2002 EMPLOYEE STOCK OPTION PLAN
1.       PURPOSE
         The Covance Inc. 2002 Employee Stock Option Plan (the "Plan") is
intended to (i) encourage managerial, technical and other Employees of Covance
Inc. (the "Corporation") or a Subsidiary (as defined below) to become owners of
stock of the Corporation in order to increase their proprietary interest in the
Corporation's success; (ii) to stimulate the efforts of certain key managerial,
technical and other Employees by giving suitable recognition to services which
contribute materially to the Corporation's success; and (iii) to provide such
Employees with additional incentive and reward opportunity.
         Unless previously terminated by the Corporation's Board of Directors
(the "Board"), the Plan shall have a term of ten years.
         (a) "1934 Act" means the Securities and Exchange Act of 1934, as
amended, including the rules and regulations promulgated thereunder.
         (b) "Award" means a stock option, SAR (as defined below), or any
combination of them, as described in and granted under the Plan.
         (c) "Award Agreement" is defined in Section 12 hereof.
         (d) "Change of Control" is defined in Section 11(b).
         (e) "Code" means the Internal Revenue Code of 1986, as amended,
including any rules and regulations promulgated thereunder or any successor body
of laws, rules and regulations.
         (f) "Committee" means the Compensation and Organization Committee of
the Board of Directors or such other committee as is appointed by the Board to
administer the Plan.
         (g) "Employee" means an employee or a consultant of the Corporation or
a Subsidiary.
         (h) "Fair Market Value" means the average of the highest and the lowest
quoted selling prices of the Shares on the New York Stock Exchange Composite
Tape on the valuation date, or, if there were no sales on the valuation date,
the average of the highest and lowest quoted selling prices on the New York
Stock Exchange Composite Tape on the first trading day before and the first
trading day after the valuation date.
         (i) "Grant Price" is defined in Section 8 hereof.
         (j) "Non-Statutory Option" means an option that is not an incentive
stock option as defined in Section 422 of the Code.
         (k) "Participant" means an Employee who has been granted an Award under
the Plan.
         (l) "SAR" means a stock appreciation right.
         (m) "Shares" means the common stock of the Corporation, par value $0.01
per share.
         (n) "Subsidiary" means an entity that is directly or indirectly
controlled by the Corporation or any entity, including an acquired entity, in
which the Corporation has a significant equity interest, as determined by the
         (o) "Treasury Shares" means authorized and issued, but not outstanding,
         (a) The Committee shall be responsible for administering the Plan.
         (b) The Committee shall have full and exclusive power to interpret the
Plan and to adopt such rules, regulations, and guidelines for carrying out the
Plan as it may deem necessary or proper, all of which power shall be executed in
the best interests of the Corporation and in keeping with the provisions and
objectives of the Plan. This power includes, but is not limited to (i) selecting
Award recipients and the extent of their participation; (ii) establishing all
Award terms and conditions; (iii) adopting procedures and regulations governing
Awards; and (iv) making all other determinations necessary or advisable for the
administration of the Plan. All decisions made by the Committee shall be final,
binding and conclusive on all persons interested in the Plan or any Awards.
         The Committee may delegate from time to time during the term of the
Plan to one or more executive officers or directors of the Corporation the
authority to carry out some or all of its responsibilities provided that the
Committee may not delegate its authority and powers in any way which would be
inconsistent with the requirements of the Code or the 1934 Act. The Committee
may at any time rescind the authority delegated to any such executive officer or
         To the extent consistent with the Corporation's Amended and Restated
Certificate of Incorporation, no member of the Committee shall be liable for any
action or determination with respect to the Plan, and the members shall be
entitled to indemnification and reimbursement in the manner provided in the
Corporation's Restated Certificate of Incorporation, as amended, modified or
supplemented from time to time. In the performance of its functions under the
Plan, the Committee shall be entitled to rely upon information and advice
furnished by the Corporation's officers, accountants, counsel and any other
party the Committee deems necessary, and no member of the Committee shall be
liable for any action taken or not taken in reliance upon any such advice.
         (c) The Committee may, from time to time, alter or amend, and the Board
of Directors may terminate, the Plan as it shall deem advisable, subject to any
requirement for shareholder approval imposed by applicable law or securities
exchange listing requirements.
         (d) The termination of the Plan, either pursuant to Section 2, Section
4(c) or otherwise, shall not cause any previously granted Awards to terminate.
After the termination of the Plan, any previously granted Awards shall remain in
effect and shall continue to be governed by the terms of the Plan, the Awards,
and any applicable Award Agreements.
