<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1999
REGISTRATION NO. 333-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COVANCE INC.
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 210 CARNEGIE CENTER 22-3265977
(State of Incorporation) PRINCETON, NEW JERSEY 08540-6233 (I.R.S. Employer
(Address of principal executive offices) Identification Number)
</TABLE>
COVANCE INC.
DEFERRED STOCK UNIT PLAN FOR NON-EMPLOYEE
MEMBERS OF THE BOARD OF DIRECTORS
(Full Title of the Plan)
Jeffrey S. Hurwitz, Esq.
Corporate Senior Vice President,
General Counsel and Secretary
Covance Inc.
210 Carnegie Center
Princeton, New Jersey 08540-6233
(Name and address of agent for service)
(609) 452-4430
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Title of Securities to Amount to be Proposed Maximum Proposed Maximum Amount of
be Registered Registered Offering Price per Aggregate Offering Registration Fee
Share(1) Price(1)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock, Par
Value $.01 per share 50,000 $9.9375 $496,875 $139
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
(1) Estimated solely for purposes of determining the registration fee in
accordance with Rule 457(c) and (h) under the Securities Act of 1933 based
on the average of the high and low prices for the Company's Common Stock
reported on the New York Stock Exchange on November 5, 1999.
<PAGE>
PART I
INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with the
Introductory Note to Part I of Form S-8.
ITEM 2. COMPANY INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with the
Introductory Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed or to be filed by Covance Inc. ("the
Company") with the Securities and Exchange Commission (the "Commission") are
incorporated by reference in this Registration Statement as of their respective
dates:
1. The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 filed pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), containing audited
financial statements for the Registrant's latest fiscal year, including
any amendment or report filed for the purpose of updating such
description.
2. The Company's Quarterly Report on Form 10-Q for the period
ending March 31, 1999.
3. The Company's Quarterly Report on Form 10-Q for the period
ending June 30, 1999.
4. The Company's Quarterly Report on Form 10-Q for the
period ending September 30, 1999.
5. The Company's Proxy Statement in connection with the 1999
Annual Meeting of Shareholders filed with the Commission on March 8,
1999.
6. The Company's Current Reports on Form 8-K filed with the
Commission on May 4, 1999 and June 25, 1999.
7. The description of the Company's Common Stock contained in
the Company's Registration Statement on Form 10, declared effective by
the Commission on November 26, 1996 pursuant to Section 12(b) of the
Exchange Act, including any amendment or report filed for the purpose
of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing with the
Commission of a post-effective amendment to this Registration Statement that
indicates that all securities offered have been sold or effects the
deregistration of the balance of such securities then remaining unsold shall be
deemed to be incorporated herein by reference and to be part hereof from the
date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Incorporated by reference to Registrant's Form 10 declared effective by
the Commission on November 26, 1996 pursuant to Section 12(b) of the Exchange
Act, including any amendment or report filed for the purpose of updating such
description.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Jeffrey S. Hurwitz, Corporate Senior Vice President, General Counsel
and Secretary of the Company, issued the opinion as to the legality of
securities being registered herein, attached as Exhibit 5.1 hereto. Mr. Hurwitz
participates in the Company stock and option benefit plans and holds directly
shares of the Company's Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Delaware Law, the Company's Restated Certificate of
Incorporation provides that directors of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, relating to prohibited dividends or distributions or the repurchase or
redemption of stock or (iv) for any transaction from which the director derives
an improper personal benefit. In addition, the Company's Restated Certificate of
Incorporation provides for indemnification of the Company's officers and
directors to the fullest extent permitted under Delaware law. Section 145 of the
Delaware Law provides that a corporation may indemnify any persons, including
officers and directors, who were or are, or are threatened to be made, parties
to any threatened, pending or completed legal action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such corporation), by reason of the fact that such person
was an officer, director, employee or agent of such corporation or is or was
serving at the request of such corporation as an officer, director, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, for criminal proceedings,
had no reasonable cause to believe that his conduct was unlawful. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such officer or
director actually and reasonably incurred. Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"), may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
The directors and officers of the Company are insured against certain
liabilities under the Company's directors' and officers' liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following exhibits are filed herewith:
Exhibit
NO. DOCUMENT
4.1 Covance Inc. Deferred Stock Unit Plan for
Non-Employee Members of the Board of Directors
5.1 Opinion of General Counsel as to the legality of
securities being registered.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of General Counsel (contained in the opinion
filed as Exhibit 5.1 to this Registration Statement).
