EXHIBIT 15
XXXXXX BROTHERS
February 15, 2007
TRANSACTION
SmithKline Xxxxxxx Corporation
Xxx Xxxxxxxx Xxxxx
000 X. 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx, fax 000-000-0000
CC: Xxxxxx Xxxxxxxx,
Global Deal Id: 2883070
Effort Id: [_____]
Dear Sir or Madam:
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the Transaction entered into between Xxxxxx Brothers
Finance S.A. ("Party A") and SmithKline Xxxxxxx Corporation ("Party B") on the
Trade Date specified below (the "Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
This Confirmation supplements, forms part of, and is subject to, the ISDA Master
Agreement dated as of May 21, 2002, as amended and supplemented from time to
time (the "Agreement"), between Party A and Party B. All provisions contained in
the Agreement shall govern this Confirmation except as expressly modified below.
The definitions and provisions contained in the 1996 ISDA Equity Derivatives
Definitions (the "Equity Definitions") and the 2000 ISDA Definitions (the "Swap
Definitions", and together with the Equity Definitions, the "Definitions"), in
each case as published by the International Swaps and Derivatives Association,
Inc. ("ISDA") are incorporated into this Confirmation. References herein to
"Transaction" shall be deemed references to "Swap Transaction" for purposes of
the Swap Definitions and "Share Swap Transaction" for purposes of the Equity
Definitions. In the event of any inconsistency between the Equity Definitions
and the Swap Definitions, the Equity Definitions will govern. In the event of
any inconsistency between either set of Definitions and this Confirmation, this
Confirmation will govern.
Party A and Party B each represents that entering into the Transaction is within
its capacity, is duly authorized and does not violate any laws of its
jurisdiction of organization or residence or the terms of any agreement to which
it is a party. Party A and Party B each represents that (a) it is not relying on
the other party in connection with its decision to enter into this Transaction,
and neither party is acting as an advisor to or fiduciary of the other party in
connection with this Transaction regardless of whether the other party provides
it with market information or its views; (b) it understands the risks of the
Transaction and any legal, regulatory, tax, accounting and economic consequences
resulting therefrom; and (c) it has determined based upon its own judgment and
upon any advice received from its own professional advisors as it has deemed
necessary to consult that entering into the Transaction is appropriate for such
party in light of its financial capabilities and objectives. Party A and Party B
each represents that upon due execution and delivery of this Confirmation, it
will constitute a legally valid and binding obligation, enforceable against it
in accordance with its terms, subject to applicable principles of bankruptcy and
creditors' rights generally and to equitable principles of general application.
XXXXXX BROTHERS FINANCE S.A.
XXXXXXXXXX 00 - X.X. XXX 0000 - XX-0000 XXXXXX - XXXXXXXXXXX
TELEPHONE (00-0) 000 00 00 - TELEFAX (00-0) 000 00 00 - TELEX 812096 LBFS CH
The terms of the Transaction to which this Confirmation relates are as follows:
Agent: Xxxxxx Brothers Inc. ("LBI") is acting as agent
on behalf of Party A and Party B for this
Transaction. LBI has no obligations, by
guarantee, endorsement or otherwise, with
respect to the performance of this Transaction
by either party.
(A) GENERAL TERMS
Trade Date: February 15, 2007
Effective Date: Three (3) Exchange Business Days next following
the Trade Date
Valuation Date: Each Averaging Date
Valuation Time: 4:00 p.m. (local time in New York)
Shares: The common stock of Quest Diagnostics Incorporated
(the "Issuer") Ticker:
DGX
Exchange: New York Stock Exchange
Related Exchange(s): Any exchange on which options or futures on the
Shares are traded.
Number of Shares: 2,000,000
Initial Price: USD 52.5720
Depreciation Floor: USD 52.5720
Appreciation Cap: USD 82.6011
Final Price: To the extent Physical Settlement is
applicable, Final Price shall be the closing
price per Share quoted by the Exchange on each
Averaging Date at the Valuation Time, without
regard to extended or after hours trading. To
the extent Cash Settlement is applicable, Final
Price shall be the arithmetic average of the
Relevant Prices, and "Relevant Price" shall be
the closing price per Share quoted by the
Exchange on each Averaging Date at the
Valuation Time, without regard to extended or
after hours trading.
