Exhibit 2
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
THIS AMENDMENT (this "Amendment") effective as of the 1st day of July,
1999, amends and modifies a certain Rights Agreement dated as of December 31,
1996, (the "Rights Agreement") between Quest Diagnostics Incorporated (the
"Company") and ▇▇▇▇▇▇ Trust and Savings Bank (the "Rights Agent"). All terms
defined in the Rights Agreement shall have the same meanings in this Amendment
unless otherwise defined.
WHEREAS, pursuant to a Stock and Asset Purchase Agreement dated as of
February 9, 1999, as amended (the "Purchase Agreement") among SmithKline ▇▇▇▇▇▇▇
plc ("SB"), SmithKline ▇▇▇▇▇▇▇ Corporation ("SBC") and the Company, the Company
will acquire the clinical laboratory business of SmithKline ▇▇▇▇▇▇▇ plc,
including all of the issued and outstanding capital stock of SBCL, Inc.
("SBCL"), for approximately $1.025 billion in cash and 12,564,336 shares of
common stock, par value $.01 per share ("Common Shares"), of the Company.
WHEREAS, as a result of the issuance of 12,564,336 Common Shares to SB
or SBC pursuant to the Purchase Agreement, SB will be the Beneficial Owner of
approximately 29.5% of the outstanding Common Shares.
WHEREAS, under the terms of the Rights Agreement, SB would be deemed an
"Acquiring Person," which is defined therein as "any Person...who or which,
together with all Affiliates and Associates...shall be the Beneficial Owner...of
20% or more of the Common Shares of the Company then outstanding."
WHEREAS, the Rights Agreement provides that, subject to certain
conditions, if any person or group becomes an Acquiring Person, then each Right
(other than Rights beneficially owned by the Acquiring Person and certain
affiliated persons) would become exercisable and could, among other things,
entitle the holder to purchase Common Shares for a purchase price equal to
approximately half of the current market price.
WHEREAS, it is not the intent of the Company that solely by reason of
the transactions contemplated by the Purchase Agreement, SmithKline ▇▇▇▇▇▇▇ and
its affilliates be deemed an Acquiring Person which could result in the Rights
becoming exercisable.
WHEREAS, on February 8, 1999, the Board of Directors of the Company
adopted a resolution approving the execution of this Amendment to the Rights
Agreement and directs the Rights Agent to enter into this Amendment.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
1. All terms not defined herein have the meaning set forth in the
Rights Agreement.
2. The definition of "Acquiring Person" in Section 1(a) of the Rights
Agreement is hereby amended by the addition of the following sentence at the end
of such Section:
"Notwithstanding the foregoing, SmithKline ▇▇▇▇▇▇▇ plc ("SB"),
with its Affiliates, Associates and Persons of which they are
Associates, shall not be considered an "Acquiring Person" by
reason of the issuance to SB or its Affiliates of 12,564,336
Common Shares pursuant to the Stock and Asset Purchase
Agreement dated as of February 9, 1999, as amended (the
"PURCHASE AGREEMENT") among SB, SmithKline ▇▇▇▇▇▇▇ Corporation
and the Company; and (1) SB, together with its Affiliates,
shall not be considered an "Acquiring Person" unless and until
such time as SB or any of its Affiliates acquire Beneficial
Ownership of additional Common Shares (other than the
12,564,336 Common Shares to be issued pursuant to the Purchase
Agreement) if the effect of such acquisition would be to cause
SB, together with its Affiliates, to be the Beneficial Owner
at the time of such acquisition of more than 29.5% of the
outstanding Common Shares; and (2) Persons of which SmithKline
▇▇▇▇▇▇▇ and its Affiliates are Associates (other than
SmithKline ▇▇▇▇▇▇▇ and its Affiliates) will not be considered
to be the Beneficial Owner of the Common Shares acquired by
SmithKline ▇▇▇▇▇▇▇ and its Affiliates pursuant to the Purchase
Agreement."
3. This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
4. Except as expressly amended hereby, all the terms and conditions of
the Rights Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date set forth above.
QUEST DIAGNOSTICS INCORPORATED ▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
Rights Agent
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President & Secretary Title: Trust Officer