Exhibit 6
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of August 16, 1999 (this
"AGREEMENT"), between , SMITHKLINE XXXXXXX PLC public limited company organized
under the laws of England (the "STOCKHOLDER"), and QUEST DIAGNOSTICS
INCORPORATED, a Delaware corporation (the "COMPANY").
WHEREAS, the execution and delivery of this Agreement is a
condition to the obligations of the Company and the Stockholder under the Stock
and Asset Purchase Agreement dated as of February 9, 1999, among the Company,
the Stockholder and SmithKline Xxxxxxx Corporation, a Pennsylvania corporation
and an indirect wholly owned subsidiary of the Stockholder (the "PURCHASE
AGREEMENT"), pursuant to which the Stockholder shall cause Seller Subsidiary (as
defined in the Purchase Agreement) to sell to the Company, and the Company shall
purchase from Seller Subsidiary, the Shares (as defined in the Purchase
Agreement) and shall sell to the Company and shall cause the Seller Entities (as
defined in the Purchase Agreement) to sell to the Company, and the Company shall
purchase from the Stockholder and the Seller Entities, certain assets, and the
Company shall assume certain liabilities, all upon the terms and subject to the
conditions set forth in the Purchase Agreement;
WHEREAS, upon consummation of the transaction contemplated by
the Purchase Agreement, the Stockholder will beneficially own 12,564,336 shares
of the common stock of the Company, par value $0.01 per share (together with any
common stock of the Company issued as a dividend or other distribution with
respect thereto, or in exchange therefor, or in replacement thereof, the
"COMPANY COMMON STOCK"); and
WHEREAS, the Company and the Stockholder now wish to enter
into this Agreement to set forth their understanding as to the matters set forth
herein with respect to, among other things, representation on the Company's
Board of Directors (the "BOARD") and the holding, acquisition and transfer of
Company Common Stock by the Stockholder and its Affiliates (as defined below);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Company and the
Stockholder hereby agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. (a) As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" has the meaning set forth in Rule 12b-2, as in
effect on the date hereof, under the Exchange Act.
"BENEFICIALLY OWN" has the meaning set forth in Rule 13d-3, as
in effect on the date hereof, under the Exchange Act.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed in The
City of New York.
"BUYOUT TRANSACTION" means a tender offer, merger, sale of all
or substantially all of the Company's assets or any similar transaction that
offers each holder of Company Common Stock (other than, if applicable, the
Person proposing such transaction) the opportunity to dispose of all Company
Common Stock beneficially owned by each such holder or otherwise contemplates
the acquisition of all (but not less than all) Company Common Stock beneficially
owned by each such holder.
"CLOSING" has the meaning set forth in the Purchase Agreement.
"CLOSING DATE" has the meaning set forth in the Purchase
Agreement.
"COMMISSION" means the U.S. Securities and Exchange Commission
and any successor agency.
"DIRECTOR" means a member of the Board.
"EMPLOYEE PLAN" means any equity incentive plan, agreement,
bonus, award, stock purchase plan, stock option plan or other stock arrangement
with respect to any directors, officers or other employees of the Company.
"EXCHANGE ACT" means the United States Securities Exchange Act
of 1934, as amended.
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"GOVERNMENTAL ENTITY" means any Federal, state, local or
foreign government or any court of competent jurisdiction, administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign.
"GROUP" has the meaning set forth in Rule 13d-5, as in effect
on the date hereof, under the Exchange Act.
"HOLDER" means the Stockholder, the Initial Holder and any
Subsidiary Transferee.
"INDEPENDENT DIRECTOR" means a Director who is not, at the
time of determination, (i) a director, officer, employee or Affiliate of any
Holder or (ii) an officer or employee of the Company.
"INITIAL HOLDER" means the Stockholder.
"PERSON" means any individual, firm, corporation, partnership,
limited partnership, limited liability company, association, trust,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.
"REGISTER," "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act and the declaration or
ordering of effectiveness of such registration statement or document.
"REGISTRABLE STOCK" means the Stockholder Shares and any
securities issued or issuable with respect to any Stockholder Shares by way of
conversion, exchange, replacement, stock dividend, stock split or other
distribution or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise. For purposes of this
Agreement, any Registrable Stock shall cease to be Registrable Stock when (i) a
registration statement covering such Registrable Stock has been declared
effective and such Registrable Stock has been disposed of pursuant to such
effective registration statement, (ii) such Registrable Stock is sold by a
Person in a transaction in which the rights under the provisions of this
Agreement are not assigned or (iii) such Registrable Stock is sold pursuant to
Rule 144(k) (or any similar provision then in force, but not Rule 144A) under
the 1933 Act without registration under the 1933 Act.
"SECURITIES ACT" means the United States Securities Act of
1933, as amended.
"STOCKHOLDER DIRECTOR" means a Director designated by the
Stockholder pursuant to this Agreement.
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"STOCKHOLDER SHARES" means Company Common Stock now or
hereafter beneficially owned by the Stockholder, the Initial Holder or a
Subsidiary Transferee and any securities issued or issuable with respect to any
such Common Stock by way of conversion, exchange, replacement, stock dividend,
stock split or other distribution or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
"THIRD PARTY OFFER" means a bona fide offer to enter into a
Buyout Transaction by a Person other than the Stockholder or any of its
Affiliates or any other Person acting on behalf of the Stockholder or any of its
Affiliates that does not treat the Stockholder or any of its Affiliates
differently than other holders of Company Common Stock and that is approved by
two-thirds of the Independent Directors.
(b) The following terms have the meanings set forth in the
Sections set forth below:
Term Location
---- --------
Agreement................................................. Preamble
Board..................................................... Recitals
Company................................................... Preamble
Company Common Stock...................................... Recitals
Initial Restriction Period................................ ss.4.02(a)
Initiating Holders........................................ ss.5.03(a)
Purchase Agreement........................................ Recitals
Selling Stockholders...................................... ss.4.05
Shelf Registration........................................ ss.5.05(a)
Standstill Period......................................... ss.4.01(a)
Stockholder............................................... Preamble
Subsidiary Transferee..................................... ss.4.02(b)
Transfer.................................................. ss.4.02(a)
Transfer Notice........................................... ss.4.05(a)
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ARTICLE II
GOVERNANCE
SECTION 2.01. INITIAL BOARD REPRESENTATION. As soon as
practicable following the Closing, the Company will (a) take such actions as may
be necessary to increase the size of the Board to nine, and (b) exercise all
authority to fill the two vacancies thereby created in two classes of Directors
with Xxxxxxx X. Xxxxx and Xxxx X. Xxxxxx. Xxxxxxx X. Xxxxx is an Independent
Director.
