Exhibit 10.2

 

COVANCE INC.

 

RESTRICTED STOCK AGREEMENT

 

2002 Employee Equity Participation Plan

(2006 Retention Incentive Award)

 

 

                RESTRICTED STOCK AGREEMENT dated as of February 23, 2006 (the
“Agreement”) between COVANCE INC., a Delaware corporation (“Company”), located
at 210 Carnegie Center, Princeton, New Jersey 08540, and
                           (the “Employee”).

 

W I T N E S S E T H:

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                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”)
                    shares of Common Stock, par value $.01 per share (the
“Common Stock”), of the Company.

 

                2.  Vesting of Restricted Shares; Rights.  (a) The Shares shall
vest on February 23, 2011.

 

                (b)  Subject to the terms and conditions of this Agreement,
Employee shall have all rights relating to the Shares, including the right to
vote and collect dividends as declared and paid by the Company, subject to
appropriate withholding to satisfy applicable tax requirements.

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                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.  Physical Possession of Shares; Restrictions on Transfer. 
(a)  Each certificate of Shares shall be registered in the name of the Employee
but shall be held by the Company until the Employee is entitled to physical
possession of the Shares pursuant to the terms of this Agreement.  Until the
Employee has received physical possession of 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.

 

                (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.

 

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                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)  Within sixty
(60) days of the date of this Agreement, the Company shall cause its transfer
agent to issue in the Employee’s name a certificate evidencing the Shares
granted pursuant to this Agreement.  The certificate representing 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 the vesting date as set forth in
Section 2 hereof, the Company shall cause its transfer agent to issue to the
Employee, upon the Company’s surrender of the appropriate certificate
representing unvested Shares, a new certificate representing the Shares vested
during the plan year.  The transfer agent shall thereupon re-issue on behalf of
and in the Employee’s name a certificate representing the remaining unvested
Shares still subject to the terms of this Agreement, which certificate shall be
retained by the Company.

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                (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 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.

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                13.  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.

 

                14.           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 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.

 

                15.           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).

 

                16.           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.

 

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COVANCE INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph L. Herring

 

 

 

 

 

 

 

 

 

 

Chairman of the Board and

 

 

 

 

 

 

 

 

 

 

Chief Executive Officer

 

 

 

Attest:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James W. Lovett

 

 

 

 

 

 

 

 

 

 

Corporate Senior Vice President,

 

 

 

 

 

 

 

 

 

 

General Counsel and Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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