) each semi-annual date on which the Shares to which that RSU Consideration relates would have been issued to the holder, pursuant to the issuance provisions in effect under that RSU Award, in the absence of the Merger, (ii) the date such holder incurs a separation from service within the meaning of Code Section 409A and the applicable Treasury Regulations thereunder, subject to any required holdback under Code Section 409A if the holder is a “specified employee” for Code Section 409A purposes at the time of such separation from service, or (iii) the first date on which the distribution can be made to such holder without contravention of any applicable provisions of Code Section 409A, or as soon as administratively practicable following such applicable date, but in no event later than five (5) Business Days after the occurrence of such applicable date. The holders of the RSU Awards shall, as of the Effective Time, cease to have any further right or entitlement to acquire Shares or any shares of the capital stock of Parent or the Surviving Corporation under their canceled RSU Awards but shall at all times be fully-vested in their RSU Consideration, together with any interest, earnings or other proceeds that accrues thereon while that consideration may be deposited in the grantor trust in accordance herewith.

     (c) Immediately prior to the Effective Time, the then-current offering period (as set forth in the Company’s Amended and Restated 2004 Employee Stock Purchase Plan (the “ ESPP ”)) shall terminate (the “ Final Date ”) and the payroll deductions of each participant accumulated as of the Final Date for the then-current offering period shall be immediately applied to the purchase of whole Shares in accordance with the terms of the ESPP, which number of Shares shall be canceled and be converted in the Merger into the right to receive the Merger Consideration as provided in Section 2.1(a) with respect to such Shares.

     (d) The Surviving Corporation shall be entitled to deduct and withhold from the amounts otherwise payable pursuant to this Section 2.3 to any holder of Company Stock Options or an RSU Award such amounts as the Surviving Corporation is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, or local Tax Law, and the Surviving Corporation shall make any required filings with and payments to Tax authorities relating to any such deduction or withholding. To the extent that amounts are so deducted and withheld by the Surviving Corporation, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the

Company Stock Options or RSU Award in respect of which such deduction and withholding was made by the Surviving Corporation.

     (e) The Board of Directors (or the appropriate committee thereof) shall take such actions as are necessary in connection with the foregoing provisions of this Section 2.3.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except (i) as disclosed in, and reasonably apparent from, any report, schedule, form or other document filed with, or furnished to, the SEC and publicly available prior to the date of this Agreement (collectively, the “ Filed SEC Documents ”) or (ii) as disclosed in the disclosure letter delivered by the Company to Parent immediately prior to the execution of this Agreement (the “ Company Disclosure Letter ”, it being agreed that disclosure of any item in any section of the Company Disclosure Letter shall also be deemed disclosure with respect to any other section of this Agreement to which the relevance of such item is reasonably apparent), the Company represents and warrants to Parent and the Purchaser as follows:

     Section 3.1 Qualification, Organization, etc.

     (a) Each of the Company and its Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization, except for such failures that would not, individually or in the aggregate, have a Company Material Adverse Effect. Each of the Company and its Subsidiaries has all requisite corporate, partnership or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except for such failures that would not, individually or in the aggregate, have a Company Material Adverse Effect.

     (b) Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation (or other legal entity) in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Company Material Adverse Effect. The organizational or governing documents of the Company and each of its Subsidiaries are in full force and effect and neither the Company nor any Subsidiary is in violation of its organizational or governing documents, in each case, except for such failures that would not, individually or in the aggregate, have a Company Material Adverse Effect.

     (c) As used in this Agreement, any reference to any fact, circumstance, event, change, effect or occurrence having a “ Company Material Adverse Effect ” means any fact, circumstance, event, change, effect or occurrence that, individually or in the aggregate with all other facts, circumstances, events, changes, effects, or occurrences, has or would be reasonably expected to have a material adverse effect on or with respect to the business, results of operation or financial condition of the Company and its Subsidiaries, taken as a whole, provided, however, that, Company Material Adverse Effect shall not include facts, circumstances, events, changes, effects or occurrences (i) (A) generally affecting the pharmaceutical contract research organization industry or the segments thereof in which the Company and its Subsidiaries operate

