EXHIBIT 9
May 21, 2002
TRANSACTION
SmithKline ▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, fax ▇▇▇-▇▇▇-▇▇▇▇
CC: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, fax ▇▇-▇▇-▇▇▇▇-▇▇▇▇
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Global Deal Id: 245466
Effort Id: 234123
Dear Sir or Madam:
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the Transaction entered into between ▇▇▇▇▇▇ Brothers
Finance S.A. ("Party A") and SmithKline ▇▇▇▇▇▇▇ Corporation ("Party B") on the
Trade Date specified below (the "Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
This Confirmation supplements, forms part of, and is subject to, the ISDA Master
Agreement dated as of May 21, 2002, as amended and supplemented from time to
time (the "Agreement"), between Party A and Party B. All provisions contained in
the Agreement shall govern this Confirmation except as expressly modified below.
The definitions and provisions contained in the 1996 ISDA Equity Derivatives
Definitions (the "Equity Definitions") and the 2000 ISDA Definitions (the "Swap
Definitions", and together with the Equity Definitions, the "Definitions"), in
each case as published by the International Swaps and Derivatives Association,
Inc. ("ISDA") are incorporated into this Confirmation. References herein to
"Transaction" shall be deemed references to "Swap Transaction" for purposes of
the Swap Definitions and "Share Swap Transaction" for purposes of the Equity
Definitions. In the event of any inconsistency between the Equity Definitions
and the Swap Definitions, the Equity Definitions will govern. In the event of
any inconsistency between either set of Definitions and this Confirmation, this
Confirmation will govern.
Party A and Party B each represents that entering into the Transaction is within
its capacity, is duly authorized and does not violate any laws of its
jurisdiction of organization or residence or the terms of any agreement to which
it is a party. Party A and Party B each represents that (a) it is not relying on
the other party in connection with its decision to enter into this Transaction,
and neither party is acting as an advisor to or fiduciary of the other party in
connection with this Transaction regardless of whether the other party provides
it with market information or its views; (b) it understands the risks of the
Transaction and any legal, regulatory, tax, accounting and economic consequences
resulting therefrom; and (c) it has determined based upon its own judgment and
upon any advice received from its own professional advisors as it has deemed
necessary to consult that entering into the Transaction is appropriate for such
party in light of its financial capabilities and objectives. Party A and Party B
each represents that upon due execution and delivery of this Confirmation, it
will constitute a legally valid and binding obligation, enforceable against it
in accordance with its terms, subject to applicable principles of bankruptcy and
creditors' rights generally and to equitable principles of general application.
The terms of the Transaction to which this Confirmation relates are as follows:
Agent: ▇▇▇▇▇▇ Brothers Inc. ("LBI") is acting as agent on behalf of Party
A and Party B for this Transaction. LBI has no obligations, by
guarantee, endorsement or otherwise, with respect to the
performance of this Transaction by either party.
▇▇▇▇▇▇ BROTHERS FINANCE S.A.
▇▇▇▇▇▇▇▇▇▇ ▇▇ - ▇.▇. ▇▇▇ ▇▇▇▇ - ▇▇-▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇▇▇▇▇▇▇
TELEPHONE (▇▇-▇) ▇▇▇ ▇▇ ▇▇ - TELEFAX (▇▇-▇) ▇▇▇ ▇▇ ▇▇ - TELEX 812096 LBFS CH
(a) GENERAL TERMS
Trade Date: May 21, 2002
Effective Date: Three (3) Exchange Business Days next
following the Trade Date
Valuation Date: Each Averaging Date
Valuation Time: 4:00 p.m. (local time in New York)
Shares: The common stock of Quest Diagnostics,
Inc. (the "Issuer") Ticker: DGX
Exchange: New York Stock Exchange
Related Exchange(s): Any exchange on which options or futures
on the Shares are traded.
Number of Shares: 1,000,000
Initial Price: USD84.55
Depreciation Floor: USD84.55
Appreciation Cap: USD118.45
Final Price: To the extent Physical Settlement is
applicable, Final Price shall be the
closing price per Share quoted by the
Exchange on each Averaging Date at the
Valuation Time, without regard to
extended or after hours trading. To the
extent Cash Settlement is applicable,
Final Price shall be the arithmetic
average of the Relevant Prices, and
"Relevant Price" shall be the closing
price per Share quoted by the Exchange
on each Averaging Date at the Valuation
Time, without regard to extended or
after hours trading.
