10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended March 31, 2007.

or

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transitional period from                      to                     

Commission file number 0-29100

eResearchTechnology, Inc.

(Exact name of registrant as specified in its charter)

Delaware	22-3264604
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
30 South 17th Street Philadelphia, PA	19103
(Address of principal executive offices)	(Zip code)

215-972-0420 (Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o     Accelerated filer þ     Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of Common Stock, $.01 par value, outstanding as of April 27, 2007, was 50,405,956.

eResearchTechnology, Inc. and Subsidiaries

INDEX

			Page
Part I. Financial Information
	Item 1.	Financial Statements
		Consolidated Balance Sheets-December 31, 2006 and March 31, 2007 (unaudited)		3
		Consolidated Statements of Operations (unaudited)—Three Months Ended March 31, 2006 and 2007		4
		Consolidated Statements of Cash Flows (unaudited)—Three Months Ended March 31, 2006 and 2007		5
		Notes to Consolidated Financial Statements (unaudited)		6—11
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12—20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		20
	Item 4.	Controls and Procedures		21
Part II. Other Information
	Item 6.	Exhibits		22
Signatures				23
Exhibit Index				24
2007 Bonus Plan
Amended and Restated 2003 Equity Incentive Plan, as amended
Consultant Agreement
Certification of Chief Executive Officer
Certification of Chief Financial Officer
Statement of Chief Executive Officer
Statement of Chief Financial Officer

2

Part 1. Financial Information

Item 1. Financial Statements

eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share amounts)

	December 31, 2006			March 31, 2007
				(unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	15,497		$	18,345
Short-term investments		41,416			43,203
Accounts receivable, net		17,866			16,217
Prepaid income taxes		2,819			1,499
Prepaid expenses and other		2,761			3,439
Deferred income taxes		912			912
Total current assets		81,271			83,615
Property and equipment, net		31,129			33,649
Goodwill		1,212			1,212
Long-term investments		928			932
Other assets		524			530
Total assets	$	115,064		$	119,938
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	4,360		$	2,153
Accrued expenses		3,445			3,528
Income taxes payable		781			781
Current portion of capital lease obligations		40			2,831
Deferred revenues		11,325			10,931
Total current liabilities		19,951			20,224
Capital lease obligations, excluding current portion		—			778
Deferred income taxes		1,491			1,574
Total liabilities		21,442			22,576
Commitments and contingencies
Stockholders’ Equity:
Preferred stock — $10.00 par value, 500,000 shares authorized, none issued and outstanding		—			—
Common stock — $.01 par value, 175,000,000 shares authorized, 58,356,546 and 58,576,225 shares issued, respectively		584			586
Additional paid-in capital		83,493			84,962
Accumulated other comprehensive income		1,510			1,531
Retained earnings		70,225			72,473
Treasury stock, 8,247,119 shares at cost		(62,190	)		(62,190	)
Total stockholders’ equity		93,622			97,362
Total liabilities and stockholders’ equity	$	115,064		$	119,938

The accompanying notes are an integral part of these statements.

3

eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)

	Three Months Ended March 31,
	2006		2007
Net revenues:
Licenses	$	638	$	782
Services		14,725		13,968
Site support		6,036		6,334
Total net revenues		21,399		21,084
Costs of revenues:
Cost of licenses		76		66
Cost of services		6,156		6,790
Cost of site support		4,153		4,195
Total costs of revenues		10,385		11,051
Gross margin		11,014		10,033
Operating expenses:
Selling and marketing		3,038		2,538
General and administrative		3,839		3,469
Research and development		1,314		925
Total operating expenses		8,191		6,932
Operating income		2,823		3,101
Other income, net		390		550
Income before income taxes		3,213		3,651
Income tax provision		1,289		1,403
Net income	$	1,924	$	2,248
Basic net income per share	$	0.04	$	0.04
Diluted net income per share	$	0.04	$	0.04
Shares used to calculate basic net income per share		49,102		50,198
Shares used to calculate diluted net income per share		51,685		51,431

The accompanying notes are an integral part of these statements.

4

eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)

	Three Months Ended March 31,
	2006			2007
Operating activities:
Net income	$	1,924		$	2,248
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,819			3,215
Cost of sales of equipment		420			383
Non-cash share-based compensation		730			483
Changes in operating assets and liabilities:
Accounts receivable		301			1,654
Prepaid expenses and other		(1,171	)		(681	)
Accounts payable		607			(2,209	)
Accrued expenses		(1,030	)		84
Income taxes		(2,070	)		1,395
Deferred revenues		(2,135	)		(398	)
Net cash provided by operating activities		395			6,174
Investing activities:
Purchases of property and equipment		(4,923	)		(2,490	)
Purchases of investments		(7,436	)		(26,633	)
Proceeds from sales of investments		4,266			24,842
Net cash used in investing activities		(8,093	)		(4,281	)
Financing activities:
Repayment of capital lease obligations		(37	)		(40	)
Proceeds from exercise of stock options		1,099			879
Stock option income tax benefit		1,493			109
Repurchase of common stock for treasury		(5,803	)		—
Net cash (used in) provided by financing activities		(3,248	)		948
Effect of exchange rate changes on cash		32			7
Net (decrease) increase in cash and cash equivalents		(10,914	)		2,848
Cash and cash equivalents, beginning of period		18,432			15,497
Cash and cash equivalents, end of period	$	7,518		$	18,345

The accompanying notes are an integral part of these statements.

5

eResearchTechnology, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)

Note 1. Basis of Presentation

     The accompanying unaudited consolidated financial statements, which include the accounts of eResearchTechnology, Inc. (the “Company”, “eRT” or “we”) and its wholly-owned subsidiaries, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. Further information on potential factors that could affect our financial results can be found in our Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission and in this Form 10-Q.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

     The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

     The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Actual results could differ from those estimates.

Property and Equipment

     Pursuant to Statement of Position 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use,” we capitalize costs associated with internally developed or purchased software systems for new products and enhancements to existing products that have reached the application development stage and meet recoverability tests. These costs are included in property and equipment. Capitalized costs include external direct costs of materials and services utilized in developing or obtaining internal-use software, and payroll and payroll-related expenses for employees who are directly associated with and devote time to the internal-use software project.

     Amortization of capitalized software development costs is charged to cost of revenues. Amortization of capitalized software development costs was $0.4 million and $0.7 million for the three months ended March 31, 2006 and 2007, respectively. For the three months ended March 31, 2006 and 2007, we capitalized $1.4 million and $0.6 million, respectively, of software development costs related to labor and consulting. As of March 31, 2007, $0.6 million of capitalized costs have not yet been placed in service and are therefore not being amortized.

     During the first quarter of 2007, we entered into an agreement to purchase all of our leased cardiac safety equipment at an established price at the end of each lease schedule’s term, rather than return the equipment at that time. As a result, in accordance with Statement of Financial Accounting Standards (SFAS) No. 13, “Accounting for Leases,” we re-evaluated the classification of the leases and determined that the classification should be converted from operating leases to capital leases. As a result, we recorded a non-cash addition to property, plant and equipment of $3.6 million and $3.6 million of capital lease obligations.

Long-lived Assets

     In accordance with the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” when events or circumstances so indicate, we assess the potential impairment of our long-lived assets based on

6

anticipated undiscounted cash flows from the assets. Such events and circumstances include a sale of all or a significant part of the operations associated with the long-lived asset, or a significant decline in the operating performance of the asset. If an impairment is indicated, the amount of the impairment charge would be calculated by comparing the anticipated discounted future cash flows to the carrying value of the long-lived asset. No impairment was indicated during either of the three-month periods ended March 31, 2006 or March 31, 2007.

Software Development Costs

     Research and development expenditures are charged to operations as incurred. SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed,” requires the capitalization of certain software development costs subsequent to the establishment of technological feasibility. Since software development costs have not been significant after the establishment of technological feasibility, all such costs have been charged to expense as incurred.

Stock-Based Compensation

Accounting for Stock-Based Compensation

     On January 1, 2006, we adopted the provisions of SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123R), which requires that the costs resulting from all share-based payment transactions be recognized in the financial statements at their fair values. We adopted SFAS No. 123R using the modified prospective application method under which the provisions of SFAS No. 123R apply to new awards and to awards modified, repurchased or cancelled after the adoption date. Additionally, compensation cost for the portion of the awards for which the requisite service had not been rendered that were outstanding as of January 1, 2006 is recognized in the Consolidated Statements of Operations over the remaining service period after such date based on the award’s original estimate of fair value. The aggregate share-based compensation expense recorded in the Consolidated Statements of Operations for the three months ended March 31, 2006 and 2007 under SFAS No. 123R was $0.7 million and $0.5 million, respectively. For the three months ended March 31, 2006, this additional share-based compensation lowered pre-tax earnings by $0.7 million, lowered net income by $0.6 million and lowered basic and diluted earnings per share by $0.01. For the three months ended March 31, 2007, this additional share-based compensation lowered pre-tax earnings by $0.5 million, lowered net income by $0.4 million and lowered basic and diluted earnings per share by $0.01. SFAS No. 123R also amended SFAS No. 95, “Statement of Cash Flows,” to require that tax benefits be reported as financing cash inflows, rather than as a reduction of taxes paid, which is included within operating cash flows.

7

Valuation Assumptions for Options Granted

     The fair value of each stock option granted during the three months ended March 31, 2006 and 2007 was estimated at the date of grant using Black-Scholes, assuming no dividends and using the weighted-average valuation assumptions noted in the following table. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life (estimated period of time outstanding) of the stock options granted was estimated using the historical exercise behavior of employees. Expected volatility was based on historical volatility for a period equal to the stock option’s expected life, calculated on a daily basis.

	2006			2007
Risk-free interest rate		4.66	%		4.70	%
Expected dividend yield		0.00	%		0.00	%
Expected life	3.5 years			3.5 years
Expected volatility		60.83	%		56.19	%

     The above assumptions were used to determine the weighted-average per share fair value of $7.04 and $3.34 for stock options granted during the first three months of 2006 and 2007, respectively.

Stock Option Plans

     In 1996, we adopted a stock option plan (the “1996 Plan”) that authorized the grant of both incentive and non-qualified options to acquire up to 3,375,000 shares of the Company’s common stock. Our Board of Directors determined the exercise price of the options under the 1996 Plan. The exercise price of incentive stock options was not below the fair value of the common stock on the grant date. Incentive stock options under the 1996 Plan expire ten years from the grant date and are exercisable in accordance with vesting provisions set by the Board, which generally are over three to five years. In May 1999, the stockholders approved an amendment to the 1996 Plan that increased the number of shares which could be acquired through option grants under the 1996 Plan by 4,050,000 to 7,425,000 and provided for an annual option grant of 5,000 shares to each outside director. In April 2001, the stockholders approved an amendment to the 1996 Plan that increased the number of shares which could be acquired through option grants under the 1996 Plan by 2,025,000 to 9,450,000. No additional options have been granted under this plan, as amended, since December 31, 2003 and no additional options may be granted thereunder in accordance with the terms of the 1996 Plan.

     In May 2003, the stockholders approved a new stock option plan (the “2003 Plan”) that authorized the grant of both incentive and non-qualified options to acquire up shares of our common stock and provided for an annual option grant of 10,000 shares to each outside director. The Compensation Committee of our Board of Directors determines the recipients of option grants, the exercise price and other terms of the options under the 2003 Plan. The exercise price of incentive stock options may not be set below the fair value of the common stock on the grant date. Incentive stock options under the 2003 Plan expire ten years from the grant date, or at the end of such shorter period as may be designated by the Compensation Committee, and are exercisable in accordance with vesting provisions set by the Compensation Committee, which generally are over four years. In April 2006, the stockholders approved an amendment to the 2003 Plan that increased the number of shares which could be acquired through option grants under the 2003 Plan by 3,500,000. In accordance with the terms of the 2003 Plan, there are a total of 7,318,625 shares reserved for issuance under the 2003 Plan. The Company normally issues new shares to satisfy option exercises under these plans. On February 15, 2007, the Board of Directors of the Company, based on the recommendation of the Compensation Committee, adopted, subject to stockholder approval at the Annual Meeting, the Company’s Amended and Restated 2003 Equity Incentive Plan (the “2003 Equity Plan”). On April 26, 2007, the stockholders approved the adoption of the Plan. The 2003 Equity Plan amended the Company’s existing 2003 Plan in two material respects. First, it prohibits repricing of any stock options granted under the Plan unless the stockholders approve such repricing. Second, it permits awards of stock appreciation rights, restricted stock, long term performance awards and performance shares in addition to grants of stock options.

     On February 7, 2006, we entered into a new employment agreement with our former President and Chief Executive Officer in connection with the announcement of his retirement from his position as President and Chief Executive Officer and Director of the Company. His employment terminated on September 11, 2006 and any options not then exercisable became exercisable in full. As a result of this modification to his option terms, we revalued his options as of February 7, 2006 and amortized the resulting expense through September 11, 2006. This change resulted in additional pre-tax compensation expense of $0.1 million in the first three months of 2006.

8

     Information with respect to outstanding options under our plans is as follows:

				Weighted		Remaining		Intrinsic
				Average		Contractual		Value
	Shares			Exercise Price		Term		(in thousands)
Outstanding as of January 1, 2007		4,387,033		$	8.56
Granted		509,900			7.41
Exercised		(219,679	)		4.00
Cancelled/forfeited		(210,251	)		14.16
Outstanding as of March 31, 2007		4,467,003			8.39		5.1	$	11,551
Options exercisable or expected to vest at March 31, 2007		4,259,560			8.32		5.0	$	11,467
Options exercisable at March 31, 2007		3,084,049			7.71		4.6	$	10,990

     The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing common stock price on the last trading day of the first quarter of 2007 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2007. This amount changes based on the fair market value of the Company’s common stock. The total intrinsic value of options exercised for the three months ended March 31, 2006 and 2007 was $5.4 million and $0.7 million, respectively.

     As of March 31, 2007, there was $4.6 million of total unrecognized compensation cost related to non-vested stock options granted under the plans. That cost is expected to be recognized over a weighted-average period of 2.5 years.

