Document:

Exhibit 10.1

 

 

EXECUTION VERSION

 

November 8, 2010

 

Covance Inc.

210 Carnegie Center

Princeton, New Jersey 08540

 

Ladies
and Gentlemen:

 

The purpose of this letter agreement (this “Confirmation”)
is to confirm the terms and conditions of the Transaction entered into between
J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National
Association, London Branch (the “Seller”), and
Covance Inc., a Delaware corporation (the “Purchaser”),
on the Trade Date specified below (the “Transaction”).  This Confirmation constitutes a “Confirmation”
as referred to in the Agreement specified below.

 

This
Confirmation evidences a complete and binding agreement between the Seller and
the Purchaser as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a
part of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the “Agreement”) as if the Seller and
the Purchaser had executed an agreement in such form (but without any Schedule
except for the election of the laws of the State of New York as the governing
law but without regard to its choice of law provisions) on the Trade Date.  In the event of any inconsistency between
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation
relates.  The parties hereby agree that
no Transaction other than the Transaction to which this Confirmation relates
shall be governed by the Agreement.

 

ARTICLE 1

DEFINITIONS

 

Section 1.01.  Definitions. 
(a) As used in this Confirmation, the following terms shall have
the following meanings:

 

“10b-18 VWAP” means, (A) for any Trading Day described
in clause (x) of the definition of Trading Day hereunder, the
volume-weighted average price at which the Common Stock trades as reported in
the composite transactions for United States exchanges and quotation systems,
during the regular trading session for the Exchange (or, if applicable, the
Successor Exchange on which the Common Stock has been listed in accordance with
Section 7.01(c)) on such Trading Day, excluding (i) trades that do
not settle regular way, (ii) opening (regular way) reported trades in the
consolidated system on such Trading Day, (iii) trades that occur in the
last ten minutes before the scheduled close of trading on the Exchange on such
Trading Day and ten minutes before the scheduled close of the primary trading
in the market where the trade is effected, and (iv) trades on such Trading
Day that do not satisfy the requirements of Rule 10b-18(b)(3), as
determined in good faith by the Calculation Agent, or (B) for any Trading
Day that is described in clause (y) of the definition of Trading Day
hereunder, an amount determined in good faith by the Calculation Agent as 10b-18
VWAP.  The Purchaser acknowledges that
the Calculation Agent may refer to the Bloomberg Page “CVD <Equity>
AQR SEC” (or any successor thereto), in its judgment, for such Trading Day to
determine the 10b-18 VWAP.

 

“Additional Termination Event” has the meaning set forth in Section 7.01.

 

JPMorgan Chase Bank,
National Association

Organised under the laws of
the United States as a National Banking Association.

Main Office 1111 Polaris
Parkway, Columbus, Ohio 43271

Registered as a branch in
England & Wales branch No. BR000746.

Registered Branch Office
125 London Wall, London EC2Y 5AJ

Authorised and regulated by
the Financial Services Authority

 

 

“Agreement” has the meaning set forth in the second paragraph
of this Confirmation.

 

“Affected Party” has the meaning set forth in Section 14
of the Agreement.

 

“Affected Transaction” has the meaning set forth in Section 14
of the Agreement.

 

“Affiliated Purchaser” means any “affiliated purchaser” (as
such term is defined in Rule 10b-18) of the Purchaser.

 

“Alternative Termination Delivery Unit” means (i) in the
case of a Termination Event (other than following consummation of a Merger
Event or Nationalization) or Event of Default (as defined in the Agreement),
one share of Common Stock and (ii) in the case of consummation of a Merger
Event or Nationalization, a unit consisting of the number or amount of each
type of property received by a holder of one share of Common Stock in such
Merger Event or Nationalization; provided that
if such Merger Event involves a choice of consideration to be received by
holders of the Common Stock, an Alternative Termination Delivery Unit shall be
deemed to include the amount of cash received by a holder who had elected to
receive the maximum possible amount of cash as consideration for his shares.

 

“Averaging Period” means the period of consecutive Trading
Days from and including the first Trading Day following the Hedging Completion
Date to and including the Valuation Completion Date.

 

“Bankruptcy Code” has the meaning set forth in Section 9.07.

 

“Business Day” means any day on which the Exchange is open
for trading.

 

“Calculation Agent” means JPMorgan Chase Bank, National
Association.

 

“Common Stock” has the meaning set forth in Section 2.01.

 

“Communications Procedures” has the meaning set forth in
Annex A hereto.

 

“Confirmation” has the meaning set forth in the first
paragraph of this letter agreement.

 

“Contract Fee” means the amount specified as such in the
Pricing Supplement.

 

“Contract Period” means the period commencing on and including
the Trade Date and ending on and including the date all payments or deliveries
of shares of Common Stock pursuant to Article 3 or Section 7.03 have
been made.

 

“Default Notice Day” has the meaning set forth in Section 7.02(a).

 

“De-Listing” has the meaning set forth in Section 7.01(c).

 

“Discount” means the amount specified as such in the Pricing
Supplement.

 

“Early Termination Date” has the meaning set forth in
Section 14 of the Agreement.

 

“Event of Default” has the meaning set forth in Section 14
of the Agreement.

 

“Exchange” means the New York Stock Exchange.

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

“Expiration Date” means the 147th Trading Day
following the Hedging Completion Date.

 

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“Extraordinary Cash Dividend” means the per share cash
dividend or distribution, or a portion thereof, declared by the Purchaser on
shares of Common Stock that is classified by the board of directors of the
Purchaser as an “extraordinary” dividend.

 

“Hedging Completion Date” means the Trading Day on which the
Seller completes the establishment of its initial hedge position with respect
to this Transaction.

 

“Hedging Price” means the volume weighted average of the per
share prices at which the Seller (or an affiliate of the Seller) purchases
shares of Common Stock during the Hedging Period to establish Seller’s initial
hedge position with respect to this Transaction.

 

“Hedging Period” has the meaning set forth in Section 2.04(a).

 

“Hedging Threshold Price” means the price per share equal to
the quotient of (A) the Purchase Price divided by (B) the
product of the percentage contained in the definition of the Upside Threshold
and the Initial Number of Shares.

 

“Indemnified Person” has the meaning set forth in Section 9.02.

 

“Indemnifying Party” has the meaning set forth in Section 9.02.

 

“Initial Number of Shares” means the number of shares of
Common Stock specified as such in the Pricing Supplement.

 

“Initial Settlement Date” means the first Business Day
immediately following the Trade Date.

 

“Merger Event” has the meaning set forth in Section 7.01(d).

 

“Minimum Delivery Number” means the number of shares of
Common Stock, rounded down to the nearest integer, equal to (A) the
Purchase Price divided by (B) the Upside
Threshold.

 

“Nationalization” has the meaning set forth in Section 7.01(e).

 

“Obligations” has the meaning set forth in Section 9.02.

 

“Pricing Supplement” means the Pricing Supplement attached
hereto as Annex B.

 

“Purchase Price” has the meaning set forth in Section 2.01.

 

“Purchaser” has the meaning set forth in the first paragraph
of this Confirmation.

 

“Purchaser Share Cap” means, for any date, the lesser of (x) (i) 11,400,000
shares of Common Stock, minus (ii) the
net number of shares of Common Stock delivered by the Purchaser to the Seller
in respect of this Transaction on or prior to such date, plus (iii) the
net number of shares of Common Stock delivered by the Seller to the Purchaser
in respect of this Transaction on or prior to such date, subject to
proportionate adjustments in the event of a stock split, recombination or other
event within the Purchaser’s control that has a dilutive or concentrative
effect on the theoretical value of the Common Stock and (y) 19.9% of the number
of shares of Common Stock outstanding as of the Trade Date.

 

“Regulation M” means Regulation M under the Exchange Act.

 

“Rule 10b-18” means Rule 10b-18 promulgated under
the Exchange Act (or any successor rule thereto).

 

“SEC” means the Securities and Exchange Commission.

 

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“Securities Act” means the Securities Act of 1933, as
amended.

 

“Seller” has the meaning set forth in the first paragraph
hereto.