24.1 Power of Attorney (included on Signature Page).
ITEM 9. UNDERTAKINGS.
The undersigned Company hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act.
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in this Registration Statement.
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (i) and (ii) of this section do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) that, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Princeton and State of New Jersey on November
10, 1999.
COVANCE INC.
By: /S/ CHRISTOPHER A. KUEBLER
Christopher A. Kuebler
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Jeffrey S. Hurwitz and Ross A. Hyams each of them, his true and lawful
attorneys-in-fact and agents each with full power of substitution and
resubstitution for him in any and all capacities to sign any and all amendments
(including pre- or post-effective amendments) to this Registration Statement on
Form S-8 and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, hereby ratifying and confirming all that
each such attorney-in-fact, or his substitute or substitutes, may do or cause to
be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chairman of the Board,
/S/ CHRISTOPHER A. KUEBLER President and Chief Executive Officer
Christopher A. Kuebler (Principal Executive Officer) November 10, 1999
Corporate Senior Vice President and
/S/ CHARLES C. HARWOOD, JR. Chief Financial Officer (Principal
Charles C. Harwood, Jr. Financial Officer) November 10, 1999
/S/ MICHAEL GIANNETTO Vice President and Controller
Michael Giannetto (Principal Accounting Officer) November 10, 1999
/S/ ROBERT M. BAYLIS
Robert M. Baylis Director November 10, 1999
/S/ VAN C. CAMPBELL
Van C. Campbell Director November 10, 1999
/S/ IRWIN LERNER
Irwin Lerner Director November 10, 1999
/S/ J. RANDALL MACDONALD
J. Randall MacDonald Director November 10, 1999
/S/ NIGEL W. MORRIS
Nigel W. Morris Director November 10, 1999
/S/ KATHLEEN G. MURRAY
Kathleen G. Murray Director November 10, 1999
/S/ WILLIAM A. UGHETTA
William A. Ughetta Director November 10, 1999
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO DOCUMENT PAGE NO.
4.1 Covance Inc. Deferred Stock Unit Plan for Non-Employee
Members of the Board of Directors. FILED HEREWITH.
5.1 Opinion of the General Counsel as to the legality of
securities being REGISTERED. FILED HEREWITH.
23.1 Consent of PricewaterhouseCoopers LLP. FILED HEREWITH.
23.2 Consent of General Counsel (contained in opinion filed
as Exhibit 5.1 to this Registration Statement). FILED
HEREWITH.
24.1 Power of Attorney (included on Signature Page). FILED
HEREWITH.
<PAGE>
EXHIBIT 4.1
DEFERRED STOCK UNIT PLAN FOR NON-EMPLOYEE MEMBERS OF
THE BOARD OF DIRECTORS OF COVANCE INC.
ARTICLE I
INTRODUCTION
1.01. NAME OF PLAN.
This Plan shall be known as the Deferred Stock 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. ARTICLE II
AWARDS AND PAYMENT ELECTIONS
2.01. AWARDS.
On January 30, 1998 and on January 30th of each calendar year after
1998, each director of Covance Inc. who is a member of the Board on that date
shall receive an award of two hundred (200) hypothetical shares of Covance
Common Stock. In addition, each director who first becomes a member of the Board
on a date after January 30, 1998 for the 1998 calendar year or January 30 during
any calendar year after 1998, as applicable, shall receive an award thirty (30)
days after he first becomes a member of the Board of two hundred (200)
hypothetical shares of Covance Common Stock. 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 is a member of the Board and is not an employee of
Covance Inc. or any Subsidiary or Affiliate thereof. Each Award shall be
automatic, shall not require any action on the part of the Board or its
designees, and shall be made by crediting the director's account maintained
pursuant to Section 3.01 with two hundred (200) hypothetical shares of Covance
Common Stock.