Tax Effect Related to Stock-based Compensation Expense

     SFAS No. 123R provides that income tax effects of share-based payments are recognized in the financial statements for those awards that will normally result in tax deductions under existing tax law. Under current U.S. federal tax law, we receive a compensation expense deduction related to non-qualified stock options only when those options are exercised. Accordingly, the financial statement recognition of compensation cost for non-qualified stock options creates a deductible temporary difference which results in a deferred tax asset and a corresponding deferred tax benefit in the statement of operations. We do not recognize a tax benefit for compensation expense related to incentive stock options (ISOs) unless the underlying shares are disposed of in a disqualifying disposition. Accordingly, compensation expense related to ISOs is treated as a permanent difference for income tax purposes. The tax benefit recognized in our Consolidated Statement of Operations in the three months ended March 31, 2007 related to stock-based compensation expense was approximately $0.1 million.

Note 3. Net Income per Common Share

     Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period, adjusted for the dilutive effect of common stock equivalents, which consist of stock options. The dilutive effect of stock options is calculated using the treasury stock method.

     The tables below set forth the reconciliation of the numerators and denominators of the basic and diluted net income per share computations (in thousands, except per share amounts):

9

	Net				Per Share
Three Months Ended March 31,	Income		Shares		Amount
2006
Basic net income	$	1,924		49,102	$	0.04
Effect of dilutive shares		—		2,583		—
Diluted net income	$	1,924		51,685	$	0.04
2007
Basic net income	$	2,248		50,198	$	0.04
Effect of dilutive shares		—		1,233		—
Diluted net income	$	2,248		51,431	$	0.04

     In computing diluted net income per share, options to purchase 686,000 and 2,136,000 shares of common stock were excluded from the computations for the three months ended March 31, 2006 and 2007, respectively. These options were excluded from the computations because the exercise prices of such options were greater than the average market price of our common stock during the respective period.

Note 4. Comprehensive Income

     SFAS No. 130, “Reporting Comprehensive Income,” requires companies to classify items of other comprehensive income by their nature in the financial statements and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in-capital in the stockholders’ equity section of the balance sheet. Our comprehensive income includes net income and unrealized gains and losses from foreign currency translation as follows (in thousands):

	Three Months Ended March 31,
	2006		2007
Net income	$	1,924	$	2,248
Other comprehensive income:
Currency translation adjustment		133		21
Comprehensive income, net of tax	$	2,057	$	2,269

Note 5. Recent Pronouncements

     In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, “Fair Value Measurements,” which establishes a framework for reporting fair value and expands disclosures about fair value measurements. SFAS No. 157 becomes effective beginning with our first quarter 2008 fiscal period. We are currently evaluating the potential impact of this standard.

     In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB 108), which provides interpretive guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB 108 was effective as of January 1, 2007. The adoption of SAB 108 did not have any impact on our financial condition or results of operations.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 allows companies to elect to measure certain assets and liabilities at fair value and is effective for fiscal years beginning after November 15, 2007. This standard is not expected to have any impact on our financial condition or results of operations.

10

Note 6. Income Taxes

     We adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48) an interpretation of FASB Statement No. 109 (SFAS 109), on January 1, 2007. We did not recognize any adjustment in the liability for unrecognized income tax benefits as a result of the implementation of FIN 48. At the adoption date, we had $0.8 million of unrecognized tax benefits, all of which would affect our effective tax rate if recognized. At March 31, 2007, we have $0.8 million of unrecognized tax benefits as a result of the implementation of FIN 48. We recognize interest and penalties related to unrecognized tax benefits in income tax expense. The tax years 2003 through 2006 remain open to examination by the major taxing jurisdictions to which we are subject.

Note 7. Operating Segments / Geographic Information

     We consider our operations to consist of one segment as this represents management’s view of our operations. We operate on a worldwide basis with two locations in the United States and one location in the United Kingdom, which are categorized below as North America and Europe, respectively. The majority of our revenues are allocated based upon the profit split transfer pricing methodology.

     Geographic information is as follows (in thousands of dollars):

	Three Months Ended March 31, 2006
	North
	America		Europe		Total
License revenues	$	638	$	—	$	638
Service revenues		12,203		2,522		14,725
Site support revenues		4,521		1,515		6,036
Net revenues from external customers	$	17,362	$	4,037	$	21,399
Operating income	$	2,541	$	282	$	2,823
Long-lived assets	$	21,228	$	9,233	$	30,461
Identifiable assets	$	87,389	$	14,346	$	101,735

	Three Months Ended March 31, 2007
	North
	America		Europe		Total
License revenues	$	782	$	—	$	782
Service revenues		11,384		2,584		13,968
Site support revenues		4,254		2,080		6,334
Net revenues from external customers	$	16,420	$	4,664	$	21,084
Operating income	$	2,665	$	436	$	3,101
Long-lived assets	$	25,243	$	8,407	$	33,650
Identifiable assets	$	102,329	$	17,610	$	119,939

11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement for Forward-Looking Information

     The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes to the consolidated financial statements appearing elsewhere in this Form 10-Q. The following discussion includes a number of forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995 that reflect our current views with respect to future events and financial performance. We use words such as anticipate, believe, expect, intend and similar expressions to identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to risks and uncertainties such as competitive factors, technology development, market demand and our ability to obtain new contracts and accurately estimate net revenues due to uncertain regulatory guidance, variability in size, scope and duration of projects and internal issues at the sponsoring client. These and other risk factors have been further discussed in our Form 10-K for the year ended December 31, 2006. Such risks and uncertainties could cause actual results to differ materially from historical results or future predictions. Further information on potential factors that could affect our financial results can be found throughout this Form 10-Q and our other reports filed with the Securities and Exchange Commission.

Overview

     We were founded in 1977 to provide Cardiac Safety services to evaluate the safety of new drugs. We provide technology and services that enable the pharmaceutical, biotechnology and medical device industries to collect, interpret and distribute cardiac safety and clinical data more efficiently. We are a market leader in providing centralized electrocardiographic services (Cardiac Safety services or EXPeRT^® ECG services) and a leading provider of technology and services that streamline the clinical trials process by enabling our clients to evolve from traditional, paper-based methods to electronic processing using our eClinical products and services.

     Our solutions improve the accuracy, timeliness and efficiency of trial set-up, data collection from sites worldwide, data interpretation and new drug, biologic and device application submissions. We offer Cardiac Safety services, which are utilized by clinical trial sponsors and clinical research organizations (CROs) during the conduct of clinical trials and measure the interval between the start of the “Q” wave and the end of the “T” wave in the heart’s electrical cycle, adjusted for heart rate. Thorough QTc studies are comprehensive studies that typically are of large volume and of short duration, with ECGs performed over a two- to six-month period. The Digital ECG Franchise program was designed to address the capacity demands for eRT’s ECG services through partnerships with sponsors that desired dedicated resources within eRT to address specific levels of cardiac safety monitoring transactions. In 2006, we decided to discontinue the offering of the Digital ECG Franchise program as we feel we can offer our clients a better value proposition in other ways in the current operating environment. We also offer site support which includes the rental and sale of cardiac safety equipment along with related supplies and freight. Additionally, we offer the licensing and, at the client’s option, hosting of our proprietary eClinical software products and the provision of maintenance and consulting services in support of our proprietary eClinical software products. We offer the following products and services on a global basis:

EXPeRT^® Cardiac Safety. EXPeRT^® Cardiac Safety services provide for workflow-enabled cardiac safety data collection, interpretation and distribution of electrocardiographic (ECG) data and images as well as for analysis and cardiologist interpretation of ECGs performed on research subjects in connection with our clients’ clinical trials. In addition, we establish rules for standardized, semi-automated and automated workflow management, allowing audit trail accounting and generating safety and operational metrics reports for sponsors and investigators. Also included in EXPeRT^® Cardiac Safety services is FDA XML delivery, which provides for the delivery of ECGs in a format compliant with the United States Food and Drug Administration’s XML standard for digital ECGs.

eClinical™. The process of designing, implementing and managing a clinical trial requires a well defined process and set of supporting products to effectively handle the variety of tasks and information comprising a clinical trial. eRT provides a suite of products to address the capture, management and dissemination of clinical trial data. Our integrated suite is comprised of the following:

• eResearch Community™ (eRC™) is an easy to use portal application that provides real-time information related to monitoring clinical trial activities, data quality and safety.

12

• eData Entry™ (eDE™) technology provides a comprehensive electronic data capture (EDC) system comprised of technology and consulting services formulated to deliver rapid time to benefit for electronic trial initiatives.

• eData Management™ (eDM™) is a clinical data management application for collecting, cleaning and managing clinical trial data.

• eSafety Net™ (eSN™ ) is an adverse event management system enabling the generation of key regulatory reports, including CIOMS and Medwatch.

• eStudy Conduct™ (eSC™) is a clinical trial management technology that can be used to set up clinical trials, establish standards, track study activities, plan resources, distribute supplies, manage the financial aspects of a trial and electronically view clinical trial data.

Project Assurance/Implementation Assurance. We provide a full spectrum of consulting services for all of our products that augment the study management and implementation efforts of clients in support of their clinical research requirements.

     Our license revenues consist of license fees for perpetual licenses and monthly and annual term licenses. Our services revenues consist of Cardiac Safety services, technology consulting and training services and software maintenance services. Our site support revenues consist of cardiac safety equipment rentals and sales along with related supplies and freight.

     We recognize software revenues in accordance with Statement of Position (SOP) 97-2, “Software Revenue Recognition,” as amended by SOP 98-9, “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions.” Accordingly, we recognize up-front license fee revenues under the residual method when a formal agreement exists, delivery of the software and related documentation has occurred, collectability is probable and the license fee is fixed or determinable. We recognize monthly and annual license fee revenues over the term of the arrangement. Hosting service fees are recognized evenly over the term of service. Cardiac Safety services revenues consist of services that we provide on a fee for services basis and are recognized as the services are performed. Site support revenues are recognized at the time of sale or over the rental period. We recognize revenues from software maintenance contracts on a straight-line basis over the term of the maintenance contract, which is typically twelve months. We provide consulting and training services on a time and materials basis and recognize revenues as we perform the services.

     For arrangements with multiple deliverables where the fair value of each element is known, the revenue is allocated to each component based on the relative fair values of each element. For arrangements with multiple deliverables where the fair value of one or more delivered elements is not known, revenue is allocated to each component of the arrangement using the residual method provided that the fair value of all undelivered elements is known. Fair values for undelivered elements are based primarily upon stated renewal rates for future products or services.

     Cost of licenses consists primarily of application service provider (ASP) fees for those clients that choose hosting, the cost of producing compact disks and related documentation and royalties paid to third parties in connection with their contributions to our product development. Cost of services includes the cost of Cardiac Safety services and the cost of technology consulting, training and maintenance services. Cost of Cardiac Safety services consists primarily of direct costs related to our centralized Cardiac Safety services and includes wages, depreciation and other direct operating costs. Cost of technology consulting, training and maintenance services consists primarily of wages, fees paid to outside consultants and other direct operating costs related to our consulting and client support functions. Cost of site support consists primarily of wages, cardiac safety equipment rent and depreciation, related supplies, cost of equipment sold, shipping expenses and other direct operating costs. Selling and marketing expenses consist primarily of wages and commissions paid to sales personnel, travel expenses and advertising and promotional expenditures. General and administrative expenses consist primarily of wages and direct costs for our finance, administrative, corporate information technology, legal and executive management functions, in addition to professional service fees and corporate insurance. Research and development expenses consist primarily of wages paid to our product development staff, costs paid to outside consultants and direct costs associated with the development of our technology products.

     We conduct our operations through offices in the United States (U.S.) and the United Kingdom (UK). Our international net revenues represented approximately 19% and 22% of total net revenues for the three months ended March 31, 2006 and 2007, respectively. The majority of our revenues are allocated among our geographic segments based upon the profit the split transfer pricing methodology, and revenues are generally attributed to the geographic segment where the work is performed.

13

Results of Operations

Executive Overview

     Our revenues for the first quarter of 2007 were $21.1 million as compared to $21.4 million in revenue for the same period in 2006. We also reported net income for the first quarter of 2007 of $2.2 million, or $0.04 per diluted share as compared to net income of $1.9 million, or $0.04 per diluted share, in the first quarter of 2006. Our operating income for the first quarter of 2007 as a percentage of total net revenues was 14.7% as compared to 13.2% in the first quarter of 2006. The Company’s tax rate for the first quarter of 2007 was 38.4% compared to 40.1% in the first quarter of 2006. We ended the quarter with $62.5 million in cash, cash equivalents and investments, an increase of $4.7 million from $57.8 million at the end of the fourth quarter of 2006.

     On May 3, 2007, we announced that we had signed $29.7 million in contracts which included $6.0 million of Thorough QTc studies. At that time, we also reported a backlog of $101.5 million at the end of the first quarter of 2007 including the $29.7 million in contracts signed, an increase of $1.2 million from December 31, 2006. This represented a 20% annualized increase from the prior quarter. The annualized cancellation rate for the first quarter of 2007 was 15%. During the first quarter of 2007, we initiated the use of EXPeRT^® 2, our new state-of-the-art cardiac safety system, and we initiated the eRT Consulting Practice which will concentrate on providing our clients with industry-leading cardiac safety consultative services. We are offering this service as both a stand-alone service as well integrated with our full suite of cardiac safety services.

     On February 21, 2007, we announced that we would be making efficiency improvements in our Cardiac Safety operations and general and administrative cost structure. The effect on the results for the year ending December 31, 2007 are expected to be minimal as severance and other transitional costs will largely offset efficiency savings. In the first quarter of 2007, general and administrative expenses included $0.7 million of severance and other transitional costs. The overall effect on diluted earnings per share is estimated to be an increase of approximately $0.05 for the year ending December 31, 2008.

