Exhibit 10.1

 

COVANCE INC.

 

RESTRICTED STOCK AGREEMENT

 

2007 Employee Equity Participation Plan

(2008 Award)

 

RESTRICTED STOCK AGREEMENT dated as of March 31, 2008 (the “Agreement”) between
COVANCE INC., a Delaware corporation (“Company”), located at 210 Carnegie
Center, Princeton, New Jersey 08540, and James W. Lovett (the “Employee”).

 

W I T N E S S E T H:

 

A.            WHEREAS, the Employee is currently employed by the Company, or a
corporation which is a “subsidiary corporation” within the meaning of
Section 424(f) of the Internal Revenue Code of 1986, as amended, modified or
supplemented from time to time (“Code”) or which is an entity in which the
Company holds beneficially at least fifty percent (50%) of the ownership
interest (each, a “Subsidiary Company”), in an important executive, managerial
or technical capacity.

 

B.            WHEREAS, the Company desires to have the Employee remain in the
employment of the Company or a Subsidiary Company and to afford the Employee the
opportunity to acquire, or enlarge the Employee’s stock ownership in the Company
so that the Employee may have a direct proprietary interest in the Company’s
success.

 

NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements set forth below, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereby agree as follows:

 

1.  Grant of Shares.  Subject to the terms and conditions of the Employee Equity
Participation Plan (as amended, modified or supplemented from time to time, the
“Plan”) and this Agreement, the Company hereby grants (“Grant”) to the Employee,
as of the date of this Agreement (“Grant Date”) 2,900 shares (the “Initial
Shares”) of Common Stock, par value $.01 per share (the “Common Stock”), of the
Company; provided, however, that the number of the Initial Shares may be
decreased depending on the post bonus operating margin of the Company’s
nutritional chemistry services (“PBOM”) in 2008, 2009 and 2010, all as more
fully specified on Exhibit A  hereto (such Initial Shares, after giving effect
to any such decrease, being “Shares”).  Nothing in this Paragraph 1 shall be
relied on or used to interrupt the vesting or termination requirements of
Paragraphs 2 and 3.  The PBOM target for 2008 is set forth in Exhibit A and the
PBOM targets for 2009 and 2010 shall be set by the Company’s Compensation and
Organization Committee.  The PBOM for 2008, 2009 and 2010 shall be certified by
the Company’s Compensation and Organization Committee; provided, that in
determining PBOM for any such years such Committee may include or exclude, on a
basis consistent with circumstances existing when such goals were established,
as applicable, the financial effect on PBOM for any such year arising from any
acquisition of the stock or assets

 

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of any other person or entity, the divestiture of all or any of the Company’s
businesses, operations or facilities, strategic expenditures by the Company
identified to the Board of Directors as such, force majeure events, material
litigation or any other unexpected or unforeseen extraordinary event or
occurrence during the year in question.  In calculating the number of Shares to
grant Employee, if any, any of the foregoing adjustments may be considered by
the Compensation and Organization Committee in determining PBOM for the years
subsequent to the year that the event giving rise to such adjustment occurred,
as determined by the Compensation and Organization Committee.

 

2.  Vesting of Restricted Shares; Rights.  (a) The Shares shall vest on
February 28, 2011.

 

(b)  Subject to the terms and conditions of this Agreement, Employee shall have
all rights relating to the Initial Shares, subject to appropriate withholding to
satisfy applicable tax requirements.

 

3.  Termination.  (a)  The Grant with respect to any unvested Shares shall be
forfeited and be of no further force or effect upon the termination of the
Employee’s employment, for any reason, with the Company, except in the case of
his death, disability (as defined 22(e)(3) of the Code) or his retirement with
the consent of the Company, in which case all unvested Shares shall thereupon
immediately vest.

 

(b)  If the Employee shall be transferred from the Company to a Subsidiary
Company, or from a Subsidiary Company to the Company, or from a Subsidiary
Company to a Subsidiary Company, his employment shall not be deemed to be
terminated by reason of such transfer.  The unvested portion of the Shares shall
terminate immediately if, while the Employee is employed by a Subsidiary
Company, such Subsidiary Company shall cease to be a Subsidiary Company and the
Employee is not thereupon transferred to and employed by the Company or another
Subsidiary Company.

 

4.  Construction.  Whenever the word “Employee” is used in any provision of this
Agreement in circumstances where the provision should logically be construed to
apply to the estate, personal representative, or beneficiary to whom this Grant
may be transferred by Will, by the laws of descent and distribution, or by a
qualified domestic relations order pursuant to the Code or Title I of the
Employment Retirement Income Security Act of 1974, as amended, modified or
supplemented from time to time (“ERISA”), it shall be deemed to include such
person.

