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SEC Potential persons who are to respond to the collection of information
1746 (2- contained in this form are not required to respond unless the form
98) displays a currently valid OMB control number.
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UNITED STATES OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION ----------------------------
Washington, D.C. 20549 OMB Number: 3235-0145
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SCHEDULE 13D Expires: October 31, 2002
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Estimated average burden
hours per response. . . 14.9
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Under the Securities Exchange Act of 1934
(Amendment No. )*
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Dynacare Inc.
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(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
26792020-5
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(CUSIP Number)
Bradford T. Smith
Executive Vice President,
Chief Legal Counsel and Secretary
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, North Carolina 27215
(336) 229-1127
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 8, 2002
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(Date of Event which Requires filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of (S)(S) 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
Page 2 of 8
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1. Names of Reporting Persons. I.R.S. Identification Nos. of
above persons (entities only).
Laboratory Corporation of America Holdings
13-3757370
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2. Check the Appropriate Box if a Member of a Group (See
Instructions)
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(a) .......................................................
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(b) X......................................................
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3. SEC Use Only ...............................................
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4. Source of Funds (See Instructions) OO ......................
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5. Check if Disclosure of Legal Proceedings Is Required
Pursuant to Items 2(d) or 2(e) .............................
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6. Citizenship or Place of Organization State of Delaware......
............................................................
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Number of 7. Sole Voting Power -0- ......................................
Shares -----------------------------------------------------------------
Beneficially 8. Shared Voting Power 10,495,192 .............................
Owned by -----------------------------------------------------------------
Each 9. Sole Dispositive Power -0- .................................
Reporting -----------------------------------------------------------------
Person 10. Shared Dispositive Power -0- ...............................
With
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11. Aggregate Amount Beneficially Owned by Each Reporting
Person .....................................................
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12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) ..................................
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13. Percent of Class Represented by Row (11)....................
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14. Type of Reporting Person (See Instructions)
CO..........................................................
............................................................
............................................................
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Page 3 of 8
Item 1. Security and Issuer
This Schedule 13D relates to the shares of common stock (the "Common
Stock") of Dynacare Inc., an Ontario corporation ("Dynacare"). The
principal executive offices of Dynacare are located at 14900 Landmark
Boulevard, Dallas, Texas 75254.
Item 2. Identity and Background
(a) Name, place of organization, principal business:
This Schedule 13D is filed by Laboratory Corporation of America
Holdings, a corporation organized under the laws of the State of
Delaware ("LabCorp"). LabCorp is the second largest independent
clinical laboratory company in the United States, based on 2001 net
revenues. Through a national network of laboratories, LabCorp offers
more than 4,000 different clinical laboratory tests which are used by
the medical profession in routine testing, patient diagnosis, and in
the monitoring and treatment of disease. LabCorp has developed
specialty and niche businesses based on certain types of specialized
testing capabilities and client requirements, such as HIV genotyping
and phenotyping, diagnostic genetics, clinical research trials and
oncology testing.
(b) Address of principal business and principal office:
The address of the principal business and principal executive office
of LabCorp is 358 South Main Street, Burlington, North Carolina 27215.
(c) Information provided pursuant to Instruction C:
For information with respect to the identity and background of each
director and executive officer of LabCorp, see Schedule I attached
hereto.
(d) No criminal convictions:
During the past five years, neither LabCorp nor, to LabCorp's
knowledge, any person identified in Schedule I to this Schedule 13D,
has been convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) No civil proceedings:
During the past five years, neither LabCorp nor, to LabCorp's
knowledge, any person identified in Schedule I to this Schedule 13D,
has been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction resulting in a judgment, decree or
final order enjoining future violations of or prohibiting or mandating
activity subject to federal or state securities laws or finding any
violation with respect to such laws.
(f) Citizenship:
Page 4 of 8
To the best of LabCorp's knowledge, all persons identified in the
attached Schedule I are citizens of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration
LabCorp agreed to acquire Dynacare (the "Acquisition") pursuant to the
Pre-Merger Agreement dated as of May 8, 2002 (the "Pre-Merger
Agreement"), by and among LabCorp, Dynacare and a wholly-owned
subsidiary of LabCorp, and subject to the conditions set forth
therein. As an inducement for LabCorp to enter into the Pre-Merger
Agreement and in consideration thereof, certain executive officers,
directors and stockholders of Dynacare named on Schedule II
(collectively, the "Stockholders") entered in a Stockholder Agreement
(collectively, the "Stockholder Agreements") with LabCorp. Pursuant to
the Stockholder Agreements, each Stockholder has agreed to vote the
Dynacare Common Stock it owns in favor of the Acquisition and against
competing proposals, and to grant LabCorp, upon request, a proxy with
respect to its Dynacare Common Stock. Pursuant to the Stockholder
Agreements, each Stockholder has also granted LabCorp an option to
purchase its shares of Dynacare Common Stock for a purchase price per
share equal to the merger consideration per share of Dynacare Common
Stock. The Stockholder Agreements cover an aggregate of 10,495,192
shares of Dynacare Common Stock owned by the Stockholders. In
addition, the Stockholder Agreements cover any additional shares
acquired upon exercise of options held by such Stockholders. A form of
the Stockholder Agreement is filed herewith as Exhibit 99.1 and
incorporated herein by reference.
Item 4. Purpose of Transaction
On May 8, 2002, LabCorp, Dynacare and a wholly-owned indirect
subsidiary of LabCorp entered into the Pre-Merger Agreement. Following
the Acquisition, Dynacare will be amalgamated with and into the
wholly-owned subsidiary of LabCorp as a result of which holders of
Dynacare Common Stock will receive 0.1164 shares of LabCorp's common
stock and $11.50 in cash for each share of Dynacare Common Stock
outstanding at the time of the Acquisition. The Acquisition which is
expected to close in the second or third calendar quarter of 2002, is
contingent on the fulfillment of certain conditions in the Pre-Merger
Agreement including, but not limited to, all required regulatory
approvals, and the approval of the Acquisition by the securityholders
of Dynacare. The Stockholder Agreements are intended to enhance the
likelihood of timely approval of the Acquisition by Dynacare's
securityholders.
Item 5. Interest in Securities of the Issuer
(a)-(b)As of May 8, 2002, the shares subject to the Stockholder Agreements
consisted of 10,495,192 shares of Dynacare Common Stock, representing
approximately 48.2% of the total number of issued and outstanding
shares of Dynacare Common Stock on May 8, 2002. The 10,495,192 total
includes options to purchase 1,246,859 shares of Dynacare Common Stock
that are exercisable within sixty days from the date hereof. The
10,495,192 total
Page 5 of 8
excludes 105,000 shares subject to options held as of the date of the
Stockholders Agreements that are not exercisable within sixty days of
the date hereof. The percentage of 48.2% is calculated based on
19,326,946 shares of Dynacare Common Stock outstanding as of May 8,
2002, plus 2,343,756 shares subject to exercisable options.
By virtue of the Stockholder Agreements entered into with each person
identified on Schedule II, LabCorp may be deemed to have the right to
acquire voting and dispositive power over the shares subject thereto
because the Stockholder Agreements grant LabCorp the right to (i)
require that the Stockholder give a proxy to LabCorp upon request to
vote those shares in favor of the Acquisition and (ii) acquire those
shares; however, LabCorp is not entitled to any other rights as a
stockholder of Dynacare with respect to the shares of Dynacare Common
Stock covered by the Stockholder Agreements. LabCorp disclaims
membership in any group consisting of one or more persons listed on
Schedule II and disclaims beneficial ownership of any shares
beneficially owned by any such persons. The filing of this Schedule
13D shall not be deemed as an admission that LabCorp is the beneficial
owner of any shares owned by any persons listed on Schedule II or a
member of any group consisting of such persons.