Averaging Dates: November 25, 2014, November 26, 2014, November
27, 2014, November 28, 2014, December 01, 2014,
December 02, 2014, December 03, 2014, December
04, 2014, December 05, 2014, December 08, 2014
Averaging Date Market
Disruption: Modified Postponement
Delivery Adjustment: (a) If the Final Price is less than or equal to
the Depreciation Floor, then the Delivery
Adjustment equals 1.0
(b) If the Final Price is greater than the
Depreciation Floor, but less than or equal to
the Appreciation Cap, then the Delivery
Adjustment equals a fraction, the numerator of
which is the Depreciation Floor and the
denominator of which is the Final Price
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Page 2 of 12
(c) If the Final Price is greater than the
Appreciation Cap, then the Delivery Adjustment
equals 1.0 minus ((the Appreciation Cap minus
the Depreciation Floor) divided by the Final
Price).
(B) PARTY A'S PAYMENT OF
PURCHASE PRICE
Purchase Price: USD 105,144,000
Payment Date: To the extent Physical Settlement is
applicable, Party A will pay the Purchase Price
divided by the Number of Averaging Dates to
Party B on each Delivery Date. To the extent
Cash Settlement is applicable, Party A will pay
the Purchase Price to Party B on the Cash
Settlement Payment Date.
(C) PARTY B'S DELIVERY
OBLIGATIONS
Settlement Amount: On each Averaging Date, the relevant Delivery
Adjustment multiplied by the relevant Number of
Shares for the relevant Averaging Date,
provided that if such calculation results in
any fractional Share, the Settlement Amount
shall be rounded up to the next whole number of
Shares and Party A shall pay the cash value
thereof to Party B.
Cash Settlement Amount: The Delivery Adjustment multiplied by the
Number of Shares multiplied by the Final Price
Delivery Date: Three (3) Exchange Business Days next following
each Averaging Date
Settlement Option: Party B may elect Physical or Cash Settlement
(with respect to all or a portion of the Number
of Shares) by delivering a written notice of
such election to Party A on or prior to the
Election Date. If Party B elects Physical or
Cash Settlement with respect to a portion of
the Number of Shares, (i) Party B will be
deemed to elect the other Settlement Option
with respect to the remainder of the Number of
Shares, (ii) the Number of Shares for each
settlement option shall be deemed to be the
portion with respect to which such election was
made and (iii) the Purchase Price shall be
allocated between the settlement options
proportionally to the Number of Shares for each
settlement option. If Party B does not provide
such notice, Physical Settlement shall apply if
the Posted Collateral on the Election Date
consists of a number of freely-tradable Shares
equal to the Number of Shares in book entry
form; otherwise, Cash Settlement shall apply.
Election Date: The fifth (5th) Exchange Business Day prior to
the first Averaging Date
Physical Settlement: To the extent Physical Settlement applies, the
Transaction shall expire in equal proportions
of Shares on each Averaging Date, with the
Delivery Date for each such Averaging Date
occurring three (3) Exchange Business Days
after each such Averaging Date. On each such
Delivery Date Party B will deliver a number of
freely-tradable Shares in book-entry form equal
to the Settlement Amount to Party A, free and
clear of any Encumbrances or Transfer
Restrictions. Party B acknowledges and
understands that any such delivery may require
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Party B to provide an opinion of counsel and
other documentation in a form acceptable to the
Issuer and the transfer agent for the Shares to
ensure the conversion of such Shares into
book-entry form in advance of any delivery.
Cash Settlement: To the extent Cash Settlement applies, Party B
will pay the Cash Settlement Amount to Party A
on the Cash Settlement Payment Date.