(except to the extent that such facts, circumstances, events, changes, effects or occurrences materially and disproportionately have a greater adverse impact on the Company and its Subsidiaries, taken as a whole, as compared to the adverse impact such facts, circumstances, events, changes, effects or occurrences have on other Persons operating in the pharmaceutical contract research organization industry or the segments thereof in which the Company and its Subsidiaries operate; provided , that any such determination of whether a Company Material Adverse Effect has occurred in connection with such changes shall be measured with respect to the Company and its Subsidiaries, taken as a whole, after giving effect to the impact of such facts, circumstances, events, changes, effects or occurrences at the level of impact generally experienced by other companies operating in the pharmaceutical contract research organization industry or the segments thereof in which the Company and its Subsidiaries operate), or (B) generally affecting the economy or the financial, debt, credit or securities markets, in the United States, including effects on the contract research organization industry or the segments thereof in which the Company and its Subsidiaries operate, the economy or the financial, debt, credit or securities markets resulting from any political conditions or developments in general, or resulting from any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism (except to the extent that such facts, circumstances, events, changes, effects or occurrences materially and disproportionately have a greater adverse impact on the Company and its Subsidiaries, taken as a whole, as compared to the adverse impact such facts, circumstances, events, changes, effects or occurrences have on other Persons operating in the pharmaceutical contract research organization industry or the segments thereof in which the Company and its Subsidiaries operate; provided , that any such determination of whether a Company Material Adverse Effect has occurred in connection with such changes shall be measured with respect to the Company and its Subsidiaries, taken as a whole, after giving effect to the impact of such facts, circumstances, events, changes, effects or occurrences at the level of impact generally experienced by other companies operating in the pharmaceutical contract research organization industry or the segments thereof in which the Company and its Subsidiaries operate); (ii) reflecting or resulting from changes or proposed changes in Law (including rules and regulations), interpretations thereof, regulatory conditions or GAAP (or authoritative interpretations thereof); (iii) resulting from actions of the Company or any of its Subsidiaries which Parent has expressly requested or to which Parent has expressly consented, or resulting from the announcement of the Offer, the Merger or the proposal thereof or this Agreement and the transactions contemplated hereby, or from compliance by the Company with this Agreement; (iv) resulting from changes in the share price or trading volume of the Company Common Stock or the Company’s failure to meet any projections or forecasts or resulting from the Company’s results of operations for the quarter ended December 31, 2008 or any subsequent quarter, including any non-cash impairment charge for such period (but not the underlying causes of any such change in share price or trading volume or failure to meet projections or forecasts, unless such causes are otherwise excluded pursuant to other clauses of the proviso to this definition); (v) resulting from the modification, delay or cancellation of contracts with clients of the Company or any of its Subsidiaries, including those contracts included in the Company’s or any of its Subsidiaries backlog, or the failure to generate new client contracts; or (vi) resulting from the Company’s receipt of a going-concern opinion from its auditors based on a lack of a plan to repay the Convertible Notes or if the Company is not Solvent as a result of the potential repayment of the Convertible Notes.

     Section 3.2  Capital Stock .

     (a) The authorized capital stock of the Company consists of 40,000,000 shares of Company Common Stock and 5,000,000 shares of Preferred Stock, par value $0.10 per share. As of February 2, 2009, (i) 19,797,146 shares of Company Common Stock were issued and outstanding, (ii) no shares of Company Common Stock were held in treasury and (iii) (A) no shares of Company Common Stock were reserved for issuance pursuant to the ESPP, (B) 3,100,000 shares of Company Common Stock were reserved for issuance upon conversion of convertible senior notes of the Company and (C) 679,206 shares of Company Common Stock were reserved for issuance under the Equity Plans. All outstanding Shares, and all shares of Company Common Stock reserved for issuance as noted in clause (iii) of the foregoing sentence, when issued in accordance with the respective terms thereof, are or will be duly authorized, validly issued, fully paid and non-assessable and free of pre-emptive or similar rights. No Subsidiary of the Company owns any Shares. Section 3.2(a) of the Company Disclosure Letter lists, as of the date hereof, each outstanding Company Stock Option and RSU, the number of shares of Company Common Stock payable thereunder or to which such award relates and the exercise price thereof.

     (b) Except as set forth in Section 3.2(a) above or in Section 3.2(b) of the Company Disclosure Letter, as of the date hereof, (i) the Company does not have any shares of its capital stock issued or outstanding and (ii) there are no outstanding subscriptions, options, warrants, calls, convertible securities, stock-based performance units or other similar rights, agreements or commitments relating to the issuance of capital stock or other equity interests to which the Company or any of its Subsidiaries is a party obligating the Company or any of its Subsidiaries to (A) issue, transfer or sell any shares of capital stock or other equity interests of the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, (B) issue, grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or commitment, (C) redeem or otherwise acquire any such shares of capital stock or other equity interests or (D) provide a material amount of funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, the Company or any Subsidiary of the Company.