(c) Except as described in this Schedule 13D, there have been no
transactions in the shares of Dynacare Common Stock effected by
LabCorp or, to the best of LabCorp's knowledge, any person identified
in Schedule I of this Schedule 13D, during the last sixty days.
(d) Not Applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Except as described in this Schedule 13D and to the best of LabCorp's
knowledge, there are no contracts, arrangements, understandings, or
relationships (legal or otherwise) among the persons named in Item 2
and between such persons and any person with respect to any securities
of Dynacare.
Item 7. Material to Be Filed as Exhibits
Exhibit 99.1 Form of Stockholder Agreement between LabCorp and the other
Stockholders identified in Schedule II hereto.
Exhibit 99.2 Form of Stockholder Agreement between GTCR and LabCorp.
Page 6 of 8
Signature
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
May 10, 2002
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Date
/s/ Bradford T. Smith
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Signature
Bradford T. Smith Executive Vice President
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Name/Title
Page 7 of 8
Schedule I
Executive Officers and Directors of LabCorp*
Name: Principal Occupation or Employment:
- ----- -----------------------------------
Thomas P. Mac Mahon Chairman of the Board, President, and Chief Executive
Officer
Wesley R. Elingburg Executive Vice President, Chief Financial Officer, and
Treasurer
Myla P. Lai-Goldman, M.D. Executive Vice President, Chief Scientific Officer, and
Medical Director
Richard L. Novak Executive Vice President, and Chief Operating Officer
Bradford T. Smith Executive Vice President of Public Affairs, Human
Resources, Law and Compliance, and Secretary
Stevan R. Stark Executive Vice President of Sales and Marketing
Jean-Luc Belingard Director
Wendy E. Lane Director
Robert E. Mittelstaedt, Jr. Director
James B. Powell, M.D. Director
David B. Skinner, M.D. Director
Andrew G. Wallace, M.D. Director
*Business address for each individual: c/o Laboratory Corporation of America
Holdings, 358 South Main Street, Burlington, North Carolina 27215.
Page 8 of 8
Schedule II
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Number of Shares of Number of Options to
Dynacare Common Stock Purchase Dynacare Common
Name Beneficially Owned* Stock Beneficially Owned*
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Golder, Thoma, Cressey, Rauner Fund V, L.P. 4,590,190
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GTCR Associates V, L.P. 8,020
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Albert Latner 366,694 207,810
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EPLCO Holdings Ltd. 344,802
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857501 Ontario Limited 115,459
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SDLCO Holdings Ltd. 949,207
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MELCO Holdings Corp. 958,566
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EPLCO Realty Group Ltd. 192,164
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JILCO Holdings Ltd. 68,631
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Joshua Latner 477,132
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Arfall Holdings Sprl. 82,443
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Asteroid Holdings Sprl. 71,702
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Ditlent Holdings Sprl. 300,767
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Mooster Holdings Sprl. 303,911
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Kakao Holdings Sprl. 406,146
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Harvey Shapiro 6,250 507,572
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Osama Sherif 3,125 346,715
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Zbig Biskup 3,124 289,762
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Michael Latner 0 207,810
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* As represented to LabCorp in the Stockholder Agreements.
Exhibit 99.1
EXECUTION COPY
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT, dated as of May 8, 2002 (this "Agreement"), by
the undersigned stockholder (the "Stockholder") of Dynacare Inc., an Ontario
corporation (the "Company"), for the benefit of Laboratory Corporation of
America Holdings, a Delaware corporation ("LabCorp").
RECITALS
--------
WHEREAS, LabCorp, 3065619 NOVA SCOTIA COMPANY, and the Company are
entering into a Pre-Merger Agreement, dated as of May 8, 2002 (the "Merger
Agreement"), as part of a plan of arrangement pursuant to Section 182 of the
Business Corporations Act (Ontario) (the "OBCA") of the Company, LabCorp and
3065619 NOVA SCOTIA COMPANY (the "Arrangement") whereby, upon the terms and
subject to the conditions set forth in the Merger Agreement, each issued and
outstanding share of capital stock of the Company ("Company Capital Stock"), not
owned directly or indirectly by LabCorp or the Company, will be converted into
0.1164 shares (the "Exchange Ratio") of Common Stock, par value $.10 per share,
of LabCorp ("LabCorp Common Stock") (or 0.2328 shares of LabCorp Common Stock
after the planned two-for-one stock split on May 10, 2002) and cash in the
amount of $11.50 (the "Cash Consideration");
WHEREAS, the Stockholder owns of record and/or holds stock options,
warrants or convertible securities to acquire (whether or not vested) or the
right to acquire or exercise investment or voting power over that number and
class of shares of Company Capital Stock appearing on the signature page hereof
(such shares of Company Capital Stock, together with any other shares of capital
stock of the Company acquired by such Stockholder or as to which the Stockholder
may acquire direct or indirect voting or investment power after the date hereof
and during the term of this Agreement, being collectively referred to herein as
the "Subject Shares");
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement and the Arrangement, LabCorp has required that the Stockholder agree,
and in order to induce LabCorp to enter into the Merger Agreement, the
Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Stockholder agrees as follows:
1. Grant of Option. The Stockholder hereby grants LabCorp an
---------------
irrevocable option (the "Option") to purchase the Subject Shares on the terms
and subject to the conditions set forth below:
(a) Exercise. At any time prior to the termination of the Option
granted hereunder in accordance with the terms of this Agreement, LabCorp (or a
wholly owned subsidiary of LabCorp designated by LabCorp) may exercise the
Option, in whole only and not in part, if, and only if, on or after the date
hereof an event has occurred that would allow LabCorp to require the Company to
pay LabCorp the termination fee described in Section 8.05 of the Merger
Agreement (any such event, a "Trigger Event"). The Stockholder shall notify
LabCorp promptly in writing of the occurrence of any Trigger Event of which it
is aware; provided, however, that notice shall not be a condition to the right
of LabCorp to exercise the Option.
(b) Exercise Procedure. In the event LabCorp wishes to exercise the
Option, LabCorp shall deliver to the Stockholder a written notice (an "Exercise
Notice"). Provided that the conditions set forth in paragraph (f) hereof to the
Stockholder's obligation to sell the Subject Shares to LabCorp hereunder have
been satisfied or, if legally possible, waived, LabCorp shall, upon delivery of
the Exercise Notice and tender of the applicable aggregate Exercise Price (as
defined below), immediately be deemed to be the holder of record of such Subject
Shares purchasable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing the
Subject Shares shall not theretofore have been delivered to LabCorp. If the
conditions set forth in paragraph (f) hereof have not been satisfied or, if
legally possible, waived, LabCorp shall not be deemed to be the holder of record
unless and until the conditions in paragraph (f) have been satisfied or, if
legally possible, waived. The closing of the purchase of the Subject Shares (the
"Closing") shall occur at a place, on a date and at a time designated by LabCorp
in the Exercise Notice delivered at least two (2) business days prior to the
date of the Closing, and shall occur no later than fifteen (15) days after the
Exercise Notice is delivered or, if a waiting period under the HSR Act, the
Investment Canada Act, the Competition Act (Canada), or the pre-merger filing
requirements of any other jurisdiction applies to the acquisition of the Subject
Shares by LabCorp, fifteen (15) days after the expiration or termination of all
such applicable waiting periods; provided that if that expiration or termination
does not occur within thirty (30) days after the Drop Dead Date, as that term is
defined under the Merger Agreement (including any modifications or extensions
thereof) (the "Option Drop Dead Date"), the Closing shall not occur, and the
Exercise Notice shall be deemed to be null and void.