Cash Settlement Payment Date: Three Exchange Business Days next following the
final Averaging Date
Collateral: If Party B elects to Transfer (and Transfers)
the Independent Amount to Party A (which
Independent Amount shall constitute Eligible
Collateral with respect to Party B), Party A's
Exposure under this Transaction shall be zero
and Party B's Credit Support Amount (as Secured
Party) shall be calculated without subtracting
the Independent Amounts referred to in clause
(iii) of the definition thereof; otherwise,
Party A's Exposure under this Transaction shall
be calculated as provided in the Credit Support
Annex. At any time Party B may revoke such
election by Transferring to Party A under the
Credit Support Annex the then Delivery Amount
(determined ignoring the Independent Amount and
with Party A's Exposure under this Transaction
being calculated as provided in the Credit
Support Annex), in which case Party A shall
promptly Transfer the Independent Amount to
Party B. Party B acknowledges and understands
that any revocation of its election to Transfer
the Independent Amount may result in such
Shares becoming subject to transfer
restrictions under the Securities Act of 1933,
as amended (the "1933 Act"), if such Shares
have previously been converted into book-entry
form. "Independent Amount" means, with respect
to Party B for this Transaction, a number of
Shares free and clear of any Encumbrances or
Transfer Restrictions (other than transfer
restrictions arising under the 1933 Act and
other than under the Stockholders Agreement,
dated as of August 16, 1999, between SmithKline
Xxxxxxx PLC and the Issuer (the "Stockholders
Agreement")) equal to the Number of Shares. The
Independent Amount shall include all
Distributions with respect to all Posted
Collateral (other than cash dividends which are
not Extraordinary Dividends). Notwithstanding
any provision to the contrary in the Credit
Support Annex, the Independent Amount shall be
delivered by Party B without regard to the
Minimum Transfer Amount and, except as provided
above, Party A shall have no obligation to
return the Independent Amount to Party B until
all of Party B's obligations with respect to
this Transaction have been satisfied. Party B
agrees to provide three stock powers executed
in blank with respect to each certificate
evidencing any Shares delivered as Posted
Collateral and to update such stock powers as
necessary.
Party A may use any Shares constituting Posted
Collateral and the Independent Amount pursuant
to Section 6(c) of the Credit Support Annex
only upon Party B's consent. Party A agrees
that if it uses any Shares pursuant to Section
6(c) of the Credit Support Annex, it will
provide additional collateral to Party B, the
terms of which shall be consistent with market
practice for stock loans of U.S. liquid equity
securities unless the parties agree otherwise.
Party B acknowledges and understands that any
such use may require Party B to provide an
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opinion of counsel and other documentation in a
form acceptable to the Issuer and the transfer
agent for the Shares to ensure the conversion
of such Shares into book-entry form prior to
such use. Party A agrees to cooperate in good
faith with respect to the conversion of Shares
into book-entry form. Party A agrees that LBI
will hold any Shares constituting Posted
Collateral in connection with this Transaction,
that Party B is the beneficial owner of such
Shares, and that, if such Shares are being held
by LBI in book-entry form and are not being
used by Party A pursuant to Section 6(c) of the
Credit Support Annex, LBI will comply with its
obligations under applicable law and regulation
(including the rules of the New York Stock
Exchange and the National Association of
Securities Dealers) to forward to the
beneficial owner all proxy and other materials
properly furnished to it by the Issuer, in
accordance with its standard business
practices.
ADJUSTMENTS:
Method of Adjustment: Calculation Agent Adjustment
Extraordinary Dividends: For purposes of this Transaction and the
definition of a "Potential Adjustment
Event" (without limiting the generality of
clause (iii) of Section 9.1(e) of the
Equity Definitions), an "Extraordinary
Dividend" shall mean, as calculated by the
Calculation Agent, (i) any cash dividend
or distribution declared with respect to
the Shares at a time when the Issuer has
not previously declared or paid dividends
or distributions on such Shares for the
prior four quarterly periods; (ii) any
increase or decrease by more than 5%
(determined on an annualized basis) in the
then current quarterly dividend or (iii)
any other "special" cash or non-cash
dividend on or distribution with respect
to the Shares which is, by its terms or
declared intent, declared and paid outside
the normal operations or normal dividend
procedures of the Issuer.
EXTRAORDINARY EVENTS:
Consequences of Merger
Events:
(a) Share-for-Share: Alternative Obligation
(b) Share-for-Other: Cancellation and Payment
(c) Share-for-Combined: Alternative Obligation with respect to the
New Shares and Cancellation and Payment
with respect to the Other Consideration
Alternative Obligation: The applicable definition of "Alternative
Obligation" in subsections 9.3(b)and (d)
of the Equity Definitions shall be amended
by adding the following at the end of each
such subsection:
"including any one or more of the Initial
Price, Final Price, Relevant Price, Number
of Shares, Appreciation Cap, Depreciation
Floor, Delivery Adjustment and any other
variable relevant to the exercise,
settlement or payment terms of each such
Transaction. In addition, the Calculation
Agent will determine if the change in the
volatility of the New Shares (as compared
with the Shares) affects the theoretical
value of any such Transaction, and if so,
shall in a commercially reasonable manner
make an adjustment to the Appreciation Cap
to reflect such change in theoretical
value. Any adjustment made pursuant to
this paragraph will be effective as of the
date determined by the Calculation Agent
on or following the Merger Date.