     (c) Except as set forth in Section 3.2(a) or Section 3.2(b) above, neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or other obligations, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter.

     (d) There are no stockholder agreements, voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting, registration, redemption, repurchase or disposition of the capital stock or other equity interest of the Company or any of its Subsidiaries.

     Section 3.3    Subsidiaries . Section 3.3 of the Company Disclosure Letter sets forth a complete and correct list of each “significant subsidiary” of the Company as such term is defined in Regulation S-X promulgated by the SEC (each, a “ Significant Subsidiary ”). Section 3.3 of the Company Disclosure Letter also sets forth the jurisdiction of organization and percentage of

outstanding equity interests (including partnership interests and limited liability company interests) owned by the Company or its Subsidiaries of each Significant Subsidiary. All equity interests (including partnership interests and limited liability company interests) of the Company’s Subsidiaries are owned by the Company or by a Subsidiary of the Company, and all such equity interests have been duly and validly authorized and are validly issued, fully paid and non-assessable and were not issued in violation of any preemptive or similar rights, purchase option, call or right of first refusal or similar rights. All such equity interests owned by the Company or any of its Subsidiaries are free and clear of any Liens, other than restrictions on transfer imposed by applicable Law. Except for its interests in Subsidiaries of the Company, or as disclosed in Section 3.3 of the Company Disclosure Letter, the Company does not own, directly or indirectly, 5% or more of the outstanding capital stock of, or other equity interests in, any Person, or any options, warrants, rights or securities convertible, exchangeable or exercisable therefor.

     Section 3.4    Corporate Authority Relative to This Agreement; No Violation .

     (a) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and, in the case of the Merger, subject to receipt of the Company Stockholder Approval, to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors and, except, in the case of the Merger, for (i) the Company Stockholder Approval and (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, no other corporate proceedings on the part of the Company are necessary to authorize the consummation of the transactions contemplated hereby. Subject to Section 5.2(d), the Board of Directors has, by resolutions duly adopted at a meeting duly called and held, (x) duly and validly approved and declared advisable this Agreement and the transactions contemplated hereby, (y) determined that the transactions contemplated by this Agreement are advisable and in the best interests of the Company and its stockholders and (z) resolved to make the Recommendation. This Agreement has been duly and validly executed and delivered by the Company and, assuming this Agreement constitutes the valid and binding agreement of Parent and the Purchaser, constitutes the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at Law) and any implied covenant of good faith and fair dealing.

     (b) Other than in connection with or in compliance with (i) the DGCL, (ii) the Exchange Act, (iii) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “ HSR Act ”), or any applicable Other Antitrust Law, and (iv) the approvals set forth on Section 3.4(b) of the Company Disclosure Letter (clauses (i) through (iv), collectively, the “ Company Approvals ”), no material authorization, consent, approval or order of, or filing with, or notice to, any United States or foreign governmental or regulatory agency, commission, court, body, entity or authority (each, a “ Governmental Entity ”) is necessary, under applicable Law, in connection with the execution, delivery and performance of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby.

     (c) Except as set forth in Section 3.4(c) of the Company Disclosure Schedule, the execution, delivery and performance by the Company of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the provisions hereof by the Company will not, (i) result in any breach or violation of, or default (with or without notice or lapse of time, or both) under, require consent under, or give rise to a right of termination, cancellation, modification or acceleration of any obligation or to the loss of any benefit under any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, lease, agreement, contract, purchase or sale order, instrument, permit, concession, franchise, right or license binding upon the Company or any of its Subsidiaries or result in the creation of any liens, claims, mortgages, encumbrances, pledges, security interests, equities or charges of any kind (each, a “ Lien ”) upon any of the properties, assets or rights of the Company or any of its Subsidiaries, (ii) conflict with or result in any violation of any provision of the certificate or articles of incorporation or by-laws or other equivalent organizational document of the Company or any of its Subsidiaries or (iii) assuming that all Company Approvals are duly obtained, conflict with or violate any applicable Laws, other than, in the case of clauses (i), (ii) (to the extent relating to Subsidiaries) and (iii), as would not, individually or in the aggregate, have a Company Material Adverse Effect and other than as may arise in connection with facts and circumstances particular to Parent and its Affiliates.