14

     The following table presents certain financial data as a percentage of total net revenues:

	Three Months Ended March 31,
	2006			2007
Net revenues:
Licenses		3.0	%		3.7	%
Services		68.8	%		66.3	%
Site support		28.2	%		30.0	%
Total net revenues		100.0	%		100.0	%
Costs of revenues:
Cost of licenses		0.3	%		0.3	%
Cost of services		28.8	%		32.2	%
Cost of site support		19.4	%		19.9	%
Total costs of revenues		48.5	%		52.4	%
Gross margin		51.5	%		47.6	%
Operating expenses:
Selling and marketing		14.2	%		12.0	%
General and administrative		17.9	%		16.5	%
Research and development		6.2	%		4.4	%
Total operating expenses		38.3	%		32.9	%
Operating income		13.2	%		14.7	%
Other income, net		1.8	%		2.6	%
Income before income taxes		15.0	%		17.3	%
Income tax provision		6.0	%		6.6	%
Net income		9.0	%		10.7	%

15

Three Months Ended March 31, 2007 Compared to Three Months Ended March 31, 2006.

     The following table presents our consolidated statements of operations with product line detail (dollars in thousands):

	Three Months Ended March 31,
	2006		2007		Increase (Decrease)
Licenses:
Net revenues	$	638	$	782	$	144		22.6	%
Costs of revenues		76		66		(10	)	(13.2	%)
Gross margin	$	562	$	716	$	154		27.4	%
Services:
Cardiac Safety
Net revenues	$	13,112	$	12,432	$	(680	)	(5.2	%)
Costs of revenues		5,425		6,164		739		13.6	%
Gross margin	$	7,687	$	6,268	$	(1,419	)	(18.5	%)
Technology consulting and training
Net revenues	$	586	$	660	$	74		12.6	%
Costs of revenues		476		410		(66	)	(13.9	%)
Gross margin	$	110	$	250	$	140		127.3	%
Software maintenance
Net revenues	$	1,027	$	876	$	(151	)	(14.7	%)
Costs of revenues		255		216		(39	)	(15.3	%)
Gross margin	$	772	$	660	$	(112	)	(14.5	%)
Total services
Net revenues	$	14,725	$	13,968	$	(757	)	(5.1	%)
Costs of revenues		6,156		6,790		634		10.3	%
Gross margin	$	8,569	$	7,178	$	(1,391	)	(16.2	%)
Site support:
Net revenues	$	6,036	$	6,334	$	298		4.9	%
Costs of revenues		4,153		4,195		42		1.0	%
Gross margin	$	1,883	$	2,139	$	256		13.6	%
Total
Net revenues	$	21,399	$	21,084	$	(315	)	(1.5	%)
Costs of revenues		10,385		11,051		666		6.4	%
Gross margin		11,014		10,033		(981	)	(8.9	%)
Operating expenses:
Selling and marketing		3,038		2,538		(500	)	(16.5	%)
General and administrative		3,839		3,469		(370	)	(9.6	%)
Research and development		1,314		925		(389	)	(29.6	%)
Total operating expenses		8,191		6,932		(1,259	)	(15.4	%)
Operating income		2,823		3,101		278		9.8	%
Other income, net		390		550		160		41.0	%
Income before income taxes		3,213		3,651		438		13.6	%
Income tax provision		1,289		1,403		114		8.8	%
Net income	$	1,924	$	2,248	$	324		16.8	%

16

     The following table presents costs of revenues as a percentage of related net revenues and operating expenses as a percentage of total net revenues:

	Three Months Ended March 31,						Increase
	2006			2007			(Decrease)
Cost of licenses		11.9	%		8.4	%		(3.5	%)
Cost of services:
Cardiac Safety		41.4	%		49.6	%		8.2	%
Technology consulting and training		81.2	%		62.1	%		(19.1	%)
Software maintenance		24.8	%		24.7	%		(0.1	%)
Total cost of services		41.8	%		48.6	%		6.8	%
Cost of site support		68.8	%		66.2	%		(2.6	%)
Total costs of revenues		48.5	%		52.4	%		3.9	%
Operating expenses:
Selling and marketing		14.2	%		12.0	%		(2.2	%)
General and administrative		17.9	%		16.5	%		(1.4	%)
Research and development		6.2	%		4.4	%		(1.8	%)

     License revenues increased due to the greater value of the license sold in 2007 as compared to the one sold in 2006.

     The decrease in Cardiac Safety service revenues was primarily due to a decrease in average revenues per transaction that was largely due to the impact of increased activity in semi-automated processing, which generally includes lower fees per transaction than other studies, as well as competitive pricing pressure. These decreases were partially offset by cardiac safety consulting services revenue of $0.2 million in 2007, which is a new revenue source to eRT beginning in 2007. Beginning in 2007, we have an arrangement with a company owned by our chairman, Dr. Morganroth, whereby for certain consulting services provided by us to customers identified and referred to us by Dr. Morganroth’s company, we will pay Dr. Morganroth’s company between 80% to 90% of such net billed amounts to these customers.

     The increase in technology consulting and training revenues was primarily related to $0.1 million of professional services performed in connection with a late 2006 license sale. The license sale in the first quarter of 2006 required limited consulting services due to the nature of the license sold.

     Software maintenance revenues decreased due to the cancellation and non-renewals of maintenance agreements or a reduction in the number of users. These declines were partially offset by maintenance on several software licenses sold during 2006 and 2007.

     Site support revenues increased primarily due to a $0.2 million increase in the rental of cardiac safety equipment in the first quarter of 2007 as compared to the first quarter of 2006, as well as an increase in freight revenue of $0.2 million due to additional shipments. Partially offsetting the increase was a $0.1 million decrease in the sale of cardiac safety equipment in the first quarter of 2007 as compared to the first quarter of 2006.

     The increase in the cost of Cardiac Safety services, both in absolute terms and as a percentage of Cardiac Safety revenues, was primarily due to a $0.3 million increase in depreciation expense related to the EXPeRT^® 2 which was placed into production in January 2007, $0.1 million in consulting costs related to cardiac safety consulting revenue discussed above and $0.1 million in higher facilities-related and insurance costs. Additional increases occurred for labor, maintenance and bonus expenses. The increase in the cost of Cardiac Safety services as a percentage of Cardiac Safety service revenues also reflects the fact that some of the costs do not necessarily change in direct relation with changes in revenue.

     The decrease in the cost of technology consulting and training services, both in absolute terms and as a percentage of technology consulting and training services revenues, was primarily due to a decrease in labor costs due to fewer employees in the first quarter of 2007 as compared to the first quarter of 2006. The decrease in the cost of technology consulting and training services as a percentage of technology consulting and training service revenues also reflects the fact that some of the costs do not necessarily increase or decrease in direct relation with changes in revenue.

     The decrease in selling and marketing expenses, both in absolute terms and as a percentage of total net revenues, was primarily due to $0.2 million decrease in bonus expense as most of the selling staff in 2006 was on a bonus plan that required the achievement of certain quarterly sales targets in order to earn but were converted in 2007 to a commission plan where

17

payments are based upon a percentage of revenue earned. Payments under the commission plan will increase as signings convert into revenue as work is performed for the contracts that were signed in the first quarter of 2007. There was also a $0.1 million decrease in labor costs due to fewer employees in the three months ended March 31, 2007. The decrease was also due to decreased stock option compensation expense, employee placement fees and marketing and advertising costs.

     The decrease in general and administrative expenses, both in absolute terms and as a percentage of total net revenues, was due primarily to $0.6 million of costs in the first quarter of 2006 associated with the settlement of a contract dispute for which there was no corresponding cost in the first quarter of 2007. Partially offsetting the decrease was $0.7 million related to severance-related costs for employees terminated in February 2007 as compared to $0.5 million of costs associated with management changes in the first quarter of 2006.

     The decrease in research and development expenses, both in absolute terms and as a percentage of total net revenues, was primarily due to a $0.2 million decrease in expense for third-party consultants and a $0.1 million decrease in software license and maintenance expense.

     Other income, net, consisted primarily of interest income realized from our cash, cash equivalents and investments, interest expense related to capital lease obligations and foreign exchange losses. Other income, net increased primarily due to higher interest income in the first quarter of 2007 due to higher average interest rates and cash balances.

     Our effective tax rate was 40.1% and 38.4% for the three months ended March 31, 2006 and 2007, respectively. The primary cause of the decrease in the effective tax rate was an increase in tax-free interest income in the first quarter of 2007 as compared to the first quarter of 2006.

18

Liquidity and Capital Resources

     At March 31, 2007, we had $18.3 million of cash and cash equivalents and $44.1 million invested in short-term and long-term investments. We generally place our investments in municipal securities, bonds of government sponsored agencies, certificates of deposit with fixed rates and maturities of less than one year and A1P1 rated commercial bonds and paper.

     For the three months ended March 31, 2007, our operations provided cash of $6.2 million compared to $0.4 million during the three months ended March 31, 2006. The change was primarily the result of a $1.3 million decrease in prepaid income taxes in the first quarter of 2007 as compared to a $1.8 million increase in the first quarter of 2006 and reductions in accounts receivable that provided $1.7 million of cash in the first quarter of 2007 as compared to $0.3 million in the first quarter of 2006. Deferred revenues decreased $0.4 million in the first quarter of 2007 as compared to $2.1 million in the first quarter of 2006. Partially offsetting the items above was a $2.1 million net use of cash for accounts payable and accrued expenses in the first quarter of 2007 as compared to $0.4 million in the first quarter of 2006.

     For the three months ended March 31, 2007, our investing activities used cash of $4.3 million compared to $8.1 million during the three months ended March 31, 2006. The change was primarily the result of a $2.4 million decrease in cash used for purchases of property and equipment for the three months ended March 31, 2007 as compared to 2006. Additionally, the change was the result of net activity related to investments, which used $1.8 million of cash for the three months ended March 31, 2007, compared to $3.2 million for the three months ended March 31, 2006.

     During the three months ended March 31, 2007 and 2006, we purchased $2.5 million and $4.9 million, respectively, of property and equipment. Included in property and equipment is internal use software associated with a data and communications management services software product (EXPeRT^®) used in connection with our centralized core cardiac safety ECG services. We capitalize certain internal use software costs in accordance with Statement of Position (SOP) 98-1, “Accounting for Costs of Computer Software for Internal Use.” The amortization is charged to the cost of Cardiac Safety services beginning at the time the software is ready for its intended use. In April 2005, we began developing enhancements to EXPeRT^® which were necessary while an upgrade to EXPeRT^® (EXPeRT^® 2) was being developed. EXPeRT^® 2 was placed into production in January 2007. Beginning in January 2007, additional capitalizable development costs of EXPeRT^® 2 were incurred to develop new functionalities of and enhancements to EXPeRT^® 2. In addition to the $0.6 million capitalized in the three months ended March 31, 2007, we expect to spend approximately $1.5 million for capitalizable development costs during the balance of 2007.

     In the first quarter of 2006, we began development of a data warehouse that enables centralized capture of cardiac safety data and the ability to integrate with the Food and Drug Administration’s ECG data warehouse. The data warehouse was placed into production in January 2007.

     The following table presents the internal use software costs and related amortization as of March 31, 2007 (in thousands):

				Related		Total
		Labor and		Direct Costs		Capitalized		Monthly		Accumulated
	Amortization Period	Consulting		of Materials		Costs		Amortization		Amortization
EXPeRT® enhancements	October 2005-September 2007		463		—		463		20		347
Semi-automated ECG processing software
Initial costs	February 2004-January 2008		449		361		810		17		641
Enhancements	October 2004-September 2008		380		—		380		8		238
Additional enhancements	April 2005-March 2009		376		—		376		8		188
EXPeRT® 2
Initial costs	January 2007-December 2011		9,412		1,139		10,551		176		528
Enhancements	To be determined		599		—		599		—		—
Data warehouse	January 2007-December 2011		722		—		722		12		36
Total		$	12,401	$	1,500	$	13,901	$	241	$	1,978

19

For the three months ended March 31, 2007, our financing activities provided cash of $0.9 million compared to a use of cash of $3.2 million for the three months ended March 31, 2006. The change was primarily the result of the purchase of $5.8 million of common stock under our stock buy-back program in the first quarter of 2006. There was no purchase under the stock buy-back program in the first quarter of 2007. Partially offsetting the impact is a reduction in the tax benefits related to stock option exercises of $1.4 million.

     We have a line of credit arrangement with Wachovia Bank, National Association totaling $3.0 million. To date, we have not borrowed any amounts under our line of credit. As of March 31, 2007, we had outstanding letters of credit of $0.5 million, which reduced our available borrowings under the line of credit to $2.5 million.

     During the first quarter of 2007, we entered into an agreement to purchase all of our leased cardiac safety equipment at an established price at the end of each lease schedule’s term. As a result, in addition to the scheduled minimum lease payments, we will pay $0.7 and $0.5 million in 2007 and 2008, respectively, to purchase the equipment.

     We have a commitment to purchase approximately $6.2 million of private label cardiac safety equipment from a manufacturer over the twelve-month period ending in July 2007. This cardiac safety equipment is expected to be purchased in the normal course of business and thus does not represent a significant commitment above our expected purchases of ECG equipment during that period. As of March 31, 2007, approximately $4.0 million of equipment had been purchased under the commitment.

     We expect that existing cash and cash equivalents, short-term investments and cash flows from operations will be sufficient to meet our foreseeable cash needs for at least the next year. However, there may be acquisition and other growth opportunities that require additional external financing and we may from time to time seek to obtain additional funds from the public or private issuances of equity or debt securities. There can be no assurance that any such acquisitions will occur or that such financings will be available or available on terms acceptable to us.

     In the second quarter of 2005, the stock buy-back program that was originally announced in April 2004 and extended to 2,500,000 shares in October 2004 was extended by an additional 10,000,000 shares to a total of 12,500,000 shares. The purchase of the remaining shares authorized could require us to use a significant portion of our cash, cash equivalents and short-term and long-term investments and could also require us to seek additional external financing. The stock buy-back authorization allows us, but does not require us, to purchase the authorized shares. During the three months ended March 31, 2006, we purchased 400,000 shares of our common stock at a cost of $5.8 million. No shares were purchased during the three months ended March 31, 2007.

