Exhibit
10.1


 


December 31,
2008


 


Joseph
L. Herring


 


	
  Re:

  	
  Amended and
  Restated Employment Letter Agreement (the “Agreement”)

  



 


Dear Joe:


 


As a result of the passage of Section 409A of the
Internal Revenue Code (the “Code”), Covance Inc. (“Covance” or the “Company”)
is required to amend and restate your employment letter agreement.  Accordingly, this Agreement completely
supersedes and replaces any prior versions.


 


Position


 


As Chief Executive Officer of Covance your duties shall
include such duties as are consistent with your title and position as Chief
Executive Officer of a publicly-traded company. 
You will report to the Board of Directors of Covance (the “Board”).  You will also serve as Chairman of the Board.


 


Salary and Bonus


 


Your salary will be determined annually by the Board
or the Compensation and Organization Committee thereof (the “Compensation
Committee”).


 


You will participate in the Covance Variable
Compensation Plan (the “Bonus Plan”) subject to the terms and conditions
thereof.  Payouts under the Bonus Plan
are contingent upon a number of factors, as specified in the Bonus Plan,
including your performance and the Company’s performance.  You will be eligible for a bonus equal to
such amount as is determined annually by the Board (the “Target Bonus Award”).  This Agreement does not constitute an
amendment, modification or supplement to the Bonus Plan and to the extent there
are any inconsistencies between this Agreement and the Bonus Plan, the latter
shall govern.  Further, the Bonus Plan is
subject to modification or discontinuation at the discretion of Covance.


 


Supplemental Pension Plan


 


A supplemental executive retirement plan (as amended,
modified or adopted from time to time, the “SERP”) has been adopted for the
senior executives of Covance in which you currently participate.  The SERP is a non-qualified, unfunded
retirement plan designed to provide retirement benefits to you upon your
retirement on or after attaining age 60, with provisions enabling you to receive
reduced benefits if you retire after attaining age 55.


 

















 


Investment and Benefit
Plans


 


You are eligible to participate in all the Covance
employee benefit plans, including medical, dental, life insurance, disability,
401(k) Savings Plan, and Employee Stock Purchase Plan (“ESPP”), in
accordance with the terms and conditions of those plans.  In addition, you will receive paid time off
benefits consistent with the provisions of our Paid Time Off Plan.


 


Equity Awards


 


You may be awarded from time to time additional
compensation (such as stock options or performance shares) pursuant to Covance’s
2007 Employee Equity Participation Plan (as amended, modified or supplemented
from time to time, the “EEPP”) or any additional or replacement incentive
compensation or long-term compensation program established by Covance for its
senior officers.  Any awards under such
programs shall be at such levels or in such amounts as the Board or the
Compensation Committee deems, in its sole discretion, appropriate for your
position and the performance of your duties.


 


Severance


 


Should you be involuntarily terminated by the Company
other than (1) for Cause (as defined below); (2) as a result of your
Extended Disability (as defined below); (3) within the 24 month period
following a Change in Control (as defined below), the Company shall pay you the
following amounts (subject to the paragraph entitled “Specified Employee,”
if applicable):


 


(i)            An amount equal to the sum of (a) two
years of base salary in effect at the time of termination plus (b) an
amount equal to your target bonus award at the time of termination (the sum of (a) and
(b) being, collectively, the “Termination Payments”), payable on the
Company’s normal payroll cycle; and


 


(ii)           In the event you elect COBRA
continuation for you and your eligible dependents, the monthly premium for such
coverage from the date of such involuntary termination until the date that is
18 months after the date of your involuntary termination from the Company (such
period being the “Health Continuation Period”).  Subsequent to the Health
Continuation Period, the Company shall continue paying the equivalent premium
payments until the date that is the second anniversary of your involuntary
termination from the Company.  In the event you are terminated for
Cause and the COBRA election is still available to you under applicable law,
and you so elect the COBRA continuation, you shall be responsible for all
health benefit premium costs.


 


(iii)          You will be given the option to
convert your life insurance benefit to a personal life insurance policy, and if
you so elect, the monthly premiums will be paid by the Company for the period
during which the Company pays the monthly premiums for health coverage in
accordance with subsection (ii) above.