2.02. PAYMENT ELECTIONS.
(a) EXPRESS ELECTION. A director who receives an Award pursuant to
Section 2.01 may submit an election to the Senior Vice President, General
Counsel or his/her successor or designee ("SVP-Legal") that specifies the time
and the manner in which the director wishes to receive payments with respect to
the Award. Such election shall satisfy each of the requirements set forth in
paragraphs (1) through (5), below.
(1) DEADLINE FOR SUBMITTING ELECTION. A director's election
with respect to an Award shall be submitted on or before the Award
Date. Notwithstanding the preceding sentence, a director's election
with respect to an Award made on January 30, 1998, shall be submitted
on or before April 30, 1998.
<PAGE>
(2) FORM OF ELECTION. The election shall be in writing and in
a form acceptable to the SVP-Legal.
(3) PAYMENT COMMENCEMENT DATE. The election shall specify the
date, selected by the director in accordance with Section 4.02, on
which payments with respect to the Award are to commence under the Plan
(I.E., any date on or after his Release Date).
(4) METHOD OF PAYMENT. The election shall specify the method,
selected by the director in accordance with Section 4.03, in which
payments with respect to the Award are to be made under the Plan (I.E.,
whether such payments are to be made in the form of a lump sum, annual
installments, or flexible installments, and whether such payments are
to be made in cash or in Covance Common Stock).
(5) ELECTION IRREVOCABLE. The payment commencement date and
the method of payment elected by a director with respect to an Award
pursuant to paragraphs (3) and (4), above, shall not be revocable or
subject to modification at any time. Notwithstanding the foregoing, a
director may at any time submit a request to the SVP-Legal to modify
the payment commencement date, the method of payment, or both, with
respect to the Award, provided that the modification does not become
effective before the director's Release Date, and provided further that
the request is submitted before any payment is made to the director
with respect to the Award pursuant to Article IV. If the modification
has the effect of accelerating all or part of any payment otherwise due
the director under Article IV, the request shall be subject to the
approval of the SVP-Legal, which approval the SVP-Legal may grant or
deny in his sole discretion. If the modification has the effect of
deferring until a later calendar year all or part of any payment
otherwise due the director under Article IV, the request shall be
granted to the extent of such deferral, provided that the request is
submitted on or before the last day of the calendar year immediately
preceding the calendar year in which the payment otherwise would have
been made to the director under Article IV. If the modification has the
effect of deferring until a later date within the same calendar year
all or part of any payment otherwise due the director under Article IV
during such calendar year, the request shall be granted to the extent
of such deferral, provided that the request is submitted before the
date on which the payment otherwise would have been made to the
director under Article IV. A director may, in his sole discretion,
specify that his request for a modification pursuant to this paragraph
(5) be submitted to the Board or the Committee for its prior approval.
(b) DEFAULT ELECTION. A director who fails to make an express election
with respect to an Award in accordance with subsection (a), above, shall be
deemed to have made such an election. The payment commencement date and the
method of payment under a deemed election pursuant to this subsection (b) shall
be the same as specified in the director's most recent express election in
effect on the Award Date under subsection (a), above. If the director has no
express election in effect on the Award Date under subsection (a), above, or if
his most recent express election under that subsection does not satisfy the
requirements of Sections 4.02 and 4.03 with respect to his current Award, then
the payment commencement date and the method of payment under the deemed
election pursuant to this subsection (b) shall be the same as specified in the
director's most recent deferral election in effect on the Award Date under the
Deferred Compensation Plan. If the director has no deferral election in effect
on the Award Date under the Deferred Compensation Plan, or if his most recent
deferral election under that plan does not satisfy the requirements of Sections
4.02 and 4.03 with respect to his current Award, he shall be deemed to
<PAGE>
have elected to receive his payments with respect to the Award in 10 annual
installments payable in cash in accordance with Section 4.03(2) commencing on
his Release Date. A deemed election pursuant to this subsection (b) shall not be
revocable or subject to modification except in accordance with the provisions of
subsection (a)(5), above.