Inflation

     We believe the effects of inflation and changing prices generally do not have a material adverse effect on our results of operations or financial condition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Our primary financial market risks include fluctuations in interest rates and currency exchange rates.

Interest Rate Risk

     We generally place our investments in money market funds, municipal securities, bonds of government sponsored agencies, certificates of deposit with fixed rates with maturities of less than one year and A1P1 rated commercial bonds and paper. We actively manage our portfolio of cash equivalents and short-term investments, but in order to ensure liquidity, will only invest in instruments with high credit quality where a secondary market exists. We have not held and do not hold any derivatives related to our interest rate exposure. Due to the average maturity and conservative nature of our investment portfolio, a sudden change in interest rates would not have a material effect on the value of the portfolio. Management estimates that had the average yield of our investments decreased by 100 basis points, our interest income for the three months ended March 31, 2007 would have decreased by approximately $0.2 million. This estimate assumes that the decrease occurred on the first day of 2007 and reduced the yield of each investment by 100 basis points. The impact on interest income of future changes in investment yields will depend largely on the gross amount of our cash, cash equivalents and short-term investments. See “Liquidity and Capital Resources” within Management’s Discussion and Analysis of Financial Condition and Results of Operations.

20

Foreign Currency Risk

     We operate on a global basis from locations in the United States (U.S.) and the United Kingdom (UK). All international net revenues and expenses are billed or incurred in either U.S. dollars or pounds sterling. As such, we face exposure to adverse movements in the exchange rate of the pound sterling. As the currency rate changes, translation of the statement of operations of our UK subsidiary from the local currency to U.S. dollars affects year-to-year comparability of operating results. We do not hedge translation risks because any cash flows from UK operations are generally reinvested in the UK.

     Management estimates that a 10% change in the exchange rate of the pound sterling would have impacted the reported operating income for the three months ended March 31, 2007 by approximately $0.1 million.

Item 4. Controls and Procedures

     We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended, as of March 31, 2007. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company (including our consolidated subsidiaries) in our periodic filings with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. There has been no change in our internal control over financial reporting during the quarter ended March 31, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

21

Part II. Other Information

Item 6. Exhibits

10.12	2007 Bonus Plan
10.31	Amended and Restated 2003 Equity Incentive Plan, as amended.
10.43	Consultant Agreement effective January 1, 2007 between Dr. Joel Morganroth and the Company.
31.1	Certification of Chief Executive Officer.
31.2	Certification of Chief Financial Officer.
32.1	Statement of Chief Executive Officer Pursuant to Section 1350 of Title 18 of the United States Code.
32.2	Statement of Chief Financial Officer Pursuant to Section 1350 of Title 18 of the United States Code.

22

Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	eResearchTechnology, Inc. (Registrant)
Date: May 4, 2007	By:	/s/ Michael J. McKelvey
		Michael J. McKelvey
		President and Chief Executive Officer, Director (Principal executive officer)
Date: May 4, 2007	By:	/s/ Richard A. Baron
		Richard A. Baron
		Executive Vice President, Chief Financial Officer and Secretary (Principal financial and accounting officer)

23

EXHIBIT INDEX

Exhibit No.	Exhibit
10.12	2007 Bonus Plan.
10.31	Amended and Restated 2003 Equity Incentive Plan, as amended.
10.43	Consultant Agreement effective January 1, 2007 between Dr. Joel Morganroth and the Company.
31.1	Certification of Chief Executive Officer.
31.2	Certification of Chief Financial Officer.
32.1	Statement of Chief Executive Officer Pursuant to Section 1350 of Title 18 of the United States Code.
32.2	Statement of Chief Financial Officer Pursuant to Section 1350 of Title 18 of the United States Code.

24

EX-10.12

                                                                  EXHIBIT 10.12

                            ERESEARCHTECHNOLOGY, INC.

                                 2007 BONUS PLAN

     Set forth below is a summary of the 2007 Bonus Plan approved by the
Compensation Committee of the Board of Directors on February 15, 2007, to be
effective for fiscal 2007.

     The purpose of the plan is to promote the interests of the Company and its
stockholders by providing employees with financial rewards upon achievement of
specified business objectives, and to help the Company attract and retain
employees by providing attractive compensation opportunities linked to
performance results. All of the Company's employees are eligible to participate
in the plan, subject in some cases to certain waiting periods and with the
exception that certain sales personnel who participate in a separate commission
incentive plan do not participate in the plan.

     In general, awards will be based upon the extent to which a specified
combination of the following performance targets are achieved:

     -    Revenues;

     -    Income Before Income Taxes;

     -    Contract Revenues Targets (revenue projected to be generated by new
          contracts into which the Company enters with all but certain specified
          customers during the applicable bonus period, regardless of when the
          revenue is actually recognized by the Company); and

     -    Individual performance goals.

     The Compensation Committee establishes the performance targets and
individual performance goals for the Company's President and Chief Executive
Officer and Chief Financial Officer. The President and Chief Executive Officer
establishes the performance targets and individual performance goals for the
executive officers. Performance targets for the remainder of the plan
participants are set by the President and Chief Executive Officer; while
departmental supervisors establish the individual performance goals for other
participants in their respective departments.

     Each participant in the plan has a targeted bonus opportunity, and a
specified percentage of that opportunity relates to the extent to which each
performance target applicable to the participant is achieved. For each
performance target other than departmental or individual performance goals, the
plan sets forth specific levels at which 50%, 75%, 100%, 125% and 150% of the
target is achieved. A participant receives that specified percentage of the
portion of the bonus opportunity applicable to the target to the extent a
particular benchmark is achieved. Where the extent to which a target is achieved
falls between the specified percentage targets, the participant receives a pro
rated portion of the bonus opportunity. As a result of the foregoing, the
maximum bonus payable to a participant under the plan is 150% of the
participant's bonus opportunity. For departmental and individual performance
goals, the participant's departmental supervisor determines the extent to which
the goals have been achieved and any related bonus has been earned.

     The bonus opportunities and the related performance targets for each of the
Company's executive officers are as follows:



                                                                                 PERCENTAGE OF BONUS BASED ON:
                                                                      --------------------------------------------------
                                                                                                                 GLOBAL
                                                                                   INCOME                       CONTRACT
                                                                                   BEFORE       INDIVIDUAL      REVENUES
                                                        BONUS                      INCOME       PERFORMANCE     TARGETS
NAME                       POSITION                  OPPORTUNITY      REVENUES      TAXES          GOALS          (2)
- -------------------------  ----------------------    -----------      --------     -------      -----------     --------
                                                                                              
Michael J. McKelvey, Ph.D  President, Chief            185,000           20          60              20              -
                           Executive Officer and
                           Director

Joel Morganroth, MD1       Chairman of the Board        94,640           30          70               -              -
                           of Directors and
                           Chief Scientific
                           Officer

Richard A. Baron           Executive Vice              137,500           20          60              20              -
                           President, Chief
                           Financial Officer and
                           Secretary

Thomas P. Devine           Executive Vice              112,500           20          60              20              -
                           President and Chief
                           Development Officer

Amy Furlong                Executive Vice              110,000           20          60              20              -
                           President, Cardiac
                           Safety

Jeffrey S. Litwin, MD      Executive Vice              130,000           20          35              20             25
                           President and Chief
                           Medical Officer

John M. Blakeley           Senior Vice                  95,000           30          30              40              -
                           President,
                           International
                           Operations and Sales

Robert S. Brown            Senior Vice                 117,500           20          60              20              -
                           President, Strategic
                           Marketing, Planning &
                           Outsourcing
                           Partnerships

George Tiger               Senior Vice                 100,000           30          30               -             40
                           President, Americas
                           Sales


1.   Dr. Morganroth's bonus, if any, is earned by and paid to his professional
     corporation pursuant to the management consulting agreement between Joel
     Morganroth M.D., P.C. and the Company.

2.   If a contract is cancelled, completed or otherwise terminated without the
     Company recognizing the revenues contemplated by a Contract Revenues Target
     based on which a bonus has been paid, then any portion of the bonus that
     would not have been paid had such unrecognized revenues not been included
     in the Contract Revenues Target will be deducted from any future bonus
     payable under the Plan or any future bonus plan and may, in the
     alternative, be deducted from other future compensation payable to the
     affected participant.

     Notwithstanding the foregoing, the Committee retains the discretion under
the plan to adjust the amount of any bonus to be paid, regardless of whether or
the extent to which any of the objective criteria, including revenue, net income
and Contract Revenues targets, are achieved.




                                       2

EX-10.31

                                                                   EXHIBIT 10.31

                            ERESEARCHTECHNOLOGY, INC.

                 AMENDED AND RESTATED 2003 EQUITY INCENTIVE PLAN

1.   PURPOSE

     The purpose of the Amended and Restated 2003 Equity Incentive Plan
(referred to herein as the "Plan") of eResearchTechnology, Inc. (the "Company")
is to provide a means by which certain employees and directors of, and others
providing services to or having a relationship with, the Company and its
subsidiaries (as such term is defined in Section 424(f) of the Internal Revenue
Code of 1986, as amended (the "Code")) may be given an opportunity to acquire
shares of common stock of the Company ("Common Stock") or receive compensation
based on the value of such shares. The Plan is intended to promote the interests
of the Company by encouraging stock ownership on the part of such individuals,
by enabling the Company and its subsidiaries to secure and retain the services
of highly qualified persons, and by providing such individuals with an
additional incentive to advance the success of the Company and its subsidiaries.

2.   ADMINISTRATION

     A. GENERAL. The Plan shall be administered by a Committee consisting of not
less than two directors (the "Committee") to be appointed from time to time by
the Board of Directors. Membership on the Committee shall in any event be
limited to those members of the Board who (i) are "Non-Employee Directors" as
defined in the regulations promulgated by the Securities and Exchange Commission
pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any successor statute or regulation, and (ii) "outside
directors" within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). The Committee shall have the power to: (a)
determine the individuals to whom awards ("Grants") may be made under the Plan;
(b) determine the type, size and terms of any such Grants, including options to
purchase common stock ("Stock Options") and awards of shares of common stock
subject to restrictions established by the Committee ("Restricted Stock"); (c)
determine the time when any such Grants will be made and the duration of any
applicable exercise or restriction period, including the criteria for
exercisability and/or forfeiture and acceleration of exercisability and
acceleration or waiver of forfeiture; (d) construe the provisions of the Plan
and (e) adopt rules and regulations governing the administration of the Plan.
All decisions, determinations and interpretations of the Committee shall be
final and binding upon all persons to whom Grants may be made under the Plan.
All power and authority granted hereunder to the Committee may, at the
discretion of the Board of Directors, be exercised by the Board of Directors,
and unless the context clearly indicates otherwise, all references herein to the
"Committee" shall be deemed to refer to the Board of Directors in the absence of
the appointment of the Committee or in the event of the exercise by the Board of
Directors of the Committee's power and authority. The members of the Board of
Directors or the



Committee shall not be liable for any action or determination made in good faith
with respect to the Plan or to any Grant awarded pursuant thereto.

     B. ADDITIONAL POWERS. The Committee may: (i) modify or restrict exercise
procedures and any other Plan procedures; (ii) establish local country plans as
subplans to this Plan, each of which may be attached as an Appendix hereto and
to the extent that the Committee determines that the restrictions imposed by the
Plan preclude the achievement of the material purposes of awarding Grants in
jurisdictions outside the United States under such a subplan, the Committee will
have the authority and discretion to modify those restrictions as the Committee
determines to be necessary or appropriate to conform to applicable requirements
or practices of jurisdictions outside the United States; (iii) take any action,
before or after a Grant is awarded, which it deems advisable to obtain or comply
with any necessary local government regulatory exemptions or approvals; provided
that the Committee may not take any action hereunder which would violate any
securities law or any governing statute.

3.   ELIGIBILITY

     The persons who shall be eligible to participate in this Plan and receive
Grants hereunder shall be the Company's directors and such employees and other
individuals who provide services to or otherwise have a relationship with the
Company or its subsidiaries as the Committee shall from time to time determine.
An eligible individual may receive more than one Grant under the Plan and Grants
of more than one type under the Plan.

4.   ALLOTMENT OF SHARES

     Subject to Section 13 of the Plan, the shares of the Common Stock, $0.01
par value, of the Company that may be issued under the Plan shall be 7,318,625
shares, all of which may be used for Grants of Incentive Stock Options (as
hereinafter defined). Such shares may be authorized and unissued shares (that
are not reserved for any other purpose) or shares issued and subsequently
reacquired by the Company. Without limiting the generality of the foregoing,
whenever the Company receives shares of Common Stock in connection with the
exercise of or payment for any Stock Options granted under the Plan, only the
net number of shares actually issued shall be counted against the foregoing
limit. Shares that by reason of the expiration of a Stock Option or otherwise
are no longer subject to purchase pursuant to a Stock Option granted under the
Plan and shares representing Restricted Stock that is forfeited to the Company
may be available for subsequent Grants under the Plan. Notwithstanding anything
to the contrary set forth in the Plan, the maximum number of shares of Common
Stock for which Grants may be granted to any employee in any calendar year shall
be 675,000 shares, all of which may be used for Grants of Incentive Stock
Options (as hereinafter defined).

5.   EFFECTIVE DATE AND TERM OF PLAN

     The effective date of the Plan was April 22, 2003. The Plan shall terminate
on April 22, 2013, but the Board of Directors may terminate the Plan at any time
prior thereto. Termination of the Plan shall not alter or impair, without the
consent of the recipient of a Grant hereunder, any of the rights or obligations
of any Grant theretofore awarded under the Plan, except as specifically
authorized herein.


                                        2



6.   TERMS AND CONDITIONS

     A. ALL STOCK OPTIONS. Stock Options granted pursuant to this Plan shall be
evidenced by Stock Option award letters in such form not inconsistent with the
Plan as the Committee shall from time to time approve. Nothing in this Plan or
any Stock Option granted hereunder shall govern the employment rights and duties
between the option holder and the Company or subsidiary. Neither this Plan, nor
any grant or exercise pursuant thereto, shall constitute an employment agreement
among such parties. The following shall also apply to all Stock Options granted
under the Plan.