(c) Termination of the Option. The Option shall terminate upon the
earlier of: (i) the Effective Time of the Merger; and (ii) thirty (30) days
following the
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termination of the Merger Agreement. Notwithstanding the foregoing, if the
Option cannot be exercised by reason of any applicable judgment, decree, order,
law or regulation, the Option shall remain exercisable and shall not terminate
until the earliest of (x) the date on which such impediment shall become final
and not subject to appeal, (y) 5:00 p.m. New York City Time, on the tenth (10th)
business day after such impediment shall have been removed and (z) the Option
Drop Dead Date. Notwithstanding the termination of the Option, LabCorp shall be
entitled to purchase the Subject Shares with respect to which LabCorp had
exercised the Option prior to such termination, subject to the limitations of
Section 1(b) above.
(d) Exercise Price. The purchase price per share of Subject Shares
purchased pursuant to the Option (the "Exercise Price") shall be an amount in
cash equal to the sum of (A) the product of (x) the Exchange Ratio multiplied by
(y) the average closing price of LabCorp Common Stock for the twenty (20)
trading days preceding the date the Option is exercised plus (B) the Cash
Consideration per share. In the event the Option is exercised to purchase
options or warrants, the Exercise Price shall be reduced by the exercise price
of the options or warrants.
(e) Exercise for all. In the event LabCorp exercises the Option,
LabCorp hereby covenants and agrees that it will exercise options for the shares
of Company Common Stock from each other Stockholder who has entered into an
Agreement on the date hereof that is substantially identical to this Agreement.
(f) Conditions to Closing. The obligation of the Stockholder to sell
the Subject Shares to LabCorp hereunder and the right of LabCorp to purchase the
Subject Shares hereunder are subject to the conditions that (i) all waiting
periods, if any, under the HSR Act, the Investment Canada Act, and the
Competition Act (Canada) and any other applicable pre-merger filing requirements
of any other jurisdiction applicable to (A) the sale of the Subject Shares by
Stockholder and (B) the acquisition of the Subject Shares by LabCorp hereunder
and (ii) all consents, approvals, orders or authorizations of, or registrations,
declarations or filings with, any federal, state or local administrative agency
or commission or other federal, state or local governmental authority or
instrumentality, if any, required in connection with the sale of the Subject
Shares by the Stockholder, the acquisition of the Subject Shares by LabCorp and,
if applicable, the acquisition of LabCorp Common Stock by Stockholders hereunder
shall have been obtained or made, as the case may be; and (iii) no preliminary
or permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such sale shall be in effect.
(g) Closing. At the Closing, (i) the Stockholder shall deliver to
LabCorp a certificate or certificates evidencing the Subject Shares being
purchased,
-3-
duly endorsed in blank, or with appropriate stock powers, duly executed in
blank, in proper form for transfer and with all applicable taxes paid or
provided for and (ii) LabCorp shall deliver to the Stockholder by wire transfer
of immediately available funds to the account or accounts specified in writing
by the Stockholder the aggregate Exercise Price for the Subject Shares.
2. Representations and Warranties of the Stockholder. The Stockholder
-------------------------------------------------
hereby represents and warrants to LabCorp as follows:
(a) Organization; Authority; Execution and Delivery; Enforceability.
The Stockholder (i) is, if not a natural person, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and (ii) has the requisite corporate, company, partnership or
other power and authority to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to comply with the terms hereof. The
execution and delivery by the Stockholder, the consummation by the Stockholder
of the transactions contemplated hereby and compliance by the Stockholder with
the provisions hereof have been duly authorized by all necessary corporate,
company, partnership or other action on the part of the Stockholder and no other
corporate, company, partnership or other proceedings on the part of the
Stockholder are necessary to authorize this Agreement, to consummate the
transactions contemplated hereby or to comply with the provisions hereof. This
Agreement has been duly executed and delivered by the Stockholder and
constitutes a valid and binding obligation of the Stockholder and, assuming this
Agreement constitutes a valid and binding obligation of LabCorp, is enforceable
against the Stockholder in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws affecting the rights and remedies of creditors
generally and general principles of equity (whether considered in a proceeding
in equity or at law). The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof do not and will not conflict with, or result in any violation
or breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien in or upon any of the properties or assets of the
Stockholder under, or give rise to any increased, additional, accelerated or
guaranteed rights or entitlements under, any provision of (i) any certificate of
incorporation or by-laws, partnership agreement or limited liability company
agreement (or similar organizational documents) of the Stockholder, (ii) any
material contract to which the Stockholder is a party or any of the properties
or assets of the Stockholder is subject or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any (A)
statute, law, ordinance, rule or regulation or (B) judgment, order or decree,
-4-
in each case, applicable to the Stockholder or its properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, violations,
breaches, defaults, rights, losses, liens or entitlements that individually or
in the aggregate could not reasonably be expected to impair in any material
respect the ability of the Stockholder to perform its obligations under this
Agreement or prevent or materially impede or delay the consummation of any of
the transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement by such Stockholder, the consummation
by the Stockholder of the transactions contemplated hereby or the compliance by
the Stockholder with the provisions hereof, except for (1) filings under the HSR
Act, the Investment Canada Act and the Competition Act (Canada) and any other
applicable competition, merger control, antitrust or similar law or regulation,
and (2) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate could not reasonably be expected to impair in
any material respect the ability of the Stockholder to perform its obligations
under this Agreement or prevent or materially impede or delay the consummation
of any of the transactions contemplated hereby.
(b) The Subject Shares. (i) The Stockholder is the record and
beneficial owner of, and has good and marketable title to, the Subject Shares
set forth opposite its name on Schedule A hereto, free and clear of any Liens
----------
except as set forth on Schedule A. As of the date hereof, other than as set
----------
forth on Schedule A hereto, the Stockholder does not own (of record or
----------
beneficially) any shares of capital stock of the Company, and the Stockholder
does not own (of record or beneficially) any options, warrants, rights or other
similar instruments to acquire any capital stock or other voting securities of
the Company. Except as set forth on Schedule A, the Stockholder has the sole
----------
right to Transfer (as defined in Section 4(c)) and direct the voting of the
Subject Shares, and none of such Subject Shares is subject to any voting trust
or other agreement, arrangement or restriction with respect to the Transfer or
the voting of the Subject Shares, except as set forth in Sections 1 and 4 of
this Agreement.
(ii) In the event LabCorp exercises the Option, upon delivery of
the Subject Shares covered thereby and payment of the aggregate Exercise Price
therefor as contemplated in Section 1, LabCorp will receive good and valid title
to the Subject Shares free and clear of any Liens or adverse claims.
3. Representations and Warranties of LabCorp. LabCorp hereby
-----------------------------------------
represents and warrants to the Stockholder as follows:
-5-
(a) Organization; Authority; Execution and Delivery; Enforceability.
LabCorp (i) is duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and (ii) has all requisite corporate power and
authority to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to comply with the terms hereof. The execution and
delivery of this Agreement by LabCorp, the consummation by LabCorp of the
transactions contemplated hereby and compliance by LabCorp with the provisions
hereof have been duly authorized by all necessary corporate action on the part
of LabCorp and no other corporate proceedings on the part of LabCorp are
necessary to authorize this Agreement, to consummate the transactions
contemplated hereby or to comply with the provisions hereof. This Agreement has
been duly executed and delivered by LabCorp and, assuming due execution by the
Stockholder, constitutes a valid and binding obligation of LabCorp enforceable
against LabCorp in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws affecting the rights and remedies of creditors
generally and general principles of equity (whether considered in a proceeding
in equity or at law). The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof do not and will not conflict with, or result in any violation
or breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien in or upon any of the properties or assets of
LabCorp under, or give rise to any increased, additional, accelerated or
guaranteed rights or entitlements under, any provision of (i) the Amended and
Restated Certificate of Incorporation or Amended and Restated By-laws of
LabCorp, (ii) any contract to which LabCorp is a party or any of its properties
or assets is subject or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any (A) statute, law, ordinance,
rule or regulation or (B) judgment, order or decree, in each case, applicable to
LabCorp or its properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, breaches, defaults, rights, losses, Liens
or entitlements that individually or in the aggregate could not reasonably be
expected to impair in any material respect the ability of LabCorp to perform its
obligations under this Agreement or prevent or materially delay the consummation
of any of the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to LabCorp in connection with
the execution and delivery of this Agreement by LabCorp, the consummation by
LabCorp of the transactions contemplated hereby or compliance by LabCorp with
the provisions hereof, except for (1) filings under the HSR Act, the Investment
Canada Act and the Competition Act (Canada) and any other applicable
-6-
competition, merger control, antitrust or similar law or regulation, (2) filings
with the SEC of such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby and (3)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate could not reasonably be expected to impair in
any material respect the ability of LabCorp to perform its obligations under
this Agreement or prevent or materially delay the consummation of any of the
transactions contemplated hereby.