         (e) The Committee shall determine, in its discretion, whether it is
desirable or feasible under local law, custom and practice to grant Awards under
the Plan to Employees in countries other than the United States. In order to
facilitate the grant of Awards hereunder, the Committee may provide for such
modifications and additional terms and conditions ("special terms") in Awards to
Employees who are employed outside the United States (or who are foreign
nationals temporarily within the United States) as the Committee may consider
necessary, appropriate or desirable to accommodate differences in local law,
policy or custom or to facilitate administration of the Plan. The special terms
may provide that the grant of an Award is subject to (a) applicable governmental
or regulatory approval or other compliance with local legal requirements or (b)
the execution by the employee of a written instrument in the form specified by
the Committee, and that in the event such requirements or conditions are not
satisfied, the grant shall be void. The Committee may adopt or approve
sub-plans, appendices or supplements to, or amendments, restatements or
alternative versions of, the Plan as it may consider necessary, appropriate or
desirable for purposes of implementing any special terms, without thereby
affecting the terms of the Plan as in effect for any other purpose. The special
terms and any appendices, supplements, amendments, restatements or alternative
versions, however, shall not include any provisions that are inconsistent with
the terms of the Plan as then in effect, unless the Plan could have been amended
to eliminate such inconsistency without further approval of the Board.
         The individuals who shall be eligible to receive Awards under the Plan
shall be Employees as the Committee or one or more executive officers or
directors, in accordance with Section 4(b) hereof shall approve from time to
time; provided, however, officers, as defined in Rule 16(a)-1(f) under the 1934
Act, and members of the Board of Directors shall not be eligible to receive
Awards under the Plan.
         (a) Subject to the provisions of this Section 6 and Section 7 hereof,
up to 5,900,000 Shares may be issued under the Plan. The stock subject to the
provisions of this Plan shall be shares of authorized but unissued Shares and
Treasury Shares.
         (b) In addition to the Shares authorized by Section 6(a) hereof, the
following Shares may be issued under the Plan: (i) Shares that a Participant
tenders, or has withheld, in payment of all or part of the Grant Price under a
stock option granted under the Plan, or in satisfaction of tax withholding
obligations hereunder, and (ii) Shares that are issued under the Plan which are
subsequently forfeited in accordance with the terms of the Award or an Award
Agreement or shares that are not issued because of the cancellation,
termination, or expiration of Awards and/or similar events under the Plan.
         (c) Subject to the foregoing provisions of this Section 6, if an Award
may be paid only in Shares or in either cash or Shares, the Shares shall be
deemed to be issued hereunder only when and to the extent that payment is
actually made in Shares. However, the Committee may, in its discretion,
authorize a cash payment under an Award in lieu of Shares.
         In the event that any dividend or other distribution (whether in the
form of 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 Corporation's Rights Agreement with Harris Trust and Savings
Bank dated December 31, 1996, the issuance of warrants or other rights to
purchase Shares or other securities, or other similar corporate transaction or
event materially affects the Shares with respect to which Awards have been or
may be issued under the Plan, then the Committee shall, in a manner and to the
extent that the Committee deems appropriate to prevent any dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, adjust any or all of:
         (a) the number and type of securities that thereafter may be issued
under the Plan,
         (b) the number and type of securities subject to outstanding Awards,
         (c) the Grant Price or purchase price with respect to any Award, or, if
deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award.
         In the event the Corporation acquires another entity by means of a
merger, consolidation, acquisition of property or stock, reorganization or
otherwise, the Committee shall be authorized to cause the Corporation to issue
or to assume stock options or stock appreciation rights, whether or not in a
transaction to which Section 424(a) of the Code applies, by means of
substitution of new options or rights for previously issued options or rights or
an assumption of previously issued options or rights.
         Subject to any required action by the Corporation's shareholders, if
the Corporation is a party to any merger or consolidation where the Corporation
is not the survivor, a Participant holding an outstanding Award valued directly
or indirectly by Shares shall be entitled to receive, upon the exercise of the
Award, the same per Share consideration (cash, shares or other consideration) on
the same terms that a holder of the same number of Shares that are subject to
the Participant's Award would be entitled to receive pursuant to the merger or
         The following types of Awards may be granted under this Plan, singly,
or in combination as the Committee may determine from time to time:
         (a) Stock Options - A stock option shall represent a right to purchase
a specified number of Shares at a stated exercise price (the "Grant Price")
during a specified time, not to exceed ten years from the date of grant, as
determined by the Committee. The Grant Price per Share for each stock option
shall not be less than 100% of the Fair Market Value on the date of grant. Stock
options granted hereunder shall be Non-Statutory Options and shall be consistent
with the applicable terms, conditions, and limitations established by the
Committee. Upon satisfaction of the applicable conditions to exercisability
specified in the terms and conditions of the Award Agreement, the Participant
shall be entitled to exercise the option in whole or in part and to receive,
upon satisfaction or payment of the Grant Price in the manner contemplated in
this Section 8(a), the number of Shares in respect of which the option shall
have been exercised.
         The Shares covered by a stock option may be purchased by methods
permitted by the Committee, including: (i) a cash payment; (ii) tendering Shares
owned for at least six months by the Participant, valued at the Fair Market
Value at the date of exercise; (iii) authorizing the Corporation to sell the
Shares (or a sufficient portion thereof) acquired upon exercise of a stock
option, and assigning to the Corporation a sufficient amount of the sale
proceeds to pay for all the Shares acquired through such exercise and any tax
withholding obligations resulting from such exercise, or (iv) any combination of
the above.