Averaging Dates: October 9, 2007, October 10, 2007,
October 11, 2007, October 12, 2007,
October 15, 2007, October 16, 2007,
October 17, 2007, October 18, 2007,
October 19, 2007 and October 22, 2007
Averaging Date Market Disruption: Modified Postponement
Delivery Adjustment: (a) If the Final Price is less than or
equal to the Depreciation Floor, then
the Delivery Adjustment equals 1.0
(b) If the Final Price is greater than
the Depreciation Floor, but less than or
equal to the Appreciation Cap, then the
Delivery Adjustment equals a fraction,
the numerator of which is the
Depreciation Floor and the denominator
of which is the Final Price
(c) If the Final Price is greater than
the Appreciation Cap, then the Delivery
Adjustment equals 1.0 minus (the
Appreciation Cap minus the Depreciation
Floor) divided by the Final Price).
(b) PARTY A'S PAYMENT OF PURCHASE PRICE
Purchase Price: USD84,550,000.00
Risk ID: N02050813/ Effort ID: 234123/ Global Deal ID: 245466
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Payment Date: To the extent Physical Settlement is
applicable, Party A will pay the
Purchase Price divided by the Number of
Averaging Dates to Party B on each
Delivery Date. To the extent Cash
Settlement is applicable, Party A will
pay the Purchase Price to Party B on the
Cash Settlement Payment Date.
(c) PARTY B'S DELIVERY OBLIGATIONS
Settlement Amount: On each Averaging Date, the relevant
Delivery Adjustment multiplied by the
relevant Number of Shares for the
relevant Averaging Date, provided that
if such calculation results in any
fractional Share, the Settlement Amount
shall be rounded up to the next whole
number of Shares and Party A shall pay
the cash value thereof to Party B.
Cash Settlement Amount: The Delivery Adjustment multiplied by
the Number of Shares multiplied by the
Final Price
Delivery Date: Three (3) Exchange Business Days next
following each Averaging Date
Settlement Option: Party B may elect Physical or Cash
Settlement (with respect to all or a
portion of the Number of Shares) by
delivering a written notice of such
election to Party A on or prior to the
Election Date. If Party B elects
Physical or Cash Settlement with respect
to a portion of the Number of Shares,
(i) Party B will be deemed to elect the
other Settlement Option with respect to
the remainder of the Number of Shares,
(ii) the Number of Shares for each
settlement option shall be deemed to be
the portion with respect to which such
election was made and (iii) the Purchase
Price shall be allocated between the
settlement options proportionally to the
Number of Shares for each settlement
option. If Party B does not provide such
notice, Physical Settlement shall apply
if the Posted Collateral on the Election
Date consists of a number of
freely-tradable Shares equal to the
Number of Shares in book entry form;
otherwise, Cash Settlement shall apply.
Election Date: The fifth (5th) Exchange Business Day
prior to the first Averaging Date
Physical Settlement: To the extent Physical Settlement
applies, the Transaction shall expire in
equal proportions of Shares on each
Averaging Date, with the Delivery Date
for each such Averaging Date occurring
three (3) Exchange Business Days after
each such Averaging Date. On each such
Delivery Date Party B will deliver a
number of freely-tradable Shares in
book-entry form equal to the Settlement
Amount to Party A, free and clear of any
Encumbrances or Transfer Restrictions.
Party B acknowledges and understands
that any such delivery may require Party
B to provide an opinion of counsel and
other documentation in a form acceptable
to the Issuer and the transfer agent for
the Shares to ensure the conversion of
such Shares into book-entry form in
advance of any delivery.
Cash Settlement: To the extent Cash Settlement applies,
Party B will pay the Cash Settlement
Amount to Party A on the Cash Settlement
Payment Date.