(b) Investment Representations of LabCorp. LabCorp represents,
warrants, and covenants to the Stockholder as follows (except as contemplated by
this Agreement and the Merger Agreement and the transactions contemplated
thereby):
(i) LabCorp does not now have, and as of the Closing will not
have, any present plan or intention to effect a distribution of the Subject
Shares within the meaning of the Securities Act;
(ii) LabCorp understands that any sale of the Subject Shares
hereunder is intended to be exempt from registration, and that no registration
statement relating to the sale of the Subject Shares in connection with this
Agreement has been or will be filed with the SEC or any state securities
commission;
(iii) LabCorp intends to acquire the Subject Shares solely for
its own account, for investment purposes only and not with a view to the resale
or distribution thereof in violation of the Securities Act;
(iv) LabCorp agrees not to sell, transfer, exchange, pledge or
otherwise dispose of, or make any offer or agreement relating to the Subject
Shares and/or any option, right or other interest with respect to the Subject
Shares that LabCorp may acquire, unless counsel representing LabCorp, which
counsel is reasonably satisfactory to the Company and the Company's legal
counsel, shall have advised the Company in a written opinion letter satisfactory
to the Company and the Company's legal counsel, and upon which the Company and
the Company's legal counsel may rely, that no registration under the Securities
Act would be required in connection with the proposed sale, transfer, exchange,
pledge or other disposition;
(v) LabCorp is an "accredited investor" as defined in Rule 501 of
Regulation D under the Securities Act and as defined in Rule 45-501 of the
Securities Act (Ontario), has the capacity to protect its interests in
connection with
-7-
this Agreement, and has such knowledge and experience in financial, tax and
business matters to be capable of evaluating the merits and risks of an
investment in the Subject Shares and in protecting its interests in connection
with the investment in the Subject Shares;
(vi) LabCorp acknowledges that (A) it has conducted its own
investigation and review of the business and affairs of the Company, (B) it has
not relied on any representations or warranties of the Stockholder concerning
the business and affairs of the Company or an investment in the Subject Shares,
(C) it has had the opportunity to ask questions of and receive information and
answers from the Company concerning the Subject Shares and other matters
pertaining to an investment in the Subject Shares, and (D) it has been given the
opportunity to verify the information provided to it in order for LabCorp to
evaluate the merits and risks of an investment in the Subject Shares, and all
such questions have been answered and all such information has been provided to
the full satisfaction of LabCorp;
(vii) LabCorp further acknowledges, represents, agrees and is
aware that the representations, warranties, agreements, undertakings and
acknowledgments made by LabCorp in this Agreement are made with the intent that
they be relied upon by such Stockholder and the Company in determining the
suitability of LabCorp as an investor in the Subject Shares; and
(viii) LabCorp undertakes to notify the Stockholder immediately
of any change in any representation, warranty or other information relating to
LabCorp set forth herein.
4. Covenants of Stockholder. Until the termination of this Agreement
------------------------
in accordance with Section 5, Stockholder agrees as follows:
(a) At the Company Meeting (or at any adjournment thereof) or in
any other circumstances upon which a vote, consent or other approval with
respect to the Arrangement Resolution and the Transaction is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares in favor of the
Arrangement Resolution and the Transaction;
(b) The Stockholder covenants and agrees in favor of LabCorp,
that if LabCorp so requests (i) not later than five days prior to the date of
the Company Meeting, it shall deliver or cause to be delivered to the Company
duly executed proxies in favor of LabCorp voting in favor of the Merger and (ii)
such proxies will not be revoked, provided, however, that if a waiting period
under the HSR Act, the Investment Canada Act, the Competition Act (Canada) or
the pre-merger filing requirements of any other jurisdiction applies to the
grant of the
-8-
proxies so requested, the Stockholder shall not deliver or grant such proxies
until any applicable waiting periods shall have expired or terminated.
(c) The Stockholder covenants that it will not exercise any
rights of dissent provided under Section 185 of the OBCA or any order relating
to the Arrangement or otherwise in connection with the Arrangement;
(d) At any meeting of the Company Securityholders or at any
adjournment thereof or in any other circumstances upon which the Stockholder's
vote, consent or other approval is sought, the Stockholder shall vote (or cause
to be voted) the Subject Shares against (i) any Acquisition Proposal or
transaction or occurrence that if proposed and offered to the Company or its
stockholders (or any of them) would constitute an Acquisition Proposal
(collectively, "Alternative Transactions"), and (ii) any amendment of the
Company's Articles of Incorporation or By-Laws, which amendment would in any
manner impede, frustrate, prevent or nullify the Transaction, the Merger
Agreement or any of the other transactions contemplated by the Merger Agreement
or change in any manner the voting rights of any class of capital stock of the
Company;
(e) Other than pursuant to this Agreement, the Stockholder agrees
not to (i) sell, transfer, pledge, assign or otherwise dispose of (including by
gift) (collectively, "Transfer"), or enter into any contract, option or other
arrangement (including any profit-sharing arrangement) with respect to the
Transfer of the Subject Shares to any person or (ii) enter into any voting
arrangement, whether by proxy, voting agreement or otherwise, in relation to the
Subject Shares, and agrees not to commit or agree to take any of the foregoing
actions, provided, however, that the Stockholder may transfer Subject Shares to
one or more parties affiliated with the Stockholder provided that (i) prior to
such transfer the Stockholder causes the transferee to execute and deliver to
LabCorp a Stockholder Agreement substantially identical to this Agreement and
providing for an identical grant of an Option and other substantive provisions
provided herein, and being reasonably satisfactory to LabCorp and (ii) the
transfer to the transferee and the issuance of the LabCorp Common Stock to such
transferee can be effected without the consent or approval of any third party;
(f) The Stockholder shall not, nor shall the Stockholder permit
any affiliate, director, officer, employee, investment banker, attorney or other
advisor or representative of the Stockholder to, (i) directly or indirectly
solicit, initiate or knowingly encourage the submission of, any Acquisition
Proposal or (ii) directly or indirectly participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal;
-9-
(g) The Stockholder shall promptly notify LabCorp in writing of
any contact, inquiry, submission, proposal or offer of which Stockholder becomes
aware for an Acquisition Proposal and of any request in connection with such a
proposal for non-public information relating to the Company or any of its
material Subsidiaries any of the relevant details relating to such a proposal
(including the identity of the prospective party and the proposed terms and
conditions) known at such time; and
(h) The Stockholder shall use the Stockholder's best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with LabCorp in doing, all things necessary, proper or
advisable to support and to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.
5. Termination. This Agreement shall terminate at the time when the
-----------
Option would otherwise expire under Section 1(c) or the final proviso of Section
1(b). In the event of the termination of this Agreement pursuant to this Section
5, except as set forth herein, this Agreement shall forthwith become null and
void, there shall be no liability on the part of any of the parties, and except
as set forth in this Section 5 all rights and obligations of each party hereto
shall cease; provided, however, that no such termination of this Agreement shall
relieve any party hereto from any liability for any willful and material breach
of any provision of this Agreement prior to termination.