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NATIONALIZATION, INSOLVENCY, Cancellation and Payment
HEDGING DISRUPTION EVENT,
BORROW LOSS OR INCREASE IN
BORROW COSTS:
Definitions: The definition of "Merger Event" in Section
9.2(a) of the Equity Definitions shall be
amended by deleting subsection 9.2(a)(iii) in
its entirety and replacing it with the
following:
"(iii) other takeover offer for the Shares that
results in a transfer of or an irrevocable
commitment to transfer 25% or more of all the
outstanding Shares (other than the Shares owned
or controlled by the offeror)"
For purposes of the definition of "Cancellation
and Payment" in Sections 9.3(c)(ii), 9.3(d)(ii)
and 9.6, this Transaction shall be deemed to be
a Share Option Transaction. The amount payable
upon Cancellation and Payment will be the
amount agreed upon promptly by the parties
after the Merger Date or the date of the
occurrence of the Nationalization, Insolvency,
Hedging Disruption Event, Increase in Borrow
Costs or Borrow Loss, as the case may be. In
the absence of such agreement, the amount
payable will be determined by the Calculation
Agent in a commercially reasonable manner
(without the requirement of soliciting dealer
quotations) as the fair value of the
Transaction with terms that would preserve the
economic equivalent of any payment or delivery
(assuming satisfaction of each applicable
condition precedent) by the parties in respect
of the relevant Transaction that would have
been required after that date but for the
occurrence of the Nationalization, Insolvency,
Hedging Disruption Event, Increase in Borrow
Costs, Borrow Loss or Merger Event, as
applicable. The Calculation Agent will
determine the amount payable on the basis of
the factors identified in subparagraphs (i),
(ii) and (iii) in Section 9.7(b) and such other
factors as it deems appropriate in a
commercially reasonable manner.
Additional Extraordinary
Events: "Hedging Disruption Event" means that the
Shares cease to be listed on or quoted by the
Exchange, the Nasdaq Global Select Market, the
Nasdaq Global Market or the American Stock
Exchange for any reason (other than a Merger
Event).
If an Increase in Borrow Costs occurs, then by
the Valuation Time on the day such event
occurs, Party B shall:
(a) (i) permit Party A to use the Shares posted
as Posted Collateral and the Independent Amount
pursuant to Section 6(c) of the Credit Support
Annex and (ii) ensure that such Shares are
freely tradable and have been converted into
book-entry form; or
(b) agree to adjustments to the terms of this
Transaction to reflect the Total Borrow Cost,
which adjustments will be determined by the
Calculation Agent in a commercially reasonable
manner; or
(c) agree to pay the Total Borrow Cost.
If Party B does not agree to (a), (b) or (c) by
the Valuation Time on the day on which the
Increase in Borrow Costs occurs, Cancellation
and Payment shall immediately be applicable.
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If a Borrow Loss occurs, the Calculation Agent
shall notify Party A and Party B and
Cancellation and Payment shall immediately be
applicable unless, by the later of the
Valuation Time on the day on which the Borrow
Loss occurs or three hours after such
notification, (i) Party B permits Party A to
use the Shares posted as Posted Collateral and
the Independent Amount pursuant to Section 6(c)
of the Credit Support Annex and (ii) such
Shares are freely tradable and have been
converted into book-entry form.
Party B acknowledges and understands that any
use of the Shares posted as Posted Collateral
pursuant to Section 6(c) of the Credit Support
Annex may require Party B to provide an opinion
of counsel and other documentation in a form
acceptable to the Issuer and the transfer agent
for the Shares to ensure the conversion of such
Shares into book-entry form prior to the
occurrence of the Borrow Loss or the Increase
in Borrow Costs, as applicable.
If Party A is permitted to use the Shares
posted as Posted Collateral pursuant to Section
6(c) of the Credit Support Annex, Party A shall
adjust the terms of this Transaction in a
commercially reasonable manner to reflect its
lower borrowing costs for the period that Party
A is permitted to use the Shares (which
borrowing costs will reflect the interest rate
earned by Party A on any collateral posted to
Party B in connection with such use).
The Calculation Agent shall notify both parties
as soon as the average rebate earned by Party A
on collateral posted for any Shares borrowed in
connection with this Transaction is at or below
1% (determined on an annualized basis).