          (I) OPTION PRICE

               The option price per share of Common Stock for each Stock Option
shall be determined by the Committee, consistent with the provisions of this
Plan.

          (II) TIME OF EXERCISE OF OPTION

               Except as otherwise set forth herein, the Committee shall
establish the option period and time or times within the option period when the
Stock Option may be exercised in whole or in such parts as may be specified from
time to time by the Committee, provided that no Stock Option shall be
exercisable after ten years from the date of grant thereof. Unless otherwise
determined by the Committee in its sole discretion, no Stock Option shall be
exercisable until after the expiration of six months from the date of grant. The
Committee may in its discretion accelerate the time or times when any particular
Stock Option held by said option holder may be so exercised so that such time or
times are earlier than those originally provided in the Stock Option agreement,
upon such circumstances and subject to such terms and conditions as the
Committee deems appropriate. In all cases, exercise of a Stock Option shall be
subject to the provisions of Section 6A(vi).

          (III) PAYMENT AND MANNER OF EXERCISE

               The entire option price shall be paid at the time the Stock
Option is exercised. To the extent that the right to purchase shares of Common
Stock has accrued hereunder, Stock Options may be exercised from time to time by
written notice to the Company stating the full number of shares with respect to
which the Stock Option is being exercised and the time of delivery thereof, in
accordance with such administrative procedures as may from time to time be
specified by the Committee. Such notice of exercise shall be accompanied by full
payment for the shares by: (1) certified or official bank check or the
equivalent thereof acceptable to Company; (2) at the sole discretion of the
Committee, by tendering to the Company shares of Common Stock, or requesting the
Company to accept shares to be acquired by exercising the Stock Option, having
an aggregate fair market value, determined by the Company at the date of
payment, equal to the option price, provided that such shares are not subject to
any pledge or other security interest; (3) at the sole discretion of the
Committee, by permitting the option holder to deliver written notice to the
Company and a broker, with irrevocable instructions to the broker promptly to
deliver to the Company the amount of sale or loan proceeds necessary to pay the
option price; or (4) at sole discretion of the Committee, any combination of the
foregoing.


                                        3



               Upon exercise, the Company shall deliver to the option holder (or
other person entitled to exercise the Stock Option), at the principal office of
the Company, or such other place as shall be mutually agreed upon, a certificate
or certificates for such shares; provided, however, that the time of delivery
may be postponed by the Company for such periods as may be required for it with
reasonable diligence to comply with any requirements of law; and provided
further that in the event the Common Stock that is issuable upon exercise is not
registered under the Securities Act of 1933 (the "Act"), then the Company may
require that the registered owner deliver an investment representation in form
acceptable to the Company and its counsel, and the Company will place a legend
on the certificate for such Common Stock restricting the transfer of same. There
shall be no obligation or duty for the Company to register under the Act at any
time the Common Stock issuable upon exercise of the Stock Option. If the option
holder (or other person entitled to exercise the Stock Option) fails to accept
delivery, the option holder's payment shall be returned and the right to
exercise the Stock Option with respect to such undelivered shares shall be
terminated.

               The Committee may also, in its discretion and subject to prior
notification to the Company by an option holder, permit an option holder to
enter into an agreement with the Company's transfer agent or a brokerage firm of
national standing whereby the option holder will simultaneously exercise the
Stock Option and sell the shares acquired thereby through the Company's transfer
agent or such brokerage firm and either the Company's transfer agent or the
brokerage firm executing the sale will remit to the Company from the proceeds of
sale the exercise price of the shares as to which the Stock Option has been
exercised.

               The Company may, at any time, offer to buy out one or more Stock
Options for payment in cash, based on such terms and conditions as the Committee
shall establish and communicate to the option holder at the time that such offer
is made; provided that no such purchase shall be made at a price greater than
the excess, if any, of the Fair Market Value of the Common Stock on the date of
purchase over the option price per share for any Stock Option so purchased.

          (IV) NON-TRANSFERABILITY OF STOCK OPTION

               A Stock Option by its terms shall not be assignable or
transferable by the option holder otherwise than by will or by the laws of
descent and distribution.

          (V) RIGHTS AFTER TERMINATION OF EMPLOYMENT

               In the event of termination of employment due to any cause other
than death or disability, rights to exercise the Stock Option to the extent
otherwise exercisable on the date of termination of employment, or to any
greater extent permitted by the Committee, shall terminate three months
following cessation of employment. In the event of termination of employment due
to disability (within the meaning of Section 22(e)(3) of the Code) or death,
such option holder or executor, administrator or devisee of an option holder,
shall have the right to exercise such Stock Option (to the extent otherwise
exercisable on the date of death or disability) at any time within one year
after cessation of employment by reason of such disability or death. In the
event of termination of employment for any reason, including death or
disability, any


                                        4



portion of the Stock Option not exercisable on the date of such termination of
employment shall expire unless otherwise provided by this Plan or the Committee
in its sole discretion.

          (VI) FAIR MARKET VALUE

               "Fair Market Value" on any date means: (a) if the Common Stock is
listed on a national securities exchange, the closing price reported as having
occurred on the primary exchange with which the Common Stock is listed and
traded; (b) if the Common Stock is not listed on any national securities
exchange but is quoted in the Nasdaq Stock Market on a last sale basis, the last
sale reported on such date, or, if there is no such sale on that date, then on
the last preceding date on which a sale was reported; or (c) if the Common Stock
is not listed on a national securities exchange nor quoted in the Nasdaq Stock
Market on a last sale basis, the amount determined by the Committee to be the
fair market value based upon a good faith attempt to value the Common Stock in
accordance with the Code and regulations promulgated thereunder.

          (VII) NO REPRICING WITHOUT STOCKHOLDER APPROVAL.

               Notwithstanding anything in the Plan to the contrary, without the
prior approval of the stockholders of the Company, the Committee may not: (a)
reduce the option price of any Stock Option after it is granted; (b) cancel any
Stock Option at a time when the option price thereof exceeds the Fair Market
Value of the Common Stock in exchange for another Stock Option or other Grant
hereunder unless the cancellation and exchange occurs in connection with a
merger, acquisition, spin-off or other similar corporate transaction or (c) take
any other action that would be treated as a repricing under generally accepted
accounting principles as applied in the United States.

     B. NON-QUALIFIED STOCK OPTIONS. The Committee may, in its discretion, grant
Stock Options under the Plan which, in whole or in part, do not qualify as
incentive stock options under Section 422 of the Code ("Non-Qualified Options").
The terms and conditions of the Non-Qualified Options shall be governed by
Section 6A above. The option price per share for each Non-Qualified Option shall
not be less than 100% of the fair market value of the Common Stock on the date
the Stock Option is granted. The fair market value shall be determined as set
forth in Section 6A(vii) above.

     C. INCENTIVE STOCK OPTIONS. The Committee may, in its discretion, grant
Stock Options under the Plan, which qualify, in whole or in part, as incentive
stock options ("Incentive Stock Option") under Section 422 of the Code. In
addition to the terms and conditions set forth in Section 6A above, the
following terms and conditions shall govern any Incentive Stock Option issued
under the Plan:

          (I) MAXIMUM FAIR MARKET VALUE OF INCENTIVE STOCK OPTIONS

               No option holder may have Incentive Stock Options that become
exercisable for the first time in any calendar year (under all Incentive Stock
Option plans of the Company and its subsidiary corporations) with an aggregate
Fair Market Value (determined as of the time such Incentive Stock Option is
granted) in excess of $100,000.


                                        5



          (II) OPTION PRICE

               The option price per share for each Incentive Stock Option shall
be 100% of the Fair Market Value of the Common Stock on the date the Stock
Option is granted; provided, however, that in the case of the grant to an option
holder who owns Common Stock of the Company possessing more than 10% of the
total combined voting power of all classes of stock of the Company or its
subsidiaries, the option price of such Stock Option shall be at least 110% of
the Fair Market Value of the Common Stock on the date the Stock Option is
granted. The Fair Market Value shall be determined as prescribed in Section
6A(vii) above.

          (III) PERIOD OF STOCK OPTION

               Each Incentive Stock Option shall expire ten years from the date
it is granted or at the end of such shorter period as may be designated by the
Committee on the date of grant; provided, however, that in the case of the grant
of an Incentive Stock Option to an option holder who owns Common Stock of the
Company possessing more than 10% of the total combined voting power of all
classes of stock of the Company or its subsidiaries, such Stock Option shall not
be exercisable after the expiration of five years from the date it is granted.

          (IV) ELIGIBLE PARTICIPANTS

               Incentive Stock Options may be issued only to employees of the
Company or its parent or subsidiary corporation or corporations.

          (V) INTERPRETATION

               No term of the Plan relating to Incentive Stock Options shall be
interpreted, amended, or altered, nor shall any direct discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code.

     D. SUBSTITUTION OF OPTIONS. Options may be granted under the Plan from time
to time in substitution for Stock Options held by employees of other
corporations who are about to become, and who do concurrently with the grant of
such Stock Options become, employees of the Company or a subsidiary of the
Company as a result of a merger or consolidation of the employing corporation
with the Company or a subsidiary of the Company, or the acquisition by the
Company or a subsidiary of the Company of the assets of the employing
corporation or the acquisition by the Company or a subsidiary of the Company of
stock of the employing corporation. The terms and conditions of the substitute
Options so granted may vary from the terms and conditions set forth in this
Section 6 to such extent as the Committee at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions of the Stock
Options in substitution for which they are granted.

7.   FIXED OPTION GRANTS TO OUTSIDE DIRECTORS

     A. DEFINED TERMS.

          (I) The term "Outside Directors" as utilized herein refers to any
individual who serves as a member of the Board of Directors of the Company and
who is neither (a) an


                                        6



employee of the Company, (c) the beneficial owner of 10% or more of the
outstanding Common Stock of the Company (a "Significant Holder"), or (c) a
stockholder, member or partner of any entity which itself is a Significant
Holder

          (II) The term "Annual Meeting" as utilized herein refers to an Annual
Meeting of Stockholders of the Company.

     B. INITIAL GRANTS. Each Outside Director initially elected to the Board of
Directors after the effective date of the Plan shall be automatically granted,
on the date of such election, an option to acquire 10,000 shares of the Common
Stock of the Company.

     C. ANNUAL GRANTS. Commencing with the 2003 Annual Meeting, each Outside
Director who is a member of the Company's Board of Directors immediately
following an Annual Meeting shall be automatically granted, on the date of the
Annual Meeting, an option to acquire 10,000 shares of the Common Stock of the
Company, provided that an Outside Director first elected to the Board of
Directors at such Annual Meeting or within six months prior to such Annual
Meeting shall not be eligible for the annual grant otherwise to be issued at the
date of such Annual Meeting.

     D. TERMS OF FIXED OPTION GRANTS. Stock Options granted pursuant to this
Section 7 will be subject to all of the terms and conditions of the Plan. In
addition, each such Stock Option granted pursuant to this Section 7 shall also
be subject to the following terms and conditions:

          (I) The option price per share shall be 100% of the Fair Market Value
of the Common Stock on the date the Stock Option is granted. The Fair Market
Value shall be determined as prescribed in Section 6A(vii) above;

          (II) Each option will be immediately exercisable upon grant;

          (III) Shares of Common Stock received upon exercise of the option
granted pursuant to this Section 7 may not be sold, transferred, assigned,
pledged or otherwise disposed of until at least six months and one day after the
date of grant;

          (IV) Each option will expire upon the earlier of (a) ten years from
the date of grant or (b) three months after the Outside Director ceases to serve
as a director for any reason; and

          (V) No Stock Option granted under this Section 7 shall constitute an
Incentive Stock Option.

8.   STOCK APPRECIATION RIGHTS.

     A. GENERAL REQUIREMENTS. "Stock Appreciation Right" means the right,
pursuant to an award granted under Section 8 hereof, to cash and/or shares of
stock in an amount equal to the difference between (i) the Fair Market Value, as
of the date such right (or such portion thereof) is


                                        7



exercised, of the shares of Stock covered by such right (or such portion
thereof) and (ii) the base amount established by the Committee with respect to
such right (or such portion thereof).

     B. GRANT AND EXERCISE. Stock Appreciation Rights may be granted separate
from or in conjunction with all or part of any Stock Option granted under the
Plan and shall be nontransferable except that, subject to Section 6A(iv) hereof,
a Stock Appreciation Right shall be transferable upon transfer of the related
Stock Option. In the case of a Non-Qualified Stock Option, Stock Appreciation
Rights may be granted either at or after the time of the grant of such Stock
Option. In the case of an Incentive Stock Option, Stock Appreciation Rights may
be granted only at the time of the grant of such Stock Option.

          A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, except that,
unless otherwise determined by the Committee, in its sole discretion at the time
of grant, a Stock Appreciation Right granted with respect to less than the full
number of shares covered by a related Stock Option shall not be reduced until
the number of shares covered by an exercise or termination of the related Stock
Option exceeds the number of shares not covered by the Stock Appreciation Right.
A Stock Appreciation Right not granted in connection with a Stock Option shall
terminate at the time specified in the grant.

          A Stock Appreciation Right granted in connection with a Stock Option
may be exercised by an optionee, in accordance with Section 6A(iii) of the Plan,
by surrendering the applicable portion of the related Stock Option. Upon such
exercise and surrender, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6A(iii) of the Plan. Stock
Options which have been so surrendered, in whole or in part, shall no longer be
exercisable to the extent the related Stock Appreciation Rights have been
exercised. A Stock Appreciation Right not granted in connection with a Stock
Option may be exercised by the grantee's delivery to the Committee of a notice
of exercise, in the form prescribed by the Committee.

     C. TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, in its sole discretion,
including the following:

          (I) Stock Appreciation Rights shall be exercisable only at such time
or times established by the Committee. Stock Appreciation Rights granted in
connection with Stock Options shall be exercisable only at such time or times
and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of Section 6 and this Section 8 of
the Plan.