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Cash Settlement Payment Date: Three Exchange Business Days next
following the final Averaging Date
Collateral: If Party B elects to Transfer (and
` Transfers) the Independent Amount to
Party A (which Independent Amount shall
constitute Eligible Collateral with
respect to Party B), Party A's Exposure
under this Transaction shall be zero and
Party B's Credit Support Amount (as
Secured Party) shall be calculated
without subtracting the Independent
Amounts referred to in clause (iii) of
the definition thereof; otherwise, Party
A's Exposure under this Transaction
shall be calculated as provided in the
Credit Support Annex. At any time Party
B may revoke such election by
Transferring to Party A under the Credit
Support Annex the then Delivery Amount
(determined ignoring the Independent
Amount and with Party A's Exposure under
this Transaction being calculated as
provided in the Credit Support Annex),
in which case Party A shall promptly
Transfer the Independent Amount to Party
B. Party B acknowledges and understands
that any revocation of its election to
Transfer the Independent Amount may
result in such Shares becoming subject
to transfer restrictions under the
Securities Act of 1933, as amended (the
"1933 Act"), if such Shares have
previously been converted into
book-entry form. "Independent Amount"
means, with respect to Party B for this
Transaction, a number of Shares free and
clear of any Encumbrances or Transfer
Restrictions (other than transfer
restrictions arising under the 1933 Act
and other than under the Stockholders
Agreement, dated as of August 16, 1999,
between SmithKline ▇▇▇▇▇▇▇ PLC and the
Issuer (the "Stockholders Agreement")
equal to the Number of Shares. The
Independent Amount shall include all
Distributions with respect to all Posted
Collateral (other than cash dividends
which are not Extraordinary Dividends).
Notwithstanding any provision to the
contrary in the Credit Support Annex,
the Independent Amount shall be
delivered by Party B without regard to
the Minimum Transfer Amount and, except
as provided above, Party A shall have no
obligation to return the Independent
Amount to Party B until all of Party B's
obligations with respect to this
Transaction have been satisfied. Party B
agrees to provide three stock powers
executed in blank with respect to each
certificate evidencing any Shares
delivered as Posted Collateral and to
update such stock powers as necessary.
Party A may use any Shares constituting
Posted Collateral and the Independent
Amount pursuant to Section 6(c) of the
Credit Support Annex only upon Party B's
consent. Party A agrees that if it uses
any Shares pursuant to Section 6(c) of
the Credit Support Annex, it will
provide additional collateral to Party
B, the terms of which shall be
consistent with market practice for
stock loans of U.S. liquid equity
securities unless the parties agree
otherwise. Party B acknowledges and
understands that any such use may
require Party B to provide an opinion of
counsel and other documentation in a
form acceptable to the Issuer and the
transfer agent for the Shares to ensure
the conversion of such Shares into
book-entry form prior to such use. Party
A agrees to cooperate in good faith with
respect to the conversion of Shares into
book-entry form. Party A agrees that LBI
will hold any Shares constituting Posted
Collateral in connection with this
Transaction, that Party B is the
beneficial owner of such Shares, and
that, if such Shares are being held by
LBI in book-entry form and are not being
used by Party A pursuant to Section 6(c)
of the Credit Support Annex, LBI will
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Page 4 of 11
comply with its obligations under
applicable law and regulation (including
the rules of the New York Stock Exchange
and the National Association of
Securities Dealers) to forward to the
beneficial owner all proxy and other
materials properly furnished to it by
the Issuer, in accordance with its
standard business practices.
ADJUSTMENTS:
Method of Adjustment: Calculation Agent Adjustment
Extraordinary Dividends: For purposes of this Transaction and the
definition of a "Potential Adjustment
Event" (without limiting the generality
of clause (iii) of Section 9.1(e) of
the Equity Definitions), an
"Extraordinary Dividend" shall mean, as
calculated by the Calculation Agent, (i)
any cash dividend or distribution
declared with respect to the Shares at a
time when the Issuer has not previously
declared or paid dividends or
distributions on such Shares for the
prior four quarterly periods; (ii) any
increase or decrease by more than 5%
(determined on an annualized basis) in
the then current quarterly dividend or
(iii) any other "special" cash or
non-cash dividend on or distribution
with respect to the Shares which is, by
its terms or declared intent, declared
and paid outside the normal operations
or normal dividend procedures of the
Issuer.