"Borrow Cost" means the difference between the
actual rebate earned by Party A on collateral
posted for any Shares borrowed in connection
with this Transaction and the General
Collateral Rate, multiplied by the closing
price per Share quoted by the Exchange at the
Valuation Time on the preceding Exchange
Business Day, multiplied by the Hedge Delta on
the preceding Exchange Business Day, calculated
on an actual/360 basis, as determined by the
Calculation Agent in a commercially reasonable
manner.
"Borrow Loss" means that it becomes
impracticable for Party A to borrow Shares
equal to its desired Hedge Delta on any day, as
determined by the Calculation Agent in a
commercially reasonable manner.
"General Collateral Rate" means the general
collateral rebate rate earned by market
participants in general on collateral posted
for U.S. liquid equity securities as determined
by the Calculation Agent in a commercially
reasonable manner. The Calculation Agent will
provide evidence of the General Collateral Rate
to either party upon request.
"Hedge Delta" means the number of Shares
borrowed by Party A in connection with this
Transaction, as determined by the Calculation
Agent in a commercially reasonable manner.
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"Increase in Borrow Costs" means that the
actual rebate earned by Party A on collateral
posted for any Shares borrowed in connection
with this Transaction is at or below zero for
ten (10) days or longer, as determined by the
Calculation Agent in a commercially reasonable
manner.
"Total Borrow Cost" means the Borrow Cost for
every day from the day on which the Increase in
Borrow Costs occurs until the final Delivery
Date, the Cash Settlement Payment Date or the
effective date for any Elected Termination, as
applicable.
Announcement Event: If an Announcement Event occurs, the
Calculation Agent will determine the economic
effect of any change in volatility and/or
liquidity relevant to the Shares or to the
Transaction caused by the Announcement Event on
the theoretical value of the Transaction from
the Announcement Date to the Valuation Date. If
such economic effect is (i) material and (ii)
has continued, or is continuing, for a period
of 30 days from the Announcement Event, on the
Valuation Date the Calculation Agent shall in a
commercially reasonable manner make an
adjustment to the Appreciation Cap to reflect
such change in theoretical value; provided that
such adjustment shall not exceed USD 2.00 (as
adjusted pursuant to "Method of Adjustment"
above). "ANNOUNCEMENT EVENT" shall mean the
occurrence of the Announcement Date of a
Share-for-Other Merger Event or a
Share-for-Combined Merger Event where Other
Consideration represents more than 50% of the
total value of the Combined Consideration.
Change in Law: "Change in Law" means that, on or after the
Trade Date (A) due to the adoption of or any
change in any applicable law or regulation, or
(B) due to the promulgation of or any change in
the interpretation by any court, tribunal or
regulatory authority with component
jurisdiction of any applicable law or
regulation, a party to such Transaction
determines in good faith that it has become
illegal to hold, acquire or dispose of Shares
relating to this Transaction.
Upon the occurrence of a Change in Law event
either party may elect to terminate this
Transaction upon at least two Exchange Business
Days' notice to the other party specifying the
date of such termination (or such lesser notice
as any be required to comply with the Change of
Law), in which event the Transaction will
terminate and the Calculation Agent will
determine any amount payable by one party to
the other.
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Bankruptcy Code: Without limiting any other protections under
the Bankruptcy Code (Title 11 of the United
States Code) (the "Bankruptcy Code"), the
Parties hereto intend for:
(a) This Transaction and the Agreement to be a
"swap agreement" as defined in the Bankruptcy
Code, and the parties hereto to be entitled to
the protections afforded by, among other
Sections, Section 560 of the Bankruptcy Code.
(b) A party's right to liquidate this
Transaction and to exercise any other remedies
upon the occurrence of any Event of Default or
Termination Event under the Agreement or this
Transaction to constitute a "contractual right"
as described in Section 560 of the Bankruptcy
Code.
(c) Any cash, securities or other property
provided as performance assurance, credit
support or collateral with respect to this
Transaction or the Agreement to constitute
"transfers" under a "swap agreement" as defined
in the Bankruptcy Code.
(d) All payments for, under or in connection
with this Transaction or the Agreement, all
payments for any securities or other assets and
the transfer of such securities or other assets
to constitute "transfers" under a "swap
agreement" as defined in the Bankruptcy Code.
Party B Representations: In addition to the representations set forth in
the Agreement, Party B further represents that;
(a) Neither Party A nor any of its affiliates
has advised Party B with respect to any legal,
regulatory, tax, accounting or economic
consequences arising from this Transaction, and
neither Party A nor any of its affiliates is
acting as agent (other than LBI as dual agent
if specified above), or advisor for Party B in
connection with this Transaction.