SECTION 2.02. CONTINUING BOARD REPRESENTATION. (a) As long as
the Holders, in the aggregate, own Stockholder Shares constituting at least 20%
of the outstanding Company Common Stock, the parties hereto shall exercise all
authority under applicable law to cause any slate of Directors presented to the
stockholders of the Company for election to the Board to consist of such
nominees that, if elected, would result in a Board that included two, and only
two, individuals designated by the Stockholder, at least one of whom will be an
Independent Director.
(b) As long as the Holders, in the aggregate, own Stockholder
Shares constituting at least 10% but less than 20% of the outstanding Company
Common Stock, the parties hereto shall exercise all authority under applicable
law to cause any slate of Directors presented to the stockholders of the Company
for election to the Board to consist of such nominees that, if elected, would
result in a Board that included one, and only one, individual designated by the
Stockholder. Such individual to be designated by the Stockholder is not required
to be an Independent Director.
(c) If the Holders, in the aggregate, own Stockholder Shares
constituting less than 10% of the outstanding Company Common Stock, the Company
shall have no obligation pursuant to this Agreement to cause any slate of
Directors presented to the stockholders of the Company for election to the Board
to include any nominee designated by the Stockholder.
(d) As long as the Stockholder has the right, pursuant to
Section 2.02(a), to designate two Directors, to the extent possible, the
Stockholder Directors shall be elected to different classes. Initially, Xxxx X.
Xxxxxx will be elected to the class of Directors which will be up for reelection
in 2000, and Xxxxxxx X. Xxxxx will be elected to the class of Directors which
will be up for reelection in 2001.
(e) As long as the Holders, in the aggregate, own Stockholder
Shares constituting at least 20% of the outstanding Company Common Stock, the
Board shall not consist of more than ten Directors UNLESS the Stockholder is
given an opportunity to designate one additional Independent Director to the
Board; PROVIDED that the Company shall not be obligated to offer such
opportunity to the Stockholder if (i) United Kingdom generally accepted
accounting principles and practices as in effect at the time of determination do
not require the
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Stockholder to have an additional Director on the Board to maintain equity
accounting for its interest in the Company or (ii) at any time between the date
of this Agreement and the time of determination, the Stockholder and its
Affiliates have ceased to own Stockholder Shares constituting at least 20% of
the outstanding Company Common Stock.
SECTION 2.03. RESIGNATIONS AND REPLACEMENTS. Subject to
Section 2.02, Section 2.03(b) and Section 2.05, if a Stockholder Director ceases
to serve as a Director for any reason, the vacancy created by such Director
ceasing to serve shall be filled by the affirmative vote of a majority of the
remaining Directors then in office with an individual designated by the
Stockholder.
(b) In the event that at any time the number of Stockholder
Directors on the Board is greater than the number of Directors that the
Stockholder has the right to designate pursuant to Section 2.02, then that
number of Stockholder Directors shall be deemed to have resigned immediately
upon the occurrence of such event such that the remaining number of Stockholder
Directors, if any, conform to the provisions of this Agreement, and the
Stockholder shall take all action to promptly effect such resignation.
SECTION 2.04. COMMITTEES. As long as the Holders, in the
aggregate, own at least 10% of the outstanding Company Common Stock, the Company
shall exercise all authority to cause the Board to designate one Stockholder
Director to serve as a member of each committee of the Board, other than the
Executive Committee, to the same extent, and on the same basis, as the other
Directors; PROVIDED, HOWEVER, that the Stockholder Director appointed to serve
on the Audit and Finance Committee shall be an Independent Director, and the
Board shall not be required to designate a Stockholder Director to serve as a
member of the Audit and Finance Committee at any time that there is no
Stockholder Director who is an Independent Director; and PROVIDED, FURTHER, that
if any applicable law or regulation of the New York Stock Exchange shall
prohibit the Board from appointing the Stockholder Director who is not an
Independent Director to serve on any committee, at any time there is no
Stockholder Director who is an Independent Director, the Board shall not be
required to appoint any Stockholder Director to serve on such committee.
SECTION 2.05. APPROVAL OF DIRECTOR NOMINEES. Any individual
designated by the Stockholder pursuant to Sections 2.01, 2.02 or 2.03, shall be
reasonably acceptable to the Company.
SECTION 2.06. NO VOTING TRUST. This Agreement does not create
or constitute, and shall not be construed as creating or constituting, a voting
trust agreement under the Delaware General Corporation Law or any other
applicable corporation law.
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SECTION 2.07. REINSTATEMENT. If the Standstill Period is
reinstated pursuant to Section 4.01(b), the terms of this Article II and all
other terms of this Agreement also shall be reinstated.
ARTICLE III
VOTING RIGHTS AND APPRAISAL RIGHTS
SECTION 3.01. VOTING RESTRICTIONS. (a) During the Standstill
Period (as defined in Article IV), the Stockholder shall, and shall cause its
Affiliates to, (i) so long as the Board includes at least one Stockholder
Director, vote all of their Company Common Stock in favor of nominees or
Directors designated by the Board, or any committee thereof, not in violation of
Article II and (ii) on votes relating to other matters, either, in Stockholder's
sole discretion, (x) vote all of their shares of Company Common Stock as
recommended by the Board or (y) in proportion to the votes cast with respect to
the shares of Company Common Stock not owned by the Stockholder and its
Affiliates.
(b) Notwithstanding Section 3.01(a) and except as provided in
Section 4.04, the Stockholder and its Affiliates may, in connection with any
required vote of the Company's stockholders, vote their shares of Company Common
Stock at their discretion with respect to (i) any amendments to the Company's
Restated Certificate of Incorporation, (ii) any recapitalization, restructuring
or similar transaction or series of transactions involving the Company, (iii)
any dissolution or complete or partial liquidation, or similar arrangement, of
the Company, (iv) any merger, consolidation or other business combination of the
Company, (v) any issuance of any shares of Company Common Stock, or (vi) any
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company to any Person, which, in the case
of clause (ii), (iv) or (v), results in any one Person or Group of Persons
becoming the beneficial owner, directly or indirectly, of more than 50% of the
outstanding Company Common Stock or, in the case of clause (i), either results
in any one Person or Group of Persons becoming the beneficial owner, directly or
indirectly, of more than 50% of the outstanding Company Common Stock or, in any
way, affects the Holders adversely in a manner different from the other holders
of Company Common Stock.
