UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 2, 2004
Covance Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 1-12213 22-3265977
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
210 Carnegie Center, Princeton, New Jersey 08540
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 609-452-4440
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
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Christopher A. Kuebler has formally announced his decision to retire from
his position as Chief Executive Officer of Covance Inc. (the "Company") at the
end of 2004 and from his position as Chairman of the Company's Board of
Directors at the end of 2005. On November 2, 2004, the Company entered into an
agreement (the "Agreement") with Mr. Kuebler pursuant to which Mr. Kuebler will
resign as Chief Executive Officer of the Company effective December 31, 2004
(the "Effective Date") and will continue to serve as an employee of the Company
as Chairman of the Board of Directors of the Company (the "Board") from the
Effective Date through and including December 31, 2005 (the "Service Period").
The Agreement provides that the terms of Mr. Kuebler's employment agreement with
the Company, dated November 7, 2001, shall remain in effect until the Effective
Date, at which time such employment agreement will be superceded in its entirety
by the terms of the Agreement and effectively terminated (as described under
Item 1.02 of this Current Report on Form 8-K). In connection with the execution
of the Agreement, the Company and Mr. Kuebler will also enter into a release
agreement, a copy of which is attached as an exhibit to the Agreement.
Pursuant to the terms of the Agreement, during the Service Period, Mr.
Kuebler will continue to receive his base salary at the annual rate in effect
immediately prior to the Effective Date and will continue to participate in the
benefit arrangements in which he participated immediately prior the Effective
Date. Mr. Kuebler will be entitled to receive benefits under the Company's
Supplemental Executive Retirement Plan ("SERP") upon his attainment of age 60 in
accordance with its terms. During the Service Period, all equity based awards
previously granted to Mr. Kuebler will remain subject to, and be exercisable in
accordance with, their existing terms. The Agreement also provides for a special
cash bonus of $341,698 to Mr. Kuebler on his 55th birthday in consideration of
the restrictive covenants described below and a special death benefit to his
spouse (or his surviving children if there is no surviving spouse) in the event
that he dies during the period commencing on November 2, 2004 through October
31, 2013.
Upon completion of the Service Period, and consistent with Mr. Kuebler's
retirement with the consent of the Board, all vested stock options will remain
outstanding and exercisable for the remainder of their respective terms, all
unvested stock options will be forfeited and all unvested restricted shares will
become immediately vested. In recognition of Mr. Kuebler's status as a founder
of the Company, Mr. Kuebler will be entitled to receive a number of restricted
shares of the Company's common stock on the Effective Date equal to an aggregate
fair market value of $1 million as of the Effective Date. These restricted
shares will vest on the earlier of the last day of the Service Period and a
change in control (as defined in the Agreement).
In the event that the Board terminates Mr. Kuebler's employment for cause
(as defined in the Agreement), the Service Period will be immediately
terminated, Mr. Kuebler's status as an employee will be immediately terminated,
he will not be entitled to any further payments, all vested stock options will
remain outstanding for 90 days following the date of termination and all
unvested restricted shares will be forfeited. The Board also may elect in its
discretion to terminate Mr. Kuebler's service as Chairman of the Board prior to
December 31, 2005 without cause, in which event Mr. Kuebler would continue to
receive the compensation and benefits he would otherwise receive as if his
service continued through December 31, 2005, unless his employment is terminated
on or prior to December 31, 2005 following a change in control, in which event
Mr. Kuebler would instead receive the benefits described below.
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The Agreement also provides for the following payments and benefits in the
event that Mr. Kuebler's employment is terminated by the Company (for reasons
other than cause) during the Service Period, or upon the expiration of the
Service Period, following a change in control: (i) a lump sum payment equal to
three years base salary; (ii) all stock options, restricted stock, deferred
compensation and similar benefits which have not become vested will become fully
vested on the date of the change in control; (iii) continued participation in
the Company's health and benefit plans until the earlier of three years and the
date he is covered by a successor employer's benefit plan; and (iv) a "gross-up
payment" for any amount that would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended. Mr. Kuebler will
also be entitled to the SERP benefits, the restricted stock founder grant and
the special cash bonus described above.
The Agreement also contains a confidentiality provision of unlimited
duration and non-competition and non-solicitation (of clients and employees)
restricted covenants for the two-year period following the expiration of the
Service Period.
A copy of the Agreement is being filed as Exhibit 10.1 to this Current
Report on Form 8-K and is incorporated by reference herein.
Item 1.02 Termination of a Material Definitive Agreement.
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Pursuant to the terms of the Agreement as described under Item 1.01 of this
Current Report on Form 8-K, the employment agreement, dated as of November 7,
2001, between the Company and Mr. Kuebler will be superceded in its entirety by
the terms of the Agreement and effectively terminated as of the Effective Date.
A description of the employment agreement is contained in the Company's
definitive proxy statement for the 2004 Annual Meeting of Stockholders, as filed
with the Securities and Exchange Commission on March 18, 2004, which description
is incorporated by reference in this Current Report on Form 8-K.
Item 5.02 Departure of Directors or Principal Executive Officers; Election of
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Directors; Appointment of Principal Officers.
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As described in Item 1.01 of this Current Report on Form 8-K,
Christopher A. Kuebler has decided to retire from service to the Company at the
end of 2005. Pursuant to the terms of the Agreement, Mr. Kuebler will resign
from his position and duties as Chief Executive Officer of the Company effective
as of the Effective Date. Mr. Kuebler will continue to serve as an employee of
the Company as Chairman of the Board through the Service Period. On November 3,
2004, the Company issued a press release announcing the foregoing.
The Company also announced in the press release that the Board has elected
Joseph L. Herring, the Company's President and Chief Operating Officer, to
succeed Mr. Kuebler as Chief Executive Officer effective January 1, 2005. Mr.
Herring, 49, joined the Company in September 1996 as Corporate Vice President
and General Manager of North America Early Development. From September 1999 to
November 2001, he held the position of Global President of Early Development
Services. Since November 2001, he has held the position of President and Chief
Operating Officer. In addition, Mr. Herring has been a member of the Board since
June 2004.
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A copy of the press release is furnished herewith as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
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(c) Exhibits
10.1 Agreement between Covance Inc. and Christopher A. Kuebler dated
November 2, 2004.
99.1 Press Release of Covance Inc. dated November 3, 2004.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COVANCE INC.
Date: November 4, 2004 By: /s/ James W. Lovett
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Name: James W. Lovett
Title: Corporate Senior Vice President,
General Counsel and Secretary
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Exhibit Index
Exhibit No. Description
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10.1 Agreement between Covance Inc. and Christopher A. Kuebler dated
November 2, 2004.
99.1 Press Release of Covance Inc. dated November 3, 2004.
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