EXTRAORDINARY EVENTS:
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation
(b) Share-for-Other: Cancellation and Payment
(c) Share-for-Combined: Alternative Obligation with respect to
the New Shares and Cancellation and
Payment with respect to the Other
Consideration
Alternative Obligation: The applicable definition of
"Alternative Obligation" in subsections
9.3(b)and (d) of the Equity Definitions
shall be amended by adding the following
at the end of each such subsection:
"including any one or more of the
Initial Price, Final Price, Relevant
Price, Number of Shares, Appreciation
Cap, Depreciation Floor, Delivery
Adjustment and any other variable
relevant to the exercise, settlement or
payment terms of each such Transaction.
In addition, the Calculation Agent will
determine if the change in the
volatility of the New Shares (as
compared with the Shares) affects the
theoretical value of any such
Transaction, and if so, shall in a
commercially reasonable manner make an
adjustment to the Appreciation Cap to
reflect such change in theoretical
value. Any adjustment made pursuant to
this paragraph will be effective as of
the date determined by the Calculation
Agent on or following the Merger Date.
NATIONALIZATION, INSOLVENCY, HEDGING
DISRUPTION EVENT, BORROW LOSS OR
INCREASE IN BORROW COSTS: Cancellation and Payment
Definitions: The definition of "Merger Event" in
Section 9.2(a) of the Equity Definitions
shall be amended by deleting subsection
9.2(a)(iii) in its entirety and
replacing it with the following:
"(iii) other takeover offer for the
Shares that results in a transfer of
or an irrevocable commitment to
transfer 25% or more of all the
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outstanding Shares (other than the
Shares owned or controlled by the
offeror)"
For purposes of the definition of
"Cancellation and Payment" in Sections
9.3(c)(ii), 9.3(d)(ii) and 9.6, this
Transaction shall be deemed to be a Share
Option Transaction. The amount payable upon
Cancellation and Payment will be the amount
agreed upon promptly by the parties after
the Merger Date or the date of the
occurrence of the Nationalization,
Insolvency, Hedging Disruption Event,
Increase in Borrow Costs or Borrow Loss, as
the case may be. In the absence of such
agreement, the amount payable will be
determined by the Calculation Agent in a
commercially reasonable manner (without the
requirement of soliciting dealer quotations)
as the fair value of the Transaction with
terms that would preserve the economic
equivalent of any payment or delivery
(assuming satisfaction of each applicable
condition precedent) by the parties in
respect of the relevant Transaction that
would have been required after that date but
for the occurrence of the Nationalization,
Insolvency, Hedging Disruption Event,
Increase in Borrow Costs, Borrow Loss or
Merger Event, as applicable. The Calculation
Agent will determine the amount payable on
the basis of the factors identified in
subparagraphs (i), (ii) and (iii) in Section
9.7(b) and such other factors as it deems
appropriate in a commercially reasonable
manner.
Additional Extraordinary Events: "Hedging Disruption Event" means that the
Shares cease to be listed on or quoted by
the Exchange, the Nasdaq National Market
System or the American Stock Exchange for
any reason (other than a Merger Event).
If an Increase in Borrow Costs occurs, then
by the Valuation Time on the day such event
occurs, Party B shall:
(a) (i) permit Party A to use the Shares
posted as Posted Collateral and the
Independent Amount pursuant to Section 6(c)
of the Credit Support Annex and (ii) ensure
that such Shares are freely tradable and
have been converted into book-entry form; or
(b) agree to adjustments to the terms of
this Transaction to reflect the Total Borrow
Cost, which adjustments will be determined
by the Calculation Agent in a commercially
reasonable manner; or
(c) agree to pay the Total Borrow Cost.
If Party B does not agree to (a), (b) or (c)
by the Valuation Time on the day on which
the Increase in Borrow Costs occurs,
Cancellation and Payment shall immediately
be applicable.
If a Borrow Loss occurs, the Calculation
Agent shall notify Party A and Party B and
Cancellation and Payment shall immediately
be applicable unless, by the later of the
Valuation Time on the day on which the
Borrow Loss occurs or three hours after such
notification, (i) Party B permits Party A to
use the Shares posted as Posted Collateral
and the Independent Amount pursuant to
Section 6(c) of the Credit Support Annex and
(ii) such Shares are freely tradable and
have been converted into book-entry form.