 

5.  Registration of Shares; Restrictions on Transfer.  (a)  The number of shares
granted shall be registered in the name of the Employee, but the Employee shall
not be entitled to receive the Shares until the Shares have vested.  Until the
Shares have vested and the Employee has received the Shares, the Employee may
not give, grant, sell, exchange, transfer legal title, pledge, assign or
otherwise encumber or dispose of any unvested Shares granted pursuant to the
Plan or any interest therein or this Agreement, otherwise than by Will, the laws
of descent and distribution, or by a qualified domestic relations order pursuant
to the Code or Title I of ERISA.

 

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(b)  No assignment or transfer of any unvested Shares, or of the rights
represented thereby or this Agreement, whether voluntary or involuntary, by
operation of law or otherwise (except by Will, the laws of descent and
distribution, or a qualified domestic relations order pursuant to the Code or
Title I of ERISA), shall vest in the assignee or transferee any interest or
right herein whatsoever.  Further, immediately upon any attempt to assign or
transfer any unvested Shares granted pursuant to this Agreement, the Grant shall
immediately terminate and be of no further force or effect (except by Will, the
laws of descent and distribution, or a qualified domestic relations order
pursuant to the Code or Title I or ERISA).

 

6.  Powers.  The existence of this Grant shall not affect in any way the right
or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalization, reorganizations or other changes in the Company’s
capital structure or its business, or any merger or consolidation of the
Company, or any issue of bonds, debentures, preferred or prior preference stocks
ahead of or affecting the Common Stock or the rights thereof, or the dissolution
or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

 

7.  Change of Control.  Except as set forth in Paragraph 3 hereof,
notwithstanding anything in this Agreement to the contrary, all Shares which
have not vested as of the date of a Change of Control (as defined below) occurs,
shall immediately vest upon a Change of Control and be delivered to the Employee
pursuant to the delivery provisions of this Agreement.  For purposes of this
Agreement, a Change of Control shall be defined as:

 

(1)   any person (including as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended) who becomes the
beneficial owner, directly or indirectly, of securities representing 20% or more
of the combined voting power of the Company’s then outstanding securities; or

 

(2)   as a result of a proxy contest or contests or other forms of contested
shareholder votes (in each case either individually or in the aggregate), a
majority of the individuals elected to serve on the Company’s Board of Directors
are different than the individuals who served on the Company’s Board of
Directors at any time within the two years prior to such proxy contest or
contests or other forms of contested shareholder votes (in each case either
individually or in the aggregate); or

 

(3)  when the Company’s shareholders approve a merger, or consolidation (where
in each case the Company is not the survivor thereof), or sale or disposition of
all or substantially all of the Company’s assets or a plan or partial or
complete liquidation; or

 

(4)   when an offerer (other than the Company) purchases shares of the Company’s
Common Stock pursuant to a tender or exchange offer for securities representing
20% or more of the combined voting power of the Company’s then outstanding
securities.

 

8.  Issuance of Shares; Power of Attorney.  (a)  In the event that the actual
number of shares of Common Stock earned by Employee, as provided in paragraph 1
of this Agreement,

 

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are less than the number of Initial Shares, the Company shall be authorized to
cancel such shares evidencing the Initial Shares and reissue to the Company on
behalf of and in the name of the Employee the number of shares of Common Stock
earned in accordance with paragraph 1 of the Agreement.  The unvested Shares
shall be retained by the Company and shall bear a legend stating that such
Shares are subject to the provisions of this Agreement.  The Company may place a
“stop transfer” order with respect to all unvested Shares with its transfer
agent.

 

(b)  Within thirty (30) days of each vesting date as set forth in Section 2
hereof, after giving effect to any adjustments to the Initial Shares required as
provided in paragraphs 1 and 8(a) of this Agreement, the Company shall issue to
the Employee, the Shares vested during the plan year.

 

(c)  The Company shall have the right to deduct from any vested shares a number
of shares sufficient to cover the withholding of any federal, state or local or
other governmental taxes or charges required by law or such greater amount of
withholding as permitted by applicable law, rules or regulations, or to take
such other action as may be necessary to satisfy any such withholding
obligations.

 

(d)  The Employee hereby constitutes and appoints the Company as his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him in his name, place and stead, in any and all capacities
to take all actions and to execute all instruments necessary and proper to carry
out the issuance and cancellation of the Shares hereunder.

 

(e)  The Employee represents and warrants that he will take all actions
necessary, as directed by the Company, to cancel the certificate representing
any or all unvested Shares upon termination of his employment.

 

9.  Changes in Law.  Notwithstanding anything in this Agreement to the contrary,
if at any time any law or regulations of any governmental authority having
jurisdiction in the premises shall require either the Company or the Employee to
take any action in connection with the Shares then to be issued, the issue of
such Shares shall be deferred until such action shall have been taken.

 

10.  Dispute.  Any dispute or disagreement which shall arise under, as a result
of, or pursuant to, this Agreement shall be finally determined by the Company’s
Compensation and Organization Committee of the Board of Directors in its
absolute and uncontrolled discretion, and any such determination or any other
determination by the Company’s Compensation and Organization Committee of the
Board of Directors under or pursuant to this Agreement, and any interpretation
by the Company’s Compensation and Organization Committee of the Board of
Directors of the terms of this Agreement, shall be final, binding and conclusive
on all persons affected thereby.

