Document:

Exhibit 10.2

 

RESTRICTED UNIT PLAN FOR
NON-EMPLOYEE MEMBERS OF

THE BOARD OF DIRECTORS OF COVANCE INC.

 

(As amended and restated effective May 8,
2008)

 

ARTICLE I

 

INTRODUCTION

 

1.01.                     Name of Plan.

 

This
Plan shall be known as the Restricted Unit Plan for Non-Employee Members of the
Board of Directors of Covance Inc.

 

1.02.                     Purpose of Plan.

 

The purpose of the Plan is
to benefit the shareholders of Covance Inc. by increasing the proprietary
interests of non-employee directors of Covance Inc. in the growth and success
of Covance Inc. through the provision of Hypothetical Shares representing
monetary compensation linked in value to the value of Covance Common Stock.

 

1.03.                     Effective Date.

 

This amendment and
restatement of the Plan is effective May 8, 2008.

 

ARTICLE II

 

AWARDS AND PAYMENT ELECTIONS

 

2.01.                     Awards.

 

(a)                                  On May 20,
2003, each non-employee director of Covance Inc. who is a member of the Board
on that date shall receive an Award of five thousand (5,000) Hypothetical
Shares. On every anniversary of May 20, 2003, each non-employee director
who is a member of the Board on that date shall receive an Award of such number
of Hypothetical Shares as is approved by the Board in advance of such date.

 

(b)                                 Any person, who
becomes a non-employee member of the Board after the date of one Award  and
before the next Award, shall receive an Award in an amount equal to the number
of months such person is a Director prior to the next award date, divided by
twelve (12), and multiplied by the number of Hypothetical Shares most recently
granted pursuant to paragraph 2.01(a) hereof.

 

 

(c)                                  Notwithstanding
any other provision of the Plan, no individual shall be eligible to receive an
Award under this Plan unless, on the Award Date, he or she is a member of the
Board and is not an employee of Covance Inc. or any Subsidiary or Affiliate
thereof.  Each Award shall vest and be
non-forfeitable three years from the Award Date (the “vesting date”) provided
the director has remained on the Board continuously through the vesting date, except
that that Awards granted pursuant to paragraph 2.01(b) shall have the same
vesting date as the most recent Awards granted pursuant to paragraph 2.01(a). In the event a director ceases to be a
director at any time prior to vesting, the Award shall be forfeited, provided
that, notwithstanding the foregoing, (i) the Award  shall vest in the event that the director dies
before the vesting date and has remained on the Board continuously from
the Award Date through his date of death, and (ii) the Award shall vest in
the event a director retires from the Board with the consent of the Board of
Directors.

 

2.02.                     Designation of
Beneficiaries.

 

A director who receives an Award pursuant to Section 2.01
may designate one or more beneficiaries under the Plan with respect to such
Award to receive the director’s benefit in the event of his death. A director
may, at any time, revoke a prior beneficiary designation and make a new
beneficiary designation pursuant to this Section 2.02. Any such
designation or revocation shall be in writing and shall be submitted to the General Counsel in such form and
in such manner as is reasonably acceptable to
the General Counsel. If a director dies before he has received all payments due
him under the Plan, the remaining payments shall be made, in a lump sum,
to his beneficiaries, or, if there is no such beneficiary, then to the director’s
estate as promptly as practicable following
the director’s death.

 

ARTICLE III

 

ACCOUNTS AND INVESTMENTS

 

3.01.                     Accounts.

 

(a)                                  Establishment of Accounts. A
separate account shall be maintained for  each
director who receives an Award pursuant to Section 2.01. Such account
shall be (1) credited with the Awards granted to the director
pursuant to Section 2.01, (2) credited (or charged, as the case may be) with the investment results determined
pursuant to Section 3.02, and (3) charged with the amounts paid by
the Plan to or on behalf of the director pursuant to Article IV.

 

(b)                                 Subaccounts. Within each director’s
account, separate subaccounts may be maintained to the extent necessary for the
administration of  the Plan.