 

“Seller Share Cap” means, for any date, (i) 32,500,000
shares of Common Stock minus (ii) the
number of shares of Common Stock delivered by the Seller to the Purchaser in
respect of this Transaction on or prior to such date, subject to appropriate
adjustments pursuant to Section 8.02(x).

 

“Seller Termination Share Purchase Period” has the meaning
set forth in Section 7.03.

 

“Settlement Number” means the number of shares of Common
Stock equal to (i) the Valuation Number minus
(ii) the Minimum Delivery Number.

 

“Share De-listing Event” has the meaning set forth in Section 7.01(c).

 

“Successor Exchange” has the meaning set forth in
Section 7.01(c).

 

“Termination Amount” has the meaning set forth in Section 7.02(a).

 

“Termination Event” has the meaning set forth in Section 14
of the Agreement.

 

“Termination Price” means the value of an Alternative
Termination Delivery Unit to the Seller, as determined by the Calculation
Agent.

 

“Trade Date” has the meaning set forth in Section 2.01.

 

“Trading Day” means (x) any day (i) other than a
Saturday, a Sunday or a day on which the Exchange is not open for business, (ii) during
which trading of any securities of the Purchaser on any national securities
exchange has not been suspended, (iii) during which there has not been, in
the Seller’s judgment, a material limitation in the trading of Common Stock or
any options contract or futures contract related to the Common Stock, and (iv) during
which there has been no suspension pursuant to Section 4.02 of this
Confirmation, or (y) any day that, notwithstanding the occurrence of events
contemplated in clauses (ii), (iii) and (iv) of this definition, the
Seller determines to be a Trading Day.

 

“Transaction” has the meaning set forth in the first
paragraph of this Confirmation.

 

“Upside Threshold” has the meaning specified as such in the
Pricing Supplement.

 

“Valuation Completion Date” has the meaning specified as such
in the Pricing Supplement.

 

“Valuation Number” means the number of shares of Common
Stock, rounded down to the nearest integer, equal to the Purchase Price divided by the Valuation Price; provided,
however, that if such number of shares of Common Stock is less than
the Minimum Delivery Number, the Valuation Number shall be equal to the Minimum
Delivery Number.

 

“Valuation Price” means the average of the 10b-18 VWAPs for all
Trading Days in the Averaging Period minus the
Discount.

 

ARTICLE 2

PURCHASE OF THE STOCK

 

Section 2.01.  Purchase of the Stock. Subject to the
terms and conditions of this Confirmation, the Purchaser agrees to purchase
from the Seller, and the Seller agrees to sell to the Purchaser, on November 8,
2010 or on such other Business Day as the Purchaser and the Seller shall
otherwise agree (the “Trade Date”), a

 

4

 

number
of shares of the Purchaser’s common stock, par value $0.01 per share (“Common Stock”), for a purchase price equal to
$250,000,000.00 (the “Purchase Price”).  The number of shares of Common Stock
purchased by the Purchaser hereunder shall be determined in accordance with the
terms of this Confirmation: provided that
if the Seller is unable to borrow or otherwise acquire a number of shares of
Common Stock equal to the Initial Number of Shares for delivery to the
Purchaser on the Initial Settlement Date, the Initial Number of Shares shall be
reduced to such number of shares of Common Stock as the Seller is able to
borrow or otherwise acquire and any amounts payable by the Purchaser pursuant
to this Section 2.02 shall be reduced correspondingly.

 

Section 2.02.  Initial Delivery and
Payments.  On the Initial
Settlement Date, the Seller shall deliver the Initial Number of Shares to the
Purchaser, upon payment by the Purchaser of (i) the Purchase Price to the
Seller and (ii) the Contract Fee to J.P. Morgan Securities LLC. Delivery
and payment pursuant to this Section 2.02 shall be effected in accordance
with the Seller’s customary procedures.

 

Section 2.03.  Conditions to Seller’s Obligations.  The Seller’s obligation to
deliver the Initial Number of Shares to the Purchaser on the Initial Settlement
Date is subject to the condition that the representations and warranties made
by the Purchaser in the Agreement shall be true and correct as of the date
hereof and the Initial Settlement Date.

 

Section 2.04.  Hedging Period.  (a) On each Trading Day beginning on the
first Trading Day immediately following the Trade Date and ending on the
Hedging Completion Date, an affiliate of the Seller shall effect, for the
account of the Seller, purchases of shares of Common Stock to establish Seller’s
initial position to hedge the Seller’s price and market risk in connection with
this Transaction (the period of consecutive Trading Days on which such
purchases for this Transaction are effected being collectively referred to as
the “Hedging Period” for this
Transaction).

 

(b)                       At the
conclusion of the Hedging Period, based on the amounts and prices at which an
affiliate of the Seller effects purchases of shares of Common Stock during the
Hedging Period to establish Seller’s initial hedge position in connection with
this Transaction, the Calculation Agent shall determine the Hedging Price, the
Upside Threshold and the Minimum Delivery Number for this Transaction; provided that if, at any time during the Hedging Period, the
weighted average price at which the Seller, or an affiliate of the Seller, has
until such time purchased shares of Common Stock in connection with
establishing its initial hedge position with respect to this Transaction equals
to or exceeds the Hedging Threshold Price, the Seller shall have the right to
terminate the Hedging Period as of such time, whereupon (i) the
Calculation Agent shall propose commercially reasonable adjustments to the
Upside Threshold and, solely for the purposes of calculating the Settlement
Number pursuant to Article 3 hereof, the Purchase Price for this
Transaction (such adjustments being made to preserve the fair value of this
Transaction to the Seller as determined by the Calculation Agent in good faith
and in a commercially reasonable manner and ensure that the Seller’s, or its
affiliate’s, initial theoretical delta for this Transaction is equal to the
number of shares of Common Stock purchased by the Seller or an affiliate of the
Seller during the Hedging Period at the time of such termination) and (ii) the
Purchaser  may elect to either accept
such adjustments or treat such termination of the Hedging Period as an
Additional Termination Event in respect of which the Purchaser is the sole
Affected Party and this Transaction is the sole Affected Transaction and with
the consequences specified in Section 7.02 and Section 7.03.

 

(c)                        On the first
Business Day following the Hedging Completion Date, in addition to satisfying
its obligations under Section 3.01(a), the Seller shall deliver to the
Purchaser a hedging completion notice, substantially in the form of Exhibit A
attached hereto, setting forth the Hedging Price, the Upside Threshold, the
Minimum Delivery Number and the first day of the Averaging Period for this
Transaction.

 

ARTICLE 3

SUBSEQUENT SHARE DELIVERIES

 

Section 3.01.  Subsequent Delivery of Shares.  (a)   On the first
business day immediately following the Hedging Completion Date, the Seller
shall deliver to the Purchaser the number of shares 

 

5

 

of
Common Stock equal to the excess, if any, of the Minimum Delivery Number over
the Initial Number of Shares.

 

(b)                       On the third
Business Day immediately following the Valuation Completion Date, the Seller
shall deliver to the Purchaser the Settlement Number, if any.

 

(c)                        Delivery
pursuant to this Article 3 shall be effected in accordance with the Seller’s
customary procedures.

 

ARTICLE 4

MARKET TRANSACTIONS

 

Section 4.01.  Transactions by the Seller.  (a) The parties agree and acknowledge
that:

 

(i)                           During the
Hedging Period and any Seller Termination Share Purchase Period, the Seller (or
its agent or affiliate) may effect transactions in shares of Common Stock in
connection with this Confirmation.  The
timing of such transactions by the Seller, the price paid or received per share
of Common Stock pursuant to such transactions and the manner in which such
transactions are made, including without limitation whether such transactions
are made on any securities exchange or privately, shall be within the sole
judgment of the Seller; provided that
the Seller shall use good faith efforts to make all purchases of Common Stock
in a manner that would comply with the limitations set forth in clauses (b)(2),
(b)(3), (b)(4) and (c) of Rule 10b-18 as if such rule were
applicable to such purchases.