 


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Notwithstanding anything in this Severance paragraph to the contrary, you
agree that if you obtain or are provided with medical and dental benefits from a
new employment position, then you shall promptly notify the Company that such
benefits are being provided to you and the Company shall cease providing such
coverage or discontinue paying the premiums for such insurance, as applicable.  You agree to promptly update the Senior Vice
President, Human Resources of the Company of any change in your employment or
benefits coverage status during any period you are receiving benefits
hereunder.


 


Please refer to that certain Confidentiality and
Non-Competition Agreement between you and the Company (the “Non-Competition
Agreement”).  You agree that any of the
severance payments under subsection (i) or (ii) above shall
constitute the payment of your base salary under Section 4(a)(ii) of
the Non-Competition Agreement.


 


“Cause” shall
mean (i) your conviction of, or plea of guilty or nolo
contendere to, a felony or a misdemeanor if such misdemeanor
involves moral turpitude; (ii) your commission of any act of gross
negligence or intentional misconduct in the performance or non-performance of
your duties as an employee of Covance or its affiliates, including without
limitation, any actions which constitute sexual harassment under applicable
laws, rules or regulations; (iii) your failure to perform your duties
assigned for a period of thirty (30) or more days unless such failure is caused
by an Extended Disability (as defined below); or (iv) your misappropriation
of assets, personal dishonesty or intentional misrepresentation of facts which
may cause Covance or its affiliates financial or reputational harm.


 


“Extended Disability”
shall (i) mean you are unable, as a result of a medically determinable
physical or mental impairment, to perform the duties and services of your
position, or (ii) have the meaning specified in any disability insurance
policy maintained by Covance, whichever is more favorable to you.


 


Except as may be otherwise provided herein or in any applicable
Covance compensation and benefit plans, Covance shall not be liable for any
salary or benefit payments to you beyond the date of your voluntary termination
of employment with Covance.  Upon the termination
of your employment with Covance for Cause or for Extended Disability, you shall
not be entitled to any compensation or other benefits not already earned and
owing to you on account of your services on the date of such termination of
employment.  The provision of any
benefits pursuant to this Agreement shall be in lieu of, and not in addition
to, any payment or benefits you otherwise would have been entitled to pursuant
to any severance pay plan of the Company, including, without limitation, the
Company’s Amended and Restated Severance Pay Plan.


 


Change-of-Control


 


Upon an Event of Termination (as defined below), you
will be entitled to a lump sum payment equal to the sum of (1) the product
of (a) 3 and (b) your base annual salary in effect at the time of the
Event of Termination and (2) the product of (a) 3 and (b) the amount
that is your annual target bonus award in effect at the time of the Event of
Termination.  Except as 


 


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otherwise provided under the paragraph entitled “Specified
Employee,” such payment will be made within 60 days of the Event of
Termination.  In addition, upon an Event
of Termination, (i) all of your stock options, restricted stock, deferred
compensation and similar benefits which have not become vested on the date of
an Event of Termination shall become vested upon such event and (ii) you
shall be entitled to receive any payments calculated pursuant to the paragraph
headed “Certain Additional Payments by Covance.”


 


For the purposes of this Agreement, an “Event of
Termination” is defined to be a termination of your employment by Covance (for
reasons other than Cause or Extended Disability) or a Constructive Termination
(as defined below) of your employment, in each case within 24 months following
a Change-of-Control (as defined below), or your voluntary termination of your
employment with Covance for any reason or no reason during the one-month period
commencing twelve months following a Change-of-Control and ending thirteen
months after such Change-of-Control (a “Voluntary Termination”).