 

 

3.02.                     Investments.

 

(a)                                  Deemed Investment in
Covance Common Stock. Until the
vesting date, the entire balance in a
director’s account shall be treated as if it were invested in Covance Common
Stock. The deemed investment in Covance Common Stock of all or part of
the balance in a director’s account shall be
determined in accordance with the following rules:

 

(1)                                  Deemed Reinvestment of Dividends. The number of
hypothetical shares of Covance Common Stock credited to a director’s account
shall be increased on each date that a dividend is paid on Covance Common
Stock. The number of additional hypothetical shares of Covance Common Stock
credited to a director’s account as a result of such increase shall be
determined, first, by multiplying the total number of hypothetical shares of
Covance Common Stock credited to the director’s account immediately before such
increase by the amount of the dividend paid per share of Covance Common Stock
on the dividend payment date, and, then, by dividing the product so determined
by the closing price of Covance Common Stock on the composite tape of New York
Stock Exchange issues on the dividend payment date (or if there was no reported
sale of Covance Common Stock on such date, on the next preceding day on which
there was such a reported sale).

 

(2)                                  Conversion Out of  Covance Common Stock. The dollar
value of the hypothetical shares of Covance Common Stock credited to a director’s
account on any date shall be determined by multiplying the number of
hypothetical shares of Covance Common Stock credited to the director’s account
on that date by the average closing price of Covance Common Stock, as reported
on the composite tape of New York Stock Exchange issues for the most recent 10
business days ending before that date.

 

(3)                                  Effect of Recapitalization.
In the event of a transaction or event described in
this paragraph (3),  the number of
hypothetical shares of Covance Common Stock credited to a director’s account
shall be adjusted in such manner as the Board, in its sole discretion, deems
equitable. A transaction or event is described in this paragraph (3) if
and only if (A) it is a dividend or other distribution (whether in the
form of cash, shares, other securities, or other property), extraordinary cash
dividend, recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of shares or other securities, the
exercisability of stock purchase rights received under the Rights Plan, the
issuance of warrants or other rights to purchase shares or other securities, or
other similar corporate transaction or event, and (B) the Board determines
that such transaction or event affects the shares of Covance Common Stock, such
that an adjustment pursuant to this paragraph (3) is appropriate to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available  under this Plan.

 

 

3.03.                     Hypothetical
Nature of Accounts and Investments.

 

Each account and investment established under this Article III
shall be hypothetical in nature and shall be maintained for bookkeeping
purposes only. In accordance with Section 4.03(a), neither the Plan nor
any of the accounts or investments established hereunder shall hold any actual
funds or assets.

 

ARTICLE IV

 

PAYMENTS

 

4.01.                     Exclusive Entitlement to
Payment.

 

An Award made pursuant to Section 2.01 shall
entitle a director to receive the payments due him at the times,  in
the amounts, and in the form specified in this Article IV. No other
amounts shall be due or payable to a director under this Plan.

 

4.02.                     Payment Commencement Date.

 

The payment to a director under this Plan shall be
made in a lump sum on the vesting date. Notwithstanding the foregoing sentence,
in the event of a participant’s death, prior to a vesting date, a participant’s
account will be distributed to his beneficiaries as soon as practicable
following the participant’s death in accordance with Section 2.02.

 

4.03.                     Limitations on Rights to
Payment.

 

(a)                                  Rights Unsecured. The right of
any person to receive one or more payments under the Plan shall be an unsecured
claim against the general assets of Covance Inc.

 

(b)                                 Rights Not Assignable. No  payment due any
person under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or  charge. Any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, or charge such payment
shall be void. No such payment or interest therein shall be liable for or
subject to the debts, contracts, liabilities, or torts of any director or
beneficiary. If any director or beneficiary becomes bankrupt or attempts to
anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge any
payment under the Plan, the Board may direct that such payment be suspended and
that all future payments to which such person otherwise would be entitled be
held and applied for the benefit of
such person, the person’s children or other dependents, or any of them, in such
manner and in such proportions as the Board may
deem proper. Notwithstanding the foregoing, a director may assign his right to
payment under the Plan to Covance Inc. or its Affiliates.

 

(c)                                  Rights Forfeited Upon Competition. A director who,
without the written consent of Covance Inc., engages in competition with
Covance Inc. or any Subsidiary thereof, accepts employment with or acquires or
holds any substantial interest in any business that is competitive with the
business carried on by Covance Inc. or any 

 

 

Subsidiary
thereof, or serves as an officer or director of any corporation engaged in competition
with the business carried on by Covance Inc. or any Subsidiary thereof, shall
forfeit all rights to any payments under the Plan that would otherwise be
payable to the director or his beneficiaries on or after the initial date of
such action by the director. The purchase by a director, for investment, on a
recognized securities exchange, of stock or other securities of a competitor of
Covance Inc. or Subsidiary thereof representing not more than one percent of
the total voting power represented by all outstanding stock and securities of such competitor, or the holding
thereof, shall not be deemed to constitute the acquisition or holding of
a substantial interest in such competitor for purposes of this subsection (c).
This subsection (c) shall not apply to any director on or after the
occurrence of a Change in Control.