SECTION 3.02. APPRAISAL RIGHTS. The Stockholder and its
Affiliates shall not exercise any appraisal or dissenters' rights they may
otherwise have under Delaware General Corporation Law or otherwise as a result
of any of the transactions described in Section 3.01(b).
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ARTICLE IV
STANDSTILL PROVISIONS
SECTION 4.01. STANDSTILL PERIOD. (a) The "STANDSTILL PERIOD"
shall mean the period beginning on the Closing Date and continuing until the
earlier of (i) the tenth anniversary of the Closing Date and (ii) the date on
which the Stockholder and its Affiliates, in the aggregate, beneficially own
less than 10% of the outstanding Company Common Stock.
(b) In the event the Standstill Period is discontinued
pursuant to Section 4.01(a)(ii), the Standstill Period shall be reinstated if,
prior to the occurrence of the event described in Section 4.01(a)(i), the
Stockholder and its Affiliates, in the aggregate, beneficially own 10% or more
of the outstanding Company Common Stock. Notwithstanding the foregoing, in no
event shall the Standstill Period continue past the tenth anniversary of the
Closing Date.
SECTION 4.02. TRANSFER RESTRICTIONS. (a) Beginning on the
Closing Date and continuing for 18 months thereafter (the "INITIAL RESTRICTION
PERIOD"), the Stockholder shall not, and shall cause its Affiliates not to,
directly or indirectly, sell, transfer, assign, pledge, hypothecate or otherwise
dispose of ("TRANSFER") any shares of Company Common Stock except (i) to a
wholly owned subsidiary of the Stockholder that expressly assumes the
Stockholder's obligations under this Agreement relating to such Company Common
Stock (a "SUBSIDIARY TRANSFEREE") or to the Stockholder, (ii) pursuant to the
incidental registration rights provided for in Section 5.04 or (iii) pursuant to
a Third Party Offer; PROVIDED, HOWEVER, that no rights under this Agreement
shall Transfer to any transferee of Company Stock pursuant to Sections
4.02(a)(ii) or 4.02(a)(iii).
(b) Following the Initial Restriction Period, for so long as
the Standstill Period is in effect, the Stockholder shall not, and shall cause
its Affiliates not to, Transfer shares of Company Common Stock except (i) with
the prior approval of a majority of the Independent Directors and in accordance
with the provisions of Section 4.05, (ii) pursuant to a bona fide public
offering registered under the Securities Act in which the Holders shall use
commercially reasonable efforts to (x) effect as wide a distribution of such
Company Common Stock as is reasonably practicable and (y) prevent any Person or
Group from acquiring pursuant to such offering beneficial ownership of Company
Common Stock representing in the aggregate 5% or more of the outstanding Company
Common Stock, (iii) pursuant to Rule 144 under the Securities Act (excluding any
Transfer of shares of Company Common Stock under Rule 144A), (iv) to a Person or
Group that is permitted to file a Schedule 13G under the Exchange Act and that,
after giving effect to such Transfer, would beneficially own Company Common
Stock representing in the aggregate less than 5% of the outstanding Company
Common Stock or (v) in any transaction expressly permitted by Section
4.02(a)(i), 4.02(a)(ii) or 4.02(a)(iii); PROVIDED, HOWEVER, that no
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rights under this Agreement shall Transfer to any transferee of Company Stock
pursuant to Sections 4.02(a)(ii), 4.02(a)(iii), 4.02(b)(i), 4.02(b)(ii),
4.02(b)(iii) or 4.02(b)(iv).
(c) The Stockholder agrees that it will not Transfer its
interests in any Initial Holder or Subsidiary Transferee unless prior thereto
the Company Common Stock held by such entity is transferred to the Stockholder
or one or more Subsidiary Transferees; PROVIDED, HOWEVER, that any transfer or
assignment by operation of law in connection with any merger of the Stockholder
or the sale of all or substantially all the Stockholder's assets shall not be
deemed a breach of this Section 4.02(c).
SECTION 4.03. ACQUISITION OF ADDITIONAL SHARES; OTHER
RESTRICTIONS. During the Standstill Period, except with the prior approval of a
majority of the Independent Directors, the Stockholder shall not, directly or
indirectly, and shall cause its Affiliates not to, directly or indirectly:
(a) acquire, announce an intention to acquire, offer to
acquire, or enter into any agreement, arrangement or undertaking of any kind the
purpose of which is to acquire, by purchase, exchange or otherwise, (i) any
shares of Company Common Stock (other than pursuant to any Employee Plan), if
the effect of such acquisition would be to increase the number of shares of
Company Common Stock beneficially owned by the Stockholder and its Affiliates,
in the aggregate, to an amount representing more than 29.5% of the outstanding
Company Common Stock or (ii) any other security convertible into, or any option,
warrant or right to acquire, Company Common Stock (other than pursuant to any
Employee Plan) or (iii) all or substantially all of the assets of the Company or
any of its Affiliates, PROVIDED that (x) Sections 4.03(a)(i) and (ii) shall not
be applicable if the aggregate percentage of outstanding Company Common Stock is
increased solely as a result of corporate action taken by the Company and not
caused by any action taken by the Stockholder or any of its Affiliates and (y)
the ownership by any employee benefit plan of the Stockholder or its Affiliates
in any diversified index, mutual or pension fund managed by an independent
investment advisor, which fund in turn holds, directly or indirectly, Company
Common Stock shall not be deemed to be a breach of Section 4.03(a)(i) if not
more than 5% of such fund's assets are comprised of Company Common Stock.
(b) Solicit, or participate in any solicitation of, proxies
with respect to any Company Common Stock, or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A of the Exchange Act)
in opposition to any matter that has been recommended by a majority of the
Independent Directors or in favor of any matter that has not been approved by a
majority of the Independent Directors, or that is not a Third Party Offer.
(c) Propose or otherwise solicit stockholders of the Company
for the approval of one or more stockholder proposals, seek or solicit support
for (whether publicly or privately) any written consent of stockholders of the
Company, attempt to call a special meeting of
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stockholders (except with the approval of a majority of the Independent
Directors), nominate or attempt to nominate any Person for election as a
Director (except in accordance with Article II), or seek the removal or
resignation of any Director (other than a Stockholder Director) (except in
accordance with Article II), in each case in opposition to any matter that has
been recommended by a majority of the Independent Directors (and such
recommendation has not been revoked or withdrawn) or in favor of any matter that
has not been approved by a majority of the Independent Directors, or that is not
a Third Party Offer.
