Employee Stock Purchase Plan FAQs

Please note: Neither UBS Financial Services Inc. nor its employees provide tax and/or legal advice. You must consult with your tax and/or legal advisor regarding your personal circumstances.

What is the Employee Stock Purchase Plan?
The Employee Stock Purchase Plan enables you to purchase Covance stock at a 15% discount of the fair market value of Covance stock. The fair market value is the weighted average trading price of Covance stock on the first business day of the quarter, or the last business day of the quarter, whichever is less. The plan is being discontinued effective January 1, 2011.

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How is the number of shares purchased during the quarter determined?
The number of shares you purchase during the quarter is calculated by adding your contributions to those that Covance contributed to your account during the quarter and dividing by the price of Covance stock on the first business day or last business day of the quarter, whichever is lower. The Covance contribution is shown on your paycheck and represents the value of the plan's 15% discount. The value of the discount is taxed each pay period. For example:

Example of how stock is purchased:

      • How do you calculate the number of shares purchased in a quarter?
        The number of shares you purchase during the quarter is calculated by adding your contributions TO those that Covance contributed to your account during the quarter and dividing by the price of Covance stock on the first business day or last business day of the quarter, whichever is lower. The Covance contribution is shown on your paycheck and represents the value of the plan's 15% discount. The value of the discount is taxed each pay period. For example:

        Assume Jane earns $1,000 each pay period (and is paid twice a month) and contributes 5% of her pay to the ESPP in the Fourth Quarter. The average price of Covance common stock on the first business day is $65.65 and the average price of Covance common stock on the last business day is $59.28. The purchase price for the quarter is $59.28.

        1. Jane's contribution in the Fourth Quarter equals $300.
        $1,000 x 5% = $50
        $50 x 6 pay periods = $300
        2. The value of Jane's 15% discount in the Fourth Quarter equals $52.92.
        $1,000 x 5% = $50
        $50 divided by 85% = $58.82
        $58.82 x 6 pay periods = $352.92
        $352.92 - $300 (Jane's contributions) = $52.92
        3. Jane's fourth quarter purchase equals 5 shares.
        $300 + $52.92 = $352.92 (total contributions made to Jane's account)
        $352.92 divided by $59.28 (Fourth Quarter purchase price) = 5.94 shares*

* The purchase can only be done in whole shares, so 5 shares are purchased in this example. The remaining cash is held by Covance on your behalf and used to purchase shares in the next quarter if you remain enrolled in the ESPP. Otherwise, it is refunded through your paycheck the following quarter.

Note: This hypothetical example is provided for illustrated purposes only and is not intended to represent a specific investment or portfolio.

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Who is eligible?
You are eligible to participate in ESPP if you are a regular full-time or part-time employee working at least 20 hours per week, and work in the United States. Please refer to the Plan Document for eligibility details.
Note: You are not eligible to participate in the ESPP while you work outside the United States, unless you remain on Covance's United States payroll.

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When can I enroll?
You may enroll in the ESPP at any time prior to January 1, 2011 except during the last 5 business days of the offering.

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How do I enroll?
Go to Covance's ESPP Enrollment Tool, read the Plan and choose your desired contribution percentage (1% - 10%). Once you see your ESPP selection on the "Benefits Update" page, you are enrolled in ESPP.

For more instructions on how to enroll online, please review the attachment below.

ESPP enrollment instructions

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Do I need to re-enroll each period?
When you first enroll you have the opportunity to have your election apply only to the current period, or the current period and all subsequent periods. If you wish to have your election apply to all subsequent periods, you MUST select the Carry Forward option.

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Are my payroll contributions into the ESPP Plan pre-tax?
Contributions to the ESPP are based on your gross (pre-tax) earnings, but they are after-tax deductions.

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When do I have access to the shares?
ESPP shares are purchased at the close of the period and deposited into individual employee accounts with UBS Financial Services Inc. Individual employee accounts will automatically be established by our firm for all employees enrolled in ESPP. The shares from each purchase period will be available as soon as it is administratively possible after the period ends.