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Party B acknowledges and understands that
any use of the Shares posted as Posted
Collateral pursuant to Section 6(c) of the
Credit Support Annex may require Party B to
provide an opinion of counsel and other
documentation in a form acceptable to the
Issuer and the transfer agent for the Shares
to ensure the conversion of such Shares into
book-entry form prior to the occurrence of
the Borrow Loss or the Increase in Borrow
Costs, as applicable.
If Party A is permitted to use the Shares
posted as Posted Collateral pursuant to
Section 6(c) of the Credit Support Annex,
Party A shall adjust the terms of this
Transaction in a commercially reasonable
manner to reflect its lower borrowing costs
for the period that Party A is permitted to
use the Shares (which borrowing costs will
reflect the interest rate earned by Party A
on any collateral posted to Party B in
connection with such use).
The Calculation Agent shall notify both
parties as soon as the average rebate earned
by Party A on collateral posted for any
Shares borrowed in connection with this
Transaction is at or below 1% (determined on
an annualized basis).
"Borrow Cost" means the difference between
the actual rebate earned by Party A on
collateral posted for any Shares borrowed in
connection with this Transaction and the
General Collateral Rate, multiplied by the
closing price per Share quoted by the
Exchange at the Valuation Time on the
preceding Exchange Business Day, multiplied
by the Hedge Delta on the preceding Exchange
Business Day, calculated on an actual/360
basis, as determined by the Calculation
Agent in a commercially reasonable manner.
"Borrow Loss" means that it becomes
impracticable for Party A to borrow Shares
equal to its desired Hedge Delta on any day,
as determined by the Calculation Agent in a
commercially reasonable manner.
"General Collateral Rate" means the general
collateral rebate rate earned by market
participants in general on collateral posted
for U.S. liquid equity securities as
determined by the Calculation Agent in a
commercially reasonable manner. The
Calculation Agent will provide evidence of
the General Collateral Rate to either party
upon request.
"Hedge Delta" means the number of Shares
borrowed by Party A in connection with this
Transaction, as determined by the
Calculation Agent in a commercially
reasonable manner.
"Increase in Borrow Costs" means that the
actual rebate earned by Party A on
collateral posted for any Shares borrowed in
connection with this Transaction is at or
below zero for ten (10) days or longer, as
determined by the Calculation Agent in a
commercially reasonable manner.
"Total Borrow Cost" means the Borrow Cost
for every day from the day on which the
Increase in Borrow Costs occurs until the
final Delivery Date, the Cash Settlement
Payment Date or the effective date for any
Elected Termination, as applicable.
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Bankruptcy Code: Without limiting any other protections under
the Bankruptcy Code (Title 11 of the United
States Code) (the "Bankruptcy Code"), the
Parties hereto intend for:
(a) This Transaction and the Agreement to be
a "swap agreement" as defined in the
Bankruptcy Code, and the parties hereto to
be entitled to the protections afforded by,
among other Sections, Section 560 of the
Bankruptcy Code.
(b) A party's right to liquidate this
Transaction and to exercise any other
remedies upon the occurrence of any Event of
Default or Termination Event under the
Agreement or this Transaction to constitute
a "contractual right" as described in
Section 560 of the Bankruptcy Code.
(c) Any cash, securities or other property
provided as performance assurance, credit
support or collateral with respect to this
Transaction or the Agreement to constitute
"transfers" under a "swap agreement" as
defined in the Bankruptcy Code.
(d) All payments for, under or in connection
with this Transaction or the Agreement, all
payments for any securities or other assets
and the transfer of such securities or other
assets to constitute "transfers" under a
"swap agreement" as defined in the
Bankruptcy Code.
Party B Representations: In addition to the representations set forth
in the Agreement, Party B further represents
that;
(a) Neither Party A nor any of its
affiliates has advised Party B with respect
to any legal, regulatory, tax, accounting or
economic consequences arising from this
Transaction, and neither Party A nor any of
its affiliates is acting as agent (other
than LBI as dual agent if specified above),
or advisor for Party B in connection with
this Transaction.
(b) Party B is not in possession of any
material non-public information
concerning the business, operations or
prospects of the Issuer and was not in
possession of any such information at
the time of placing any order with
respect to the Transaction.