6. Further Assurances. The Stockholder will, from time to time,
------------------
execute and deliver, or cause to be executed and delivered, such additional or
further consents, documents and other instruments as LabCorp may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
7. Successors, Assigns and Transferees Bound. (a) The Stockholder
-----------------------------------------
agrees that this Agreement and the obligations hereunder shall attach the
Subject Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of the Subject Shares shall pass, whether by operation of
law or otherwise, including the Stockholder's heirs, guardians, administrators
or successors, and the Stockholder further agrees to take all actions necessary
to effectuate the foregoing. The Stockholder agrees that each certificate
representing the Subject Shares shall be inscribed with the legend required by
Section 7(b). In the event of any stock split, stock dividend, reclassification,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the capital stock of the Company, the number
of Subject Shares shall be adjusted appropriately. In the event of any change in
the Company Common Stock or
-10-
LabCorp Common Stock by reason of stock dividends, stock splits, mergers (other
than the Merger), recapitalizations, combinations, exchange of shares or the
like, the type and number of shares or securities subject to the Option, and the
purchase price per share provided in Section 1(d) hereof, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that LabCorp shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that LabCorp would
have received in respect of the Company Common Stock if the Option had been
exercised immediately prior to such event or the record date therefor, as
applicable. In addition, in the event of any other acquisition of additional
shares of capital stock of the Company or other voting securities of the Company
by the Stockholder (including through the exercise of any warrants, stock
options or similar instruments), the number of Subject Shares listed on Schedule
--------
A hereto shall be increased appropriately. This Agreement and the
- -
representations, warranties, covenants, agreements and obligations hereunder
shall attach to any additional shares of capital stock of the Company or other
voting securities of the Company issued to or acquired by the Stockholder
directly or indirectly (including through the exercise of any warrants, stock
options or similar instruments).
(b) The Stockholder shall cause the certificated Subject Shares to
have a legend placed conspicuously on such certificate to the following effect:
"The shares of common stock evidenced by this certificate are
subject to a Stockholder Agreement dated May 8, 2002, entered into by
the record owner of such shares and LabCorp Corporation."
The Stockholder shall cause a counterpart of this Agreement to be
deposited with the Company at its principal place of business or registered
office where it shall be subject to the same right of examination by a
stockholder of the Company, in person or by agent or attorney, as are the books
and records of the Company.
8. Remedies. The Stockholder acknowledges that money damages would be
--------
both incalculable and an insufficient remedy for any breach of this Agreement by
it, and that any such breach would cause LabCorp irreparable harm. Accordingly,
the Stockholder agrees that in the event of any breach or threatened breach of
this Agreement, LabCorp, in addition to any other remedies at law or in equity
it may have, shall be entitled, without the requirement of posting a bond or
other security, to equitable relief, including injunctive relief and specific
performance.
9. Severability. The invalidity or unenforceability of any provision
------------
of this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the
-11-
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
10. Amendment. This Agreement may be amended only by means of a
---------
written instrument executed and delivered by both the Stockholder and LabCorp.
11. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the Province of Ontario, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof, except to the extent mandatorily governed by the law of another
jurisdiction. Each of the parties hereto (i) irrevocably consents to the
exclusive jurisdiction and venue of the Ontario Superior Court of Justice
(Commercial List), in connection with any matter based upon or arising out of
this Agreement or the matters contemplated herein and (ii) waives and covenants
not to assert or plead any objection which they might otherwise have to such
jurisdiction and venue.
12. Capitalized Terms. Capitalized terms used in this Agreement that
-----------------
are not defined herein shall have such meanings as set forth in the Merger
Agreement.
13. Counterparts. For the convenience of the parties, this Agreement
------------
may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
14. No Limitation on Actions of the Stockholder as Director. In the
-------------------------------------------------------
event the Stockholder or any officer, director, partner or manager of the
Stockholder or any affiliate thereof is a director of the Company,
notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require any such person to take
or in any way limit any action that such person may take in his or her capacity
as a director of the Company.
IN WITNESS WHEREOF, Stockholder has caused this Agreement to be
executed as of the date first above written.
---------------------------
(print or type name)
By:
------------------------
-12-
Accepted and Agreed to as of the date set forth above:
LABORATORY CORPORATION OF AMERICA HOLDINGS
By:
----------------------------------------------
Name:
Title:
-13-
SCHEDULE A
Number of Subject Shares
Owned of Record or Pursuant
to Vested or Unvested Options,
Warrants or Convertible Securities
----------------------------------
Name and Address of Stockholder
- -------------------------------
shares
---------
stock options or warrants
---------
convertible securities
----------
-14-
Exhibit 99.2
EXECUTION COPY
STOCKHOLDER AGREEMENT
---------------------
STOCKHOLDER AGREEMENT, dated as of May 8, 2002 (this "Agreement"), by
the undersigned stockholder (the "Stockholder") of Dynacare Inc., an Ontario
corporation (the "Company"), for the benefit of Laboratory Corporation of
America Holdings, a Delaware corporation ("LabCorp").
RECITALS
--------
WHEREAS, LabCorp, 3065619 NOVA SCOTIA COMPANY, and the Company are
entering into a Pre-Merger Agreement, dated as of May 8, 2002 (the "Merger
Agreement"), as part of a plan of arrangement pursuant to Section 182 of the
Business Corporations Act (Ontario) (the "OBCA") of the Company, LabCorp and
3065619 NOVA SCOTIA COMPANY (the "Arrangement") whereby, upon the terms and
subject to the conditions set forth in the Merger Agreement, each issued and
outstanding share of capital stock of the Company ("Company Capital Stock"), not
owned directly or indirectly by LabCorp or the Company, will be converted into
0.1164 shares (the "Exchange Ratio") of Common Stock, par value $.10 per share,
of LabCorp ("LabCorp Common Stock") (or 0.2328 shares of LabCorp Common Stock
after the planned two-for-one stock split on May 10, 2002) and cash in the
amount of $11.50 (the "Cash Consideration");
WHEREAS, the Stockholder owns of record and/or holds stock options,
warrants or convertible securities to acquire (whether or not vested) or the
right to acquire or exercise investment or voting power over that number and
class of shares of Company Capital Stock appearing on the signature page hereof
(such shares of Company Capital Stock, together with any other shares of capital
stock of the Company acquired by such Stockholder or as to which the Stockholder
may acquire direct or indirect voting or investment power after the date hereof
and during the term of this Agreement, being collectively referred to herein as
the "Subject Shares");
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement and the Arrangement, LabCorp has required that the Stockholder agree,
and in order to induce LabCorp to enter into the Merger Agreement, the
Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Stockholder agrees as follows:
1. Grant of Option. The Stockholder hereby grants LabCorp an
---------------
irrevocable option (the "Option") to purchase the Subject Shares on the terms
and subject to the conditions set forth below:
(a) Exercise. At any time prior to the termination of the Option
granted hereunder in accordance with the terms of this Agreement, LabCorp (or a
wholly owned subsidiary of LabCorp designated by LabCorp) may exercise the
Option, in whole only and not in part, if, and only if, on or after the date
hereof an event has occurred that would allow LabCorp to require the Company to
pay LabCorp the termination fee described in Section 8.05 of the Merger
Agreement (any such event, a "Trigger Event"). The Stockholder shall notify
LabCorp promptly in writing of the occurrence of any Trigger Event of which it
is aware; provided, however, that notice shall not be a condition to the right
of LabCorp to exercise the Option.