(d) Deposit any Company Common Stock in a voting trust or
similar agreement or subject any Company Common Stock to any arrangement or
agreement with respect to the voting of such Company Common Stock; PROVIDED,
HOWEVER, that this Section 4.03 shall not prohibit any such arrangement solely
among Stockholder and any of its wholly-owned subsidiaries.
(e) Take any action to form, join or in any way
participate in any partnership, limited partnership, syndicate or other Group
with respect to Company Common Stock or otherwise act in concert with any Person
for the purpose of circumventing the provisions or purposes of this Agreement.
(f) Propose (or publicly announce or otherwise disclose
an intention to propose), solicit, offer, seek to effect, negotiate with or
provide any confidential information relating to the Company or its business to
any other Person with respect to, any tender or exchange offer, merger,
consolidation, share exchange, business combination, restructuring,
recapitalization or similar transaction involving the Company; PROVIDED, that
nothing set forth in this Section 4.03(f) shall prohibit the Stockholder from
soliciting, offering, seeking to effect and negotiating with any Person with
respect to Transfers of Company Common Stock otherwise permitted by this Article
IV; PROVIDED FURTHER, that in so doing the Stockholder shall not (x) issue any
press release or otherwise make any public statements (other than statements
made in response to any request by any Person for confirmation by the
Stockholder or any of its Affiliates of information contained in any statement
on Schedule 13D under the Exchange Act) with respect to such action (PROVIDED
that the Stockholder may, and may permit its Affiliates to, make any statement
required by applicable law, including without limitation, the amendment of any
statement on Schedule 13D under the Exchange Act); PROVIDED, HOWEVER, that in
doing so Stockholder shall not provide any confidential information relating to
the Company or its business to any such Person, and; PROVIDED, FURTHER, that
nothing in this Section 4.04(f), shall apply to discussions between or among
officers, employees or agents of Stockholder and the Stockholder Directors.
(g) Take any other action to seek control (as such term
is defined under Rule 12b-2 of the Exchange Act) of the Company.
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(h) Make or in any way advance any request or proposal to
amend, modify or waive any provision of this Agreement except in a nonpublic and
confidential manner.
(i) Announce an intention to do, or solicit, assist,
prompt, induce or attempt to induce any Person to do, any of the actions
restricted or prohibited under subparagraphs (a) through (h) above.
Notwithstanding the restrictions contained in this Section
4.03, none of actions taken by any Stockholder Director as a member of the Board
pursuant to such Person's responsibilities in such capacity, the exercise by the
Stockholder of its voting rights in accordance with Section 3.01 with respect to
any Company Common Stock it beneficially owns, or actions taken by the
Stockholder in accordance with Section 4.04 shall be deemed to violate this
Section 4.03.
SECTION 4.04. THIRD PARTY OFFERS. (a) In the event the Company
becomes the subject of a Third Party Offer, then the Stockholder and its
Affiliates shall promptly and in any event within ten days after the Stockholder
receives notice of such Third Party Offer (whether as a result of the public
announcement thereof or otherwise), either (i) make a BONA FIDE offer to enter
into a Buyout Transaction with currently realizable value that is at least as
great as that of the Third Party Offer and otherwise with terms substantially
the same as the Third Party Offer or (ii) be obligated to, and, upon request by
a majority of the Independent Directors, confirm in writing that they will,
support such Third Party Offer by voting in favor of such Third Party Offer or
by tendering their shares of Company Common Stock pursuant to the Third Party
Offer, or both, as applicable.
(b) If the Company becomes subject of another Third Party
Offer that provides for greater currently realizable value to the Company's
stockholders than any previously proposed Third Party Offer, the Stockholder and
its Affiliates shall have the same rights and obligations with respect to such
other Third Party Offer as set forth in Section 4.04(a).
(c) In the event the Company becomes the subject of a
Buyout Transaction that is not a Third Party Offer but that is approved by a
majority of the Independent Directors, the Stockholder and its Affiliates shall
be permitted to support such Buyout Transaction, vote in favor of such Buyout
Transaction or tender or sell Company Common Stock to the Person making such
Buyout Transaction.
(d) In the event the Company becomes the subject of a
Buyout Transaction that is not a Third Party Offer and that is not approved by a
majority of the Independent Directors, the Stockholder shall not, and shall
cause the other Holders and its controlled Affiliates not to, support such
Buyout Transaction, vote in favor of such Buyout Transaction or tender or sell
Company Common Stock to the Person making such Buyout Transaction.
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SECTION 4.05. RIGHT OF FIRST REFUSAL. Prior to any Transfer of
shares of Company Common Stock pursuant to Section 4.02(b)(i), the Holder (a
"SELLING STOCKHOLDER") shall give the Company the opportunity to purchase, or
designate an alternative purchaser of such Company Common Stock in the following
manner:
(a) The Selling Stockholder shall give to the Company
written notice (the "TRANSFER Notice") of the proposed Transfer, specifying the
proposed transferee, the number of shares of Company Common Stock proposed to be
disposed of, the proposed consideration to be received in exchange therefor, and
the other material terms of the proposed Transfer.
(b) The Company shall have the right, exercisable by
written notice given to such Selling Stockholder within 10 Business Days after
receipt of such Transfer Notice, to purchase (or to cause another Person
designated by the Company to purchase) all, but not less than all, of the
Company Common Stock specified in such Transfer Notice at the purchase price and
on the other terms set forth therein. If the consideration specified in the
Transfer Notice includes any property other than cash, such purchase price shall
be deemed to be the amount of any cash included as part of such consideration
plus the value (as jointly determined by internationally recognized investment
banking firms selected by each of the Selling Stockholder and the Company or, in
the event such firms are unable to agree, a third internationally recognized
investment banking firm to be selected by the first two such firms) of such
other property included in such consideration, and the date of which the Company
must exercise its right of first refusal pursuant to this Section 4.05 shall be
extended until five Business Days after the determination of the value of
property included in the consideration.