          (II) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive up to, but not more than, an amount in cash and/or
shares of Stock equal in value to the excess of the Fair Market Value of one
share of Stock over the base amount established by the Committee, multiplied by
the number of shares in respect of which the Stock Appreciation Right shall have
been exercised, with the Committee having the right to determine


                                        8



the form of payment. In the case of a Stock Appreciation Right granted in
connection with a Stock Option the base amount shall be the exercise price of
the related Stock Option.

          (III) Upon the exercise of a Stock Appreciation Right, the Stock
Option or part thereof to which such Stock Appreciation Right is related, if
any, shall be deemed to have been exercised for the purpose of the limitation
set forth in Section 4 of the Plan on the number of shares of Stock to be issued
under the Plan, but only to the extent of the number of shares issued under the
Stock Appreciation Right at the time of exercise, if any, based on the value of
the Stock Appreciation Right at such time.

          (IV) A Stock Appreciation Right granted in connection with a Stock
Option may be exercised only if and when the market price of the Stock subject
to the Stock Option exceeds the exercise price of such Stock Option.

9.   RESTRICTED STOCK

     A. GENERAL REQUIREMENTS. The Committee may issues shares of Restricted
Stock upon such terms and conditions as the Committee deems appropriate under
this Section 9. Restricted Stock may be issued for consideration or for no
consideration (except as required by applicable law) and subject to such
restrictions as the Committee may determine. The Committee may establish
conditions under which restrictions on Restricted Stock lapse over a period of
time or according to such other criteria as the Committee deems appropriate,
including restrictions based upon the achievement of specific performance goals.

     B. NUMBER OF SHARES. Subject to Section 4 hereof, the Committee shall
determine the number of shares of Restricted Stock to be issued pursuant to any
Grant and the restrictions applicable to such shares.

     C. REQUIREMENT OF EMPLOYMENT OR SERVICE. If the participant ceases to be
employed by, or provide service to, the Company, or if any other specified
conditions are not met, any Restricted Stock as to which the restrictions have
not then lapsed shall automatically be forfeited to the Company, and those
shares shall be immediately returned to the Company. The Committee may provide
for complete or partial exceptions to this requirement as it deems appropriate.

     D. RESTRICTIONS ON TRANSFER. A participant may not sell, assign, transfer,
pledge or otherwise dispose of any Restricted Stock that remains subject to
forfeiture in accordance with the terms of the Grant thereof except by will or
in accordance with the laws of descent and distribution upon death. Each
certificate representing Restricted Stock will contain a legend giving
appropriate notice of the restrictions in the Grant. The participant shall be
entitled to have the restrictive legend removed from a stock certificate
covering Restricted Stock as to which all restrictions have lapsed. The
Committee may determine that the Company will not issue certificates for Grants
of Restricted Stock until all restrictions on such shares have lapsed, or that
the Company will retain possession of such certificates until all restrictions
on such shares have lapsed.


                                        9



     E. RIGHT TO VOTE AND TO RECEIVE DIVIDENDS. The Committee shall determine to
what extent, and under what conditions, the holder of Restricted Stock shall
have the right to vote such shares and to receive any dividends or other
distributions paid on such shares at any time that such shares remain subject to
forfeiture. The Committee may determine that a participant's entitlement to
dividends or other distributions with respect to Restricted Stock may be subject
to achievement of performance goals or other conditions.

10.  LONG TERM PERFORMANCE AWARDS.

     A. GENERAL REQUIREMENTS. "Long-Term Performance Award" means an award made
pursuant to Section 10 hereof that is payable in cash and/or shares of Common
Stock (including Restricted Stock and Performance Shares) in accordance with the
terms of the grant, based on Company, business unit and/or individual
performance over a period of at least two years, in each case as determined by
the Committee and as set forth in the grant letter.

     B. AWARDS AND ADMINISTRATION. Long Term Performance Awards may be awarded
either alone or in addition to other awards granted under the Plan. Prior to
award of a Long Term Performance Award, the Committee shall determine the
nature, length and starting date of the performance period (the "performance
period") for each Long Term Performance Award, which shall be at least two years
(subject to Section 12 below). Performance periods may overlap and participants
may participate simultaneously with respect to Long Term Performance Awards that
are subject to different performance periods and/or different performance
factors and criteria. Prior to award of a Long Term Performance Award, the
Committee shall determine the performance objectives to be used in valuing Long
Term Performance Awards and determine the extent to which such Long Term
Performance Awards have been earned. Performance objectives may vary from
participant to participant and between groups of participants and shall be based
upon such Company, business unit and/or individual performance factors and
criteria as the Committee may deem appropriate, as approved by the stockholders
of the Company. If the Committee has determined to comply with the rules and
regulations under Section 162(m) of the Code, the Committee shall determine, in
its sole discretion, the extent to which the performance objectives for any Long
Term Performance Award should be disclosed to and approved by the stockholders
of the Company and otherwise comply with such rules and regulations.

          At the beginning of each performance period, the Committee shall
determine for each Long Term Performance Award subject to such performance
period the range of dollar values or number of shares of Common Stock to be
awarded to the participant at the end of the performance period if and to the
extent that the relevant measure(s) of performance for such Long Term
Performance Award is (are) met; provided, however, that no participant shall be
awarded a Long Term Performance Award with a dollar value in excess of One
Million Dollars ($1,000,000) (determined as of the time such Long Term
Performance Award is granted) for the performance period to which the Long Term
Performance Award relates. Such dollar values or number of shares of Common
Stock may be fixed or may vary in accordance with such performance and/or other
criteria as may be specified by the Committee, in its sole discretion.

     C. ADJUSTMENT OF AWARDS. In the event of special or unusual events or
circumstances affecting the application of one or more performance objectives to
a Long Term Performance Award, the Committee may revise the performance
objectives and/or underlying


                                       10



factors and criteria applicable to the Long Term Performance Awards affected, to
the extent deemed appropriate by the Committee, in its sole discretion, to avoid
unintended windfalls or hardship.

     D. TERMINATION OF SERVICE. Unless otherwise provided in the applicable
award agreement(s), if a participant terminates service with the Corporation
during a performance period because of death, disability or retirement (as such
terms may be defined in the grant letter with respect to such Long Term
Performance Award), such participant (or his estate) shall be entitled to a
payment with respect to each outstanding Long Term Performance Award at the end
of the applicable performance period:

          (I) based, to the extent relevant under the terms of the award, upon
the Company, business unit and/or individual performance for the portion of such
performance period ending on the date of termination and the Company, business
unit and/or individual performance for the entire performance period, and

          (II) pro-rated, where deemed appropriate by the Committee, for the
portion of the performance period during which the participant was employed by
the Company, all as determined by the Committee, in its sole discretion.

          However, the Committee may provide for an earlier payment in
settlement of such award in such amount and under such terms and conditions as
the Committee deems appropriate, in its sole discretion.

          Except as otherwise determined by the Committee, if a participant
terminates service with the Company during a performance period for any other
reason, then such participant shall not be entitled to any payment with respect
to the Long Term Performance Awards subject to such performance period, unless
the Committee shall otherwise determine, in its sole discretion.

          In the event of a Change of Control (as such term is defined in the
grant letter with respect to such Long Term Performance Award), the Committee
may, in its sole discretion, cause all conditions applicable to a Long Term
Performance Award to immediately terminate and a stock certificate or stock
certificates representing shares of Common Stock subject to such award, or cash,
as the case may be, to be issued and/or delivered to the participant.

     E. FORM OF PAYMENT. The earned portion of a Long Term Performance Award may
be paid currently or on a deferred basis, together with such interest or
earnings equivalent, if any, as may be determined by the Committee, in its sole
discretion. Payment shall be made in the form of cash or whole shares of Common
Stock, including Restricted Stock, either in a lump sum payment or in annual
installments commencing as soon as practicable after the end of the relevant
performance period, all as the Committee shall determine at or after grant. If
and to the extent a Long Term Performance Award is payable in Common Stock and
the full amount of such value is not paid in Common Stock, then the shares of
Common Stock representing the portion of the value of the Long Term Performance
Award not paid in Common Stock shall again become available for award under the
Plan, subject to Section 4. Prior to any payment, the


                                       11



Committee shall certify that all of the performance goals or other material
terms of the award have been met.

11.  PERFORMANCE SHARES.

     A. GENERAL REQUIREMENTS. "Performance Share" means an award made pursuant
to Section 11 hereof of the right to receive shares of Common Stock at the end
of a specified performance period.

     B. AWARDS AND ADMINISTRATION. The Committee shall determine the persons to
whom and the time or times at which Performance Shares shall be awarded, the
number of Performance Shares to be awarded to any such person, the duration of
the period (the "performance period") during which, and the conditions under
which, receipt of the shares of Common Stock will be deferred, and the other
terms and conditions of the award in addition to those set forth below.

          The Committee may condition the receipt of shares of Common Stock
pursuant to a Performance Share award upon the attainment of specified
performance goals or such other factors or criteria as the Committee shall
determine, in its sole discretion.

          The provisions of Performance Share awards need not be the same with
respect to each participant, and such awards to individual participants need not
be the same in subsequent years.

     C. TERMS AND CONDITIONS. Performance Shares awarded pursuant to this
Section 11 shall be subject to the following terms and conditions and such other
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem desirable:

          (I) Conditions. The Committee, in its sole discretion, shall specify
the performance period during which, and the conditions under which, the receipt
of shares of Common Stock covered by the Performance Share award will be
deferred.

          (II) Stock Certificate. At the expiration of the performance period,
if the Committee, in its sole discretion, determines that the conditions
specified in the Performance Share agreement have been satisfied, a stock
certificate or stock certificates representing the number of shares of Common
Stock covered by the Performance Share award shall be issued and delivered to
the participant. A participant shall not be deemed to be the holder of Common
Stock, or to have the rights of a holder of Common Stock, with respect to the
Performance Shares unless and until a stock certificate or stock certificates
representing such shares of Common Stock are issued to such Participant.

          (III) Death, Disability or Retirement. Subject to the provisions of
the Plan, if a participant terminates service with the Corporation during a
performance period because of death, disability or retirement (as such terms may
be defined in the grant letter with respect to such Performance Share award),
such participant (or his estate) shall be entitled to a payment with respect to
each outstanding Performance Share award at the end of the applicable
performance period:


                                       12



               (A) based, to the extent relevant under the terms of the award,
upon the the attainment of specified performance goals or such other factors or
criteria as the Committee set forth in the Performance Share award for the
portion of such performance period ending on the date of termination and the
attainment of such goals or other factors or criteria for the entire performance
period, and

               (B) pro-rated, where deemed appropriate by the Committee, for the
portion of the performance period during which the participant was employed by
the Company, all as determined by the Committee, in its sole discretion.

          However, the Committee may provide for an earlier payment in
settlement of such award in such amount and under such terms and conditions as
the Committee deems appropriate, in its sole discretion.

          (IV) Termination of Service. Unless otherwise determined by the
Committee at the time of grant, the Performance Shares will be forfeited upon a
termination of service during the performance period for any reason other than
death, disability or retirement.

          (V) Change of Control. In the event of a Change of Control (as such
term is defined in the grant letter with respect to such Performance Share
award), the Committee may, in its sole discretion, cause all conditions
applicable to the Performance Shares to immediately terminate and a stock
certificate or stock certificates representing shares of Common Stock subject to
the Performance Share award to be issued and delivered to the participant.

12.  QUALIFIED PERFORMANCE-BASED COMPENSATION.

     A. DESIGNATION AS QUALIFIED PERFORMANCE-BASED COMPENSATION. The Committee
may determine that Stock Appreciation Rights, Restricted Stock, Long Term
Performance Awards or Performance Shares granted to an employee shall be
considered "qualified performance-based compensation" under Code section 162(m).
The provisions of this Section 12 shall apply to any such grants that are to be
considered "qualified performance-based compensation" under Code section 162(m).
To the extent that grants of Stock Appreciation Rights, Restricted Stock, Long
Term Performance Awards or Performance Shares are designated as "qualified
performance-based compensation" under Code section 162(m) are made, no such
grant may be made as an alternative to another grant that is not designated as
"qualified performance based compensation" but instead must be separate and
apart from all other grants made.

     B. PERFORMANCE GOALS. When Stock Appreciation Rights, Restricted Stock,
Long Term Performance Awards or Performance Shares that are to be considered
"qualified performance-based compensation" are granted, the Committee shall
establish in writing (i) the objective performance goals that must be met, (ii)
the period during which performance will be measured, (iii) the maximum amounts
that may be paid if the performance goals are met, and (iv) any other conditions
that the Committee deems appropriate and consistent with the Plan and the
requirements of Code section 162(m) for "qualified performance-based
compensation." The performance goals shall satisfy the requirements for
"qualified performance-based compensation," including the requirement that the
achievement of the goals be substantially


                                       13



uncertain at the time they are established and that the performance goals be
established in such a way that a third party with knowledge of the relevant
facts could determine whether and to what extent the performance goals have been
met. The Committee shall not have discretion to increase the amount of
compensation that is payable upon achievement of the designated performance
goals, but the Committee may reduce the amount of compensation that is payable
upon achievement of the designated performance goals.

     C. CRITERIA USED FOR OBJECTIVE PERFORMANCE GOALS. In setting the
performance goals for grants designated as "qualified performance-based
compensation" pursuant to this Section 12, the Committee shall use objectively
determinable performance goals based on one or more of the following criteria:
pre- or after-tax net earnings, sales or revenue, operating earnings, operating
cash flow, return on net assets, return on stockholders' equity, return on
assets, return on capital, stock price growth, gross or net profit margin,
earnings per share, price per share, market share or strategic business criteria
consisting of one or more Company objectives based on meeting specified revenue
goals, market penetration goals, geographic business expansion goals, cost
targets, product development goals, goals relating to acquisitions or
divestitures or any other objective measure derived from any of the foregoing
criteria. The performance goals may relate to the participant's business unit or
the performance of the Company as a whole, or any combination of the foregoing.
Performance goals need not be uniform as among participants.

