COVANCE INC.

                           DEFERRED COMPENSATION PLAN
                                  FOR DIRECTORS

                           Effective December 3, 1996

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This is the Covance Inc. Deferred Compensation Plan for Directors, effective
December 3, 1996 (the "Plan"), established by Covance Inc. to provide its
non-employee directors with an additional method of planning for their
retirement. The Plan is intended to be an unfunded plan maintained for the
purpose of providing deferred compensation to the non-employee directors of
Covance Inc.

Section 1. Effective Date

The effective date of the Plan is December 3, 1996.

Section 2. Eligibility

Any Director of Covance Inc. (the "Company") who is not an officer or employee
of the Company or a subsidiary thereof is eligible to participate in the Plan.

Section 3. Deferred Compensation Accounts

There shall be established for each participant a deferred compensation account
or accounts in the participant's name.

Section 4. Amount of Deferral

A participant may elect to defer receipt for any year of either (a) all of the
compensation payable to the participant for serving on the Board of Directors of
the Company and Committees of the Board of Directors or (b) only the retainer
(basic annual fee) payable to the participant for membership on such Board.

Section 5. Investment of Deferred Amounts

(a)  General. A participant may designate, in increments of 10%, the
     compensation to be deferred or compensation already deferred to be
     allocated to a cash account and a market value account or any combination
     of such accounts. Any change in such designation of future deferrals under
     the Plan may be made no later than the 15th day of each March, June,
     September and December during the deferral period to be effective on the
     date next following such notification that compensation would have been
     paid in accordance with the Company's normal practice but for the election
     to defer. Any change in such designation of

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     amounts already deferred under the Plan may be made no later than December
     15th of any Plan Year and shall become effective as of January 1st of the
     next Plan Year.

(b)  Cash Account. The amount, if any, in the participant's deferred
     compensation cash account shall be credited with interest, to be compounded
     quarterly, calculated prospectively at a rate equal to the prime rate in
     effect on the date compensation would have been paid in accordance with
     such practice on the first day of each January, April, July and October
     during the deferral period.

(c)  Market Value Account. The amount, if any, in or allocated to the
     participant's deferred compensation market value account on each date
     compensation would have been paid in accordance with the Company's normal
     practice but for the election to defer shall be expressed in units, the
     number of which shall be equal to such amount divided by the closing price
     of shares of the Company's Common Stock on the New York Stock Exchange
     (hereinafter referred to as "Market Value") on such date or on the trading
     day next preceding such date if such date is not a trading day. On each
     date that the Company pays a regular cash dividend on shares of its Common
     Stock outstanding, the participant's account shall be credited with a
     number of units equal to the amount of such dividend per share multiplied
     by the number of units in the participant's account on such date divided by
     the Market Value on such dividend date or on the trading day next preceding
     such date if the dividend payment date is not a trading day. The value of
     the units in the participant's market value account on any given date shall
     be determined by reference to the Market Value on such date.

(d)  Recapitalization. The number of units in the participant's market value
     account shall be proportionally adjusted for any increase or decrease in
     the number of issued shares of Common Stock of the Company resulting from a
     subdivision or consolidation of shares or other capital adjustment, or the
     payment of a stock dividend or other increase or decrease in such shares
     effected without receipt of consideration by the Company, or any
     distribution or spin-off of assets (other than cash) to the stockholders of
     the Company.

Section 6. Period of Deferral

A participant may elect to defer receipt of compensation either (a) until a
specified year in the future or (b) until the participant's termination of
service as a Director of the Company. If alternative (a) is elected, actual
payment will be made or will commence within sixty days after the beginning of
the year specified. If alternative (b) is elected, payment will be made or will
commence within sixty days after termination of services as a Director of the
Company. In addition, at any point prior to a year in which a distribution of
any or all of a participant's account is scheduled for distribution pursuant to
this Section 6, the participant shall have the option to further defer all or
part of the

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scheduled distribution to a later year. A scheduled distribution or portion
thereof may, however, be further deferred only once.

Section 7. Accelerated Distributions

   
(a) Hardship Distributions. A participant may elect to receive a distribution of
amounts credited to his account prior to the date or dates originally elected
under Section 6 without penalty if such distribution is necessary as a result of
an unforeseen hardship and the amount of the distribution is limited to an
amount reasonably necessary to satisfy the unforeseen hardship. For this
purpose, an "unforeseen hardship" is defined as severe financial hardship to a
participant resulting from a sudden and unexpected illness or accident of the
participant or of a participant's dependent, loss of a participant's property
due to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the participant's control. In addition, an
unforeseen hardship will not be considered to have occurred if such hardship is
or may be relieved through reimbursement by insurance or liquidation of the
participant's assets, to the extent the liquidation of such assets would not
itself cause severe hardship.
    

(b) Other Accelerated Distributions. A participant may elect to receive a
distribution of all or a portion of his account for any reason prior to the date
or dates originally elected under Section 6, subject to the following forfeiture
and suspension provisions.

     (i) Forfeiture. A participant shall forfeit 10% of his account balance
     under the Plan if he elects an accelerated distribution under this Section
     7(b). Any amounts forfeited under this Section 7(b) shall not be
     distributed or allocated to any other account in the Plan.

     (ii) Suspension of Participation. If a participant elects to accelerate a
     distribution under this Section 7(b), he will not be entitled to defer any
     additional compensation under the Plan for the Plan Year in which he
     elected the accelerated distribution and the Plan Year immediately
     following the Plan Year in which the participant elected to accelerate a
     distribution.