(c) If the Company exercises its right of first refusal
pursuant to this Section 4.05, the closing of the purchase of the Company Common
Stock with respect to which such right has been exercised shall take place
within five Business Days after the Company gives notice of such exercise or
five Business Days after the determination of the value of property included in
the consideration, as applicable; PROVIDED that if any approval of or notice to
any Governmental Entity is required in connection with such purchase of Company
Common Stock, the Selling Stockholder and the Company shall use all reasonable
effort to obtain such approvals or to provide such notices and the closing shall
take place within five Business Days after receipt of the last such approval and
expiration of any required waiting periods. If the Company does not exercise its
right of first refusal pursuant to this Section 4.05 within the time specified
for such exercise, the Selling Stockholder shall be free during the 90-day
period following the expiration of such time for exercise to sell the Company
Common Stock specified in such Transfer Notice to the Person specified therein
for the consideration (or at any price in excess thereof) and on substantially
the same terms (or on other terms more favorable to the Selling Stockholders)
specified therein; PROVIDED, HOWEVER, that if the Selling Stockholders have
entered
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into written agreement to sell such Common Stock prior to the expiration of such
90-day period, the closing of such sale may occur within 90 days thereafter.
SECTION 4.06. ADDITIONAL SHARES. All shares of Company Common
Stock acquired pursuant to this Article IV or as a result of a recapitalization
of the Company or any other action taken by the Company, shall be subject to all
of the terms, covenants and conditions of this Agreement.
ARTICLE V
REGISTRATION RIGHTS
SECTION 5.01. RESTRICTIVE LEGEND. (a) Each certificate
representing shares of Registrable Stock shall, except as otherwise provided in
this Section 5.01 or in Section 5.02, be stamped or otherwise imprinted with
legends substantially in the following form:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE RESTRICTIONS ON DISPOSITION AND OTHER
RESTRICTIONS OF A STOCKHOLDERS AGREEMENT DATED AS OF
JULY 2, 1999, BETWEEN SMITHKLINE XXXXXXX PLC AND
QUEST DIAGNOSTICS INCORPORATED."; and
(ii) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE."
(b) The Company shall, at the request of the Holder,
remove from each certificate evidencing Stockholder Shares transferred in
compliance with the terms of Section 4.02 and with respect to which no rights
under this Agreement shall transfer, the legend described in Section 5.01(a)(i),
and shall remove from each certificate evidencing Stockholder Shares the legend
described in Section 5.01(a)(ii) if in the opinion of counsel satisfactory to
the Company the securities evidenced thereby may be publicly sold without
registration under the Securities Act.
SECTION 5.02. NOTICE OF PROPOSED TRANSFER. Prior to any
proposed transfer of any shares of Registrable Stock (other than to a Subsidiary
Transferee or pursuant to a Third
14
Party Offer or under the circumstances described in Sections 5.03, 5.04 or
5.05), the holder thereof shall give written notice to the Company of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if requested by the Company, shall be accompanied by
an opinion of counsel satisfactory to the Company to the effect that the
proposed transfer may be effected without registration under the Securities Act,
whereupon the holder of such Registrable Stock shall be entitled to transfer
such Registrable Stock in accordance with the terms of its notice, subject in
any event to the restrictions in Article IV; PROVIDED, HOWEVER, that no such
opinion of counsel shall be required for a transfer to one or more partners of
the transferor (in the case of a transferor that is a partnership) or to an
Affiliated corporation (in the case of a transferor that is a corporation),
subject in any event to the restrictions in Article IV. Each certificate for
Registrable Stock transferred as above provided shall bear the legend set forth
in Section 5.01(a)(ii), except that such certificate shall not bear such legend
if (i) such transfer is in accordance with the provisions of Rule 144 of the
Securities Act (or any other rule permitting public sale without registration
under the Securities Act) or (ii) the opinion of counsel referred to above is to
the further effect that the transferee and any subsequent transferee (other than
an Affiliate of the Company) would be entitled to transfer such securities in a
public sale without registration under the Securities Act. The restrictions
provided for in this Section 5.02 shall not apply to securities that are not
required to bear the legend prescribed by Section 5.01(a)(ii) in accordance with
the provisions of Section 5.01.
SECTION 5.03. REQUEST FOR REGISTRATION. (a) On and after the
expiration of the Initial Restriction Period, any Holder or Holders (the
"INITIATING HOLDERS") may request in a written notice that the Company file a
registration statement under the Securities Act (or a similar document pursuant
to any other statute then in effect corresponding to the Securities Act)
covering the registration of any or all Registrable Stock held by such
Initiating Holders in the manner specified in such notice, provided that there
must be included in such registration Registrable Stock having a minimum value
of $50,000,000 (based on the current market price of such Registrable Stock).
Following receipt of any notice under this Section 5.03 the Company shall use
its best efforts to cause to be registered under the Securities Act all
Registrable Stock that the Initiating Holders have requested be registered in
accordance with the manner of disposition specified in such notice by the
Initiating Holders.
(b) If the Initiating Holders intend to have the
Registrable Stock distributed by means of an underwritten offering, the Holders
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters. Such underwriter or underwriters shall be an
internationally recognized investment banking firm selected by the Holders and
approved by the Company, which approval shall not be unreasonably withheld;
PROVIDED, that (i) all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such Holders of
Registrable Stock, (ii) any or all of the conditions precedent to the
obligations
15
of such underwriters under such underwriting agreement shall be conditions
precedent to the obligations of such Holders of Registrable Stock, and (iii) no
Holder shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, the Registrable Stock of such
Holder and such Holder's intended method of distribution and any other
representations required by law or reasonably required by the underwriter. If
any Holder of Registrable Stock disapproves of the terms of the underwriting,
such Holder may elect to withdraw all its Registrable Stock by written notice to
the Company, the managing underwriter and the Initiating Holders. The securities
so withdrawn shall also be withdrawn from registration.
(c) Notwithstanding any provision of this Agreement to the
contrary,
(i) the Company shall not be required to effect a registration
pursuant to this Section 5.03 during the period starting with the date
of filing by the Company of, and ending on a date 120 days following
the effective date of, a registration statement pertaining to a public
offering of securities for the account of the Company or on behalf of
the selling stockholders under any other registration rights agreement
which the Holders have been entitled to join pursuant to Section 5.04;
PROVIDED, that the Company shall actively employ in good faith all
reasonable efforts to cause such registration statement to become
effective as soon as possible;
(ii) if the Company shall furnish to such Holders a
certificate signed by the president of the Company stating that in the
good faith opinion of the Board such registration would interfere with
any material transaction then being pursued by the Company, then the
Company's obligation to use all reasonable efforts to file a
registration statement shall be deferred for a period not to exceed 60
days;
(iii) the Company shall not be required to effect a
registration pursuant to this Section 5.03 if the Registrable Stock
requested by all Holders to be registered pursuant to such registration
are included in, and eligible for sale under, the Shelf Registration
(as defined below); and
(iv) the Company shall not be required to effect a
registration pursuant to this Section 5.03 more than one time in any
twelve-month period or at any time when a registration statement
pursuant to Section 5.05 is in effect.