     D. TIMING OF ESTABLISHMENT OF GOALS. The Committee shall establish the
performance goals in writing either before the beginning of the performance
period or during a period ending no later than the earlier of (i) 90 days after
the beginning of the performance period or (ii) the date on which 25% of the
performance period has been completed, or such other date as may be required or
permitted under applicable regulations under Code section 162(m).

     E. ANNOUNCEMENT OF RESULTS. The Committee shall certify and announce the
results for the performance period to all participants after the Company
announces the Company's financial results for the performance period. If and to
the extent that the Committee does not certify that the performance goals have
been met, the applicable grants for the performance period shall be forfeited or
shall not be paid, as applicable.

     F. DEATH, DISABILITY OR OTHER CIRCUMSTANCES. The Committee may provide that
grants shall be payable or restrictions shall lapse, in whole or in part, in the
event of the Participant's death or disability during the performance period, a
Change of Control or under other circumstances consistent with the Treasury
regulations and rulings under Code section 162(m).

13.  ADJUSTMENT IN EVENT OF RECAPITALIZATION OF THE COMPANY

     A. CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Grant and the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Grants have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of a Stock Option, forfeiture of Restricted Stock or issuance of fewer


                                       14



shares of Common Stock upon payment of a Long Term Performance Award or
Performance Share award than were the original subject of such awards, including
the maximum number of shares of Common Stock for which Grants may be granted to
any employee in any calendar year, as well as the price per share of Common
Stock covered by any outstanding Stock Option, shall be proportionately adjusted
for any increase 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 the Common Stock, any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company, or other similar event that affects the Common
Stock such that an adjustment is required to preserve or prevent enlargement of
the benefits or potential benefits made available under the Plan. 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 Grant.

     B. DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution or
liquidation of the Company, all outstanding Awards will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Committee. The Committee may, in the exercise of its discretion in such
instances, declare that any Award shall terminate as of a date fixed by the
Committee and (i) give each holder of a Stock Option the right to exercise the
holder's Stock Option as to all or any part of the shares of Common Stock
covered by the Stock Option, including shares as to which the Stock Option would
not otherwise be exercisable, (ii) subject to the provisions of Code section
162(m), determine that the restrictions with respect to any Restricted Stock
shall lapse, in whole or in part, or (iii) subject to the provisions of Code
section 162(m), determine to pay all or any portion of a Long Term Performance
Award or Performance Share award notwithstanding that the performance criteria
set forth therein have not been satisfied in full or that the performance period
has not expired.

     C. SALE OR MERGER. In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or into
another corporation, the Committee, in the exercise of its sole discretion, may
take such action as it deems desirable, including, but not limited to: (i)
causing an Award to be assumed or an equivalent Award to be substituted by the
successor corporation or a parent or subsidiary of such successor corporation,
(ii) providing that each option holder shall have the right to exercise the
option holder's Stock Option as to all of the shares of Common Stock covered by
the Stock Option, including shares as to which the Stock Option would not
otherwise be exercisable, (iii) declaring that a Stock Option shall terminate at
a date fixed by the Committee provided that the option holder is given notice
and opportunity to exercise the then exercisable portion of the option holder's
Stock Option prior to such date, (iv) subject to the provisions of Code section
162(m), determine that the restrictions with respect to any Restricted Stock
shall lapse, in whole or in part, or (v) subject to the provisions of Code
section 162(m), determine to pay all or any portion of a Long Term Performance
Award or Performance Share award notwithstanding that the performance criteria
set forth therein have not been satisfied in full or that the performance period
has not expired.

14.  AMENDMENT OF PLAN


                                       15



     The Committee, within its discretion, shall have authority to amend the
Plan and the terms of any Grant issued hereunder at any time, subject to any
required stockholder approval or any stockholder approval that the Committee may
deem advisable for any reason, such as for the purpose of obtaining or retaining
the statutory or regulatory benefits under tax, securities or other laws as
satisfying any applicable stock exchange or Nasdaq listing requirement. The
Committee may not, without the consent of the recipient of any Grant previously
made hereunder alter or impair any right or obligation under such Grant, except
as specifically authorized herein.

15.  RIGHTS OF A STOCKHOLDER

     The recipient of any Grant under the Plan, unless otherwise provided by the
Plan or the award letter evidencing such Grant, shall have no rights as a
stockholder unless and until certificates for shares of Common Stock are issued
and delivered to him without the restrictive legend contemplated by Section 8
hereof.

16.  NO GUARANTY OF EMPLOYMENT OR PARTICIPATION

     Nothing contained in the Plan or in any award letter with respect to a
Grant shall confer upon any participant the right to continue in the employment
of the Company or any subsidiary of the Company or affect any right that the
Company or any subsidiary of the Company may have to terminate the employment of
such participant. No person shall have a right to be selected to participate in
the Plan or, having been so selected, to receive any future Grants.

17.  WITHHOLDING

     Whenever the Company proposes or is required to issue or transfer shares of
Common Stock under the Plan, the Company shall have the right to require the
recipient to remit to the Company an amount sufficient to satisfy any federal,
state, local or foreign withholding tax requirements prior to the delivery of
any certificate or certificates for such shares. If and to the extent authorized
by the Committee, in its sole discretion, a participant may make an election, by
means of a form of election to be prescribed by the Committee, to have shares of
Common Stock that are acquired upon exercise of a Stock Option withheld by the
Company or issued upon payment of a Long Term Performance Award or Performance
Share award or to tender other shares of Common Stock or other securities of the
Company owned by the option holder to the Company at the time of exercise of a
Stock Option, the lapse of any restrictions on the Restricted Stock or the
payment of a Long Term Performance Award or Performance Share award to pay the
amount of tax that would otherwise be required by law to be withheld by the
Company as a result of any such exercise, lapse or payment. Any such election
shall be irrevocable and shall be subject to termination by the Committee, in
its sole discretion, at any time. Any securities so withheld or tendered will be
valued by the Committee as of the date of exercise.

18.  NON-UNIFORM DETERMINATIONS

     The Committee's determinations under the Plan (including without limitation
determinations of the persons to receive Grants, the form, amount and timing of
such Grants and the terms and provisions of Grants and the award letters
evidencing same) need not be uniform and may be made selectively among persons
who receive, or are eligible to receive, Grants under the Plan whether or not
such persons are similarly situated.


                                       16



19.  RESERVATION OF SHARES

     The Company, during the term of the Plan, will at all times reserve and
keep available such number of shares as shall be sufficient to satisfy the
requirements of the Plan. Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any shares hereunder,
shall relieve the Company of any liability for the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained.

20.  EFFECT ON OTHER PLANS

     Participation in the Plan shall not affect an employee's eligibility to
participate in any other benefit or incentive plan of the Company or any
subsidiary of the Company. Any Grants made pursuant to the Plan shall not be
used in determining the benefits provided under any other plan of the Company or
any subsidiary of the Company unless specifically provided.

21.  FORFEITURE

     Notwithstanding anything to the contrary in the Plan, if the Committee
finds, by a majority vote, after full consideration of the facts presented on
behalf of both the Company and any option holder, that a participant has been
engaged in fraud, embezzlement, theft or commission of a felony or retention by
the Company or any subsidiary of the Company or that a participant has willfully
disclosed confidential information of the Company or any subsidiary of the
Company and that such disclosure damaged the Company or any subsidiary of the
Company, the participant shall forfeit all unexercised Stock Options, all
exercised Stock Options under which the Company has not yet delivered the
certificates, and all Restricted Stock, Stock Appreciation Rights, Long Term
Performance Awards and Performance Shares. The decision of the Committee in
interpreting and applying the provisions of this Section 21 shall be final. No
decision of the Committee, however, shall affect the finality of the discharge
or termination of such participant by the Company or any subsidiary of the
Company in any manner.

22.  NO PROHIBITION ON CORPORATE ACTION

     No provision of the Plan shall be construed to prevent the Company or any
officer or director thereof from taking any action deemed by the Company or such
officer or director to be appropriate or in the Company's best interest, whether
or not such action could have an adverse effect on the Plan or any Grants made
hereunder, and no participant or participant's estate, personal representative
or beneficiary shall have any claim against the Company or any officer or
director thereof as a result of the taking of such action.

23.  INDEMNIFICATION

     With respect to the administration of the Plan, the Company shall indemnify
each present and future member of the Committee and the Board against, and each
member of the Committee and the Board shall be entitled without further action
on his or her part to indemnity from the Company for, all expenses (including
the amount of judgments and the amount of approved settlements made with a view
to the curtailment of costs of litigation, other than amounts paid to the
Company itself) reasonably incurred by him in connection with or arising out of,
any action,


                                       17



suit or proceeding in which he may be involved by reason of his or her being or
having been a member of the Committee or the Board, whether or not he continues
to be such member at the time of incurring such expenses; provided, however,
that such indemnity shall not include any expenses incurred by any such member
of the Committee or the Board (i) in respect of matters as to which he shall be
finally adjudged in any such action, suit or proceeding to have been guilty of
gross negligence or willful misconduct in the performance of his or her duty as
such member of the Committee or the Board; or (ii) in respect of any matter in
which any settlement is effected for an amount in excess of the amount approved
by the Company on the advice of its legal counsel; and provided further that no
right of indemnification under the provisions set forth herein shall be
available to or enforceable by any such member of the Committee or the Board
unless, within 60 days after institution of any such action, suit or proceeding,
he shall have offered the Company in writing the opportunity to handle and
defend same 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 Committee or the Board and shall be in addition to all other
rights to which such member may be entitled as a matter of law, contract or
otherwise.

24.  MISCELLANEOUS PROVISIONS

     A. COMPLIANCE WITH PLAN PROVISIONS. No participant or other person shall
have any right with respect to the Plan, the Common Stock reserved for issuance
under the Plan or in any Stock Option or Restricted Stock until a written award
letter shall have been executed by the Company and all the terms, conditions and
provisions of the Plan and the Grant applicable to such participant (and each
person claiming under or through him) have been met.

     B. APPROVAL BY COMPANY. In the discretion of the Committee, no shares of
Common Stock, other securities or property of the Company or other forms of
payment shall be issued hereunder with respect to any Stock Option or Restricted
Stock award unless the Company's General Counsel or Chief Financial Officer
shall be satisfied that such issuance will be in compliance with applicable
federal, state, local and foreign legal, securities exchange and other
applicable requirements.

     C. COMPLIANCE WITH RULE 16B-3. To the extent that Rule 16b-3 under the
Exchange Act applies to Grants made under the Plan, it is the intention of the
Company that the Plan comply in all respects with the requirements of Rule
16b-3, that any ambiguities or inconsistencies in construction of the Plan be
interpreted to give effect to such intention and that, if the Plan shall not so
comply, whether on the date of adoption or by reason of any later amendment to
or interpretation of Rule 16b-3, the provisions of the Plan shall be deemed to
be automatically amended so as to bring them into full compliance with such
rule.

     D. UNFUNDED PLAN. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregations of assets under the Plan.

     E. EFFECTS OF ACCEPTANCE OF GRANT. By accepting any Stock Option,
Restricted Stock or other benefit under the Plan, each participant and each
person claiming under or through him shall be conclusively deemed to have
indicated his or her acceptance and ratification of, and


                                       18



consent to, any action taken under the Plan by the Company, the Board and/or the
Committee or its delegates.

     F. CONSTRUCTION. The masculine pronoun shall include the feminine and
neuter, and the singular shall include the plural, where the context so
indicates.

     G. COMPLIANCE WITH LEGAL AND EXCHANGE REQUIREMENTS. The Plan, the granting
and exercising of Stock Options hereunder, the issuance of Restricted Stock
hereunder and the other obligations of the Company hereunder, including Stock
Appreciation Rights, Long Term Performance Awards and Performance Shares, shall
be subject to all applicable federal and state laws, rules and regulations, and
to such approval by all regulatory or governmental agencies as may be required.
The Company, in its discretion, may postpone the granting and exercising of
Stock Options, the issuance or delivery of Common Stock under any Stock Option
or any award of Restricted Stock, or any other action sanctioned under the Plan
to permit the Company, with reasonable diligence, to complete such stock
exchange listing or registration or qualification of such Common Stock or other
required action under any federal or state law, rule or regulation and may
require any option holder to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Common Stock in compliance with applicable laws, rules, and
regulations. The Company shall not be obligated by virtue of any provision of
the Plan to recognize the exercise of any Stock Option or to otherwise sell or
issue Common Stock in violation of any such laws, rules, or regulations; and any
postponement of the exercise or settlement of any Stock Option, issuance of
Restricted Stock, Stock Appreciation Rights, Long Term Performance Awards and
Performance Shares under this provision shall not extend the term of such Stock
Option or modify the forfeiture provisions of such Restricted Stock, Stock
Appreciation Rights, Long Term Performance Awards or Performance Shares. The
Company, the Committee and the other directors or officers of the Company shall
not have any obligation or liability to an option holder with respect to any
Stock Option (or Common Stock issuable thereunder), Restricted Stock, Stock
Appreciation Rights, Long Term Performance Awards or Performance Shares that
shall lapse or be forfeited because of such postponement. Likewise, the
Committee may postpone the exercise of Stock Options, the issuance or delivery
of Common Stock under any Stock Option, Restricted Stock, Stock Appreciation
Rights, Long Term Performance Awards and Performance Shares and any action
sanctioned under the Plan to prevent the Company or any affiliate from being
denied a federal income deduction with respect to any Stock Option other than an
Incentive Stock Option, the issuance of any Restricted Stock, Stock Appreciation
Rights, Long Term Performance Awards and Performance Shares.

     H. GOVERNING LAW. The Plan and all award letters hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.

     I. NO IMPACT ON BENEFITS. Except as may otherwise be specifically stated
under any employee benefit plan, policy or program, no amount payable in
connection with any Grant shall be treated as compensation for purposes of
calculating an option holder's rights and benefits under such plan, policy or
program.