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What are the fees charged by UBS Financial Services Inc. for various transactions?
Commission Charges (incurred with each sale transaction) are as follows:

Transaction Charges (incurred with each plan-related stock sale transaction)1

  • Commissions Paid2:
    • Flat Rate $0.06/share
    • Minimum transaction charge per day that a trade is made $25.00
  • Service & Handling Fee2 $5.25/per day that a trade is made
  • Transaction Fee2,3 Nominal Fee3

Optional Services

  • U.S. Destination Wires
    • <$1,000 $10.00
    • >$1,000 $25.00
  • Foreign Destination Wires $0
  • Express Delivery As Incurred
  • Payment via ACH No Charge
  • Currency Conversion No Charge

1All fees are subject to change.
2Multiple same day business transactions are aggregated at the end of each business day to
calculate applicable fees.
3Transaction fees: For each sale of stock in a brokerage account, UBS is required to pay a fee to a self regulatory organization, which must pay the U.S. Securities and Exchange Commission (SEC) a transaction fee based on volume of securities sold on its market. This nominal fee is subject to change by the SEC.

Additional fees apply for wiring of funds and overnight check delivery.

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How do I obtain current account information?
For current account information, please visit the UBS One Source website at www.ubs.com/onesource/cvd or call 1-800-597-6956 to speak with a Customer Service Representative. International employees please call 1-201-272-7665. The fax number is 1-201-352-8833.

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How do I sell my shares?
You may sell your ESPP shares by utilizing the Internet or by speaking with a Customer Service Representative. To sell your ESPP shares via the UBS One Source website please visit www.ubs.com/onesource/cvd or call 1-800-597-6956 to reach a Customer Service Representative. Outside the US please call 1-201-272-7665.

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Can I transfer my shares to another broker?
You may transfer shares to another broker via a letter of authorization to transfer shares to a different account, or an "ACAT" transfer from the receiving firm to transfer shares. For more information on transferring shares, call 1-800-597-6956 to speak with a Customer Service Representative. Outside the US please call 1-201-272-7665.

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Can I withdraw from the plan at any time? If so, are there penalties?
You can withdraw from the ESPP at any time prior to the last 5 business days of the offering, however, your contributions that have been deducted from your pay since the last quarter purchase will be used to purchase Covance stock in the current quarter and will not be refunded. To withdraw from a current offering, you must visit the UBS One Source website at www.ubs.com/onesource/cvd and select 'stop and hold' under Discontinue Contribution, or call 1-800-597-6956 to speak with a Customer Service Representative. Outside the US please call 1-201-272-7665

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When can I make changes to my elections?
You may start, increase, or decrease your ESPP elections at any time except during the last 5 business days of the offering.

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Who do I contact regarding ESPP enrollment and purchase questions?
For ESPP enrollment or purchase questions, please visit the UBS One Source website at www.ubs.com/onesource/cvd or call 1-800-597-6956 to speak with a Customer Service Representative. Outside the US please call 1-201-272-7665.

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Can I participate in both the ESPP and 401(k)?
YES!

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What happens to leftover balances at the end of a purchase period?
The purchase can only be done in whole shares. The remaining cash is held by Covance on your behalf and used to purchase shares in the next quarter if you remain enrolled in the ESPP. Otherwise, it is refunded through your paycheck the following quarter.

Your quarterly residual amount (held by Covance on your behalf) is now viewable on the UBS web site. Click on the following attachment to review a sample of where you can view your residual balance.

Residual balance sample

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What if I leave the company before the end of the purchase period?
Your final paycheck will include a refund of all contributions for that purchase period, and no shares will be issued. If you work through the end of the purchase period and leave before the purchase date for that period, you will receive a refund and no shares will be issued. You must be an employee as of the day of the purchase in order to receive shares for the previous quarter.

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What happens to my ESPP account if I leave the company?
Your ESPP account will remain open if you leave Covance. Your account will be subject to the same rules and you will receive the same commission structure you did as a Covance employee for as long as your account remains open.

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