2.03. 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.
Notwithstanding Section 2.02(a)(5), a director may, at any time, revoke a prior
designation and make a new designation pursuant to this Section 2.03. Any such
designation or revocation shall be in writing and shall be submitted to the
SVP-Legal in such form and in such manner as is acceptable to the Board. If a
director dies before he has received all payments due him under the Plan, the
remaining payments shall be made to his beneficiaries in accordance with his
designation, or, if there is no such beneficiary, then to the director's
personal representative. All such payments shall be made in accordance with the
payment schedule (or schedules) that would have applied to the director had he
survived, unless the director specified in his designation that a shorter
payment schedule (or schedules) is to take effect upon his 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
shall be maintained to the extent necessary for the administration of the Plan.
For example, it may be necessary to maintain separate subaccounts where the
director has specified different payment commencement dates or different methods
of payment with respect to his Awards granted on different Award Dates.
3.02. INVESTMENTS.
(a) DEEMED INVESTMENT IN COVANCE COMMON STOCK. Until a director's
Release Date, the entire balance in his account shall be treated as if it were
invested in Covance Common Stock. In addition, on or after a director's Release
Date, the portion of the balance in his account that he has elected to receive
payments in the form of Covance Common Stock pursuant to Section 4.03(4) 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 hypotheti-
<PAGE>
cal 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 on or
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.
(b) DEEMED INVESTMENT IN DEFERRED COMPENSATION PLAN INVESTMENT OPTION.
On and after a director's Release Date, the portion of the balance in his
account that is not required to be treated as if it were invested in Covance
Common Stock on and after his Release Date pursuant to subsection (a), above,
shall be treated as if it were invested in the investment option specified in
Section 5(b) of the Deferred Compensation Plan. The deemed investment in the
investment option specified in Section 5(b) of the Deferred Compensation Plan of
all or part of the balance in a director's account shall be determined in
accordance with the following rules:
(1) COVANCE COMMON STOCK. On and after a director's Release
Date, the portion of the balance in his account that is not required to
be treated as if it were invested in Covance Common Stock on and after
his Release Date pursuant to subsection (a), above, shall not be
treated as if it were invested in Covance Common Stock. However,
subject to paragraph (2) below, at any time on or after his Release
Date, a director may elect to have all or part of such portion of the
balance in his account treated as if it were invested in the Market
Value Account described in Section 5(c) of the Deferred Compensation
Plan.
(2) LIMITATION ON DEEMED INVESTMENT IN MARKET VALUE ACCOUNT.
During the six-month period following his Release Date, a director
shall not be entitled to direct that any
<PAGE>
portion of the balance in his account be treated as invested in the
Market Value Account described in Section 5(c) of the Deferred
Compensation Plan if at any previous time such portion was treated as
invested in any investment other than the Market Value Account
described in Section 5(c) of the Deferred Compensation 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 4.04(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 payments to a director with respect to an Award shall commence on
the date selected by the director in accordance with this Section 4.02. Such
date shall be a date that is on or after his Release Date, and that is no later
than the last day of his life expectancy, determined as of the age he will have
attained on the payment commencement date. A director may select different
payment commencement dates with respect to his Awards granted on different Award
Dates. In addition, a director may select different payment commencement dates
with respect to different portions of his Award granted on the same Award Date.
4.03. METHOD OF PAYMENT.
The payments to a director with respect to an Award shall be made
pursuant to the method selected by the director in accordance with paragraph
(1), (2), or (3), below. All payments to a director with respect to an Award
shall be made solely in cash, except as provided in paragraph (4), below, which
permits a director to elect to receive payments with respect to an Award in the
form of Covance Common Stock. A director may select different methods of payment
with respect to his Awards granted on different Award Dates. In addition, a
director may select different methods of payment with respect to different
portions of his Award granted on the same Award Date.