 

(ii)                        During the
Averaging Period, the Seller (or its agent or affiliate) may effect
transactions in shares of Common Stock in connection with this
Confirmation.  The timing of such
transactions by the Seller, the price paid or received per share of Common
Stock pursuant to such transactions and the manner in which such transactions
are made, including without limitation whether such transactions are made on
any securities exchange or privately, shall be within the sole judgment of the
Seller; provided that the Seller
shall use good faith efforts to make all purchases of Common Stock (other than
purchases made as part of its dynamic adjustment of its hedge of the put ,call
and timing options embedded in this Transaction) in a manner that would comply
with the limitations set forth in clauses (b)(2), (b)(3), (b)(4) and (c) of
Rule 10b-18 as if such rule were applicable to such purchases.

 

(iii)                     The Purchaser shall, at
least one day prior to the first day of the Hedging Period or the Seller
Termination Share Purchase Period, notify the Seller of the total number of
shares of Common Stock purchased in Rule 10b-18 purchases of blocks
pursuant to the once-a-week block exception set forth in Rule 10b-18(b)(4) by
or for the Purchaser or any of its Affiliated Purchasers during each of the
four calendar weeks preceding such day and during the calendar week in which
such day occurs (“Rule 10b-18 purchase”
and “blocks” each being used as defined in Rule 10b-18),
which notice shall be substantially in the form set forth as Exhibit B
hereto.

 

(b)                       The Purchaser
acknowledges and agrees that (i) all transactions effected pursuant to Section 4.01
hereunder shall be made in the Seller’s sole judgment and for the Seller’s own
account and (ii) the Purchaser does not have, and shall not attempt to
exercise, any influence over how, when or whether to effect such transactions,
including, without limitation, the price paid or received per share of Common
Stock pursuant to such transactions whether such transactions are made on any
securities exchange or privately.  It is
the intent of the Seller and the Purchaser that this Transaction comply with
the requirements of Rule 10b5-1(c) of the Exchange Act and that this
Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c)(1)(i)(B) and
the Seller shall take no action that results in the Transaction not so
complying with such requirements.

 

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(c)                        Notwithstanding
anything to the contrary in this Confirmation, the Purchaser acknowledges and
agrees that, on any day, the Seller shall not be obligated to deliver or
receive any shares of Common Stock to or from the Purchaser and the Purchaser
shall not be entitled to receive any shares of Common Stock from the Seller on
such day, to the extent (but only to the extent) that after such transactions
the Seller’s ultimate parent entity would directly or indirectly beneficially
own (as such term is defined for purposes of Section 13(d) of the
Exchange Act) at any time on such day in excess of 8.0% of the outstanding
shares of Common Stock.  Any purported
receipt or delivery of shares of Common Stock shall be void and have no effect
to the extent (but only to the extent) that after any receipt or delivery of
such shares of Common Stock the Seller’s ultimate parent entity would directly
or indirectly so beneficially own in excess of 8.0% of the outstanding shares
of Common Stock.  If, on any day, any
delivery or receipt of shares of Common Stock by the Seller is not effected
(any such day, a “Scheduled Delivery Date”),
in whole or in part, as a result of this provision, the Seller’s and Purchaser’s
respective obligations to make or accept such receipt or delivery shall not be
extinguished and such receipt or delivery shall be effected over time as
promptly as the Seller determines (but in no event later than the 30th day following the related Scheduled Delivery
Date), in the reasonable determination of the Seller, that after such receipt
or delivery its ultimate parent entity would not directly or indirectly
beneficially own in excess of 8.0% of the outstanding shares of Common Stock.

 

Section 4.02.  Adjustment
of Transaction for Securities Laws.  (A)  Notwithstanding anything to the
contrary in Section 4.01(a), if, based on the advice of counsel, Seller
reasonably determines that, on any Trading Day, trading activity that is
reasonably necessary in order to manage its economic hedge in respect of the
Transaction would not be advisable in respect of applicable securities laws,
then Seller may extend the Expiration Date, modify the Averaging Period, or
otherwise adjust the terms of the Transaction in its good faith reasonable
discretion to ensure Seller’s compliance with such laws; provided
that such adjustments shall preserve the fair value of the Transaction to the
Seller, as determined by the Calculation Agent in good faith and in a
commercially reasonable manner.  The
Seller shall notify the Purchaser of the exercise of the Seller’s rights
pursuant to this Section 4.02(a) upon such exercise.

 

(b)                       The Purchaser
agrees that, during the Contract Period, neither the Purchaser nor any of its
affiliates or agents shall make any distribution (as defined in Regulation M)
of Common Stock, or any security for which the Common Stock is a reference
security (as defined in Regulation M), other than a distribution meeting the
requirements of an exception set forth in Rules 102(b)(7) or 102(c) of
Regulation M, or take any other action that would, in the view of the Seller,
preclude purchases by the Seller of the Common Stock or cause the Seller to
violate any applicable law, rule or regulation with respect to such
purchases.

 

Section 4.03.  Purchases of Common Stock by the Purchaser.  Without
the prior written consent of the Seller (which consent shall not be unreasonably
withheld or delayed), the
Purchaser shall not, and shall cause its affiliates and affiliated purchasers
(each as defined in Rule 10b-18) not to, directly or indirectly
(including, without limitation, by means of a derivative instrument) purchase,
offer to purchase, place any bid or limit order that would effect a purchase
of, or commence any tender offer relating to, any shares of Common Stock (or
equivalent interest, including a unit of beneficial interest in a trust or
limited partnership or a depository share) or any security convertible into or
exchangeable for shares of Common Stock during the Contract Period; provided that this Section 4.03 shall
not apply to any of the following: (A) purchases of shares of Common Stock
pursuant to exercises of stock options granted to former or current employees,
officers, directors, or other affiliates of Purchaser, including the
withholding and/or purchase of shares of Common Stock from holders of such
options to satisfy payment of the option exercise price and/or satisfy tax
withholding requirements in connection with the exercise of such options; (B) purchases  of 
shares of Common Stock from 
holders  of  performance 
shares  or  units or restricted  shares 
or  units  to 
satisfy  tax withholding requirements
in connection with vesting; (C) the conversion or exchange by holders of
any convertible  or  exchangeable 
securities  of  the 
Purchaser  previously issued;  (D)  purchases  of shares of Common Stock effected by or for
a plan by an agent  independent  of  the
Purchaser  that  satisfy the requirements of Rule 10b-18(a)(13)(ii);
or (E) purchases executed by the Seller or an affiliate of the Seller.

 

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ARTICLE 5

REPRESENTATIONS, WARRANTIES AND AGREEMENTS

 

Section 5.01.  Repeated Representations, Warranties and
Agreements of the Purchaser.  The Purchaser represents and warrants to, and
agrees with, the Seller, on the date hereof and on any date on which the
Purchaser elects to receive or make any delivery or payment pursuant to this
Confirmation, that:

 

(a)                        Disclosure;
Compliance with Laws.  The reports
and other documents filed by the Purchaser with the SEC pursuant to the
Exchange Act when considered as a whole (with the more recent such reports and
documents deemed to amend inconsistent statements contained in any earlier such
reports and documents), do not contain any untrue statement of a material fact
or any omission of a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances in which they
were made, not misleading.  The Purchaser
is not in possession of any material nonpublic information regarding the
Purchaser or the Common Stock.

 

(b)                       Rule 10b5-1.  The Purchaser acknowledges that (i) the
Purchaser does not have, and shall not attempt to exercise, any influence over
how, when or whether to effect purchases of Common Stock by the Seller (or its
agent or affiliate) in connection with this Confirmation and (ii) the
Purchaser is entering into the Agreement and this Confirmation in good faith
and not as part of a plan or scheme to evade compliance with federal securities
laws including, without limitation, Rule 10b-5 promulgated under the
Exchange Act.  The Purchaser also
acknowledges and agrees that any amendment, modification, waiver or termination
of this Confirmation must be effected in accordance with the requirements for
the amendment or termination of a “plan” as defined in Rule 10b5-1(c) under
the Exchange Act.  Without limiting the generality
of the foregoing, any such amendment, modification, waiver or termination shall
be made in good faith and not as part of a plan or scheme to evade the
prohibitions of Rule 10b-5 under the Exchange Act, and no amendment,
modification or waiver shall be made at any time at which the Purchaser or any
officer or director of the Purchaser is aware of any material nonpublic
information regarding the Purchaser or the Common Stock.

