Exhibit 10.2

 

COVANCE INC.

 

RESTRICTED STOCK AGREEMENT

(Performance Share)

 

201  Employee Equity Participation Plan

(201  Award)

 

                RESTRICTED STOCK AGREEMENT dated as of                   , 201 
(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:

 

                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
(the “Initial Shares”) of Common Stock, par value $.01 per share (the “Common
Stock”), of the Company; provided, however, that one half of the Initial Shares
may be increased or decreased depending on the Company’s compounded annual
revenue growth (“CAGR”) and one half may be increased or decreased based on the
Company’s return on capital (“ROC”) in the three-year period commencing January
1, 201   (the “Performance Period”), all as more fully specified on Exhibit A 
hereto (such Initial Shares, after giving effect to any such decrease or
increase, being the “Adjusted Shares”).  The CAGR and ROC for the Performance
Period shall be certified by the Company’s Compensation and Organization
Committee; provided, that with respect to the targets and determinations of CAGR
and ROC such Committee may include or exclude, on a basis consistent with
circumstances existing when such goals were established, the financial effect on
CAGR and ROC for any such year arising from any acquisition of the stock or
assets of any other person or entity, the divestiture of all or any of the
Company’s businesses, operations or facilities, special items or charges, asset
impairments, strategic expenditures by the Company identified to the Board of
Directors as such, force majeure events, changes in GAAP or tax law, or any
other unexpected or unforeseen extraordinary event or occurrence during the year
or years in question.

 

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                2.  Vesting of Restricted Shares; Rights.  (a) The Shares shall
vest on                , 201   [three years]; provided, however, that in the
event the Compensation and Organization Committee shall have not yet certified
the CAGR and ROC for the Performance Period, the Shares shall vest on the date
of such certification.

 

                (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 or her death, disability (as defined in section
22(e)(3) of the Code) or his or her 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 or her 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.

 

                (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

 

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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 a Change-of-Control (as defined below)
occurs, shall immediately vest upon the Employee’s involuntary termination by
the Company for reasons other than cause (as defined in the Plan) or upon a
constructive termination (as defined in the Plan), in each case within two years
of such 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) becomes the beneficial owner, directly or indirectly, of securities
representing 30% or more of the combined voting power of the Company’s then
outstanding securities; or

 

(2)                                 within any period of 24 consecutive months,
persons who were members of the Company’s Board of Directors immediately prior
to such 24-month period, together with persons who were first elected as
directors (other than as a result of any settlement of a proxy or consent
solicitation contest or any action taken to avoid such a contest) during such
24-month period by or upon the recommendation of persons who were members of the
Company’s Board of Directors immediately prior to such 24-month period and who
constituted a majority of the Company’s Board of Directors at the time of such
election, cease to constitute a majority of the Company’s Board of Directors; or

 

(3)                                 upon the consummation of 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 30% 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, 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.  In the event that the actual number of shares of Common Stock
earned by the Employee pursuant to Paragraph 1 of this Agreement is greater than
the Initial Shares, then the Company shall instruct the Transfer Agent to issue
on behalf of the Employee shares evidencing such additional shares of Common
Stock.  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 Paragraph 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.

 

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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 or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him or her in his or her 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 or she will
take all actions necessary, as directed by the Company, to cancel the shares and
share certificates representing any or all unvested Shares upon termination of
his or her 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.

 

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. 

 

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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 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 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.

 

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

 

 

 

 

COVANCE INC.

 

 

 

 

 

Signature

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

Signature

 

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Exhibit A

 

201  -201   Performance Share Matrix

 

 

 

Threshold

 

 

 

 

 

Target

 

 

 

 

 

Maximum

 

 

 

Target %
-       bps

 

Target %
-      bps

 

Target %
-       bps

 

Target %

 

Target %
+       bps

 

Target %
+      bps

 

Target %
+       bps

 

Absolute 3 Year Revenue CAGR

 

    %

 

    %

 

    %

 

    %

 

    %

 

    %

 

    %

 

% of Target Shares Earned

 

0%

 

50%

 

75%

 

100%

 

125%

 

150%

 

200%

 

 

 

Interpolate results if performance is between two columns.

1 basis point variance to target results in:

 

    % change in shares earned

 

    % change in shares earned

 

    % change in shares earned

 

 

 

 

Threshold

 

 

 

 

 

Target

 

 

 

 

 

Maximum

 

 

 

Target %
-       bps

 

Target %
-      bps

 

Target %
-       bps

 

Target %

 

Target %
+       bps

 

Target %
+       bps

 

Target %
+       bps

 

Absolute 3 Year Return on Capital

 

    %

 

    %

 

    %

 

    %

 

    %

 

    %

 

    %

 

% of Target Shares Earned

 

0%

 

50%

 

75%

 

100%

 

125%

 

150%

 

200%

 

 

 

Interpolate results if performance is between two columns.

1 basis point variance to target results in:

 

    % change in shares earned

 

    % change in shares earned

 

    % change in shares earned

 

 

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