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STOCKHOLDERS AGREEMENT
Between
QUEST DIAGNOSTICS INCORPORATED
and
SMITHKLINE XXXXXXX PLC
Dated as of August 16, 1999
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TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Definitions..........................................2
ARTICLE II
Governance
SECTION 2.01. Initial Board Representation.........................5
SECTION 2.02. Continuing Board Representation......................5
SECTION 2.03. Resignations and Replacements........................6
SECTION 2.04. Committees...........................................6
SECTION 2.05. Approval of Director Nominees........................6
SECTION 2.06. No Voting Trust......................................6
SECTION 2.07. Reinstatement........................................7
ARTICLE III
Voting Rights and Appraisal Rights
SECTION 3.01. Voting Restrictions..................................7
SECTION 3.02. Appraisal Rights.....................................7
ARTICLE IV
Standstill Provisions
SECTION 4.01. Standstill Period....................................8
SECTION 4.02. Transfer Restrictions................................8
SECTION 4.03. Acquisition of Additional Shares; Other Restrictions.9
SECTION 4.04. Third Party Offers..................................11
SECTION 4.05. Right of First Refusal..............................11
SECTION 4.06. Additional Shares...................................12
ARTICLE V
Registration Rights
SECTION 5.01. Restrictive Legend..................................13
SECTION 5.02. Notice of Proposed Transfer.........................13
SECTION 5.03. Request for Registration............................14
SECTION 5.04. Incidental Registration.............................15
SECTION 5.05. Shelf Registration..................................16
SECTION 5.06. Obligations of the Company..........................17
SECTION 5.07. Furnish Information.................................19
SECTION 5.08. Expenses of Registration............................19
SECTION 5.09. Underwriting Requirements...........................20
SECTION 5.10. Indemnification.....................................20
SECTION 5.11. Lockup..............................................23
ARTICLE VI
Miscellaneous
SECTION 6.01. Interpretation......................................23
SECTION 6.02. Amendments..........................................24
SECTION 6.03. Assignment..........................................24
SECTION 6.04. No Third-Party Beneficiaries........................24
SECTION 6.05. Notices.............................................24
SECTION 6.06. Attorney Fees.......................................25
SECTION 6.07. Counterparts........................................25
SECTION 6.08. Severability........................................25
SECTION 6.09. Consent to Jurisdiction.............................26
SECTION 6.10. Waiver of Jury Trial................................26
SECTION 6.11. Specific Performance................................26
SECTION 6.12. Principal Stockholder Information...................26
SECTION 6.13. Governing Law.......................................27
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:
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.
"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.
"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................ Section 4.02(a)
Initiating Holders........................ Section 5.03(a)
Purchase Agreement........................ Recitals
Selling Stockholders...................... Section 4.05
Shelf Registration........................ Section 5.05(a)
Standstill Period......................... Section 4.01(a)
Stockholder............................... Preamble
Subsidiary Transferee..................... Section 4.02(b)
Transfer.................................. Section 4.02(a)
Transfer Notice........................... Section 4.05(a)
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
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.
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).
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 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 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.
(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.
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 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 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 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 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.
(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;
(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 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.
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 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 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 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.
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 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
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 circum stance 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
26
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 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.
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