"Material" information for these purposes is
any information to which an investor would
reasonably attach importance in reaching a
decision to buy, sell or hold any securities
of the Issuer(s).
(c) Party B is the legal and beneficial
owner of the Shares, free and clear of any
Encumbrances or any Transfer Restrictions
(other than transfer restrictions arising
under the 1933 Act and other than under the
Stockholder's Agreement), and, upon the
transfer of the Shares to Party A in
settlement of this Transaction (except to
the extent that Party B elects the Cash
Settlement option, if any) Party A will
acquire good and marketable title and will
be the beneficial owner of the Shares, free
and clear of any Encumbrances or any
Transfer Restrictions.
"Encumbrance" means any pledge,
hypothecation, assignment, encumbrance,
charge, claim, security interest, option,
preference,
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Page 8 of 11
priority or other preferential arrangement
of any kind or nature whatsoever, or other
charge, claim or other encumbrance (other
than an Encumbrance routinely imposed on all
securities in the relevant Clearance
System).
"Transfer Restriction" means, with respect
to any security or other property, any
condition to or restriction on the ability
of the holder thereof to sell, assign or
otherwise transfer such security or other
property or to enforce the provisions
thereof or of any document related thereto,
whether set forth in such security or other
property itself or in any document related
thereto, including, without limitation, (i)
any requirement that any sale, assignment or
other transfer or enforcement of such
security or other property be consented to
or approved by any person, including,
without limitation, the Issuer or any other
obligor thereon, (ii) any limitations on the
type or status, financial or otherwise, of
any purchaser, pledgee, assignee or
transferee of such security or other
property, (iii) any requirement for the
delivery of any certificate, consent,
agreement, opinion of counsel, notice or any
other document of any person to be given to
the Issuer, any other obligor on or any
registrar or transfer agent for, such
security or other property, and (iv) any
registration or qualification requirement or
prospectus delivery requirement for such
security or other property pursuant to any
federal, state or foreign securities law
(including, without limitation, any such
requirement arising as a result of Rule 144
or Rule 145 under the 1933 Act).
(d) As of the date hereof (without giving
effect to the transactions contemplated
hereby) Party B is the beneficial owner (as
defined in Rule 13d-3 under the Securities
Exchange Act of 1934 (the "1934 Act")) of
22,128,672 Shares, which constitutes
approximately 22.8% of the outstanding
Shares of the Issuer (as at April 30, 2002).
Party B is currently, and in the past has
been, in compliance with any applicable
reporting and other obligations under
Section 13 and Section 16 of the 1934 Act.
Party B shall comply with all applicable
reporting and other requirements of Section
13 and Section 16 of the 1934 Act (and the
rules and regulations promulgated
thereunder) relating to this Transaction.
Party B will provide Party A with a draft of
any amendments to its Schedule 13D which
relate to the Transaction and will give
Party A a reasonable opportunity to comment
on the draft. Party B shall promptly file
all amendments to its Schedule 13D in a form
reasonably acceptable to Party A.
(e) Party B's entry into this Transaction,
any sale of Shares hereunder, the pledge of
any Eligible Collateral hereunder and Party
A's exercise of all rights and remedies
hereunder with respect to such Eligible
Collateral complies with and is not in any
way limited by (i) any trading or "blackout"
policies of the Issuer or (ii) any other
conditions or restrictions imposed by the
Issuer on the sale, transfer, loan, pledge,
disposition or other use by its employees of
any Eligible Collateral or Shares.
(f) Party B acquired the Shares and paid for
the Shares in full more than one year prior
to the Trade Date. Party B did not acquire the
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Shares in contemplation of, or in a
transaction that was contingent upon,
entering into this Transaction.
(g) Neither Party B nor any person who would
be considered to be the same "person" (as
such term is used in Rule 144(a)(2) under
the 1933 Act, has sold any Shares or hedged
(through swaps, options, short sales or
otherwise) any long position in the Shares
during the preceding three (3) months prior
to the Trade Date. For purposes of this
paragraph, "Shares" shall be deemed to
include securities convertible into or
exchangeable or exercisable for Shares and
any other security or instrument that would
be subject to aggregation under paragraphs
(a)(2) and (e) of Rule 144 under the 1933
Act.