         The Committee may not grant additional stock options under the Plan to
a Participant contingent upon the surrender of Shares owned by the Participant
in payment of the Grant Price of a stock option granted under the Plan.
         (b) SARs - An SAR shall represent a right to receive a payment in cash,
Shares, or a combination thereof as determined by the Committee, equal to the
excess of the Fair Market Value of a specified number of Shares on the date the
SAR is exercised over an amount which shall be no less than the Fair Market
Value on the date the SAR was granted as set forth in the applicable Award
         Payment of Awards may be in the form of cash, Shares, other Awards, or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose. The Committee also may require or permit
participants to elect to defer the receipt or issuance of Shares from stock
options or the settlement of Awards in cash under such rules and procedures as
it may establish under the Plan. It also may provide that deferred settlements
of Awards include the payment or crediting of earnings on deferred amounts, or
the payment or crediting of dividend equivalents where the deferred amounts are
denominated in Share equivalents.
         During the lifetime of a Participant, the Award shall be exercisable
only by such Participant and Awards shall not be transferable or assignable
other than by will or the laws of descent and distribution, or pursuant to
qualified domestic relations orders as defined in or meeting the requirements of
the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended provided, however, that, in the discretion of the Committee, a stock
option may, in connection with a Participant's estate plan, be assigned in whole
or in part during the Participant's lifetime to one or more members of the
Participant's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the Option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the Option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Committee may deem
         (a) In the event of a Change of Control, all Awards which have not
vested shall immediately vest upon the occurrence of such Change of Control.
         (b) A "Change of Control" shall be deemed to occur if and when: (i) any
person (including as such term is used in Section 13(d) and 14(d)(2) of the 1934
Act) becomes the beneficial owner, directly or indirectly, of securities
representing 20% or more of the combined voting power of the Corporation's then
outstanding securities; or (ii) as a result of a proxy contest or contests or
other forms of contested shareholder votes (in each case either individually or
in the aggregate), a majority of the individuals elected to serve on the
Corporation's Board of Directors are different than the individuals who served
on the Corporation's Board of Directors at any time within the two years prior
to such proxy contest or contests or other forms of contested shareholder votes
(in each case either individually or in the aggregate); or (iii) when the
Corporation's shareholders approve a merger, or consolidation (where in each
case the Corporation is not the survivor thereof), or sale or disposition of all
or substantially all of the Corporation's assets or a plan or partial or
complete liquidation; or (iv) when an offeror (other than the Corporation)
purchases shares of the Corporation's Common Stock pursuant to a tender or
exchange offer for securities representing 20% or more of the combined voting
power of the Corporation's then outstanding securities.
         Each Award under the Plan shall be evidenced by an agreement setting
forth its terms, conditions, and limitations for each Award, and the provisions
applicable in the event the Participant's employment terminates (an "Award
Agreement"). The Committee need not require the execution of any such agreement
by the recipient, in which case acceptance of the Award by the respective
Participant shall constitute agreement by the Participant to the terms and
conditions of the Awards.
         The Corporation shall have the right to deduct from any settlement of
an Award made under the Plan, including the delivery of Shares, or require the
payment of, a sufficient amount to cover withholding of any federal, state or
local or other governmental taxes or charges required by law or such greater
amount of withholding as the Committee shall determine from time to time and as
permitted by applicable laws, rules and regulations, or to take such other
action as may be necessary to satisfy any such withholding obligations. If the
Committee permits or requires Shares to be used to satisfy required tax
withholdings, such Shares shall be valued at the Fair Market Value as of the tax
recognition date for such Award or such other date as may be required by
applicable law, rule or regulation.
         Unless otherwise specifically determined by the Committee, settlements
of Awards received by Participants under the Plan shall not be deemed a part of
a Participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Corporation benefit plan or severance program.
Further, the Corporation or any Subsidiary may adopt from time to time other
compensation programs, plans or arrangements as it deems appropriate or
         Unless otherwise determined by the Committee, the Plan shall be
unfunded and shall not create (or be construed to create) a trust or a separate
fund or funds. The Plan shall not establish any fiduciary relationship between
the Corporation and any participant or other person. To the extent any person
holds any rights by virtue of an Award granted under the Plan, such rights shall
constitute general unsecured liabilities of the Corporation and shall not confer
upon any participant any right, title, or interest in any assets of the
         The implementation of the Plan, the granting of any Award under the
Plan, and the issuance of Shares upon the exercise or settlement or any Award
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the Awards
granted under it, or the Shares issued pursuant to it.
         A Participant shall have no rights as a stockholder with respect to
Shares covered by an Award until the date the Participant or his nominee is the
holder of record with respect to the Shares covered by such Award. No adjustment
will be made for dividends or other rights for which the record date is prior to
such date.
         No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of the Corporation or a Subsidiary or to participate in
any other compensation or benefit plan, program or arrangement of the
Corporation or any Subsidiary or to receive any future Award under the Plan. In
addition, the Corporation expressly reserves the right at any time to dismiss a
Participant free from any liability or any claim under the Plan, except as
expressly provided in the Plan or in any Award Agreement entered into hereunder.