(b) Exercise Procedure. In the event LabCorp wishes to exercise the
Option, LabCorp shall deliver to the Stockholder a written notice (an "Exercise
Notice"). Provided that the conditions set forth in paragraph (f) hereof to the
Stockholder's obligation to sell the Subject Shares to LabCorp hereunder have
been satisfied or, if legally possible, waived, LabCorp shall, upon delivery of
the Exercise Notice and tender of the applicable aggregate Exercise Price (as
defined below), immediately be deemed to be the holder of record of such Subject
Shares purchasable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing the
Subject Shares shall not theretofore have been delivered to LabCorp. If the
conditions set forth in paragraph (f) hereof have not been satisfied or, if
legally possible, waived, LabCorp shall not be deemed to be the holder of record
unless and until the conditions in paragraph (f) have been satisfied or, if
legally possible, waived. The closing of the purchase of the Subject Shares (the
"Closing") shall occur at a place, on a date and at a time designated by LabCorp
in the Exercise Notice delivered at least two (2) business days prior to the
date of the Closing, and shall occur no later than fifteen (15) days after the
Exercise Notice is delivered or, if a waiting period under the HSR Act, the
Investment Canada Act, the Competition Act (Canada), or the pre-merger filing
requirements of any other jurisdiction applies to the acquisition of the Subject
Shares by LabCorp, fifteen (15) days after the expiration or termination of all
such applicable waiting periods; provided that if that expiration or termination
does not occur within thirty (30) days after the Drop Dead Date, as that term is
defined under the Merger Agreement (including any modifications or extensions
thereof) (the "Option Drop Dead Date"), the Closing shall not occur, and the
Exercise Notice shall be deemed to be null and void.
(c) Termination of the Option. The Option shall terminate upon the
earlier of: (i) the Effective Time of the Merger; and (ii) thirty (30) days
following the
-2-
termination of the Merger Agreement. Notwithstanding the foregoing, if the
Option cannot be exercised by reason of any applicable judgment, decree, order,
law or regulation, the Option shall remain exercisable and shall not terminate
until the earliest of (x) the date on which such impediment shall become final
and not subject to appeal, (y) 5:00 p.m. New York City Time, on the tenth (10th)
business day after such impediment shall have been removed and (z) the Option
Drop Dead Date. Notwithstanding the termination of the Option, LabCorp shall be
entitled to purchase the Subject Shares with respect to which LabCorp had
exercised the Option prior to such termination, subject to the limitations of
Section 1(b) above.
(d) Exercise Price. The purchase price per share of Subject Shares
purchased pursuant to the Option (the "Exercise Price") shall be an amount in
cash equal to the sum of (A) the product of (x) the Exchange Ratio multiplied by
(y) the average closing price of LabCorp Common Stock for the twenty (20)
trading days preceding the date the Option is exercised plus (B) the Cash
Consideration per share. In the event the Option is exercised to purchase
options or warrants, the Exercise Price shall be reduced by the exercise price
of the options or warrants.
(e) Exercise for all. In the event LabCorp exercises the Option,
LabCorp hereby covenants and agrees that it will exercise options for the shares
of Company Common Stock from each other Stockholder who has entered into an
Agreement on the date hereof that is substantially identical to this Agreement.
(f) Conditions to Closing. The obligation of the Stockholder to sell
the Subject Shares to LabCorp hereunder and the right of LabCorp to purchase the
Subject Shares hereunder are subject to the conditions that (i) all waiting
periods, if any, under the HSR Act, the Investment Canada Act, and the
Competition Act (Canada) and any other applicable pre-merger filing requirements
of any other jurisdiction applicable to (A) the sale of the Subject Shares by
Stockholder and (B) the acquisition of the Subject Shares by LabCorp hereunder
and (ii) all consents, approvals, orders or authorizations of, or registrations,
declarations or filings with, any federal, state or local administrative agency
or commission or other federal, state or local governmental authority or
instrumentality, if any, required in connection with the sale of the Subject
Shares by the Stockholder, the acquisition of the Subject Shares by LabCorp and,
if applicable, the acquisition of LabCorp Common Stock by Stockholders hereunder
shall have been obtained or made, as the case may be; and (iii) no preliminary
or permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such sale shall be in effect.
(g) Closing. At the Closing, (i) the Stockholder shall deliver to
LabCorp a certificate or certificates evidencing the Subject Shares being
purchased,
-3-
duly endorsed in blank, or with appropriate stock powers, duly executed in
blank, in proper form for transfer and with all applicable taxes paid or
provided for and (ii) LabCorp shall deliver to the Stockholder by wire transfer
of immediately available funds to the account or accounts specified in writing
by the Stockholder the aggregate Exercise Price for the Subject Shares.
2. Representations and Warranties of the Stockholder. The Stockholder
-------------------------------------------------
hereby represents and warrants to LabCorp as follows:
(a) Organization; Authority; Execution and Delivery; Enforceability.
The Stockholder (i) is, if not a natural person, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and (ii) has the requisite corporate, company, partnership or
other power and authority to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to comply with the terms hereof. The
execution and delivery by the Stockholder, the consummation by the Stockholder
of the transactions contemplated hereby and compliance by the Stockholder with
the provisions hereof have been duly authorized by all necessary corporate,
company, partnership or other action on the part of the Stockholder and no other
corporate, company, partnership or other proceedings on the part of the
Stockholder are necessary to authorize this Agreement, to consummate the
transactions contemplated hereby or to comply with the provisions hereof. This
Agreement has been duly executed and delivered by the Stockholder and
constitutes a valid and binding obligation of the Stockholder and, assuming this
Agreement constitutes a valid and binding obligation of LabCorp, is enforceable
against the Stockholder in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws affecting the rights and remedies of creditors
generally and general principles of equity (whether considered in a proceeding
in equity or at law). The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof do not and will not conflict with, or result in any violation
or breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien in or upon any of the properties or assets of the
Stockholder under, or give rise to any increased, additional, accelerated or
guaranteed rights or entitlements under, any provision of (i) any certificate of
incorporation or by-laws, partnership agreement or limited liability company
agreement (or similar organizational documents) of the Stockholder, (ii) any
material contract to which the Stockholder is a party or any of the properties
or assets of the Stockholder is subject or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any (A)
statute, law, ordinance, rule or regulation or (B) judgment, order or decree,
-4-
in each case, applicable to the Stockholder or its properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, violations,
breaches, defaults, rights, losses, liens or entitlements that individually or
in the aggregate could not reasonably be expected to impair in any material
respect the ability of the Stockholder to perform its obligations under this
Agreement or prevent or materially impede or delay the consummation of any of
the transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement by such Stockholder, the consummation
by the Stockholder of the transactions contemplated hereby or the compliance by
the Stockholder with the provisions hereof, except for (1) filings under the HSR
Act, the Investment Canada Act and the Competition Act (Canada) and any other
applicable competition, merger control, antitrust or similar law or regulation,
and (2) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate could not reasonably be expected to impair in
any material respect the ability of the Stockholder to perform its obligations
under this Agreement or prevent or materially impede or delay the consummation
of any of the transactions contemplated hereby.
(b) The Subject Shares. (i) The Stockholder is the record and
beneficial owner of, and has good and marketable title to, the Subject Shares
set forth opposite its name on Schedule A hereto, free and clear of any Liens
----------
except as set forth on Schedule A. As of the date hereof, other than as set
----------
forth on Schedule A hereto, the Stockholder does not own (of record or
----------
beneficially) any shares of capital stock of the Company, and the Stockholder
does not own (of record or beneficially) any options, warrants, rights or other
similar instruments to acquire any capital stock or other voting securities of
the Company. Except as set forth on Schedule A, the Stockholder has the sole
----------
right to Transfer (as defined in Section 4(c)) and direct the voting of the
Subject Shares, and none of such Subject Shares is subject to any voting trust
or other agreement, arrangement or restriction with respect to the Transfer or
the voting of the Subject Shares, except as set forth in Sections 1 and 4 of
this Agreement.
(ii) In the event LabCorp exercises the Option, upon delivery of
the Subject Shares covered thereby and payment of the aggregate Exercise Price
therefor as contemplated in Section 1, LabCorp will receive good and valid title
to the Subject Shares free and clear of any Liens or adverse claims.