 

11.  Securities Law Restrictions. The Employee represents and warrants that he
or she is acquiring the Shares for investment, for his or her own account and
not with a view to the distribution thereof, and that the Employee has no
present intention of disposing of the Shares

 

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or any interest therein or sharing ownership thereof with any other person or
entity.  The Employee shall not sell, hypothecate or transfer the Shares except
pursuant to an effective registration statement under the Securities Act of
1933, as amended or an applicable exemption thereto evidenced by an opinion of
counsel in form and substance satisfactory to the Company.

 

12.  No Effect Upon Employment.   This Agreement does not give, nor shall it be
construed as giving, the Employee any right to employment by the Company or any
of its subsidiaries or affiliates.

 

13.  Data Authorization.  The Employee acknowledges and consents to the
collection, use, processing and transfer of personal data as described in this
paragraph.  The Company, its subsidiaries and the Employee’s employer hold
certain personal information about the Employee, including the Employee’s name,
home address and telephone number, date of birth, social security number or
other employee identification number, salary, nationality, job title, any shares
of stock or directorships held in the Company, details of all options or any
other entitlement to shares of stock awarded, canceled, purchased, vested,
unvested or outstanding in the Employee’s favor, for the purpose of managing and
administering the Plan (“Data”).  The Company and/or its subsidiaries will
transfer Data amongst themselves as necessary for the purpose of implementation,
administration and management of the Employee’s participation in the Plan, and
the Company and/or any of its subsidiaries may each further transfer Data to any
third parties assisting the Company in the implementation, administration and
management of the Plan.  These recipients may be located in the European
Economic Area, the United States, or elsewhere.  The Employee authorizes them to
receive, possess, use, retain and transfer the Data, in electronic or other
form, for the purposes of implementing, administering and managing the
Employee’s participation in the Plan, including any requisite transfer of such
Data as may be required for the administration of the Plan and/or the subsequent
holding of shares of stock on the Employee’s behalf to a broker or other third
party with whom the Employee may elect to deposit any shares of stock acquired
pursuant to the Plan.  The Employee may, at any time, review Data, require any
necessary amendments to it or withdraw the consents herein in writing by
contacting the Company; however, withdrawing consent may affect the Employee’s
ability to participate in the Plan.

 

14.  Governing Law; Binding Effect.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY (WITHOUT REGARD
TO THE CONFLICT OF LAW PROVISIONS THEREOF) AND ALL QUESTIONS CONCERNING THE
VALIDITY AND CONSTRUCTION THEREOF SHALL BE GOVERNED IN ACCORDANCE WITH THE LAWS
OF SAID STATE; PROVIDED, HOWEVER, THAT ALL MATTERS OF CORPORATE GOVERNANCE AND
OTHER CORPORATE MATTERS CONCERNING DELAWARE CORPORATIONS SHALL BE GOVERNED BY
THE DELAWARE GENERAL CORPORATION LAW. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto, their legal representatives, successors and assigns.

 

15.  Effect on Compensation and Discretionary Nature of Grant.  Notwithstanding
anything in this Agreement to the contrary, none of the Shares, if any, granted
or paid to Employee shall be considered compensation for the purpose of
determining Employee’s

 

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compensation under any other benefit or compensation plan of the Company,
including, without limitation, any bonus plan, variable compensation plan,
long-term incentive plan, pension plan or other retirement plans.  The Employee
acknowledges and agrees that the Plan is discretionary in nature and may be
amended, cancelled, or terminated by the Company, in its sole discretion, at any
time.  The grant of restricted stock under the Plan is a one-time benefit and
does not create any contractual or other right to receive a restricted grant of
stock or benefits in lieu of restricted stock in the future.  Future grants of
restricted stock, if any, will be at the sole discretion of the Company,
including, but not limited to, the timing of any grant, the number of shares of
restricted stock and the vesting provisions.

 

16.           Section 83(b) Election.  If Employee makes an election with
respect to the receipt of the Shares pursuant to Section 83(b) of the Code (the
“Election”), such Election shall contain all information required by Treasury
Regulation Section 1.83-2 and shall, in accordance with that regulation, be
filed no later than 30 days after the transfer of the Shares to the Employee. 
The Election shall be filed with the Internal Revenue Service Center at which
the Employee files his or her income tax return.  Contemporaneously with such
filing, the Employee shall furnish a copy of the Election to the Company, in
accordance with Treasury Regulation Section 1.83-2(d).

 

17.           Plan Document.  This Agreement is subject in all respects to the
Plan, a copy of which may be obtained from the Company’s Corporate Senior Vice
President, Human Resources, 210 Carnegie Center, Princeton, New Jersey  08540. 
To the extent that there is any inconsistency or conflict between this Agreement
and the Plan, the Plan shall control.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

 

 

COVANCE INC.

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

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