 

(c)                        No
Manipulation.  The
Purchaser is not entering into this Confirmation to create actual or apparent
trading activity in the Common Stock (or any security convertible into or
exchangeable for Common Stock) or to manipulate the price of the Common Stock
(or any security convertible into or exchangeable for Common Stock).

 

(d)                       Regulation
M.  The Purchaser is not engaged
in a distribution, as such term is used in Regulation M, that would preclude
purchases by the Purchaser or the Seller of the Common Stock or cause the
Seller to violate any law, rule or regulation with respect to such
purchases.

 

(e)                        Board
Authorization.  The
Purchaser is entering into this Transaction in connection with its share
repurchase program, which was approved by its board of directors and publicly
disclosed, solely for the purposes stated in such board resolution and public
disclosure.  There is no internal policy
of the Purchaser, whether written or oral, that would prohibit the Purchaser
from entering into any aspect of this Transaction, including, but not limited
to, the purchases of shares of Common Stock to be made pursuant hereto.

 

(f)                          Due
Authorization and Good Standing.  The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  This Confirmation has been
duly authorized, executed and delivered by the Purchaser and (assuming due
authorization, execution and delivery thereof by the Seller) constitutes a
valid and legally binding obligation of the Purchaser. The Purchaser has all
corporate power to enter into this Confirmation and to consummate the
transactions contemplated hereby and to purchase the Common Stock in accordance
with the terms hereof.

 

(g)                       Certain
Transactions.  There has
not been any public announcement (as defined in Rule 165(f) under the
Securities Act) of any merger, acquisition, or similar transaction involving a
recapitalization relating to the Purchaser that would fall within the scope of Rule 10b-18(a)(13)(iv).

 

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Section 5.02.  Initial Representations,
Warranties and Agreements of the Purchaser.  The Purchaser represents and warrants to, and
agrees with the Seller, as of the date hereof, that:

 

(a)                        Solvency.  The assets of the Purchaser at their fair
valuation exceed the liabilities of the Purchaser, including contingent
liabilities; the capital of the Purchaser is adequate to conduct the business
of the Purchaser and the Purchaser has the ability to pay its debts and
obligations as such debts mature and does not intend to, or does not believe
that it will, incur debt beyond its ability to pay as such debts mature.

 

(b)                       Required
Filings.  The Purchaser has made, and
will use its best efforts to make, all filings required to be made by it with
the SEC, any securities exchange or any other regulatory body with respect to
the Transaction contemplated hereby.

 

(c)                        No
Conflict.  The execution
and delivery by the Purchaser of, and the performance by the Purchaser of its
obligations under, this Confirmation and the consummation of the transactions
herein contemplated do not conflict with or violate (i) any provision of
the certificate of incorporation, by-laws or other constitutive documents of
the Purchaser, (ii) any statute or order, rule, regulation or judgment of
any court or governmental agency or body having jurisdiction over the Purchaser
or any of its subsidiaries or any of their respective assets or (iii) any
contractual restriction binding on or affecting the Purchaser or any of its
subsidiaries or any of its assets.

 

(d)                       Consents.  All governmental and other consents that are
required to have been obtained by the Purchaser with respect to performance,
execution and delivery of this Confirmation have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with.

 

(e)                        Investment
Company Act.  The
Purchaser is not and, after giving effect to the transactions contemplated in
this Confirmation, will not be required to register as an “investment company”
as such term is defined in the Investment Company Act of 1940, as amended.

 

(f)                          Commodity
Exchange Act.  The
Purchaser is an “eligible contract participant”, as such term is defined in Section 1a(12)
of the Commodity Exchange Act, as amended.

 

Section 5.03.  Additional Representations, Warranties and
Agreements.  The Purchaser
and the Seller represent and warrant to, and agree with, each other that:

 

(a)                        Agency.  Each
party agrees and acknowledges that (i) J.P. Morgan Securities LLC, an
affiliate of the Seller (“JPMS”), has
acted solely as agent and not as principal with respect to this Transaction and
(ii) JPMS has no obligation or liability, by way of guaranty, endorsement
or otherwise, in any manner in respect of this Transaction (including, if
applicable, in respect of the settlement thereof).  Each party agrees it will look solely to the
other party (or any guarantor in respect thereof) for performance of such other
party’s obligations under this Transaction. JPMS is authorized to act as agent
for the Seller.

 

(b)                       Non-Reliance.  Each party has entered into this Transaction
solely in reliance on its own judgment. 
Neither party has any fiduciary obligation to the other party relating
to this Transaction.  In addition,
neither party has held itself out as advising, or has held out any of its
employees or agents as having the authority to advise, the other party as to
whether or not the other party should enter into this Transaction, any
subsequent actions relating to this Transaction or any other matters relating
to this Transaction.  Neither party shall
have any responsibility or liability whatsoever in respect of any advice of
this nature given, or views expressed, by it or any such persons to the other
party relating to this Transaction, whether or not such advice is given or such
views are expressed at the request of the other party.  The Purchaser has conducted its own analysis
of the legal, accounting, tax and other implications of this Transaction and
consulted such advisors, accountants and counsel as it has deemed necessary.

 

Section 5.04.  Representations and Warranties of the Seller.  The Seller represents and warrants to the
Purchaser that:

 

9

 

(a)                        Due
Authorization.  This
Confirmation has been duly authorized, executed and delivered by the Seller and
(assuming due authorization, execution and delivery thereof by the Purchaser)
constitutes a valid and legally binding obligation of the Seller. The Seller
has all corporate power to enter into this Confirmation and to consummate the
transactions contemplated hereby and to deliver the Common Stock in accordance
with the terms hereof.

 

(b)                       Right
to Transfer.  The Seller
will, at the Initial Settlement Date, have the free and unqualified right to
transfer the Number of Shares of Common Stock to be sold by the Seller pursuant
to Section 2.01 hereof, free and clear of any security interest, mortgage,
pledge, lien, charge, claim, equity or encumbrance of any kind.

 

(c)                        Commodity
Exchange Act.  The Seller
is an “eligible contract participant”, as such term is defined in Section 1a(12)
of the Commodity Exchange Act, as amended.

 

ARTICLE 6

ADDITIONAL COVENANTS

 

Section 6.01.  Purchaser’s Further Assurances.  The Purchaser hereby agrees with the Seller
that the Purchaser shall cooperate with the Seller, and execute and deliver, or
use its best efforts to cause to be executed and delivered, all such other
instruments, and to obtain all consents, approvals or authorizations of any
person, and take all such other actions as the Seller may reasonably request
from time to time, consistent with the terms of this Confirmation, in order to
effectuate the purposes of this Confirmation and the Transaction contemplated
hereby.

 

Section 6.02  Purchaser’s Hedging Transactions.  The Purchaser hereby agrees with the Seller
that the Purchaser shall not, during the Contract Period, enter into or alter
any corresponding or hedging transaction or position with respect to the Common
Stock (including, without limitation, with respect to any securities
convertible or exchangeable into the Common Stock) and agrees not to alter or
deviate from the terms of this Confirmation.

 

Section 6.03.  No Communications.  The Purchaser hereby agrees with
the Seller that the Purchaser shall not, directly or indirectly, communicate
any information relating to the Common Stock or this Transaction (including any
notices required by Section 6.05) to any employee of the Seller or J.P.
Morgan Securities LLC, other than as set forth in the Communications Procedures
attached as Annex A hereto.

 

Section 6.04.  Maximum Deliverable Number of Shares of
Common Stock.  Notwithstanding
any other provision of this Confirmation, the Seller shall not be required to
deliver Settlement Shares, or shares of Common Stock or other securities
comprising the aggregate Alternative Termination Delivery Units, in excess of
the Seller Share Cap.