(h) Party B has not made, and will not make,
any payment in connection with the offering
or sale of the Shares to any person other
than Party A.
(i) Party B has not solicited or arranged
for the solicitation of, and will not
solicit or arrange for the solicitation of,
orders to buy Shares in anticipation of or
in connection with any proposed sale of the
Shares.
(j) The Shares constituting Posted
Collateral are currently eligible for public
resale by Party B pursuant to Rule 144 under
the 1933 Act. Party B acknowledges and
agrees that (i) the entering into of this
Confirmation will constitute a sale for
purposes of Rule 144, (ii) Party B has not
taken and will not take any action that
would cause the sale made pursuant to this
Confirmation to fail to meet all applicable
requirements of Rule 144, including without
limitation, the volume limitations of Rule
144(e).
MUTUAL REPRESENTATION: Party A and Party B each represent that the
Number of Shares will not exceed the greater
of (i) 1% of the outstanding Shares as shown
by the most recent report or statement
published by the Issuer, or (ii) the average
reported weekly volume of trading in the
Shares during the four calendar weeks
preceding the Trade Date.
COVENANTS: (a) Party B will transmit three signed
copies of a Form 144 for filing with the
Securities and Exchange Commission (the
"SEC"), the Exchange and the Issuer
concurrently with the execution of this
Confirmation.
(b) Party B will send to Party A via
facsimile a copy of each Form 144 and each
filing under Section 13 or 16 of the
Exchange Act, if any, relating to this
Transaction concurrently with filing or
transmission for filing, as the case may be,
of such form to or with the SEC.
(c) Party A covenants that, through its
affiliate ▇▇▇▇▇▇ Brothers Inc., it will
introduce into the public market a number of
Shares equal to the Number of Shares in a
manner consistent with the manner-of-sale
conditions described in 144(f) and (g) under
the 1933 Act.
Risk ID: N02050813/ Effort ID: 234123/ Global Deal ID: 245466
Page 10 of 11
(d) Each party acknowledges and agrees that
upon execution of this Confirmation, this
Confirmation shall constitute a "binding
commitment" within the meaning of the
interpretive letter from the SEC to ▇▇▇▇▇▇▇,
Sachs & Co. dated December 20, 1999.
Elected Termination: Party B may elect to terminate this
Transaction upon mutually agreed upon terms.
The Calculation Agent will calculate any
amounts owing upon such early termination in
a commercially reasonable manner. Upon
request, the Calculation Agent will provide
the assumptions it used to calculate any
amounts owing.
Payments on Early Termination: Party A and Party B agree that for this
Transaction, for purposes of Section 6(e) of
the Agreement, Loss and the Second Method
will apply.
Additional Provision: Party B hereby identifies the Shares
initially pledged as Posted Collateral under
this Transaction as a position with respect
to personal property that is an offsetting
position with respect to Party B's rights
and obligations hereunder and that is part
of a "straddle" with such rights and
obligations within the meaning of section
1092 of the Internal Revenue Code of 1986,
as amended, and Party A acknowledges that
Party B has identified the Shares for that
purpose.
Calculation Agent: ▇▇▇▇▇▇ Brothers Inc., whose adjustments,
determinations and calculations shall be
made in a commercially reasonable manner.
THIS TRANSACTION HAS BEEN ENTERED INTO FOR INVESTMENT AND HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY
OTHER UNITED STATES FEDERAL OR STATE SECURITIES LAWS; THIS TRANSACTION MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF APPROPRIATE REGISTRATION
UNDER SUCH SECURITIES LAWS EXCEPT IN A TRANSACTION EXEMPT FROM OR NOT SUBJECT TO
THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES LAWS.
Please confirm your agreement with the foregoing by executing this Confirmation
and returning it to us at facsimile number ▇▇▇-▇▇▇-▇▇▇▇, Attention:
Documentation.
Yours sincerely, Confirmed as of the date first above written:
▇▇▇▇▇▇ BROTHERS FINANCE S.A. SMITHKLINE ▇▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------- -------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President Title: Vice President & Secretary
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
Execution time will be furnished upon Counterparty's written request.
Risk ID: N02050813/ Effort ID: 234123/ Global Deal ID: 245466
Page 11 of 11