(b) Party B is not in possession of any
material non-public information concerning the
business, operations or prospects of the Issuer
and was not in possession of any such
information at the time of placing any order
with respect to the Transaction.
"Material" information for these purposes is
any information to which an investor would
reasonably attach importance in reaching a
decision to buy, sell or hold any securities of
the Issuer(s).
(c) Party B is the legal and beneficial owner
of the Shares, free and clear of any
Encumbrances or any Transfer Restrictions
(other than transfer restrictions arising under
the 1933 Act and other than under the
Stockholder's Agreement), and, upon the
transfer of the Shares to Party A in settlement
of this Transaction (except to the extent that
Party B elects the Cash Settlement option, if
any) Party A will acquire good and marketable
title and will be the beneficial owner of the
Shares, free and clear of any Encumbrances or
any Transfer Restrictions.
"Encumbrance" means any pledge, hypothecation,
assignment,
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encumbrance, charge, claim, security interest,
option, preference, priority or other
preferential arrangement of any kind or nature
whatsoever, or other charge, claim or other
encumbrance (other than an Encumbrance
routinely imposed on all securities in the
relevant Clearance System).
"Transfer Restriction" means, with respect to
any security or other property, any condition
to or restriction on the ability of the holder
thereof to sell, assign or otherwise transfer
such security or other property or to enforce
the provisions thereof or of any document
related thereto, whether set forth in such
security or other property itself or in any
document related thereto, including, without
limitation, (i) any requirement that any sale,
assignment or other transfer or enforcement of
such security or other property be consented to
or approved by any person, including, without
limitation, the Issuer or any other obligor
thereon, (ii) any limitations on the type or
status, financial or otherwise, of any
purchaser, pledgee, assignee or transferee of
such security or other property, (iii) any
requirement for the delivery of any
certificate, consent, agreement, opinion of
counsel, notice or any other document of any
person to be given to the Issuer, any other
obligor on or any registrar or transfer agent
for, such security or other property, and (iv)
any registration or qualification requirement
or prospectus delivery requirement for such
security or other property pursuant to any
federal, state or foreign securities law
(including, without limitation, any such
requirement arising as a result of Rule 144 or
Rule 145 under the 1933 Act).
(d) As of the date hereof (without giving
effect to the transactions contemplated hereby)
Party B is the beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of
1934 (the "1934 Act")) of 36,504,308 Shares,
which constitutes approximately 18.7% of the
outstanding Shares of the Issuer (as at
February 15, 2007). Party B is currently, and
in the past has been, in compliance with any
applicable reporting and other obligations
under Section 13 and Section 16 of the 1934
Act. Party B shall comply with all applicable
reporting and other requirements of Section 13
and Section 16 of the 1934 Act (and the rules
and regulations promulgated thereunder)
relating to this Transaction. Party B will
provide Party A with a draft of any amendments
to its Schedule 13D which relate to the
Transaction and will give Party A a reasonable
opportunity to comment on the draft. Party B
shall promptly file all amendments to its
Schedule 13D in a form reasonably acceptable to
Party A.
(e) Party B's entry into this Transaction, any
sale of Shares hereunder, the pledge of any
Eligible Collateral hereunder and Party A's
exercise of all rights and remedies hereunder
with respect to such Eligible Collateral
complies with and is not in any way limited by
(i) any trading or "blackout" policies of the
Issuer or (ii) any other conditions or
restrictions imposed by the Issuer on the sale,
transfer, loan, pledge, disposition or other
use by its employees of any Eligible Collateral
or Shares.
(f) Party B acquired the Shares and paid for
the Shares in full more
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than one year prior to the Trade Date. Party B
did not acquire the Shares in contemplation of,
or in a transaction that was contingent upon,
entering into this Transaction.
(g) Neither Party B nor any person who would be
considered to be the same "person" (as such
term is used in Rule 144(a)(2) under the 1933
Act, has sold any Shares or hedged (through
swaps, options, short sales or otherwise) any
long position in the Shares during the
preceding three (3) months prior to the Trade
Date. For purposes of this paragraph, "Shares"
shall be deemed to include securities
convertible into or exchangeable or exercisable
for Shares and any other security or instrument
that would be subject to aggregation under
paragraphs (a)(2) and (e) of Rule 144 under the
1933 Act.
(h) Party B has not made, and will not make,
any payment in connection with the offering or
sale of the Shares to any person other than
Party A.