3. Representations and Warranties of LabCorp. LabCorp hereby
-----------------------------------------
represents and warrants to the Stockholder as follows:
-5-
(a) Organization; Authority; Execution and Delivery; Enforceability.
LabCorp (i) is duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and (ii) has all requisite corporate power and
authority to execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to comply with the terms hereof. The execution and
delivery of this Agreement by LabCorp, the consummation by LabCorp of the
transactions contemplated hereby and compliance by LabCorp with the provisions
hereof have been duly authorized by all necessary corporate action on the part
of LabCorp and no other corporate proceedings on the part of LabCorp are
necessary to authorize this Agreement, to consummate the transactions
contemplated hereby or to comply with the provisions hereof. This Agreement has
been duly executed and delivered by LabCorp and, assuming due execution by the
Stockholder, constitutes a valid and binding obligation of LabCorp enforceable
against LabCorp in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws affecting the rights and remedies of creditors
generally and general principles of equity (whether considered in a proceeding
in equity or at law). The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof do not and will not conflict with, or result in any violation
or breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien in or upon any of the properties or assets of
LabCorp under, or give rise to any increased, additional, accelerated or
guaranteed rights or entitlements under, any provision of (i) the Amended and
Restated Certificate of Incorporation or Amended and Restated By-laws of
LabCorp, (ii) any contract to which LabCorp is a party or any of its properties
or assets is subject or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any (A) statute, law, ordinance,
rule or regulation or (B) judgment, order or decree, in each case, applicable to
LabCorp or its properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, breaches, defaults, rights, losses, Liens
or entitlements that individually or in the aggregate could not reasonably be
expected to impair in any material respect the ability of LabCorp to perform its
obligations under this Agreement or prevent or materially delay the consummation
of any of the transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to LabCorp in connection with
the execution and delivery of this Agreement by LabCorp, the consummation by
LabCorp of the transactions contemplated hereby or compliance by LabCorp with
the provisions hereof, except for (1) filings under the HSR Act, the Investment
Canada Act and the Competition Act (Canada) and any other applicable
-6-
competition, merger control, antitrust or similar law or regulation, (2) filings
with the SEC of such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby and (3)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate could not reasonably be expected to impair in
any material respect the ability of LabCorp to perform its obligations under
this Agreement or prevent or materially delay the consummation of any of the
transactions contemplated hereby.
(b) Investment Representations of LabCorp. LabCorp represents,
warrants, and covenants to the Stockholder as follows (except as contemplated by
this Agreement and the Merger Agreement and the transactions contemplated
thereby):
(i) LabCorp does not now have, and as of the Closing will not
have, any present plan or intention to effect a distribution of the Subject
Shares within the meaning of the Securities Act;
(ii) LabCorp understands that any sale of the Subject Shares
hereunder is intended to be exempt from registration, and that no registration
statement relating to the sale of the Subject Shares in connection with this
Agreement has been or will be filed with the SEC or any state securities
commission;
(iii) LabCorp intends to acquire the Subject Shares solely for
its own account, for investment purposes only and not with a view to the resale
or distribution thereof in violation of the Securities Act;
(iv) LabCorp agrees not to sell, transfer, exchange, pledge or
otherwise dispose of, or make any offer or agreement relating to the Subject
Shares and/or any option, right or other interest with respect to the Subject
Shares that LabCorp may acquire, unless counsel representing LabCorp, which
counsel is reasonably satisfactory to the Company and the Company's legal
counsel, shall have advised the Company in a written opinion letter satisfactory
to the Company and the Company's legal counsel, and upon which the Company and
the Company's legal counsel may rely, that no registration under the Securities
Act would be required in connection with the proposed sale, transfer, exchange,
pledge or other disposition;
(v) LabCorp is an "accredited investor" as defined in Rule 501 of
Regulation D under the Securities Act and as defined in Rule 45-501 of the
Securities Act (Ontario), has the capacity to protect its interests in
connection with
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this Agreement, and has such knowledge and experience in financial, tax and
business matters to be capable of evaluating the merits and risks of an
investment in the Subject Shares and in protecting its interests in connection
with the investment in the Subject Shares;
(vi) LabCorp acknowledges that (A) it has conducted its own
investigation and review of the business and affairs of the Company, (B) it has
not relied on any representations or warranties of the Stockholder concerning
the business and affairs of the Company or an investment in the Subject Shares,
(C) it has had the opportunity to ask questions of and receive information and
answers from the Company concerning the Subject Shares and other matters
pertaining to an investment in the Subject Shares, and (D) it has been given the
opportunity to verify the information provided to it in order for LabCorp to
evaluate the merits and risks of an investment in the Subject Shares, and all
such questions have been answered and all such information has been provided to
the full satisfaction of LabCorp;
(vii) LabCorp further acknowledges, represents, agrees and is
aware that the representations, warranties, agreements, undertakings and
acknowledgments made by LabCorp in this Agreement are made with the intent that
they be relied upon by such Stockholder and the Company in determining the
suitability of LabCorp as an investor in the Subject Shares; and
(viii) LabCorp undertakes to notify the Stockholder immediately
of any change in any representation, warranty or other information relating to
LabCorp set forth herein.
4. Covenants of Stockholder. Until the termination of this Agreement
------------------------
in accordance with Section 5, Stockholder agrees as follows:
(a) At the Company Meeting (or at any adjournment thereof) or in
any other circumstances upon which a vote, consent or other approval with
respect to the Arrangement Resolution and the Transaction is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares in favor of the
Arrangement Resolution and the Transaction;
(b) The Stockholder covenants and agrees in favor of LabCorp,
that if LabCorp so requests (i) not later than five days prior to the date of
the Company Meeting, it shall deliver or cause to be delivered to the Company
duly executed proxies in favor of LabCorp voting in favor of the Merger and (ii)
such proxies will not be revoked, provided, however, that if a waiting period
under the HSR Act, the Investment Canada Act, the Competition Act (Canada) or
the pre-merger filing requirements of any other jurisdiction applies to the
grant of the
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proxies so requested, the Stockholder shall not deliver or grant such proxies
until any applicable waiting periods shall have expired or terminated.