 

Section 6.05.  Notice of Certain
Transactions.  If at any time
during the Contract Period, the Purchaser makes, or expects to be made, or has
made, any public announcement (as defined in Rule 165(f) under the
Securities Act) of any merger, acquisition, or similar transaction involving a
recapitalization relating to the Purchaser (other than any such transaction in
which the consideration consists solely of cash and there is no valuation
period, or as to which the completion of such transaction or the completion of
the vote by target shareholders has occurred), then the Purchaser shall (i) notify
the Seller prior to the opening of trading in the Common Stock on any day on
which the Purchaser makes, or expects to be made, or has made any such public
announcement, (ii) notify the Seller promptly following any such
announcement (or, if later, prior to the opening of trading in the Common Stock
on the first day of any Seller Termination Share Payment Period) that such
announcement has been made and (iii) promptly deliver to the Seller
following the making of any such announcement (or, if later, prior to the
opening of trading in the Common Stock on the first day of any Seller
Termination Share Payment Period) a certificate indicating (A) the
Purchaser’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18)
during the three full calendar months preceding the date of such announcement
and (B) the Purchaser’s block purchases (as defined in Rule 10b-18)
effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three
full calendar months preceding the date of such announcement.  

 

10

 

In
addition, the Purchaser shall promptly notify the Seller of the earlier to
occur of the completion of such transaction and the completion of the vote by
target shareholders.  Accordingly, the
Purchaser acknowledges that its actions in relation to any such announcement or
transaction must comply with the standards set forth in Section 6.03.

 

Section 6.06.  No
Dividends.  The
Purchaser hereby agrees with the Seller that the Purchaser shall not declare
any cash dividend that is not an Extraordinary Cash Dividend with an
ex-dividend date scheduled to occur during the Contract Period.

 

Section 6.07.  Delivery or Receipt of Cash. For the
avoidance of doubt, other than payment of the Purchase Price by the Purchaser,
nothing in this Confirmation shall be interpreted as requiring the Purchaser to
cash settle this Transaction, except in circumstances where cash settlement is
within the Purchaser’s control (including, without limitation, where the
Purchaser fails timely to elect to deliver or receive Alternative Termination
Delivery Units in accordance with Section 7.02) or in those circumstances
in which holders of the Common Stock would also receive cash.

 

ARTICLE 7

TERMINATION

 

Section 7.01.  Additional Termination Events.  (a) An Additional Termination Event
shall occur in respect of which the Purchaser is the sole Affected Party and
this Transaction is the sole Affected Transaction if, on any day, the Seller
reasonably determines, that after using commercially reasonable efforts, it is
unable to establish, re-establish or maintain any hedging transactions
reasonably necessary in the normal course of such party’s business of hedging
the price and market risk of entering into and performing under this
Transaction, due to market illiquidity, illegality, lack of availability of
hedging transaction market participants.

 

(b)                       An Additional
Termination Event shall occur in respect of which the Purchaser is the sole
Affected Party and this Transaction is the sole Affected Transaction if (i) a
Share De-listing Event occurs; (ii) a Merger Event occurs; (iii) a
Nationalization occurs, (iv) the 10b-18 VWAP on any Trading Day following
the Trade Date shall have been less than $21.75 (subject to adjustment under Section 8.02)
or (v) an event described in paragraph III of Annex A occurs.

 

(c)                        A “Share De-listing Event” means that at any time during the
Contract Period, the Common Stock ceases to be listed, traded or publicly
quoted on the Exchange for any reason (other than a Merger Event, a “De-Listing”) and is not immediately re-listed, traded or
quoted as of the date of such de-listing, on another U.S. national securities
exchange or a U.S. automated interdealer quotation system (a “Successor Exchange”), provided that
it shall not constitute an Additional Termination Event if the Common Stock is
immediately re-listed on a Successor Exchange upon its De-Listing from the
Exchange, and the Successor Exchange shall be deemed to be the Exchange for all
purposes.  In addition, in such event, the
Seller shall make any commercially reasonable adjustments it deems necessary to
the terms of the Transaction.

 

(d)                       A “Merger Event” means the public announcement, including any
public announcement as defined in Rule 165(f) of the Securities Act
(by the Purchaser or otherwise) at any time during the Contract Period of any (i) planned
recapitalization, reclassification or change of the Common Stock that will, if
consummated, result in a transfer of more than 20% of the outstanding shares of
Common Stock, (ii) planned consolidation, amalgamation, merger or similar
transaction of the Purchaser with or into another entity (other than a
consolidation, amalgamation or merger in which the Purchaser will be the
continuing entity and which does not result in any such recapitalization,
reclassification or change of more than 20% of such shares outstanding), (iii) other
takeover offer for the shares of Common Stock that is aimed at resulting in a
transfer of more than 20% of such shares of Common Stock (other than such
shares owned or controlled by the offeror) or (iv) irrevocable commitment
to any of the foregoing.

 

11

 

(e)                        A “Nationalization” means that all or substantially all of the
outstanding shares of Common Stock or assets of the Purchaser are nationalized,
expropriated or are otherwise required to be transferred to any governmental
agency, authority or entity.

 

Section 7.02.  Consequences of Additional Termination
Events. (a) In the event of
the occurrence or effective designation of an Early Termination Date under the
Agreement, cash settlement, as set forth in Section 7.02(b), shall apply unless (i) the Purchaser elects (which election shall
be binding) in lieu of payment of the amount payable in respect of this
Transaction pursuant to Section 6(d)(ii) of the Agreement (the “Termination Amount”), to deliver or to receive Alternative
Termination Delivery Units pursuant to Section 7.03, and (ii) notifies
the Seller of such election by delivery of written notice to the Seller on the
Business Day immediately following the Purchaser’s receipt of a notice (as
required by Section 6(d) of the Agreement following the designation
of an Early Termination Date in respect of this Transaction) setting forth the
amounts payable by the Seller or the Purchaser with respect to such Early
Termination Date (the date of such delivery, the “Default
Notice Day”) in which event (x) if the Termination Amount is
owed to the Purchaser, the Seller shall be obligated to deliver to the Purchaser,
or (y) if the Termination Amount is owed to the Seller, the Purchaser
shall be obligated to deliver to the Seller, the Alternative Termination
Delivery Units pursuant to Section 7.03; provided that
the Purchaser’s election to deliver or receive the Alternative Termination
Delivery Units pursuant to Section 7.03 shall not be valid and cash
settlement shall apply if (i) the representations and warranties made by
the Purchaser to the Seller in Section 5.01 are not true and correct as of
the date the Purchaser makes such election, as if made on such date or (ii) in
the event that the Termination Amount is payable by the Purchaser to the
Seller, (A) the Purchaser has taken any action that would make unavailable
(x) the exemption set forth in Section 4(2) of the Securities
Act, for the sale of any Alternative Termination Delivery Units by the
Purchaser to the Seller or (y) an exemption from the registration
requirements of the Securities Act reasonably acceptable to the Seller for
resales of Alternative Termination Delivery Units by the Seller, (B) such
Early Termination Date is in respect of an event which is within Purchaser’s
control, or (C) the Purchaser fails to execute a private placement
agreement providing for such resale, which agreement shall be in form and
substance reasonably satisfactory to the Seller, or otherwise fails to comply
with any commercially reasonable requirements imposed by the Seller in respect
of the private placement of the Alternative Termination Delivery Units.  For the avoidance of doubt, the Purchaser
shall enter into an agreement (a “Private
Placement Agreement”) with the Seller (or any affiliate of the
Seller designated by the Seller) in connection with the private placement of
such Alternative Termination Delivery Units by the Purchaser to the Seller (or
any such affiliate) and the private resale of such Alternative Termination
Delivery Units by the Seller (or any such affiliate), substantially similar to
private placement purchase agreements customary for private placements of equity
offerings of its size, in form and substance commercially reasonably
satisfactory to the Seller.

 

(b)                       If cash
settlement applies in respect of an Early Termination Date, Section 6 of
the Agreement shall apply.