(d) The Company shall not be obligated to effect and pay
for more than four registrations pursuant to this Section 5.03; PROVIDED, that a
registration requested pursuant to this Section 5.03 shall not be deemed to have
been effected for purposes of this Section 5.03(d) unless (i) it has been
declared effective by the Commission, (ii) it has remained effective for the
period set forth in Section 5.06(a) and (iii) the offering of Registrable Stock
pursuant to such registration is not subject to any stop order, injunction or
other order or requirement of the
16
Commission (other than any such stop order, injunction, or other requirement of
the Commission prompted by any act or omission of Holders of Registrable Stock).
SECTION 5.04. INCIDENTAL REGISTRATION. (a) Subject to Section
5.09, if at any time the Company determines that it shall file a registration
statement under the Exchange Act for the registration of Company Common Stock
(other than a registration statement on a Form S-4 or S-8 or filed in connection
with an exchange offer or an offering of securities solely to the Company's
existing stockholders) on any form that would also permit the registration of
the Registrable Stock and such filing is to be on its behalf or on behalf of
selling holders of its securities for the general registration of Company Common
Stock to be sold for cash, the Company shall each such time promptly give the
Stockholder written notice of such determination setting forth the date on which
the Company proposes to file such registration statement, which date shall be no
earlier than 15 days from the date of such notice, and advising the Stockholder
of its right to have Registrable Stock included in such registration. Upon the
written request of any Holder received by the Company no later than 15 days
after the date of the Company's notice, the Company shall use all reasonable
efforts to cause to be registered under the Securities Act all of the
Registrable Stock that each such Holder has so requested to be registered.
(b) If, in the written opinion of the managing underwriter
(or, in the case of a non-underwritten offering, in the written opinion of the
Company), the total amount of such securities to be so registered, including
such Registrable Stock, will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to the then
current market value of such securities, or (ii) without otherwise materially
and adversely affecting the entire offering, then the Company shall be entitled
to reduce the number of shares of Registrable Stock to be sold in such offering
by the Holders and any other stockholder of the Company hereafter granted
incidental registration rights in proportion (as nearly as practicable) to the
amount of Registrable Stock requested to be included by each Holder and each
other stockholder at the time of filing the registration statement.
SECTION 5.05. SHELF REGISTRATION. (a) On or after the
expiration of the Initial Restriction Period, a Holder may use one of its
request registration rights granted pursuant to Section 5.03, subject to the
limitations of Section 5.03(d), to request that the Company file a "shelf"
registration statement pursuant to Rule 415 under the Securities Act (the "SHELF
REGISTRATION") with respect to the Registrable Stock. The Company shall (i) use
all reasonable efforts to have the Shelf Registration declared effective as soon
as reasonably practicable following such request and (ii) subject to Section
5.03(c)(ii), use all reasonable efforts to keep the Shelf Registration
continuously effective from the date such Shelf Registration is declared
effective until at least the second anniversary of such effective date in order
to permit the prospectus forming a part thereof to be usable by Holders during
such period.
17
(b) Subject to Section 5.03(c)(ii), the Company shall
supplement or amend the Shelf Registration, (i) as required by the registration
form utilized by the Company or by the instructions applicable to such
registration form or by the Securities Act, (ii) to include in such Shelf
Registration any additional securities that become Registrable Stock by
operation of the definition thereof and (iii) following the written request of
an Initiating Holder pursuant to Section 5.05(c), to cover offers and sales of
all or a part of the Registrable Stock by means of an underwriting. The Company
shall furnish to the Holders of the Registrable Stock to which the Shelf
Registration relates copies of any such supplement or amendment sufficiently in
advance (but in no event less than five Business Days in advance) of its use or
filing with the Commission to allow the Holders a meaningful opportunity to
comment thereon.
(c) The Holders may, at their election and upon written
notice by an Initiating Holder to the Company, subject to the limitations set
forth in Section 5.03(c)(ii), effect offers and sales under the Shelf
Registration by means of one or more underwritten offerings, in which case the
provisions of Section 5.03(b) shall apply to any such underwritten distribution
of securities under the Shelf Registration and such underwriting shall, if sales
of Registrable Stock pursuant thereto shall have closed, be regarded as the
exercise of one of the registration rights contemplated by Section 5.03.
SECTION 5.06. OBLIGATIONS OF THE COMPANY. Whenever required
under Sections 5.03 and 5.05 to use all reasonable efforts to effect the
registration of any Registrable Stock, the Company shall, as expeditiously as
possible:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Stock (which shall be filed in no
event later than 90 days after written notice requesting a registration
statement under Sections 5.03 or 5.05 has been received by the Company, and use
all reasonable efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated thereby determined as
provided hereafter; PROVIDED that the Company shall not be required to keep any
Registration Statement (other than the Shelf Registration) effective more than
120 days;
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Stock covered
by such registration statement and as may be necessary to keep such Registration
Statement effective for a reasonable period not to exceed 120 days (or, in the
case of the Shelf Registration, as provided in Section 5.05(a)) and promptly
notify the Holders of any stop order issued or, to the Company's knowledge,
threatened to be issued by the Commission and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered;
18
(c) furnish to the Holders such numbers of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus and any amendments or supplements thereto in conformity
with the requirements of the Securities Act any exhibits filed therewith and
such other documents and information as they may reasonably request;
(d) use all reasonable efforts to register or qualify the
Registrable Stock covered by such registration statement under such other
securities or blue sky laws of such jurisdiction within the United States and
Puerto Rico as shall be reasonably appropriate for the distribution of the
Registrable Stock covered by the registration statement; PROVIDED, HOWEVER, that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business in or to file a general consent to service of
process in any jurisdiction wherein it would not but for the requirements of
this paragraph (d) be obligated to do so; and PROVIDED, FURTHER, that the
Company shall not be required to qualify such Registrable Stock in any
jurisdiction in which the securities regulatory authority requires that any
Holder submit any shares of its Registrable Stock to the terms, provisions and
restrictions of any escrow, lockup or similar agreement(s) for consent to sell
Registrable Stock in such jurisdiction unless such Holder agrees to do so;
(e) promptly notify each Holder for whom such Registrable
Stock is covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and at the request of any such Holder
promptly prepare and furnish to such Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under which they were made. In the