 


For purposes of this Agreement, a “Change-of-Control” shall
mean:


 


(i)            any
person, or more than one person acting as a group within the meaning of Code Section 409A
and the regulations issued thereunder, acquires ownership of stock of the
Company that, together with stock held by such person or group, constitutes
more than 50 percent of the total fair market value or total voting power of
the stock of the Company;


 


(ii)           any
person, or more than one person acting as a group within the meaning of Code Section 409A
and the regulations issued thereunder, acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition) ownership of
stock of the Company possessing 30 percent or more of the total voting power of
the Company’s stock;


 


(iii)          a
majority of the members of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
members of the Board before the date of the appointment or election; or


 


(iv)          a
person, or more than one person acting as a group within the meaning of Code Section 409A
and the regulations issued thereunder, acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition) assets from
the Company that have a total gross fair market value equal to or more than 40
percent of the total gross fair market value of all the assets of the Company
immediately before such acquisition or acquisitions.


 


For purposes of this Agreement, a “Constructive
Termination” is defined to be your termination of employment with Covance
because of:


 


(i)            a
material breach by Covance of this Agreement, including, without limitation, a
reduction in your then current salary or the percentage of base salary eligible
for incentive compensation;


 


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(ii)           a
diminution of your responsibilities, status, title or duties hereunder;


 


(iii)          a
relocation of your work place which increases the distance between your
principal residence and your work place by more than 25 miles;


 


(iv)          a
failure by Covance to provide you with benefits which are as favorable to you
in all material respects as those provided immediately prior to a
Change-of-Control; or


 


(v)           the
failure of any acquiror or successor in interest to the business of Covance to
agree in writing to be bound by the terms of this Agreement within four months
of any Change-of-Control;


 


provided,
however, that a Constructive Termination will only occur upon (1) written
notice by you to Covance of the existence of one or more of the conditions
listed above and your intent to terminate employment with Covance, within 30
days of the commencement of such condition; and (2) Covance’s failure to cure
such condition within 30 days of Covance’s receipt of such notice.  Any such written notice by you shall specify
the particular act or acts, or failure to act, which is or are the basis for
your Constructive Termination.


 


In the event you are involved in any dispute about
your rights under this Agreement arising on or after a Change-of-Control,
Covance shall pay all reasonable legal costs and fees incurred by you during
your lifetime in connection with such dispute promptly upon receipt of any
invoice relating thereto, provided that any such reimbursement shall be made no
later than December 31 of the year following the year during which such
cost or expense is incurred.


 


With respect to an Event of Termination, medical and
dental benefits will be continued, to the extent they are not otherwise
prohibited under the respective plans and on the terms and conditions of the
relevant provisions of this Agreement and the applicable plan, until you find
other employment but not longer than three years from the date of the Event of
Termination.  In addition, you will be
given the option to convert your life insurance benefit to a personal policy
and if you so elect, Covance will pay such monthly premiums until you find
other employment but not longer than three years from the date of the Event of
Termination.


 


Notwithstanding the foregoing, to the extent
applicable, any claims for reimbursement of medical and dental expenses under
this Agreement shall be paid as soon as administratively feasible following the
proper submission of the applicable expense; provided that all such claims must
be submitted and paid by December 31 of the year following the year during
which you incurred the applicable expense.


 


Specified Employee


 


Notwithstanding any other provision of the Agreement,
if (i) you become entitled to receive payments or benefits under this
Agreement as a result of your “separation from service” within the meaning of
Code Section 409A, (ii) you are a “specified employee” within the
meaning of Code Section 409A, and (iii) such payment or benefit would
be subject to tax 


 


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under Code Section 409A if the payment or benefit
is paid within six months of your separation from service, then such payment or
benefit required under this Agreement shall not be paid until the first day
which is six months after your separation from service.


 


Certain Additional
Payments by Covance


 


(a)           Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment
or distribution by, to or for the benefit of you, whether made under this
Agreement or otherwise (a “Payment”), would be subject to the excise tax
imposed by Code Section 4999 (the “Excise Tax”), then you shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by you of all taxes (including any Excise Tax) imposed
upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.