     Section 3.5     Reports and Financial Statements .

     (a) The Company and its Subsidiaries have timely filed all forms, documents, statements, reports and other materials, together with any amendments required to be made thereto, required to be filed by them with the SEC since January 1, 2007 (the forms, documents, statements, reports and other materials, together with any amendments required to be made thereto, filed with the SEC since January 1, 2007, including any amendments thereto, the “ Company SEC Documents ”). As of their respective dates, the Company SEC Documents complied, and each of the Company SEC Documents filed subsequent to the date of this Agreement will comply, in all material respects with the requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), the Exchange Act and the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), as the case may be, and the applicable rules and regulations promulgated thereunder. As of the time of filing with the SEC, none of the Company SEC Documents so filed or that will be filed subsequent to the date of this Agreement contained or will contain, as the case may be, any untrue statement of a material fact or omitted or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were or will be made, not misleading. No Subsidiary of the Company is subject to the periodic reporting requirements of the Exchange Act.

     (b) The financial statements (including all related notes and schedules) of the Company and its Subsidiaries included in the Company SEC Documents complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, fairly present in all material respects the financial position of the Company and its Subsidiaries, as at the respective dates thereof, and the results of their operations and their cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments expressly described therein, including the notes thereto, none of which are expected to be material) and were prepared in conformity with

United States generally accepted accounting principles (“ GAAP ”) (except, in the case of the unaudited statements, as permitted by the SEC) applied on a consistent basis during the periods involved (except as may be expressly indicated therein or in the notes thereto).

     (c) The Company and its Subsidiaries have established and maintain “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). The Company’s and its Subsidiaries’ disclosure controls and procedures are designed to reasonably ensure that information required to be disclosed in the Company’s periodic reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all material information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002.

     Section 3.6     No Undisclosed Liabilities . Except (i) as reflected or reserved against in the Company’s consolidated balance sheet as of September 30, 2008 (or the notes thereto) included in the Company SEC Documents filed prior to the date hereof, (ii) for liabilities or obligations incurred in connection with the transactions contemplated by this Agreement, (iii) for liabilities and obligations incurred in the ordinary course of business consistent with past practice since September 30, 2008 and (iv) as set forth in Section 3.6 of the Company Disclosure Letter, neither the Company nor any Subsidiary of the Company has any liabilities or obligations of any nature that would be required in accordance with GAAP to be set forth on the Company’s consolidated balance sheet, whether or not accrued, contingent or otherwise and whether due or to become due, that would, individually or in the aggregate, have a Company Material Adverse Effect.

     Section 3.7     Compliance with Law; Permits . Since January 1, 2007, the businesses of each of the Company and its Subsidiaries have been conducted in compliance, in all material respects, with all federal, state, local or foreign laws, statutes, ordinances, rules, regulations, Orders, arbitration awards, agency requirements, licenses and permits of each Governmental Entity (collectively, “ Laws ”), except for such violations that would not, individually or in the aggregate, have a Company Material Adverse Effect. The Company and its Subsidiaries have all material permits, licenses, franchises, variances, exemptions, Orders, authorizations, consents and approvals issued or granted by a Governmental Entity necessary to conduct their business as presently conducted, except those the absence of which would not, individually or in the aggregate, have a Company Material Adverse Effect (collectively, the “ Permits ”). Neither the Company nor any Subsidiary has received notice from any Governmental Authority (i) asserting a material violation of any Law, (ii) threatening revocation or non-renewal of any Permit material to the business of the Company and its Subsidiaries, or (iii) restricting or limiting in any material respect the operations of the Company and its Subsidiaries as currently conducted or purposed to be conducted.

     Section 3.8     Environmental Laws and Regulations .