(i) Party B has not solicited or arranged for
the solicitation of, and will not solicit or
arrange for the solicitation of, orders to buy
Shares in anticipation of or in connection with
any proposed sale of the Shares.
(j) The Shares constituting Posted Collateral
are currently eligible for public resale by
Party B pursuant to Rule 144 under the 1933
Act. Party B acknowledges and agrees that (i)
the entering into of this Confirmation will
constitute a sale for purposes of Rule 144,
(ii) Party B has not taken and will not take
any action that would cause the sale made
pursuant to this Confirmation to fail to meet
all applicable requirements of Rule 144,
including without limitation, the volume
limitations of Rule 144(e).
MUTUAL REPRESENTATION: Party A and Party B each represent that the
Number of Shares will not exceed the greater of
(i) 1% of the outstanding Shares as shown by
the most recent report or statement published
by the Issuer, or (ii) the average reported
weekly volume of trading in the Shares during
the four calendar weeks preceding the Trade
Date.
COVENANTS: (a) Party B will transmit three signed copies
of a Form 144 for filing with the Securities
and Exchange Commission (the "SEC"), the
Exchange and the Issuer concurrently with the
execution of this Confirmation.
(b) Party B will send to Party A via facsimile
a copy of each Form 144 and each filing under
Section 13 or 16 of the Exchange Act, if any,
relating to this Transaction concurrently with
filing or transmission for filing, as the case
may be, of such form to or with the SEC.
(c) Party A covenants that, through its
affiliate Xxxxxx Brothers Inc., it will
introduce into the public market a number of
Shares equal to the Number of Shares in a
manner consistent with the manner-of-sale
conditions described in 144(f) and (g) under
the 1933 Act.
Risk ID: N[_____] / Effort ID: [_____] / Global Deal ID: 2883070
Page 11 of 12
(d) Each party acknowledges and agrees that
upon execution of this Confirmation, this
Confirmation shall constitute a "binding
commitment" within the meaning of the
interpretive letter from the SEC to Xxxxxxx,
Sachs & Co. dated December 20, 1999.
Elected Termination: Party B may elect to terminate this Transaction
upon mutually agreed upon terms. The
Calculation Agent will calculate any amounts
owing upon such early termination in a
commercially reasonable manner. Upon request,
the Calculation Agent will provide the
assumptions it used to calculate any amounts
owing.
Payments on Early Termination: Party A and Party B agree that for this
Transaction, for purposes of Section 6(e) of
the Agreement, Loss and the Second Method will
apply.
Additional Provision: Party B hereby identifies the Shares initially
pledged as Posted Collateral under this
Transaction as a position with respect to
personal property that is an offsetting
position with respect to Party B's rights and
obligations hereunder and that is part of a
"straddle" with such rights and obligations
within the meaning of section 1092 of the
Internal Revenue Code of 1986, as amended, and
Party A acknowledges that Party B has
identified the Shares for that purpose.
Calculation Agent: Xxxxxx Brothers Inc., whose adjustments,
determinations and calculations shall be made
in a commercially reasonable manner.
THIS TRANSACTION HAS BEEN ENTERED INTO FOR INVESTMENT AND HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY
OTHER UNITED STATES FEDERAL OR STATE SECURITIES LAWS; THIS TRANSACTION MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF APPROPRIATE REGISTRATION
UNDER SUCH SECURITIES LAWS EXCEPT IN A TRANSACTION EXEMPT FROM OR NOT SUBJECT TO
THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES LAWS.
Please confirm your agreement with the foregoing by executing this Confirmation
and returning it to us at facsimile number 000-000-0000, Attention:
Documentation.
Yours sincerely, Confirmed as of the date first above
written:
XXXXXX BROTHERS FINANCE S.A. SMITHKLINE XXXXXXX CORPORATION
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxx X. Xxxxxx
------------------------------- ----------------------------------
Title: Director Title: Vice President
------------------------------ ---------------------------------
By: /s/ Xxxxxxx Xxxx
---------------------------------
Name: Xxxxxxx Xxxx
-------------------------------
Title: Authorised Signatory
------------------------------
Execution time will be furnished upon Counterparty's written request.
Risk ID: N[_____] / Effort ID: [_____] / Global Deal ID: 2883070
Page 12 of 12