 


(b)           All determinations required to be
made under these provisions, including whether a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall be made by the accounting firm
utilized by Covance for the preparation of its annual external financial
statements (the “Accounting Firm”) which shall provide detailed supporting
calculations both to Covance and you within 30 days of the Event of
Termination, if applicable, or such earlier time as is requested by Covance.  The Gross-Up Payment, if any, as determined
pursuant to this item (b), shall be paid to you within 10 days of the receipt
of the Accounting Firm’s determination.  Any
determination by the Accounting Firm shall be binding upon Covance and you.  If subsequent final determinations of the
Excise Tax made by the Internal Revenue Service give rise to additional Excise
Tax, then additional Gross-Up Payments shall be made by Covance to you within
10 days after the notice is received by Covance of such final determination.


 


(c)           You shall notify Covance in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by Covance of a Gross-Up Payment. 
Such notification shall be given as soon as practicable but no later
than 10 business days after you know of such claim.  You shall not pay such claim prior to the
expiration of the thirty-day period following the date on which you give such
notice to Covance (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). 
If Covance notifies you in writing prior to the expiration of such
period that it desires to contest such claim, you shall:


 


(i)            give Covance any information
reasonably requested by Covance relating to such claim,


 


(ii)           take such action in connection with
contesting such claim as Covance shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney selected by Covance,


 


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(iii)          cooperate with Covance in good faith
in order effectively to contest such claim, and


 


(iv)          permit Covance to participate in any
proceedings relating to such claim; provided,
however, that Covance shall bear all
costs and expenses incurred in connection with such contest and shall indemnify
and hold you harmless, on an after-tax basis, for any Excise Tax or income tax
imposed as a result of such contest or representation and payment of costs and
expenses.  Covance shall control all proceedings
taken in connection with such contest.  Covance
may, at its sole option, either direct you to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and you agree to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as
Covance shall determine.


 


(d)           Notwithstanding the foregoing, in no
event shall any Gross-Up Payment, or any reimbursement of related costs and
expenses within the meaning of Code Section 409A, be paid to you or on
your behalf later than December 31 of the year following the year in which
you paid the Excise Tax or other cost or expense on which such Gross-Up Payment
or reimbursement is payable under this Agreement.


 


Injunctive Relief


 


You agree that the remedies available to Covance at
law for any breach of any of your obligations under this Agreement may be
inadequate, and you accordingly agree and consent that temporary or permanent
injunctive relief, and/or an order of specific performance, may be granted in
any proceeding which may be brought to enforce any provision hereof, without
the necessity of proof of actual damage, in addition to any other remedies
available to Covance at law.


 


Outplacement


 


If there has been an Event of Termination, Covance
shall provide for you, at Covance’s cost, executive outplacement support for
one year following such termination; provided that all reimbursements of costs
and expenses under this paragraph shall be made to you no later than December 31
of the year following the year during which you incurred the applicable cost or
expense.


 


Release


 


If there has been an Event of Termination or if there
has been no Change-of-Control but you have been terminated without Cause, the
obligation of Covance to make to you any or all of the payments specified under
this Agreement (including, without limitation, the Termination Payments, the
salary continuation payments described in subsection (i) of the paragraph
entitled Severance of this Agreement or
the payments specified under the paragraph headed “Change
of Control,” as applicable) shall be subject to
your execution and delivery to 


 


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Covance of a release in form and substance reasonably
satisfactory to Covance of all claims, demands, suits or actions, whether in
law or at equity, you have or may have relating to or giving rise from such
Event of Termination or non-Cause termination.


 


Plans and Conflicts


 


As in the case with the Bonus Plan, the Agreement does
not constitute an amendment, modification or supplement to any other plan or
policy (benefit, compensation or otherwise, including without limitation the
EEPP, SERP, 401(k) Savings Plan, and ESPP) of Covance, whether or not described
in the Agreement, and to the extent there is any inconsistency between the
Agreement and any other plan (benefit, compensation or otherwise, including
without limitation the EEPP, SERP, 401(k) Savings Plan, and ESPP), of
Covance, whether or not described herein, such plans or policies shall govern.  Further, nothing in this Agreement shall
constitute a limitation on Covance’s right to modify or discontinue any such
plans or policies.


 


The provisions of employment relating to health
benefits, vacation and reimbursement for business expenses, professional dues,
etc. will be administered in accordance with company policies, as they may be
amended, modified or supplemented from time to time.