 

Section 7.03.  Alternative Termination Settlement.  Subject to Section 7.02(a), unless cash
settlement is applicable pursuant to Section 7.02(b), (i) the Seller
shall, beginning on the first Trading Day following the Default Notice Day and
ending when the Seller shall have satisfied its obligations under this clause
(the “Seller Termination Share Purchase Period”),
purchase (subject to the provisions of Section 4.01 and Section 4.02
hereof) a number of Alternative Termination Delivery Units equal to (A) the
Termination Amount divided by (B) the
Termination Price; and (ii) the Seller shall deliver such Alternative
Termination Delivery Units to the Purchaser on the settlement dates relating to
such purchases; provided that if the Termination
Amount is owed to the Seller, clauses (i) and (ii) of this Section 7.03
shall not apply and, in lieu thereof, the Purchaser shall, as soon as directed
by the Seller after the Default Notice Day, deliver to the Seller a number of
Alternative Termination Delivery Units equal to the quotient of (A) the
Termination Amount divided by (B) the Termination Price.  Notwithstanding the foregoing, the Purchaser
shall not be required to deliver shares of Common Stock or other securities
comprising the aggregate Alternative Termination Delivery Units in excess of
the Purchaser Share Cap, in each case except to the extent that the Purchaser
has available at such time authorized but unissued shares of such Common Stock
or other securities not expressly reserved for any other uses (including,
without limitation, shares of Common Stock reserved for issuance upon the
exercise of options or convertible debt); provided, however,
that such exception shall not be applicable to the limitation set forth in
clause (y) of the definition of Purchaser Share Cap.  The Purchaser shall not permit the sum of (i) the
Purchaser Share Cap plus (ii) the aggregate number of shares expressly
reserved for any such other uses, in each case whether expressed as 

 

12

 

caps
or as numbers of shares reserved or otherwise, to exceed at any time the number
of authorized but unissued shares of Common Stock.

 

Section 7.04.  Notice of Default.  If an Event of Default
occurs in respect of the Purchaser, the Purchaser will, promptly upon becoming
aware of it, notify the Seller specifying the nature of such Event of Default.

 

ARTICLE 8

ADJUSTMENTS

 

Section 8.01.  Extraordinary Cash Dividends.  If the Purchaser declares any Extraordinary
Cash Dividend that has a record date during the Contract Period, then prior to
or on the date on which such Extraordinary Cash Dividend is paid by the
Purchaser to holders of record, the Purchaser shall pay to the Seller an amount
in cash equal to the product of (i) the amount of such Extraordinary Cash
Dividend and (ii) the theoretical short delta number of shares as of the
opening of business on the related ex-dividend date, as determined by the
Calculation Agent, required for the Seller to hedge its exposure to the
Transaction.

 

Section 8.02.  Other Dilution
Adjustments.  If (x) any
corporate event occurs having a dilutive or concentrative effect on the
theoretical value of the Common Stock (other than an Extraordinary Cash
Dividend or an Ordinary Cash Dividend but including, without limitation, a
spin-off, a stock split, stock or other dividend or distribution,
reorganization, rights offering or recapitalization), or (y) as a result
of the definition of Trading Day (whether because of a suspension of
transactions pursuant to Section 4.02 or otherwise), any day that would
otherwise be a Trading Day during the Contract Period is not a Trading Day or
on such Trading Day, pursuant to Section 4.02, the Seller effects
transactions with respect to shares of Common Stock at a volume lower than
originally anticipated with respect to this Transaction or (z) as a result
of market conditions, the Seller incurs additional costs in connection with
maintaining its hedge position with respect to this Transaction resulting from
the insufficient availability of stock lenders willing and able to lend shares
of Common Stock with a borrow cost not significantly greater than the cost as
of the date hereof and otherwise on terms not materially less favorable to
Seller than those available to it as of the date hereof (in each case without
regard to any increased borrow cost or less favorable terms resulting from
changes in the creditworthiness of Seller),then in any such case, the
Calculation Agent shall make corresponding adjustments with respect to any one
or more of the Upside Threshold, the Minimum Delivery Number and any other
variable or term relevant to the terms of the Transaction, as the Calculation
Agent determines appropriate in good faith and in a commercially reasonable
manner to preserve the fair value of the Transaction to the Seller, and shall
determine the effective date of such adjustment.

 

ARTICLE 9

MISCELLANEOUS

 

Section 9.01.  Successors and Assigns.  All covenants and agreements in this
Confirmation made by or on behalf of either of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.

 

Section 9.02.  Purchaser Indemnification.  The Purchaser (the “Indemnifying Party”) agrees to indemnify and hold harmless
the Seller and its officers, directors, employees, affiliates, advisors, agents
and controlling persons (each, an “Indemnified Person”)
from and against any and all losses, claims, damages and liabilities, joint or
several (collectively, “Obligations”),
to which an Indemnified Person becomes subject arising directly out of or in
connection with this Confirmation or any claim, litigation, investigation or
proceeding relating thereto, and to reimburse, within 30 days, upon written
request, each such Indemnified Person for any reasonable and documented legal or
other expenses incurred in connection with investigating, preparation for,
providing evidence for or defending any of the foregoing, provided, however, that the Indemnifying
Party shall not have any liability to any Indemnified Person to the extent that
such Obligations (i) have resulted from the 

 

13

 

gross
negligence, breach of agreement or willful misconduct of any Indemnified Person
(and in such case, such Indemnified Person shall promptly return to the Indemnifying
Party any amounts previously expended by the Indemnifying Party hereunder) or (ii) are
trading losses incurred by the Seller as part of its purchases or sales of
shares of Common Stock pursuant to this Confirmation (unless the Purchaser has
breached any agreement, term or covenant herein).

 

Section 9.03.  Assignment and Transfer.  Notwithstanding the
Agreement, the Seller may assign any of its rights or duties hereunder to any
one or more of its affiliates (“Assignee”)
with the prior written consent of Purchaser, which shall not be unreasonably
withheld or delayed.  Notwithstanding any
other provision in this Confirmation to the contrary requiring or allowing
Seller to purchase, sell, receive or deliver any shares of Common Stock or
other securities to or from the Purchaser, Seller may designate any of its
affiliates to purchase, sell, receive or deliver such shares of Common Stock or
other securities and otherwise to perform the Seller’s obligations in respect
of this Transaction and any such designee may assume such obligations.  The Seller shall be discharged of its
obligations to the Purchaser only to the extent of any such performance.  For the avoidance of doubt, Seller hereby
acknowledges that notwithstanding any such designation hereunder, to the extent
any of Seller’s obligations in respect of this Transaction are not completed by
its designee, Seller shall be obligated to continue to perform or to cause any
other of its designees to perform in respect of such obligations.

 

Section 9.04.  Calculation Agent.  Whenever the Calculation Agent is required to
act or to exercise judgment in any way with respect to this Transaction, it
will do so in good faith and in a commercially reasonable manner.

 

Section 9.05.  Non-confidentiality.  The Seller and the Purchaser hereby
acknowledge and agree that subject to Section 6.03 each is authorized to
disclose every aspect of this Confirmation and the transactions contemplated
hereby to any and all persons, without limitation of any kind, and there are no
express or implied agreements, arrangements or understandings to the contrary.

 

Section 9.06.  Unenforceability and Invalidity.  To the extent permitted by law, the
unenforceability or invalidity of any provision or provisions of this
Confirmation shall not render any other provision or provisions herein
contained unenforceable or invalid.

 

Section 9.07.  Securities Contract.  The parties hereto agree and
acknowledge as of the date hereof that (i) the Seller is a “financial
institution” within the meaning of Section 101(22) of Title 11 of the
United States Code (the “Bankruptcy Code”)
and (ii) this Confirmation is intended to be a “securities contract,” as
such term is defined in Section 741(7) of the Bankruptcy Code,
entitled to the protection of Sections 362(b)(6) and 555 of the Bankruptcy
Code.

 

Section 9.08.  No Collateral, Netting or Setoff.  Notwithstanding any
provision of the Agreement, or any other agreement between the parties, to the
contrary, the obligations of the Purchaser hereunder are not secured by any
collateral.  Obligations under this
Transaction shall not be netted, recouped or set off (including pursuant to Section 6
of the Agreement) against any other obligations of the parties, whether arising
under the Agreement, this Confirmation, under any other agreement between the
parties hereto, by operation of law or otherwise, and no other obligations of
the parties shall be netted, recouped or set off (including pursuant to Section 6
of the Agreement) against obligations under this Transaction, whether arising
under the Agreement, this Confirmation, under any other agreement between the
parties hereto, by operation of law or otherwise, and each party hereby waives
any such right of setoff, netting or recoupment.

 

Section 9.09  Notices. 
Unless otherwise specified herein, any notice, the delivery of which is
expressly provided for in this Confirmation, may be made by telephone, to be
confirmed in writing to the address below. 
Changes to the information below must be made in writing.

 

(a)                                  If to the Purchaser:

 

Covance Inc.