 

ARTICLE V

 

MISCELLANEOUS

 

5.01.                     Severability.

 

If any provision of the Plan is held unlawful or
otherwise invalid or unenforceable in whole or in part, the unlawfulness,
invalidity, or unenforceability shall not affect any other provision of the
Plan or part thereof, each of which shall remain in full force and effect.

 

5.02.                     Board Authority.

 

(a)                                  In General. Except to the
extent that the Plan specifically provides otherwise, the Board shall have the
sole authority and discretion (1) to amend, suspend, or terminate the
Plan, (2) to interpret the Plan, (3) to establish and revise rules and
regulations relating to the Plan, (4) to delegate such responsibilities or
duties as it deems desirable, and (5) to make any other determination that
it believes necessary or advisable for the administration of the Plan.

 

(b)                                 Plan Termination. Except to the extent that
the Plan specifically provides otherwise, the Board may terminate the Plan at
any time, in accordance with applicable law. Upon termination of the Plan, all  Awards made before the date of
termination, and any rights to payment with respect to such Awards, shall
continue to be governed by the provisions of the Plan in effect immediately
before the date of termination.

 

5.03.                     Change in Control.

 

(a)                                 Plan Modifications
Following Change in Control. Notwithstanding
any provision of the Plan to the contrary, the Board may amend, modify, or
suspend the Plan (including the Change in Control provisions) at any time
before a Change in Control occurs, but except as may be required by law, after
a Change in Control occurs: (1) the 

 

 

Change
in Control provisions shall not be amended, modified, suspended, or terminated,
directly or indirectly, and (2)(A) no other provisions of the Plan shall
be amended, modified, suspended, or terminated, directly or indirectly, (B) no
rules, regulations, or procedures under the Plan shall be established or
modified, (C) no interpretation of the Plan shall be adopted, (D) no
determination under the Plan shall be made, and (E) no authority or
discretion shall be exercised, in a manner that would alter the meaning or operation of the Change
in Control provisions or that would undermine or frustrate their purposes.

 

(b)                                 Rights Protected Following Change in Control. Notwithstanding
any provision of the
Plan to the contrary, no amendment, suspension, or termination of the
Plan, or revocation of any required approval by the Board, effected after a
Change in Control shall operate to reduce, eliminate, or otherwise adversely
affect any director’s or beneficiary’s right to receive any payment under the
Plan (including, without limitation, the amount, timing, and method thereof) in
accordance with any Award made prior to the date of such amendment, suspension,
termination, or revocation of approval and in accordance with any investment or
payment option permitted (irrespective of any requirement for approval)
pursuant to the Plan as in effect on the date immediately preceding the date on
which the Change in Control occurs. Notwithstanding any provision of the Plan
to the contrary, upon and after a Change in Control, the rights described in
the immediately preceding sentence shall be fully vested, nonforfeitable
contractual rights enforceable by or on behalf of any director or former
director against Covance Inc. or any successor to all or substantially all of
the business or assets of Covance Inc.

 

5.04.                     Usage and Definitions.

 

(a)                                  Titles and Headings Not to Control. The titles to Articles and
the headings of Sections, subsections, paragraphs, and subparagraphs in this
Plan are placed herein for convenience of reference only and, as such, shall be of no force or effect in the
interpretation of the Plan.

 

(b)                                 Definitions. Unless the context clearly
indicates otherwise, the following terms, when used in capitalized form in this
Plan, shall have the meanings set forth below.

 

Acquiring Person. “Acquiring Person” shall mean any Person who or
which, together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the Covance Common Stock then outstanding,
but shall not include Covance Inc., any Subsidiary of Covance Inc., any employee
benefit plan of Covance Inc. or any Subsidiary of Covance Inc., or any entity
holding Covance Common Stock for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an “Acquiring Person” as
the result of an acquisition of Covance Common Stock which, by reducing the number of shares outstanding,
increases the proportionate

 

 

number
of shares beneficially owned by such Person
to 20% or more of Covance Common Stock then outstanding; provided,  however,
that if a Person shall become the Beneficial Owner of 20% or more of Covance
Common Stock then outstanding by reason of share purchases by Covance and
shall, after such share purchases by Covance Inc., become the Beneficial Owner
of any additional Covance Common Stock, then such Person shall be deemed to be
an “Acquiring Person”. Notwithstanding the foregoing, if the Board
determines in good faith that a Person who
would otherwise be an “Acquiring Person”, as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Covance Common
Stock so that such Person would no longer be an “Acquiring Person,” as defined pursuant to the foregoing provisions of
this paragraph, then such Person shall not be
deemed to be an “Acquiring Person” for any purposes of this Plan.