     J. NO CONSTRAINT ON CORPORATION ACTION. Nothing in this Plan shall be
construed to limit, impair or otherwise affect the Company's right or power to
make adjustments,


                                       19



reclassifications, reorganizations or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell or transfer
all or any part of its business or assets or, except as provided in Section 13,
to limit the power or right of the Company or any affiliate to take any action
which such entity deems to be necessary or appropriate.

     K. BENEFICIARY DESIGNATION. Each participant under the Plan may, from time
to time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid or by whom any
right under the Plan is to be exercised in the event of the participant's death.
Each designation will revoke all prior designations by the same participant,
must be in a form prescribed by the Committee, and will be effective only when
filed by the participant in writing with the Committee during the option
holder's lifetime. In the absence of any such designation, benefits remaining
unpaid at a participant's death shall be paid to or exercised by the
participant's surviving spouse, if any, or otherwise to or by his or her estate.

     L. CODE SECTION 409A COMPLIANCE. It is intended that this amended and
restated Plan be drafted and administered in compliance with Code section 409A
including, but not limited to, any future amendments to Code section 409A, and
any other Internal Revenue Service or other governmental rulings or
interpretations ("IRS Guidance") issued pursuant to Section 409A so as not to
subject the Participant to payment of interest or any additional tax under Code
section 409A. In furtherance thereof, if payment or provision of any amount or
benefit hereunder that is subject to Code section 409A at the time specified
herein would subject such amount or benefit to any additional tax under Code
section 409A, the payment or provision of such amount or benefit shall be
postponed to the earliest commencement date on which the payment or provision of
such amount or benefit could be made without incurring such additional tax. In
addition, to the extent that any IRS Guidance issued under Code section 409A
would result in the Participant being subject to the payment of interest or any
additional tax under Code section 409A, the parties agree, to the extent
reasonably possible, to amend this Plan in order to avoid the imposition of any
such interest or additional tax under Code section 409A, which amendment shall
have the minimum economic effect necessary and be reasonably determined in good
faith by the Company and the Participant.

As amended through April 26, 2007.


                                       20

EX-10.43

                                                                   Exhibit 10.43

                            ERESEARCHTECHNOLOGY, INC.

                              CONSULTANT AGREEMENT

The following agreement is hereby entered into between, Joel Morganroth, M.D.,
P.C. (hereinafter known as Consultant) and eResearchTechnology, Inc. (together
with its affiliated corporations hereinafter known as the "Company"), and having
its principal offices at 30 S. 17th Street, Philadelphia, PA 19103

1.   SCOPE OF PROJECT

     a)   Consultant agrees to provide Joel Morganroth, M.D. ("Dr. Morganroth")
          to advise the Company on matters related to the successful operation,
          marketing and business development of the Company's Cardiac Safety
          group, on a best efforts basis to achieve annual goals established
          with the Board of Directors.

     b)   Consultant agrees to provide Joel Morganroth, M.D. ("Dr. Morganroth")
          to market the services of the Company's eRT Consulting Group, which
          the Company shall define from time to time, ("Services") to
          pharmaceutical, biomedical and medical device companies and to perform
          such Services for the eRT Consulting Group as requested by the
          Company.

          For each marketing opportunity, Consultant shall deliver to the
          Company a completed Standard Opportunity Lead Sheet (Exhibit A) prior
          to the Company's preparation of a proposal and/or contract with the
          prospect company ("Lead"). The Standard Opportunity Lead Sheet shall
          identify the Lead. For the purposes of determining whether the Lead
          was generated solely by Consultant ("Consultant Lead"), Leads provided
          by the Consultant to the Company will be deemed to be a Consultant
          Lead unless the Company demonstrates that the subject of such Lead is
          either in the Company's existing backlog at the time the Lead is
          submitted by the Consultant to the Company, or is included in an
          existing proposal made or in the process of preparation by the Company
          at the time the Lead is submitted to the Company, or involves a client
          of the Company with which the Company has an existing repeat business
          presence whether internally generated or generated through a prior
          Consultant Lead or any combination thereof.

2.   ETHICAL CONDUCT

     Consultant will conduct himself in a professional and ethical manner at all
     times and will comply with all Company policies as well as all State and
     Federal regulations and laws as they may apply to the services, products,
     and business of the Company.


                                       1



3.   COMPENSATION

     a)   Base fees shall be $294,000/year payable in twelve equal installments
          of $24,500 by the 15th of each month. Consultant will be eligible for
          incentive compensation to be determined by the Board of Directors.

     b)   Consultant shall be paid a commission of 90% of net revenues for
          Services performed by the eRT Consultant Group for those Consultant
          Leads. Payment shall be made to Consultant within thirty (30) days
          following the Company's billing to the Lead for such Services.

     c)   Consultant shall be paid a commission of 80% of net revenues for
          Services performed by Consultant for eRT Consultant Group. Payment
          shall be made to Consultant within thirty (30) days following the
          Company's billing to the Lead for such Services.

     d)   Consultant will be reimbursed for reasonable out of pocket expenses
          when properly documented.

     e)   Consultant agrees to maintain his medical licenses and insurance as
          required to carry out the duties described herein, which will be
          reimbursed by the company when properly documented and which shall not
          exceed $15,000 per year.

     f)   Consultant shall be acting as an independent contractor and not as an
          employee of the Company. Payment of any tax and/or social security
          liabilities relative to this compensation shall be the responsibility
          of the Consultant.

4.   NON-DISCLOSURE

     Consultant acknowledges that consultancy for the Company requires him to
     have access to confidential information and material belonging to the
     Company, including customer lists, contracts, proposals, operating
     procedures, and trade secrets. Upon termination of the consulting
     relationship for any reason, Consultant agrees to return to the Company any
     such confidential information and material in his possession with no copies
     thereof retained. Consultant further agrees, whether during the term of
     this agreement with the Company or any time after the termination thereof
     (regardless of the reason for such termination), he will not disclose nor
     use in any manner, any confidential or other material relating to the
     business, operations, or prospects of the Company except as authorized in
     writing by the Company.

5.   INVENTIONS

     a)   Consultant agrees to promptly disclose to the Company each discovery,
          improvement, or invention conceived, made, or reduced to practice
          during the term of this agreement. Consultant further agrees to grant
          to the Company the entire interest in all of such discoveries,
          improvements, and inventions and to sign all patent/copyright
          applications or other documents needed to implement the provisions of
          this paragraph without additional consideration. Consultant further
          agrees that all works of authorship subject to statutory copyright
          protection developed jointly or solely, during the term of this
          agreement shall be considered property of the Company and any
          copyright thereon shall belong to the Company. Any invention,
          discovery, or improvement conceived, made, or disclosed, during the
          one year period following the termination of this agreement shall be
          deemed to have been made, conceived, or discovered during the term
          hereof.


                                       2



     b)   If publication of data generated from studies conducted under the
          auspices of the Company is anticipated, Consultant agrees to obtain
          permission from the Company for such publication.

6.   NO SOLICITATION

     During the continuance of this Agreement and for a period of one year
     thereafter (regardless of the reason for termination), Consultant agrees
     that it will not, directly or indirectly, in any way for its own account,
     as employee, stockholder, partner or otherwise, or for the account of any
     other person, corporation, or other entity, inappropriately or unethically
     solicit clients, Company employees or independent contractors that would
     interfere with the business of the Company.

7.   NO CURRENT CONFLICT

     Consultant hereby assures the Company that he/she is not currently
     restricted by any existing employment or non-compete agreement that would
     conflict with the terms of this Agreement.

8.   TERM OF AGREEMENT

     The term of this Agreement will be effective as of January 1, 2007 and will
     continue from year to year unless terminated.

9.   TERMINATION

     a)   The Company may terminate consulting services at any time without the
          need to show cause upon ninety (90) days written notice to Consultant.

     b)   The Company may terminate consulting services without notice for
          failure to meet obligations under the Agreement. The following, as
          determined by the Company in its reasonable judgment, shall constitute
          failure to meet these obligations:

          (1)  Consultant's failure to perform services or meet goals defined
               under the scope of the project.

          (2)  Any misconduct which is injurious to the business or interests of
               the Company.

          (3)  Violation of any federal, state, or local law applicable to the
               business of the Company.

          (4)  Any material breach of this agreement.

     c)   The Consultant will be notified on any alleged breach in writing and
          be allowed sixty (60) days to cure any deficiency. Upon any
          termination pursuant to subparagraph (a) and (b) above, the Consultant
          shall be entitled to no further fees or payments hereunder, except
          those which shall have accrued to the date of termination.

10.  MISCELLANEOUS

     a)   This Agreement and any disputes arising here from shall be governed by
          Pennsylvania law.

     b)   In the event that any provision of this Agreement is held to be
          invalid or unenforceable for any reason, including without limitation
          the geographic or business scope or duration


                                       3



          thereof, this Agreement shall be construed as if such provision had
          been more narrowly drawn so as not to be invalid or unenforceable.

     c)   This Agreement supersedes all prior agreements, arrangements, and
          understandings, written or oral, relating to the subject matter with
          the Company or its affiliates. Without limiting the foregoing, this
          Agreement replaces and supersedes in full the Consultant Agreement
          between the Company and Consultant dated May 21, 2001, as amended,
          which is hereby terminated in full.

     d)   The failure of either party at any time or times to require
          performance of any provision hereof shall in no way affect the right
          at a later time to enforce the same.

     e)   The provisions of paragraphs 2, 4,5,6,7 and 9 hereof are intended to
          apply equally to the Consultant and Dr. Morganroth, and the Consultant
          will assure Dr. Morganroth's compliance with the same.

     f)   The provisions of paragraphs 4, 5 and 6 shall survive termination of
          this Agreement.

For Consultant:                         For the Company:


- -------------------------------------   ----------------------------------------
Date:                                   Date:
      -------------------------------         ----------------------------------


                                       4



                                    EXHIBIT A

                         Standard Opportunity Lead Sheet

This Exhibit A is made pursuant to the Consultant Agreement ("Agreement")
entered into between Joel Morganroth, M.D., P.C. and eResearchTechnology, Inc.
Defined terms not otherwise defined herein shall take on the meanings assigned
to them in the Agreement.

LEAD INFORMATION

Company Name:

________________________________________________________________________________

Address:

________________________________________________________________________________

________________________________________________________________________________

City/State/Zip:

________________________________________________________________________________

Contact Name: ______________________________ Title: ____________________________

Phone: _______________________ Fax: _____________ E-mail: ______________________

Brief description of Services requested:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

List any relationships or affiliations that may exist between Lead or any Lead
affiliate and Consultant or any Consultant affiliate:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

_____________________________________   ________________________________________
Consultant                              Date

_____________________________________   ________________________________________
Company                                 Date


                                       5

EX-31.1

                                                                    Exhibit 31.1

                                  CERTIFICATION

I, Michael J. McKelvey, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of eResearchTechnology,
     Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f)) for the registrant and have:

     (a)  Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

     (b)  Designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     (c)  Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (d)  Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and


                                       1



5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors:

     (a)  All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.


Date: May 4, 2007                       /s/ Michael J. McKelvey
                                        ----------------------------------------
                                        Michael J. McKelvey,
                                        President and Chief Executive Officer


                                       2

EX-31.2

                                                                    Exhibit 31.2

                                  CERTIFICATION

I, Richard A. Baron, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of eResearchTechnology,
     Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material fact or omit to state a material fact necessary to make the
     statements made, in light of the circumstances under which such statements
     were made, not misleading with respect to the period covered by this
     report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
     financial reporting (as defined in Exchange Act Rules 13a-15(f) and
     15d-15(f)) for the registrant and have:

     (a)  Designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this report is being prepared;

     (b)  Designed such internal control over financial reporting, or caused
          such internal control over financial reporting to be designed under
          our supervision, to provide reasonable assurance regarding the
          reliability of financial reporting and the preparation of financial
          statements for external purposes in accordance with generally accepted
          accounting principles;

     (c)  Evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this report our conclusions about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     (d)  Disclosed in this report any change in the registrant's internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter that has materially affected, or is
          reasonably likely to materially affect, the registrant's internal
          control over financial reporting; and


                                       1



5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of the registrant's board
     of directors:

     (a)  All significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     (b)  Any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.


Date: May 4, 2007                       /s/ Richard A. Baron
                                        ----------------------------------------
                                        Richard A Baron,
                                        Executive Vice President, Chief
                                        Financial Officer and Secretary


                                       2

EX-32.1

                                                                    Exhibit 32.1

                   ERESEARCHTECHNOLOGY, INC. AND SUBSIDIARIES

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of eResearchTechnology, Inc. (the
"Company") on Form 10-Q for the period ended March 31, 2007, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Michael
J. McKelvey, President and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to my knowledge, that:

     The Report fully complies with the requirements of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934, as amended; and

     The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of the Company.


Dated: May 4, 2007                      /s/ Michael J. McKelvey
                                        ----------------------------------------
                                        Michael J. McKelvey,
                                        President and Chief Executive Officer

This certification is being furnished solely to accompany the Report pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, and shall not be deemed "filed" by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be
incorporated by reference into any filing of the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
whether made before or after the date of this Report, irrespective of any
general incorporation language contained in such filing.

EX-32.2

                                                                    Exhibit 32.2

                   ERESEARCHTECHNOLOGY, INC. AND SUBSIDIARIES

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of eResearchTechnology, Inc. (the
"Company") on Form 10-Q for the period ended March 31, 2007, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Richard
A. Baron, Executive Vice President, Chief Financial Officer and Secretary of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

     The Report fully complies with the requirements of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934, as amended; and

     The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of the Company.


Dated: May 4, 2007                      /s/ Richard A. Baron
                                        -----------------------------------
                                        Richard A. Baron,
                                        Executive Vice President, Chief
                                        Financial Officer and Secretary

This certification is being furnished solely to accompany the Report pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, and shall not be deemed "filed" by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be
incorporated by reference into any filing of the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
whether made before or after the date of this Report, irrespective of any
general incorporation language contained in such filing.