     (a) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, (i) the Company and each of its Subsidiaries have conducted their respective businesses in compliance with all, and have not violated any, applicable

Environmental Laws, (ii) there has been no release of any Hazardous Substance in any manner that could reasonably be expected to give rise to any remedial obligation, corrective action requirement or liability of or against the Company, any of its Subsidiaries or any other Person whose liability for such matters the Company or any of its Subsidiaries is responsible for by Law or Contract, under applicable Environmental Laws, (iii) neither the Company nor any of its Subsidiaries has received in writing any claims, notices, demand letters or requests for information (except for such claims, notices, demand letters or requests for information the subject matter of which has been resolved prior to the date of this Agreement) from any Governmental Entity or any other Person asserting that the Company or any of its Subsidiaries is in violation of, or liable under, any Environmental Law, (iv) no Hazardous Substance has been disposed of, arranged to be disposed of, released or transported in violation of any applicable Environmental Law, or in a manner giving rise to, or that would reasonably be expected to give rise to, any liability under Environmental Law, from any current or former properties or facilities while owned or operated by the Company or any of its Subsidiaries or as a result of, or in connection with, any operations or activities of the Company, any of its Subsidiaries, any other Person whose liability for such matters the Company is responsible for by Law or Contract, at any location and Hazardous Substances are not otherwise present at or about any such properties or facilities in amount or condition that would reasonably be expected to result in liability to the Company or any of its Subsidiaries any other Person whose liability for such matters the Company is responsible for by Law or Contract under Environmental Law, (v) neither the Company, its Subsidiaries nor any of their respective properties or facilities are subject to, or are threatened to become subject to, any liabilities relating to any suit, settlement, court order, administrative order, regulatory requirement, judgment or written claim asserted or arising under any Environmental Law or any agreement relating to environmental liabilities, (vi) neither the Company nor any of its Subsidiaries has assumed, undertaken, provided an indemnity with respect to, become contractually responsible for, or have otherwise become subject to any liability of any other Person arising under any Environmental Law, and (vii) the Company has provided Parent with complete copies of any and all environmental assessment or audit reports or other similar studies or analyses generated within the last two years and in the Company’s or any Subsidiary’s possession that relate to the assets or properties of the Company or any Subsidiary.

     (b) As used herein, “ Environmental Law ” means any Law relating to (i) the protection, preservation, pollution or restoration of the environment (including air, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource) or protection of human health, or (ii) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Substances.

     (c) As used herein, “ Hazardous Substance ” means any substance listed, defined, designated, classified or regulated as a waste, pollutant or contaminant or as hazardous, toxic, radioactive or dangerous or any other term of similar import under any Environmental Law, including all Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, toxic mold and petroleum.

     Section 3.9     Employee Benefit Plans .

     (a) Section 3.9(a) of the Company Disclosure Letter sets forth a true and complete list of each material Company Benefit Plan. For purposes of this Agreement, the term “ Company Benefit Plan ” shall mean any employee or non-employee director benefit plan, arrangement or agreement, including, without limitation, any such plan that is an employee welfare benefit plan within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), an employee pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA), it being agreed that any such employee pension benefit plan is “material” for purposes of this Agreement, or a bonus, incentive, deferred compensation, vacation, stock purchase, stock option, severance, employment, change of control or fringe benefit plan, program or agreement that is sponsored or maintained by the Company or any of its Subsidiaries to or for the benefit of the current or former employees, independent contractors or non-employee directors of the Company and its Subsidiaries.

     (b) The Company has heretofore made available to Parent true and complete copies of each of the material Company Benefit Plans and (i) each writing constituting a part of such Company Benefit Plan, including all amendments thereto; (ii) the two most recent (A) Annual Reports (Form 5500 Series) and accompanying schedules, if any, (B) audited financial statements and (C) actuarial valuation reports; (iii) the most recent determination letter from the Internal Revenue Service (“ IRS ”) (if applicable) for such Company Benefit Plan; and (iv) any related trust agreement or funding instrument now in effect or required in the future as a result of the transactions contemplated by this Agreement.

     (c) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect: (i) each of the Company Benefit Plans has been established, operated and administered in all material respects with applicable Laws, including, but not limited to, ERISA, the Code, the Laws of the relevant non-U.S. jurisdiction and in each case the regulations thereunder; (ii) each of the Company Benefit Plans intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter from the IRS, and there are no existing circumstances or events that have occurred that would reasonably be expected to result in the revocation of such letter; (iii) no Company Benefit Plan is or has during the last six years been subject to Title IV of ERISA; (iv) no Company Benefit Plan provides health, life insurance or disability benefits (whether or not insured), with respect to current or former employees or directors of the Company or its Subsidiaries beyond their retirement or other termination of service, other than (A) coverage mandated by applicable Law, (B) death benefits or retirement benefits under any “employee pension plan” (as such term is defined in Section 3(2) of ERISA) or (C) as required pursuant to the express terms of existing contracts between the Company and its employees that will remain in effect following the Effective Time; (v) no liability u