event the Company shall give such notice, the Company shall extend the period
during which such Registration Statement shall be maintained effective as
provided in Section 5.06(a) (or, in the case of the Shelf Registration, Section
5.05(a)) by the number of days during the period from and including the date of
the giving of such notice to the date when the Company shall make available to
the Holders such supplemented or amended prospectus;
(f) furnish, at the request of any Holder requesting
registration of Registrable Stock pursuant to Sections 5.03 or 5.05, if the
method of distribution is by means of an underwriting, on the date that the
shares of Registrable Stock are delivered to the underwriters for sale pursuant
to such registration, or if such Registrable Stock is not being sold through
underwriters, on the date that the registration statement with respect to such
shares of Registrable
19
Stock becomes effective, (1) a signed opinion, dated such date, of the
independent legal counsel representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and if such Registrable
Stock is not being sold through underwriters, then to the Holders making such
request, as to such matters as such underwriters or the Holders holding a
majority of the Registrable Stock included in such registration, as the case may
be, may reasonably request and as would be customary in such a transaction; and
(2) letters dated such date and the date the offering is priced from the
independent certified public accountants of the Company, addressed to the
underwriters, if any, and if such Registrable Stock is not being sold through
underwriters, then to the Holders making such request and, if such accountants
refuse to deliver such letters to such Holders, then to the Company (i) stating
that they are independent certified public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements and other financial data of the Company included in the registration
statement or the prospectus, or any amendment or supplement thereto, comply as
to form in all material respects with the applicable accounting requirements of
the Securities Act and (ii) covering such other financial matters (including
information as to the period ending not more than five Business Days prior to
the date of such letters) with respect to the registration in respect of which
such letter is being given as such underwriters or the Holders holding a
majority of the Registrable Stock included in such registration, as the case may
be, may reasonably request and as would be customary in such a transaction;
(g) enter into customary agreements (including if the
method of distribution is by means of an underwriting, an underwriting agreement
in customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Stock to be
so included in the registration statement;
(h) otherwise use all reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, but not later than 18
months after the effective date of the registration statement, an earnings
statement covering the period of at least 12 months beginning with the first
full month after the effective date of such registration statement, which
earnings statements shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(i) use all reasonable efforts to list the Registrable
Stock covered by such registration statement with any securities exchange on
which the Company Common Stock is then listed.
For purposes of Sections 5.06(a) and 5.06(b), the period of distribution of
Registrable Stock in a firm commitment underwritten public offering shall be
deemed to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Registrable Stock
in any other registration shall be deemed to extend until the earlier of the
sale of all Registrable Stock covered thereby and six months after the effective
date thereof.
20
SECTION 5.07. FURNISH INFORMATION. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Agreement that the Holders shall furnish to the Company such information
regarding themselves, the Registrable Stock held by them, and the intended
method of disposition of such securities as the Company shall reasonably request
and as shall be required in connection with the action to be taken by the
Company.
SECTION 5.08. EXPENSES OF REGISTRATION. All expenses incurred
in connection with each registration pursuant to Sections 5.03, 5.04 and 5.05 of
this Agreement, excluding underwriters' discounts and commissions, but including
without limitation all registration, filing and qualification fees, word
processing, duplicating, printers' and accounting fees (including the expenses
of any special audits or "cold comfort" letters required by or incident to such
performance and compliance), fees of the National Association of Securities
Dealers, Inc. or listing fees, messenger and delivery expenses, all fees and
expenses of complying with state securities or blue sky laws, and the fees and
disbursements of counsel for the Company, shall be paid by the Company;
PROVIDED, HOWEVER, that if a registration request pursuant to Section 5.03 or
5.05 is subsequently withdrawn by the Holders the Company shall not be required
to pay any expenses of such registration proceeding, and such withdrawing
Holders shall bear such expenses. The Holders shall bear and pay the
underwriting commissions and discounts applicable to securities offered for
their account and the fees and disbursements of their counsel in connection with
any registrations, filings and qualifications made pursuant to this Agreement.
SECTION 5.09. UNDERWRITING REQUIREMENTS. In connection with
any underwritten offering, the Company shall not be required under Section 5.04
to include shares of Registrable Stock in such underwritten offering unless the
Holders of such shares of Registrable Stock accept the terms of the underwriting
of such offering that have been reasonably agreed upon between the Company and
the underwriters selected by the Holders.
SECTION 5.10. INDEMNIFICATION. In the event any Registrable
Stock is included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each
Holder, such Holder's directors and officers, each person who participates in
the offering of such Registrable Stock, including underwriters (as defined in
the Securities Act), and each person, if any, who controls such Holder or
participating person within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which they may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or proceedings in respect thereof) arise out of
or are based on any untrue or alleged untrue statement of any material fact
contained in such registration statement on the effective date thereof
(including any prospectus filed under Rule 424 under the Securities Act or any
amendments or supplements thereto) or arise out of or are based upon the
omission or alleged omission to state
21
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse each such Holder, such
Holder's directors and officers, such participating person or controlling person
for any legal or other expenses reasonably incurred by them (but not in excess
of expenses incurred in respect of one counsel for all of them) in connection
with investigating or defending any such loss, claim, damage, liability or
action; PROVIDED, HOWEVER, that the indemnity agreement contained in this
Section 5.10(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company; PROVIDED, FURTHER, that the Company shall not be liable
to any Holder, such Holder's directors and officers, participating person or
controlling person in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
connection with such registration statement, preliminary prospectus, final
prospectus or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, such Holder's directors and officers,
participating person or controlling person. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of any
such Holder, such Holder's directors and officers, participating person or
controlling person, and shall survive the transfer of such securities by such
Holder.