 

Affiliate. “Affiliate” shall have the meaning ascribed
to such term in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

 

Article. “Article” shall mean an article of this Plan.

 

Associate. “Associate” shall have the meaning ascribed
to such term in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.

 

Award. “Award” shall mean the award of hypothetical
shares of Covance Common Stock made to a director pursuant to Section 2.01.

 

Award Date. “Award Date” shall mean the date on  which an Award is made to a director
pursuant to Section 2.01.

 

Beneficial
Owner. A  Person shall be deemed the “Beneficial
Owner” of, and shall be deemed to “beneficially own,” any securities:

 

(1)                                  which such Person or  any of such Person’s
Affiliates or Associates beneficially owns, directly
or indirectly;

 

(2)                                  which such
Person or any of such Person’s Affiliates or Associates has (A) the right
or obligation to acquire (whether such right or obligation is exercisable or
effective immediately or only after the passage of time) pursuant to any
agreement, arrangement, or understanding (whether
or not in writing) (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities) or upon the exercise of conversion rights, exchange
rights, rights (other than the rights granted pursuant to the Rights Plan),
warrants or options, or otherwise; provided,  however, that a
Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,”
securities tendered pursuant to a tender or exchange offer made by 

 

 

such Person or any of such
Person’s Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement, or understanding (whether or not in writing); provided,
however. that a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own,” any security under this clause if the agreement,
arrangement, or understanding to vote such security (i) arises solely from
a revocable proxy given in response
to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act, and (ii) is not also then reported by
such person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or

 

(3)                                  which are
beneficially owned, directly or indirectly, by any other Person with which such
Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement, or understanding (whether or not in writing) (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to clause (B) of
paragraph (2), above), or disposing of any securities of Covance Inc.

 

Board. “Board” shall mean the Board of Directors of
Covance lnc.

 

Change in Control. A  “Change in Control” shall
occur when and only when the first of the following events occurs:

 

(1)                                  the date that
an Acquiring Person first becomes such; provided that in determining
whether a Change in Control has occurred, the acquisition of securities of
Covance Inc. in a Non-Control Transaction shall not constitute an acquisition
that would cause a Change in Control; or

 

(2)                                  three or more
directors, whose election or nomination for election is not approved by a
majority of the members of the “Incumbent
Board” (as defined below) then serving as members of the Board, are elected
within any single 12-month period to serve on the Board; provided that an
individual whose election or nomination for election
is approved as a result of either an
actual or  threatened “Election
Contest” (as described in Rule 14a-11 promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board (a “Proxy Contest”), including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest, shall be deemed not to have been approved by a majority of the
Incumbent Board for purposes hereof; or

 

 

(3)                                  members of the
Incumbent Board cease for any reason to constitute at least a majority of the  Board; “Incumbent
Board” shall mean individuals who, as of May 1, 2003, are members of the Board,
provided that if the election, or nomination for election by Covance Inc.’s
shareholders, of any new director was approved by a vote of at least
three-quarters of the Incumbent Board, such new director shall, for purposes of
the Plan, be considered as a member of the Incumbent Board; provided further
that no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened Election Contest or other actual or threatened Proxy Contest,
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or

 

(4)                                  approval by
shareholders of Covance Inc. of:

 

(A)                              a merger,
consolidation, or reorganization involving Covance Inc., unless

 

(i)                                     the
shareholders of Covance Inc., immediately before the merger, consolidation, or
reorganization, own, directly or indirectly immediately following such merger,
consolidation, or reorganization, at least 50 percent of the combined voting
power of the outstanding voting securities of the corporation resulting from
such merger, consolidation, or reorganization (the “Surviving Corporation”) in
substantially the same proportion as their ownership of the voting securities
immediately before such merger, consolidation, or reorganization;

 

(ii)                                  individuals who  were members of the
Incumbent Board immediately prior to the execution of the agreement providing for such  merger,
consolidation, or reorganization constitute at least a majority of the board of
directors of the Surviving Corporation; and

 

(iii)                               no Person (other than Covance Inc. or any
Subsidiary, any employee benefit plan (or any trust forming a part thereof)
maintained by Covance Inc., the Surviving Corporation or any Subsidiary, or any
Person who, immediately prior to such merger, consolidation, or reorganization
had Beneficial Ownership of securities representing 20 percent or more of the
Voting Power) has Beneficial Ownership of securities representing 20 percent
Covance Inc., within the meaning of section 16 of the Exchange Act.