Section 8. Form of Payment

On the participant's deferral election form, the participant shall elect to
receive the compensation deferred under the Plan in either (a) a lump sum or (b)
a number of annual installments as specified by the participants. All amounts in
the participant's cash and market value accounts shall be paid in cash.

Section 9. Death or Disability Prior to Receipt

In the event that a participant dies or becomes totally and permanently disabled
prior to receipt of any or all of the amounts payable to the participant
pursuant to the Plan, any

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amounts remaining in the participant's deferred compensation account may be paid
to the beneficiary so designated on his election form in a lump sum within sixty
(60) days following the Company's notification of the participant's death or
disability.

Section 10. Time of Election of Deferral

Effective January 1, 1997 the period commencing January 1 and ending December 31
of each year shall be the Plan Year.

An election to defer compensation may be made by a nominee for election as a
Director prior to, or concurrently with the nominee's election for, the term for
which the nominee is being elected, and may be made by a person then currently
serving as a Director for the next succeeding Plan Year no later than the
preceding December 15th.

Section 11. Manner of Electing Deferral

A participant may elect to defer compensation by giving written notice to the
Secretary of the Company on a form provided by the Company, which notice shall
include the amount to be deferred, the accounts to which such amounts are to be
allocated and the percentage (in increments of 10%) of such amounts to be
allocated to each account, the period of deferral, and the form of payment,
including the number of installments.

Section 12. Effect of Election

An election to defer compensation shall be irrevocable once the Plan Year to
which it applies has commenced, and may be revoked or modified only upon
demonstration of unforeseen hardship, as defined in Section 7 of the Plan, and
with the concurrence of the Compensation Committee of the Board of the Company.
An election covering more than one Plan Year may be revoked or modified with
respect to Plan Years not yet begun by notifying the Secretary of the Company in
writing at least fifteen (15) days prior to the commencement of such Plan Year.

Section 13. Participant's Rights Unsecured

The Plan is an unfunded plan and the right of any participant to receive future
payments under the provisions of the Plan shall be an unsecured claim against
the general assets of the Company.

Section 14. Statement of Accounts

Statements will be sent to each participant each year as to the value of the
participant's deferred compensation accounts as of the end of the preceding
December.

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Section 15. Assignability

No right to receive payments hereunder shall be transferable or assignable by a
participant, except by will or by the laws of descent and distribution. The
participant may not sell, assign, transfer, pledge or otherwise encumber any
interest in the participant's deferred compensation account and any attempt to
do so shall be void against, and shall not be recognized by, the Company.

Section 16. Administration

The Compensation Committee of the Board will determine the plan administrator,
who together shall have the authority to adopt rules and regulations for
carrying out the Plan and interpret, construe and implement the provisions of
the Plan.

Section 17. Amendment

The Plan may at any time or from time to time be amended, modified or terminated
by the Company. No amendment, modification or termination shall, without the
consent of the participant, adversely affect accruals in such participant's
deferred compensation account.

Section 18. Claims Procedure

(a)  Denial of Claim for Benefits. Any denial by the Compensation Committee of
     any claim for benefits under the Plan by a participant shall be stated in
     writing by the Compensation Committee and delivered or mailed to the
     participant. The Compensation Committee shall furnish the participant with
     notice of the decision not later than 90 days after receipt of the claim,
     unless special circumstances require an extension of time for processing
     the claim. If such an extension of time for processing is required, written
     notice of the extension shall be furnished to the participant prior to the
     termination of the initial 90 day period. In no event shall such extension
     exceed a period of 90 days from the end of such initial period. The
     extension notice shall indicate the special circumstances requiring an
     extension of time and the date by which the Compensation Committee expects
     to render the final decision. The notice of the Compensation Committee
     decision shall be written in a manner calculated to be understood by the
     participant and shall include (i) the specific reasons for the denial,
     including, where appropriate, references to the Plan, (ii) any additional
     information necessary to perfect the claim with an explanation of why the
     information is necessary, and (iii) an explanation of the procedure for
     perfecting the claim.

(b)  Appeal of Denial. The participant shall have 60 days after receipt of
     written notification of denial of his or her claim in which to file a
     written appeal with the Compensation Committee. As a part of any such
     appeal, the participant may submit issues and comments in writing and
     shall, on request, be afforded an

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     opportunity to review any documents pertinent to the perfection of his or
     her claim. The Compensation Committee shall render a written decision on
     the participant's appeal ordinarily within 60 days of receipt of notice
     thereof but, in no case, later than 120 days.

Section 19. Miscellaneous

(a)  Limited Purpose of Plan. The establishment or existence of the Plan shall
     not confer upon any individual the right to be continued as a Director.

(b)  Non-alienation. No amounts payable under the Plan shall be subject in any
     manner to anticipation, assignment, or voluntary or involuntary alienation.

(c)  Facility of Payment  If the Compensation Committee, in its sole discretion,
     deems a participant who is eligible to receive any payment hereunder to be
     incompetent to receive the same by reason of age, illness or any infirmity
     or incapacity of any kind, the Compensation Committee may direct the
     Company to apply such payment directly for the benefit of such person, or
     to make payment to any person selected by the Compensation Committee to
     disburse the same for the benefit of the participant. Payments made
     pursuant to this Section 11(c) shall operate as a discharge, to the extent
     thereof, of all liabilities of the Company and the Compensation Committee
     to the person for whose benefit the payments are made.

(d)  Governing Law. This Plan shall be governed by and construed in accordance
     with the laws of the state of New Jersey, to the extent not preempted by
     federal law.

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