(1) LUMP SUM. The director may elect to receive payment with
respect to an Award in a lump sum. The lump sum shall be payable to the
director on the payment commencement date and shall equal the portion
of the balance in his account attributable to the Award, determined as
of the payment commencement date.
(2) ANNUAL INSTALLMENTS. The director may elect to receive the
payments with respect to an Award in two or more annual installments.
If so, the director shall indicate in
<PAGE>
his election pursuant to Section 2.02(a) the number of annual
installments he wishes to elect. The number of annual installments
elected shall not exceed 20 and shall not extend the period of payment
beyond the director's life expectancy, determined as of the age he will
have attained on the payment commencement date. If the number of annual
installments elected by a director would otherwise exceed the limits in
the preceding sentence, he shall be deemed to have elected the maximum
number of annual installments permitted under the preceding sentence.
The annual installments shall be payable to the director beginning on
the payment commencement date and on each anniversary thereof until the
total number of installments elected by the director have been paid.
Each annual installment shall equal the portion of the balance in the
director's account attributable to the Award, determined as of the date
the installment is payable and after giving effect to the previous
annual payments, if any, multiplied by a fraction, the numerator of
which is one, and the denominator of which is the excess of the total
number of installments elected by the director over the number of
installment payments previously made under the schedule. For example,
the respective fractions under a 5-year installment schedule are 1/5
for the first installment, 1/4 for the second installment, 1/3 for the
third installment, 1/2 for the fourth installment, and 1/1 for the
fifth and final installment.
(3) FLEXIBLE INSTALLMENTS. The director may elect to receive
the payments with respect to an Award in accordance with any other
reasonable method he specifies. Such payments shall be referred to
herein as flexible installments. If a director elects to receive the
payments with respect to an Award in the form of flexible installments,
he shall indicate in his election pursuant to Section 2.02(a) the
method under which he wishes the date and the amount of each such
installment to be determined. Flexible installments shall be payable to
the director on the dates and in the amounts determined in accordance
with the method specified in his election. Regardless of the method of
payment he elects, no installment shall be payable to a director before
the payment commencement date he has selected in accordance with
Section 4.02. Nor shall any installment be payable to a director to the
extent that the portion of the balance in his account attributable to
the Award has been depleted, determined as of the date the installment
is otherwise payable to him. Furthermore, the period over which
flexible installments are paid to a director shall not exceed the
lesser of 20 years or the director's life expectancy, determined as of
the age he will have attained on the payment commencement date. If the
period over which a director has elected to receive flexible
installments would otherwise exceed the maximum period permitted under
the preceding sentence, a final installment shall be payable to the
director upon the expiration of such maximum period. Such final
installment shall equal the portion of the balance in the director's
account attributable to the Award, determined as of the date the
installment is payable.
(4) PAYMENT IN THE FORM OF COVANCE COMMON STOCK.
Notwithstanding the general requirement of this Section 4.03 that all
payments to a director with respect to an Award be made solely in cash,
a director may elect to receive payments with respect to an Award in
the form of Covance Common Stock rather than cash. Distributions in the
form of Covance Common Stock shall be made in whole shares only, and
any resulting fractional shares shall be distributed in cash. In
accordance with Section 3.02(a), the portion of the balance in a
director's account with respect to which he has elected to receive
payments in the form of Covance Common Stock shall at all times be
treated as invested solely in Covance Common Stock.
<PAGE>
4.04. 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.
<PAGE>
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. Unless otherwise provided, the Board shall be deemed to have delegated
such authority and discretion to the Committee.
(b) PLAN TERMINATION. Except to the extent that the Plan specifically
provides otherwise, the Board may terminate the Plan at any time. 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
<PAGE>
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 annual 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.
<PAGE>
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
Inc..