210 Carnegie Center
 Princeton, New Jersey 08540

 

14

 

Attention: 
William E. Klitgaard

Title: 
Corporate Senior Vice President and Chief Financial Officer

Telephone No: 
XXX-XXX-XXXX

Facsimile No:  
XXX-XXX-XXXX

 

With a copy to:

 

Attention: 
Ross Hyams

Title: 
Associate General Counsel and Assistant Secretary

Telephone No: 
XXX-XXX-XXXX

Facsimile No:  
XXX-XXX-XXXX

 

(b)                                 If to the
Seller:

 

JPMorgan
Chase Bank, National Association

c/o
J.P. Morgan Securities LLC

4
New York Plaza, Floor 18

New
York, NY  10004-2413

Attn:  Mariusz Kwasnik

Title:  Operations Analyst

EDG
Corporate Marketing

Telephone:
XXX-XXX-XXXX

Facsimile:
XXX-XXX-XXXX

 

15

 

Please
confirm that the foregoing correctly sets forth the terms of our agreement by
executing the copy of this Confirmation enclosed for that purpose and returning
it to us.

 

	
   

  	
  Yours
  sincerely,

  
	
   

  	
   

  
	
   

  	
  J.P.
  MORGAN SECURITIES LLC, as agent for JPMorgan Chase Bank, National
  Association, London Branch

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeffrey Zajkowski

  
	
   

  	
   

  	
  Name:
  Jeffrey Zajkowski

  
	
   

  	
   

  	
  Title:
  Managing Director

  

 

Confirmed
as of the date first

above written:

 

COVANCE INC.

 

 

	
  By:

  	
  /s/
  William E. Klitgaard

  	
   

  
	
   

  	
  Name:
  William E. Klitgaard

  	
   

  
	
   

  	
  Title:
  Corporate Senior Vice President and

            Chief Financial Officer

  	
   

  

 

JPMorgan Chase Bank,
National Association

Organised under the laws of
the United States as a National Banking Association.

Main Office 1111 Polaris
Parkway, Columbus, Ohio 43271

Registered as a branch in
England & Wales branch No. BR000746.

Registered Branch Office
125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services
Authority

 

 

 

ANNEX A

 

COMMUNICATIONS PROCEDURES

 

November 8, 2010

 

I.                                         Introduction

 

Covance Inc., a Delaware corporation (“Counterparty”)
and J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National
Association, London Branch (“JPMorgan”) have
adopted these communications procedures (the “Communications
Procedures”) in connection with entering into the Confirmation (the “Confirmation”) dated as of November 8, 2010 between
JPMorgan and Counterparty relating to the sale by JPMorgan to Counterparty of
common stock, par value $0.01 per share, or security entitlements in respect
thereof (the “Common Stock”) of the
Counterparty.  These Communications
Procedures supplement, form part of, and are subject to the Confirmation.

 

II.                                     Communications
Rules

 

1.                                       From the date
hereof until the end of the Contract Period, Counterparty and its Employees and
Designees shall not engage in any Program-Related Communication with, or
disclose any Material Non-Public Information to, any EDG Trading
Personnel.  Except as set forth in the
preceding sentence, the Confirmation shall not limit Counterparty and its
Employees and Designees in their communication with Affiliates and Employees of
JPMorgan, including without limitation Employees who are EDG Permitted
Contacts.

 

III.                                 Termination

 

If,
in the sole judgment of any EDG Trading Personnel or any affiliate or Employee
of JPMorgan participating in any Communication with Counterparty or any
Employee or Designee of Counterparty, such Communication would not be permitted
by these Communications Procedures, such EDG Trading Personnel or affiliate or
Employee of JPMorgan shall immediately terminate such Communication.  In such case, or if such EDG Trading
Personnel or affiliate or Employee of JPMorgan determines following completion
of any Communication with Counterparty or any Employee or Designee of Counterparty
that such Communication was not permitted by these Communications Procedures,
such EDG Trading Personnel or such affiliate or Employee of JPMorgan shall
promptly consult with his or her supervisors and with counsel for JPMorgan
regarding such Communication.  If, in the
reasonable judgment of JPMorgan’s counsel following such consultation, there is
more than an insignificant risk that such Communication could materially
jeopardize the availability of the affirmative defenses provided in Rule 10b5-1
under the Exchange Act with respect to any ongoing or contemplated activities
of JPMorgan or its affiliates in respect of the Confirmation, it shall be an
Additional Termination Event with respect to the Confirmation.

 

IV.                                 Definitions

 

Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed to
them in the Confirmation.  As used
herein, the following words and phrases shall have the following meanings:

 

“Communication” means any contact or communication (whether
written, electronic, oral or otherwise) between Counterparty or any of its
Employees or Designees, on the one hand, and JPMorgan or any of its affiliates
or Employees, on the other hand.

 

“Designee” means a person designated, in writing or orally,
by Counterparty to communicate with JPMorgan on behalf of Counterparty.

 

A-1

 

“EDG Permitted Contact” means any of Mr. David Aidelson,
Mr. Gregory Batista, Mr. Elliot Chalom, Mr. James Rothschild, Mr. David
Seaman and Mr. Jeffrey J. Zajkowski or any of their designees; provided that JPMorgan may amend the list of EDG Permitted
Contacts by delivering a revised list of EDG Permitted Contacts to
Counterparty.

 

“EDG Trading Personnel” means Graham Orton, Michael Tatro and
any other Employee of the public side of the Equity Derivatives Group or the
Special Equities Group of J.P. Morgan Chase & Co.; provided that JPMorgan may amend the list of EDG Trading
Personnel by delivering a revised list of EDG Trading Personnel to
Counterparty; and provided further that, for the
avoidance of doubt, the persons listed as EDG Permitted Contacts are not EDG
Trading Personnel.

 

“Employee” means, with respect to any entity, any owner,
principal, officer, director, employee or other agent or representative of such
entity, and any affiliate of any of such owner, principal, officer, director,
employee, agent or representative.

 

“Material Non-Public Information” means information relating
to the Counterparty or the Common Stock that (a) has not been widely disseminated
by wire service, in one or more newspapers of general circulation, by
communication from the Counterparty to its shareholders or in a press release,
or contained in a public filing made by the Counterparty with the Securities
and Exchange Commission and (b) a reasonable investor might consider to be
of importance in making an investment decision to buy, sell or hold shares of
Common Stock.  For the avoidance of doubt
and solely by way of illustration, information should be presumed “material” if
it relates to such matters as dividend increases or decreases, earnings
estimates, changes in previously released earnings estimates, significant
expansion or curtailment of operations, a significant increase or decline of
orders, significant merger or acquisition proposals or agreements, significant
new products or discoveries, extraordinary borrowing, major litigation,
liquidity problems, extraordinary management developments, purchase or sale of
substantial assets and similar matters.

 

“Program-Related Communication” means
any Communication the subject matter of which relates to the Confirmation or
any Transaction under the Confirmation or any activities of JPMorgan (or any of
its affiliates) in respect of the Confirmation or any Transaction under the Confirmation.

 

A-2

 

 

ANNEX B

 

PRICING SUPPLEMENT

 

This
Pricing Supplement is subject to the Confirmation dated as of November 8,
2010 (the “Confirmation”) between
J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National
Association, London Branch (the “Seller”), and
Covance Inc., a Delaware corporation (the “Purchaser”).  Capitalized terms used herein have the
meanings set forth in the Confirmation.

 

	
  1

  	
  Discount:

  	
  $0.12

  
	
   

  	
   

  	
   

  
	
  2

  	
  Initial
  Number of Shares

  	
  3,500,000
  shares of Common Stock

  
	
   

  	
   

  	
   

  
	
  3

  	
  Upside
  Threshold:

  	
  Subject
  to the proviso contained in Section 2.04(b), 112% of the Hedging Price.

  
	
   

  	
   

  	
   

  
	
  4

  	
  Contract
  Fee:

  	
  $0.00

  
	
   

  	
   

  	
   

  
	
  5

  	
  Valuation
  Completion Date:

  	
  The
  Trading Day, during the period commencing on and including the 87th Trading Day following the Hedging Completion
  Date and ending on and including the Expiration Date, specified as such by
  the Seller, in its sole judgment, by delivering a notice designating such
  Trading Day as a Valuation Completion Date by the close of business on the
  Business Day immediately following such Trading Day; provided
  that if the Seller fails to validly designate the Valuation Completion Date
  prior to the Expiration Date, the Valuation Completion Date shall be the
  Expiration Date.