 

 

Rights Plan. “Rights Plan” shall mean the Rights
Agreement, dated as of December 31, 1996, between Covance Inc. and Harris
Trust and Savings Bank as it may be amended from time to time, or any successor
thereto.

 

Section. “Section” shall mean a section of
this Plan.

 

Subsidiary. “Subsidiary” of any Person shall mean any
corporation or other entity of which a majority of the voting power of the
voting equity securities or voting interest is owned, directly or indirectly,
by such Person, or which is otherwise controlled by such Person.

 

Voting Power. “Voting  Power”
shall mean the voting power of all securities of Covance Inc. then outstanding
generally entitled to vote for the election of directors of Covance Inc.Exhibit 10.26

 

Non-Employee Director Compensation Plan

 

Non-Employee
Director Compensation Plan, effective as of the date of the Company’s 2008
Annual Meeting of Stockholders:

 

·                  Each
non-employee member of the Board of Directors (the “Board”) shall receive
cash compensation in the amount of $10,000 per quarter at the time of each
quarterly Board meeting and are eligible for reimbursement for expenses
incurred in attending Board and Committee meetings.

 

·                  Upon initial
election or appointment to the Board, each non-employee director is granted an
initial option (the “Initial Option Grant”) on the date of his or her
election or appointment to purchase a number of shares valued at $288,000, as
of the date of grant, at an exercise price equal to the fair market value on
the date of grant.  The Initial Option
Grant becomes exercisable as to 1/36th of the option shares each month
following the date of grant.

 

·                  Each
non-employee director whose Initial Option Grant is fully vested shall be
granted an annual option grant at the regular Board meeting held at the time of
the Company’s annual meeting to purchase a number of shares valued at $72,000,
as of the date of grant, at an exercise price equal to the fair market value on
the date of grant(the “Annual Option Grant”).  The Annual Option Grant becomes exercisable
as to 1/12th of the option shares each month following the date of grant.

 

·                  Each
non-employee director shall receive an annual restricted stock grant to be
granted at the Board meeting held at the time of the Company’s annual meeting,
for a number of shares of common stock valued at $40,000 as of the date of
grant.  The annual restricted stock grant
will vest in full on the date of the following annual meeting, so long as the
recipient remains a director until such date.

 

·                  The Chairperson
of the Audit Committee shall be granted each year at the time of our annual
meeting of stockholders a restricted stock grant valued at $40,000 as of the
date of grant. Such grant will vest in full at the time of the next year’s
annual meeting of stockholders, so long as the director continues to serve in
such capacity.

 

·                  Each non-chair
member of the Audit shall be granted each year at the time of our annual
meeting of stockholders a restricted stock grant valued at $15,000 as of the
date of grant. Such grant will vest in full at the time of the next year’s
annual meeting of stockholders, so long as the as the recipient remains a
director until such date.

 

·                  The Chairperson
of the Corporate Governance Committee shall be granted each year at our annual
meeting of stockholders a restricted stock grant valued at $10,000 as of the
date of grant. Such grant will vest in full at the time of the next year’s
annual meeting of stockholders, so long as the director continues to serve in
such capacity.

 

·                  Each non-chair
member of the Corporate Governance Committee shall be granted each year at the
time of our annual meeting of stockholders a restricted stock grant valued at
$5,000 as of the date of grant. Such grant will vest in full at the time of the
next year’s annual meeting of stockholders, so long as the as the recipient
remains a director until such date.

 

 

·      The Chairperson of the
Compensation Committee shall be granted each year at our annual meeting of
stockholders a restricted stock grant valued at $20,000 as of the date of
grant. Such grant will vest in full at the time of the next year’s annual
meeting of stockholders, so long as the director continues to serve in such
capacity.

 

·      Each non-chair member of the
Compensation Committee shall be granted each year at the time of our annual
meeting of stockholders a restricted stock grant valued at $10,000 as of the
date of grant. Such grant will vest in full at the time of the next year’s
annual meeting of stockholders, so long as the recipient remains a director
until such date.

 

·      The Independent Lead
Director shall be granted each year at the time of our annual meeting of
stockholders a restricted stock grant valued at $35,000 as of the date of
grant. Such grant will vest in full at the time of the next year’s annual
meeting of stockholders, so long as the recipient remains a director until such
date.

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