 


Governing Law


 


This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without reference to any
conflicts of law provisions.


 


Conditions to Effectiveness


 


This Agreement will become effective as of the date
first written above upon which all of the following conditions have been
satisfied:


 


a)             The Board has approved this
Agreement; and


 


b)            The Agreement has been executed and
delivered by each of you and Covance.


 


Representations
and Warranties


 


You hereby represent and warrant to Covance the
following:


 


a)             You are not currently party to any
contract of employment that might impede or impair your ability to execute this
Agreement or perform the services contemplated hereof;


 


b)            You are not subject to any
non-competition agreement, arrangement or understanding or any other
restrictive covenants that might restrict your employment by Covance pursuant
to this Agreement or otherwise; and


 


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c)             You shall hold the terms and
conditions of your employment with Covance, including this Agreement, in strict
confidence and will not divulge the terms thereof to anyone else except
employees or agents of Covance who have a need to know or your spouse,
accountant, investment advisor, lawyer or others who have a need to know, provided, they are under similar obligations
of confidentiality.


 


Waivers


 


The failure of either party at any time to require
performance by the other party of any provision hereof shall not affect in any
way the full right to require such performance at any time thereafter, nor
shall a waiver by either party of a breach of any provision hereof be taken or
held to be a waiver of future performance under the provision itself.


 


Scope of Restrictions
Reasonable


 


You hereby expressly agree that all of the covenants
in this Agreement are reasonable and necessary in order to protect Covance and
its business.  If any provision or any
part of any provision of this Agreement shall be invalid or unenforceable under
applicable law, such part shall be ineffective only to the extent of such
invalidity or unenforceability and shall not affect in any way the validity or
enforceability of the remaining provisions of this Agreement, or the remaining
parts of such provision.


 


Assignment; Amendments


 


This Agreement shall be binding on and inure to the
benefit of the parties hereto and their heirs, executors, legal
representatives, successors and assigns. 
Except in the event of a transfer to a successor corporation or other
entity or affiliate of Covance, neither party shall have the right to assign
its rights or delegate its obligations, or all or any portion of its rights or
interests under this Agreement without the prior written consent of the other
party hereto.  This Agreement may be
amended only by a written instrument signed by both parties hereto making
specific reference to this Agreement and expressing the plan or intention to
modify it.


 


Notification


 


Any notice, request, demand, or other communication
required or permitted by this Agreement shall be deemed to be properly given if
delivered by hand or when mailed certified, registered or first class mail or
overnight courier with postage or shipping charge prepaid, addressed to Covance
at 210 Carnegie Center, Princeton, New Jersey 08540, Attention: Corporate
Senior Vice President, General Counsel & Secretary, and to you at your
address specified above, and all such notices shall be deemed effective at the
time of delivery.  The addresses for the
purpose of this paragraph may be changed only by giving written notice of such
change in the manner provided herein for giving notices.


 


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Captions


 


The captions of the paragraphs herein are inserted as
a matter of convenience only and in no way define, limit or describe the scope
of this Agreement or any provisions hereof.


 


Entire Agreement


 


This Agreement sets forth the entire agreement and
understanding between the parties hereto as to the subject matter hereof, and
as such supersedes in its entirety any existing agreement or offer letters,
whether oral or written, between you and Covance, except for any
confidentiality and/or non-competition agreements between you and Covance which
shall continue in full force and effect in addition to any of the provisions
contained in this Agreement.


 


Employee at Will


 


This Agreement is not a contract of employment.  Your employment by Covance is for no fixed
term, and either you or Covance may terminate the employment relationship at
any time for no reason or any reason not prohibited by applicable laws.


 


Please indicate your agreement with the terms and
conditions of this Agreement by signing two copies of this Agreement and
returning them to my attention.


 


Withholding


 


All payments made by Covance
under this Agreement will be reduced by any tax or other amounts required to be
withheld by Covance under applicable law.


 


 


Very truly yours,


 


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


 


Accepted as of the date
first above specified:


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Joseph
  L. Herring

  	
   

  



 


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