  

 

B-1

 

 

EXHIBIT A

 

FORM OF HEDGING COMPLETION NOTICE

 

JPMorgan Chase Bank, National Association

c/o J.P. Morgan Securities LLC

277 Park Avenue, 11th Floor

New York, New York 10172

 

	
   

  	
  [Date]

  

 

Covance Inc.

210 Carnegie Center
 Princeton, New Jersey 08540

 

Ladies
and Gentlemen:

 

This
letter is a hedging completion notice within the meaning of Section 2.04(c) of
the Confirmation dated as of November 8, 2010 (the “Confirmation”) between Covance Inc.
(the “Purchaser”) and JPMorgan
Chase Bank, National Association, London Branch (the “Seller”), by J.P. Morgan Securities LLC, as
its agent.  Capitalized terms used herein
have the meanings set forth in the Confirmation.

 

This
hedging completion notice relates to the Transaction described in the
Confirmation.  Upon the terms and subject
to the conditions of the Confirmation, the terms of the Transaction shall be as
follows:

 

	
  1.  Hedging Price:

  	
  [                    ].

  
	
  2.  Upside Threshold:

  	
  [                    ]

  
	
  3.  Minimum Delivery Number:

  	
  [                    ].

  
	
  4.  First Day of the Averaging Period:

  	
  [                    ].

  

 

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  J.P.
  MORGAN SECURITIES LLC, as agent for JPMorgan Chase Bank, National
  Association, London Branch

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
  Acknowledged
  and Confirmed:

  	
   

  
	
   

  	
   

  
	
  COVANCE INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

Exh-A-1

 

EXHIBIT B

 

[Letterhead of Purchaser]

 

JPMorgan
Chase Bank, National Association

c/o
J.P. Morgan Securities LLC

277
Park Avenue

11th Floor

New
York, New York 10172

 

Re:          Accelerated Purchase of Equity
Securities

 

Ladies
and Gentlemen:

 

In
connection with our entry into the Confirmation dated as of November 8,
2010 (the “Confirmation”), we hereby
represent that set forth below is the total number of shares of our common stock
purchased by or for us or any of our affiliated purchasers in Rule 10b-18
purchases of blocks (all defined in Rule 10b-18 under the Securities
Exchange Act of 1934) pursuant to the once-a-week block exception set forth in Rule 10b-18(b)(4) during
the four full calendar weeks immediately preceding the first day of the
Averaging Period (as defined in the Confirmation) and the week during which the
first day of the Hedging Period occurs.

 

Number
of Shares:

 

We
understand that you will use this information in calculating trading volume for
purposes of Rule 10b-18.

 

	
   

  	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COVANCE INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Exh-B-1Exhibit 10.68

 

CLEAN ENERGY FUELS, INC.

 

AMENDMENT TO WARRANT NUMBER SI-4

 

TO PURCHASE COMMON STOCK OF CLEAN ENERGY FUELS, INC.

 

This
Amendment (the “Amendment”) dated November 10, 2010 amends Warrant
Number SI-4 dated November 3, 2008 (the “Warrant”) issued by Clean
Energy Fuels, Inc., a Delaware corporation (the “Company”) to
Portside Growth and Opportunity Fund (the “Holder”), pursuant to which
the Holder is entitled to subscribe for and purchase up to 1,183,712 shares of
the voting common stock of the Company, par value $0.0001 per share (the “Common
Stock”). Capitalized terms used but not defined in this Amendment have the
meanings given to them in the Warrant.

 

WHEREAS,
pursuant to Section 9 of the Warrant, the written consent of the
Company and the Holder is required to amend any provision of the Warrant; and

 

WHEREAS,
the Holder and the Company desire to amend the Warrant as set forth herein.

 

NOW,
THEREFORE, for good and valuable consideration, the parties hereto agree as
follows:

 

1.                                       Amendments.

 

1.1                                 The definition
of “Expiration Date” in Section 15 (i) of the Warrant is
hereby amended and restated in its entirety as follows:

 

“(i)                               “Expiration
Date” means November 10, 2010.”

 

1.2                                 The Company and
the Holder acknowledge that the current Exercise Price is $12.68.

 

1.3                                 All other terms
of the Warrant shall remain unchanged.

 

2.                                       Cash
Consideration. In consideration for the Holder executing this
Amendment and for agreeing to reduce the term of the Warrant, the Company
hereby agrees to pay to the Holder in immediately available funds cash
consideration in the amount of $3,172,348.16 to be paid contemporaneously with
the execution of this Amendment, but in no event more than three (3) business
day thereafter.

 

 

3.                                       The Company
represents, warrants and agrees that:

 

3.1                                 it has all the
requisite authority and power to enter into and consummate the transactions
contemplated herein and such transactions shall not contravene any contractual,
regulatory, statutory or other obligation or restriction applicable to the
Company;

 

3.2                                 this Amendment
has been duly and validly authorized, executed and delivered by the Company,
and shall constitute a legal, valid, and binding obligation of the Company,
enforceable against it in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles whether in a
proceeding in equity or at law;

 

3.3                                 it has a
sufficient number of authorized and unissued shares of voting common stock to
consummate the exercise of the Warrant;

 

3.4                                 any shares
issued to Holder pursuant to an exercise of the Warrant shall be freely
tradable unlegended Common Stock that may be sold into the public market
pursuant to the Company’s effective shelf registration statement on Form S-3
(File No. 333-152306), subject to the accuracy of Holder’s representations
in Section 4.4 below;

 

3.5                                 as of the date
hereof that none of the terms offered to any holders of the Company’s Series SI-1,
SI-2, SI-3 or SI-4 warrants are more favorable than those terms offered to the
Holder and,

 

4.                                       The Holder  represents and warrants that:

 

4.1                                 it has the
authority to enter into the transactions and consummate the transactions
contemplated herein and such transactions shall not contravene any contractual,
regulatory, statutory or other obligation or restriction applicable to the
Holder;

 

4.2                                 the Amendment
has been duly and validly authorized, executed and delivered by the Holder, and
shall constitute a legal, valid, and binding obligation of the Holder,
enforceable against it in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles whether in a
proceeding in equity or at law;

 

4.3                                 it has
sufficient knowledge and experience in financial and business matters so as to
be capable of bearing the economic risks of participation in this Amendment,
and it is capable of evaluating the merits and risks of participating in this
Amendment, including any risks associated with surrendering certain rights
related to the Warrants; and

 

4.4                                 it is not an
affiliate of the Company as such term is defined in Rule 144 promulgated
under the Act.

 

 

5.                                       Miscellaneous.

 

5.1                                 Disclosure of
Transactions and Other Material Information.  On or before 9:00 a.m., New York City
time, on the first (1st) Business Day following the date of this Agreement, the
Company shall (A) file a Current Report on Form 8-K in the form
required by the 1934 Act describing the material terms of the transactions
contemplated hereby and (B) either (i) to the extent the Company is
proceeding with the proposed equity offering previously disclosed to the
Holder, file either a press release or prospectus supplement disclosing such
proposed equity offering, or (ii) provide the Holder with notice via email
that such offering has been cancelled.

 

5.2                                 This Amendment
may be executed in multiple original counterparts, each of which shall be an
original, but all of which shall constitute one and the same Amendment.  This Amendment and all rights, obligations
and liabilities hereunder shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without giving effect to the
principles of conflicts of law that would require the application of the laws
of any other jurisdiction.

 

 

IN
WITNESS WHEREOF, the Holder and the Company have executed this Amendment as of November 10,
2010.

 

 

	
   

  	
  THE
  HOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  Portside
  Growth and Opportunity Fund

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Jeffrey C. Smith

  
	
   

  	
  Name:

  	
  Jeffrey
  C. Smith

  
	
   

  	
  Title:
  

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
  Clean
  Energy Fuels, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Richard R. Wheeler

  
	
   

  	
  Name:

  	
  Richard
  R. Wheeler

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

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