(b) Each Holder requesting or joining in a registration
severally and not jointly shall indemnify and hold harmless the Company, each of
its directors and officers, each person, if any, who controls the Company within
the meaning of the Securities Act, and each agent and any underwriter for the
Company (within the meaning of the Securities Act) against any losses, claims,
damages or liabilities, joint or several, to which the Company or any such
director, officer, controlling person, agent or underwriter may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or proceedings in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in such registration statement on the effective date thereof
(including any prospectus filed under Rule 424 under the Securities Act or any
amendments or supplements thereto) or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished by or on behalf of such Holder expressly for use in connection with
such registration; and each such Holder shall reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, agent or underwriter (but not in excess of expenses incurred
in respect of one counsel for all of them) in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the indemnity agreement contained in this
22
Section 5.10(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of such Holder, and PROVIDED, FURTHER, that the liability of each Holder
hereunder shall be limited to the proportion of any such loss, claim, damage,
liability or expense which is equal to the proportion that the net proceeds from
the sale of the shares sold by such Holder under such registration statement
bears to the total net proceeds from the sale of all securities sold thereunder,
but not in any event to exceed the net proceeds received by such Holder from the
sale of Registrable Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party under
this Section 5.10 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5.10, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall have the
right to participate in and assume the defense thereof with counsel selected by
the indemnifying party and reasonably satisfactory to the indemnified party
(unless (i) such indemnified party reasonably objects to such assumption on the
grounds that there may be defenses available to it which are different from or
in addition to those available to such indemnifying party, (ii) the indemnifying
party and such indemnified party shall have mutually agreed to the retention of
such counsel or (iii) in the reasonable opinion of such indemnified party
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding, in which case the indemnified party shall be
reimbursed by the indemnifying party for the reasonable expenses incurred in
connection with retaining separate legal counsel); PROVIDED, HOWEVER, that an
indemnified party shall have the right to retain its own counsel, with all fees
and expenses thereof to be paid by such indemnified party, and to be apprised of
all progress in any proceeding the defense of which has been assumed by the
indemnifying party. The failure to notify an indemnifying party promptly of the
commencement of any such action shall not relieve the indemnifying party from
any liability in respect of such action which it may have to such indemnified
party on account of the indemnity contained in this Section 5.10, unless (and
only to the extent) the indemnifying party was prejudiced by such failure, and
in no event shall such failure relieve the indemnifying party from any other
liability which it may have to such indemnified party. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability arising
out of such claim or proceeding.
(d) (i) To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party, in lieu
of indemnifying such
23
indemnified party, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.10(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
SECTION 5.11. LOCKUP. Each Holder shall, in connection with
any registration of the Company's securities, upon the request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
agree in writing not to effect any sale, disposition or distribution of any
Registrable Stock (other than that included in the registration) without the
prior written consent of the Company or such underwriters, as the case may be,
for such period of time from 30 days prior to the effective date of such
registration as the Company or the underwriters may specify; PROVIDED, HOWEVER,
that (i) all executive officers and directors of the Company shall also have
agreed not to effect any sale, disposition or distribution of any Registrable
Stock under the circumstances and pursuant to the terms set forth in this
Section 5.11 and (ii) in no event shall the Holders be required to not effect
any sale, disposition or distribution for longer than 90 days after the
Registration Statement becomes effective.
24
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. INTERPRETATION. (a) The headings contained in
this Agreement and, in the table of contents to this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(b) In the event of an ambiguity or a question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
(c) The definitions of the terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (i) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include the Person's successors and
permitted assigns, (iii) the words "herein", "hereof" and "hereunder", and words
of similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, and (iv) all references herein to
Articles and Sections shall be construed to refer to Articles and Sections of
this Agreement.
SECTION 6.02. AMENDMENTS. No amendment, modification or waiver
in respect of this Agreement shall be effective unless it shall be in writing
and signed by both parties hereto.
SECTION 6.03. ASSIGNMENT. Except where otherwise expressly
provided herein, this Agreement and the rights and obligations hereunder shall
not be assignable or transferable by the parties hereto (except by operation of
law in connection with a merger, or sale of substantially all the assets, of the
parties hereto) without the prior written consent of the other party hereto. Any
attempted assignment in violation of this Section 6.03 shall be void.
SECTION 6.04. NO THIRD-PARTY BENEFICIARIES. This Agreement is
for the sole benefit of the parties hereto and their permitted assigns and
nothing herein expressed or implied
25
shall give or be construed to give to any Person, other than the parties hereto
and such assigns, any legal or equitable rights hereunder.
SECTION 6.05. NOTICES. All notices or other communications
required or permitted to be given hereunder shall be in writing and shall be
delivered by hand or sent by prepaid telex, cable or telecopy or sent, postage
prepaid, by registered, certified or express mail or reputable overnight courier
service and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the case
of express mail or overnight courier service), as follows:
(i) if to the Company,
Quest Diagnostics Incorporated
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X'Xxxxx; and
(ii) if to the Stockholder,
SmithKline Xxxxxxx plc
Xxx Xxx Xxxxxxxx Xxxxx
Xxxxxxxxx, XX0 0XX
Brentford England
Attention: General Counsel
with copies to:
SmithKline Xxxxxxx Corporation
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: U.S. General Counsel; and
26
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
SECTION 6.06. ATTORNEY FEES. A party in breach of this
Agreement shall, on demand, indemnify and hold harmless the other party for and
against all reasonable out-of-pocket expenses, including legal fees, incurred by
such other party by reason of the enforcement and protection of its rights under
this Agreement. The payment of such expenses is in addition to any other relief
to which such other party may be entitled.
SECTION 6.07. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 6.07; PROVIDED that receipt of copies of such
counterparts is confirmed.
SECTION 6.08. SEVERABILITY. If any provision of this Agreement
(or any portion thereof) or the application of any such provision (or any
portion thereof) to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other Persons or circumstances.
SECTION 6.09. CONSENT TO JURISDICTION. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of (a) a Federal court
for the Southern District of New York and (b) any New York state court located
in the County of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the Company and the Stockholder agrees to commence any action, suit or
proceeding relating hereto either in a Federal Court for the Southern District
of New York or in a New York state court located in the County of New York. Each
of the parties hereto further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 6.09. Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) any Federal court for the Southern District of New York or (ii)
any New York state court located in the County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that
27
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
SECTION 6.10. WAIVER OF JURY TRIAL. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law, any right it
may have to a trial by jury in respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement. Each of the parties
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce that foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement, by, among other things, the mutual waivers and
certifications in this Section 6.10.
SECTION 6.11. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 6.12. PRINCIPAL STOCKHOLDER INFORMATION. At any time
when the Holders, in the aggregate, own Stockholder Shares constituting (a) at
least 10% of the outstanding Company Common Stock in the case of (i) below or
(b) 5% of the outstanding Company Common Stock in the case of (ii) below, the
Stockholder shall use commercially reasonable efforts to, and to cause its
Affiliates to, promptly provide the Company with such information regarding the
Holders (i) as may be reasonably requested by the Company's customers
(including, without limitation, with respect to bids or proposals to prospective
customers) and (ii) as may be required by applicable law (including under
permits and licenses) with respect to principal stockholders of the Company;
PROVIDED that neither the Stockholder nor its Affiliates shall be required to
disclose any confidential information pursuant to this Section 6.12.
SECTION 6.13. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State other than
Section 5-1401 of the New York General Obligations Law.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
QUEST DIAGNOSTICS
INCORPORATED
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
SMITHKLINE XXXXXXX PLC
By /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Authorized Signatory