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
<PAGE>
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 January
30, 1998, 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 or more
of the combined voting power of the
Surviving Corporation's then outstanding
voting securities;
<PAGE>
(B) a complete liquidation or dissolution of
Covance Inc.; or
(C) an agreement for the sale or other
disposition of all or substantially all of the assets
of Covance Inc. to any Person (other than a transfer
to a Subsidiary).
CHANGE IN CONTROL PROVISIONS. "Change in Control Provisions"
shall mean (1) the last sentence of Section 4.04(c), (2) Section 5.03,
and (3) this Section 5.04(b).
COMMITTEE. "Committee" shall mean the Compensation and
Organization Committee of the Board, or any successor committee
thereto.
DEFERRED COMPENSATION PLAN. "Deferred Compensation Plan" shall
mean the Deferred Compensation Plan for Directors of Covance Inc.,
dated as of December 3, 1996 as amended and in effect from time to
time, or any successor plan thereto.
EXCHANGE ACT. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended and in effect from time to time, or
any successor thereto.
COVANCE COMMON STOCK. "Covance Common Stock" shall mean the
common stock of Covance Inc..
NON-CONTROL TRANSACTION. "Non-Control Transaction" shall mean
a transaction described in clauses (i) through (iii) of subparagraph
(4)(A) of the definition of "Change in Control" herein.
PERSON. "Person" shall mean any individual, firm, corporation,
partnership, joint venture, association, trust, or other entity.
PLAN. "Plan" shall mean the Deferred Stock Unit Plan for
Non-Employee Members of the Board of Directors of Covance Inc., as
amended and in effect from time to time.
RELEASE DATE. "Release Date" shall mean, with respect to a
director, the first day on which the director is no longer either a
"director" or an "officer" of 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.
<PAGE>
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.
<PAGE>
EXHIBIT 5.1
November 10, 1999
Covance Inc.
210 Carnegie Center
Princeton, New Jersey 08540
Re: Covance Inc.
Deferred Stock Unit Plan for Non-Employee
Members of the Board of Directors
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
I am issuing this opinion in my capacity as General Counsel of
Covance Inc., a Delaware corporation (the "Company"), in connection with the
registration by the Company under the Securities Act of 1933, as amended (the
"Securities Act"), of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), on a Registration Statement on Form S-8 (the "Registration
Statement"). The Registration Statement relates to the issuance and sale of up
to 50,000 shares of Common Stock pursuant to the Covance Inc. Deferred Stock
Unit Plan for Non-Employee Members of the Board of Directors comprising a
non-employee Director benefit plan (the "Plan"). Capitalized terms used and not
otherwise defined herein shall have the meanings ascribed to them in the
Registration Statement.
As such counsel, I have made such legal and factual
examinations and inquiries as I have deemed advisable for the purpose of
rendering this opinion. Based upon the foregoing, it is my opinion that the
Common Stock, when issued, delivered and paid for in the manner described in the
Plan, will be validly issued, fully paid and non-assessable.
The opinions contained herein relate solely to the Delaware
General Corporation Law, and I express no opinion herein concerning the laws of
any other jurisdiction. This opinion is rendered to the Company in connection
with the filing by the Company of the Registration Statement with the Securities
and Exchange Commission pursuant to the Securities Act and is solely for the
benefit of the Company in connection with such filing. The opinions expressed
herein may not be used or relied on by any other person, nor may this letter or
any copies thereof be furnished to a third party, filed with a government
agency, quoted, cited or otherwise referred to without my prior written consent,
except as noted below.
<PAGE>
November 10, 1999
Page 2
I hereby consent to the reference to myself under the caption
"Legal Matters" in the prospectus included in the Registration Statement. I
hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement.
Very truly yours,
/s/ Jeffrey S. Hurwitz
-------------------------------
Jeffrey S. Hurwitz
Corporate Senior Vice President,
General Counsel and
Secretary
<PAGE>
EXHIBIT 23.1
November 10, 1999
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 20, 1999, appearing on page 26
of Covance Inc.'s Annual Report on Form 10-K for the fiscal year ended December
31, 1998.
/s/ PricewaterhouseCoopers LLP
