On December 26, 2012, the Compensation Committee (the "Committee") of the Board of Directors (the "Board") of Epocrates, Inc. (the "Company"), pursuant to the authority delegated to the Committee by the Board, adopted the 2013 Performance Equity Plan (the "2013 Plan"). The 2013 Plan provides the Company's executive officers and other eligible employees the opportunity to earn performance-based equity awards based on the Company's level of achievement of certain specifically measured corporate objectives, or the Corporate Objectives, from January 1, 2013 through December 31, 2013. The terms of the 2013 Plan are substantially consistent with that of the Company's management bonus plan for 2012. The Committee approved the Corporate Objectives and assigned a weighting to each objective as further described below.

For 2013, the Committee selected the following three key business metrics from the Company's general business plan as Corporate Objectives under the 2013 Plan:

· sales bookings, meaning total dollar amount of business contracted during the year (40% of overall award);

· revenue, measured as GAAP revenue calculated in accordance with the Company's revenue recognition policies in effect at the time (20% of overall award); and

· adjusted EBITDA, measured as GAAP net income before interest income, interest expense, other income (expense) net, provision for income taxes, depreciation and amortization expense, and stock-based compensation expense (30% of overall award).

In order to earn any grant under the 2013 Plan, the Company must achieve the following threshold levels of each metric set forth above:

·          92% of the Company's business plan for sales bookings;

·          96% of the Company's business plan for revenue; and

·          89% of the Company's business plan for adjusted EBITDA.

A fourth goal, measuring the health of the user network, as determined by an internal metric, is the final Corporate Objective under the 2013 Plan and worth 10% of the overall award.

If any one threshold level is missed, no grant will be earned for that metric. If the threshold level is achieved, then the actual grant amount earned will be calculated based on actual achievement, and the grant earned for each metric could vary from 0% to 125% of the target grant amount for that metric based on the actual over- or under-achievement of that metric.

The target and maximum restricted stock units ("RSUs") for our named executive officers under the 2013 Plan as approved by the Committee (and the Board with respect to Andrew Hurd) are as follows:

Named Executive Officer                             Targets            Maximum
Andrew Hurd
   President, Chief Executive Officer and
Interim Chief Financial Officer                      83,097            103,871
Heather Gervais
   SVP, Commercial Operations                        20,822            26,028
Matthew A. Kaminer
   General Counsel and Secretary                     20,822            26,028

On December 26, 2012, the Committee (and the Board with respect to Andrew Hurd) approved the grant of the maximum RSUs to the named executive officers as set forth above. The Committee will determine the degree to which each of the Corporate Objectives have been met after receiving the analysis and recommendations of management. Based on such determination, the Committee will determine the Company's degree of attainment of the Corporate Objectives and, following such determination, will adjust the shares underlying the performance-based equity awards, issued pursuant to the 2013 Plan, accordingly. Any performance-based RSUs granted pursuant to the 2013 Plan shall vest annually over four years.