(c) The Stockholder covenants that it will not exercise any
rights of dissent provided under Section 185 of the OBCA or any order relating
to the Arrangement or otherwise in connection with the Arrangement;
(d) At any meeting of the Company Securityholders or at any
adjournment thereof or in any other circumstances upon which the Stockholder's
vote, consent or other approval is sought, the Stockholder shall vote (or cause
to be voted) the Subject Shares against (i) any Acquisition Proposal or
transaction or occurrence that if proposed and offered to the Company or its
stockholders (or any of them) would constitute an Acquisition Proposal
(collectively, "Alternative Transactions"), and (ii) any amendment of the
Company's Articles of Incorporation or By-Laws, which amendment would in any
manner impede, frustrate, prevent or nullify the Transaction, the Merger
Agreement or any of the other transactions contemplated by the Merger Agreement
or change in any manner the voting rights of any class of capital stock of the
Company;
(e) Other than pursuant to this Agreement and the Merger
Agreement, the Stockholder agrees not to (i) sell, transfer, pledge, assign or
otherwise dispose of (including by gift) (collectively, "Transfer"), or enter
into any contract, option or other arrangement (including any profit-sharing
arrangement) with respect to the Transfer of the Subject Shares to any person or
(ii) enter into any voting arrangement, whether by proxy, voting agreement or
otherwise, in relation to the Subject Shares, and agrees not to commit or agree
to take any of the foregoing actions, provided, however, that (A) the
-------- -------
Stockholder may transfer Subject Shares to one or more parties affiliated with
the Stockholder provided that (i) prior to such transfer the Stockholder causes
the transferee to execute and deliver to LabCorp a Stockholder Agreement
substantially identical to this Agreement and providing for an identical grant
of an Option and other substantive provisions provided herein, and being
reasonably satisfactory to LabCorp, and (ii) the transfer to the transferee and
the issuance of the LabCorp Common Stock to such transferee can be effected
without the consent or approval of any third party, and (B) in the event the
Stockholder reasonably believes that the Company is or may become a "controlled
foreign corporation" (within the meaning of Section 957 of the Internal Revenue
Code of 1986, as amended (the "Code") and the Treasury Regulations promulgated
under the Code), then the Stockholder may Transfer a number of the Subject
Shares to its general and limited partners equal to (but not in excess of) the
number of Subject Shares that shall (x) cause the Company to cease to be or not
become a "controlled foreign corporation" (within the meaning of Code Section
957 and the Treasury Regulations promulgated under the Code) or (y) otherwise
minimizes any tax cost attributable to Code Section 951 or Code Section 1248
with
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respect to the Stockholder and its direct and indirect partners, which number of
Transferred Shares shall be determined in the reasonable discretion of
Stockholder after consultation with its tax counsel. In the event of a Transfer
in accordance with clause (B) of the proviso to the immediately preceding
sentence, the Stockholder shall (i) notify LabCorp prior to making the Transfer
of its intention to do so and (ii) use its reasonable best efforts to cause the
transferees to execute and deliver to Lighthouse a Stockholder Agreement
substantially identical to this Agreement and providing for an identical grant
of an Option and other substantive provisions provided herein. For further
clarification, a Transfer in accordance with clause (B) of the first sentence of
this Section 4(e) shall not be subject to the requirements set forth in clause
(A) of that sentence;
(f) The Stockholder shall not, nor shall the Stockholder permit
any affiliate, director, officer, employee, investment banker, attorney or other
advisor or representative of the Stockholder to, (i) directly or indirectly
solicit, initiate or knowingly encourage the submission of, any Acquisition
Proposal or (ii) directly or indirectly participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal;
(g) The Stockholder shall promptly notify LabCorp in writing of
any contact, inquiry, submission, proposal or offer of which Stockholder becomes
aware for an Acquisition Proposal and of any request in connection with such a
proposal for non-public information relating to the Company or any of its
material Subsidiaries any of the relevant details relating to such a proposal
(including the identity of the prospective party and the proposed terms and
conditions) known at such time; and
(h) The Stockholder shall use the Stockholder's best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with LabCorp in doing, all things necessary, proper or
advisable to support and to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.
5. Termination. This Agreement shall terminate at the time when the
-----------
Option would otherwise expire under Section 1(c) or the final proviso of Section
1(b). In the event of the termination of this Agreement pursuant to this Section
5, except as set forth herein, this Agreement shall forthwith become null and
void, there shall be no liability on the part of any of the parties, and except
as set forth in this Section 5 all rights and obligations of each party hereto
shall cease; provided, however, that no such termination of this Agreement shall
relieve
-10-
any party hereto from any liability for any willful and material breach of any
provision of this Agreement prior to termination.
6. Further Assurances. The Stockholder will, from time to time,
------------------
execute and deliver, or cause to be executed and delivered, such additional or
further consents, documents and other instruments as LabCorp may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
7. Successors, Assigns and Transferees Bound. (a) The Stockholder
-----------------------------------------
agrees that this Agreement and the obligations hereunder shall attach the
Subject Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of the Subject Shares shall pass, whether by operation of
law or otherwise, including the Stockholder's heirs, guardians, administrators
or successors, and the Stockholder further agrees to take all actions necessary
to effectuate the foregoing, except as otherwise provided in Section 4(e). The
Stockholder agrees that each certificate representing the Subject Shares shall
be inscribed with the legend required by Section 7(b). In the event of any stock
split, stock dividend, reclassification, merger, reorganization,
recapitalization or other change in the capital structure of the Company
affecting the capital stock of the Company, the number of Subject Shares shall
be adjusted appropriately. In the event of any change in the Company Common
Stock or LabCorp Common Stock by reason of stock dividends, stock splits,
mergers (other than the Merger), recapitalizations, combinations, exchange of
shares or the like, the type and number of shares or securities subject to the
Option, and the purchase price per share provided in Section 1(d) hereof, shall
be adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that LabCorp shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
LabCorp would have received in respect of the Company Common Stock if the Option
had been exercised immediately prior to such event or the record date therefor,
as applicable. In addition, in the event of any other acquisition of additional
shares of capital stock of the Company or other voting securities of the Company
by the Stockholder (including through the exercise of any warrants, stock
options or similar instruments), the number of Subject Shares listed on Schedule
--------
A hereto shall be increased appropriately. This Agreement and the
- -
representations, warranties, covenants, agreements and obligations hereunder
shall attach to any additional shares of capital stock of the Company or other
voting securities of the Company issued to or acquired by the Stockholder
directly or indirectly (including through the exercise of any warrants, stock
options or similar instruments).
(b) The Stockholder shall cause the certificated Subject Shares to
have a legend placed conspicuously on such certificate to the following effect:
-11-
"The shares of common stock evidenced by this certificate are
subject to a Stockholder Agreement dated May 8, 2002, entered into by
the record owner of such shares and LabCorp Corporation."
The Stockholder shall cause a counterpart of this Agreement to be
deposited with the Company at its principal place of business or registered
office where it shall be subject to the same right of examination by a
stockholder of the Company, in person or by agent or attorney, as are the books
and records of the Company.
8. Remedies. The Stockholder acknowledges that money damages would be
--------
both incalculable and an insufficient remedy for any breach of this Agreement by
it, and that any such breach would cause LabCorp irreparable harm. Accordingly,
the Stockholder agrees that in the event of any breach or threatened breach of
this Agreement, LabCorp, in addition to any other remedies at law or in equity
it may have, shall be entitled, without the requirement of posting a bond or
other security, to equitable relief, including injunctive relief and specific
performance.
9. Severability. The invalidity or unenforceability of any provision
------------
of this Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such jurisdiction, or
the validity or enforceability of any provision of this Agreement in any other
jurisdiction.
10. Amendment. This Agreement may be amended only by means of a
---------
written instrument executed and delivered by both the Stockholder and LabCorp.
11. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the Province of Ontario, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof, except to the extent mandatorily governed by the law of another
jurisdiction. Each of the parties hereto (i) irrevocably consents to the
exclusive jurisdiction and venue of the Ontario Superior Court of Justice
(Commercial List), in connection with any matter based upon or arising out of
this Agreement or the matters contemplated herein and (ii) waives and covenants
not to assert or plead any objection which they might otherwise have to such
jurisdiction and venue.
12. Capitalized Terms. Capitalized terms used in this Agreement that
-----------------
are not defined herein shall have such meanings as set forth in the Merger
Agreement.
-12-
13. Counterparts. For the convenience of the parties, this Agreement
------------
may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
14. No Limitation on Actions of the Stockholder as Director. In the
-------------------------------------------------------
event the Stockholder or any officer, director, partner or manager of the
Stockholder or any affiliate thereof is a director of the Company,
notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require any such person to take
or in any way limit any action that such person may take in his or her capacity
as a director of the Company.
IN WITNESS WHEREOF, Stockholder has caused this Agreement to be
executed as of the date first above written.
-------------------------------------------
(print or type name)
By:
----------------------------------------
Accepted and Agreed to as of the date set forth above:
LABORATORY CORPORATION
OF AMERICA HOLDINGS
By:
---------------------------------
Name:
Title:
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SCHEDULE A
Number of Subject Shares
Owned of Record or Pursuant
to Vested or Unvested Options,
Name and Address of Stockholder Warrants or Convertible Securities
- ------------------------------- ----------------------------------
shares
---------
stock options or warrants
---------
convertible securities
----------
-14-
