EXHIBIT 5
XXXXXX BROTHERS
May 21, 2002
TRANSACTION
SmithKline Xxxxxxx Corporation
Xxx Xxxxxxxx Xxxxx
000 X. 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx, fax 000-000-0000
CC: Xxxxx Xxxxxxxxxx, fax 00-00-0000-0000
Global Deal Id: 245459
Effort Id: 234117
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.
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.
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
(a) GENERAL TERMS
Trade Date: May 21, 2002
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, Inc.
(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: 1,000,000
Initial Price: USD84.55
Depreciation Floor: USD84.55
Appreciation Cap: USD113.38
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: May 8, 2007, May 9, 2007, May 10, 2007, May
11, 2007, May 14, 2007, May 15, 2007, May
16, 2007, May 17, 2007, May 18, 2007, May
21, 2007
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
(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
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Purchase Price: USD84,550,000.00
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 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
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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
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
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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.
NATIONALIZATION, INSOLVENCY, HEDGING Cancellation and Payment
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:
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"(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
National Market System 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.
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
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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.
"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
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Delivery Date, the Cash Settlement Payment
Date or the effective date for any Elected
Termination, as applicable.
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.
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"Encumbrance" means any pledge,
hypothecation, assignment, 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
22,128,672 Shares, which constitutes
approximately 22.8% of the outstanding
Shares of the Issuer (as at April 30, 2002).
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.
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(f) Party B acquired the Shares and paid for
the Shares in full more 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.
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(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 XXXXX By: /s/ XXXXXX X. XXXXXX
------------------------ ------------------------------
Name: XXXXXX XXXXX Name: XXXXXX X. XXXXXX
Title: VICE PRESIDENT Title: VICE PRESIDENT & SECRETARY
By: /s/ XXXXX XXXXXXXXXX
------------------------
Name: XXXXX XXXXXXXXXX
Title: VICE PRESIDENT
Execution time will be furnished upon Counterparty's written request.
Risk ID: N02050816 / Effort ID: 234117 / Global Deal ID: 245459
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