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As filed with the Securities and Exchange Commission on July 16, 1999
Registration No. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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QUINTILES TRANSNATIONAL CORP.
(Exact name of registrant as specified in its charter)
North Carolina 56-1714315
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4709 Creekstone Drive
Riverbirch Building, Suite 200
Durham, North Carolina 27703-8411
(919) 998-2000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
DENNIS B. GILLINGS, Ph.D.
Chairman and Chief Executive Officer
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Building, Suite 200
Durham, North Carolina 27703-8411
(919) 998-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
GERALD F. ROACH, ESQ.
AMY J. MEYERS, ESQ.
SMITH, ANDERSON, BLOUNT,
DORSETT, MITCHELL & JERNIGAN, L.L.P.
2500 First Union Capitol Center
Raleigh, North Carolina 27601
(919) 821-1220
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Proposed
Title of Each Class Maximum Maximum
of Securities Amount to Offering Price Aggregate Amount of
to be Registered be Registered Per Share(1) Offering Price(1) Registration Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share. . . . 1,749,162 $37.90625 $66,304,172.06 $18,432.56
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee,
based upon the average of the high and low prices of the Common Stock on
the Nasdaq National Market on July 13, 1999 in accordance with Rule
457(c).
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Quintiles Transnational Corp.
1,749,162 Shares of Common Stock
The shareholders listed inside are offering to sell 1,749,162 shares of
Quintiles common stock. The selling shareholders obtained their shares when we
acquired one of four different companies, including Oak Grove Technologies,
Inc., SMG Marketing Group, Inc., Minerva Medical Limited and Medlab (Pty)
Limited and when we acquired the assets of the Niehaus & Botha partnership.
The selling shareholders may offer their Quintiles shares through public or
private transactions, on or off the Nasdaq National Market, at prevailing market
prices, or at privately negotiated prices. We will not receive any part of the
proceeds from the sales.
Quintiles common stock is listed on the Nasdaq National Market under the symbol
"QTRN". On July 15, 1999, the last reported sale price of our common stock was
$39.625 per share.
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You should consider carefully the risk factors beginning on page 3 before making
a decision to purchase our stock.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is __________, 1999.
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About Quintiles
Quintiles is a market leader in providing a full range of integrated product
development and commercialization services to the global pharmaceutical,
biotechnology and medical device industries. Supported by our extensive
information technology capabilities, we provide a broad range of contract
services to help our clients reduce the length of time from the beginning of
development to peak sales of a new drug or medical device. Our product
development services include a full range of services focused on helping our
clients through the development and regulatory approval of a new drug or medical
device. Our commercialization services, including sales and specialized
marketing support services, focus on helping our clients achieve commercial
success for a new product or medical device. We also are a leader in the
electronic data interchange and healthcare informatics industries and provide
healthcare policy consulting to governments and other organizations worldwide.
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Risk Factors You Should Consider
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In addition to the other information provided or incorporated by reference in
this prospectus, you should consider the following factors carefully in
evaluating us and our business before making an investment decision. Additional
risks and uncertainties not presently known to us, that we currently deem
immaterial or that are similar to those faced by other companies in our industry
or business in general, such as competitive conditions, may also impair our
business operations. If any of the following risks occur, our business,
financial condition, or results of operations could be materially adversely
affected. In that event, the trading price of our common stock could decline, in
which case the value of your investment may decline as well. You should also
refer to "Forward Looking Statements" on page 19.
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Changes in Outsourcing Trends in the Pharmaceutical and Biotechnology Industries
Could Adversely Affect Our Operating Results
Economic factors and industry trends that affect our primary customers,
pharmaceutical and biotechnology companies, also affect our business. For
example, the practice of many companies in these industries has been to
hire outside organizations such as ours to conduct large clinical research
and sales and marketing projects. This practice has grown substantially in
the 1990s, and we have benefited from this trend. If this trend were to
change and companies in these industries reduced their tendency to
outsource those projects, our operations and financial condition could be
materially and adversely affected. In addition, numerous governments have
undertaken efforts to control growing healthcare costs through legislation,
regulation and voluntary agreements with medical care providers and
pharmaceutical companies. If future regulatory cost containment efforts
limit the profits which can be derived on new drugs, our customers may
reduce their research and development spending which could reduce the
business they outsource to us. We cannot predict the likelihood of any of
these events or the effects they would have on our business, results of
operations or financial condition.
We May Not Be Able to Successfully Integrate PMSI and ENVOY Into Our Business
In March 1999 we completed the acquisitions of Pharmaceutical Marketing
Services, Inc. and ENVOY Corporation. ENVOY is the largest acquisition we
have completed to date, and PMSI is one of the largest we have ever
completed. We may not achieve the intended benefits of the mergers with
PMSI and ENVOY if we are unable to integrate these businesses with our own
successfully. The PMSI and ENVOY acquisitions have expanded our lines of
business and thus involve new risks. ENVOY is a provider of electronic data
interchange (or "EDI") and data analysis services; PMSI provides market
research audits and other studies for the pharmaceutical industry. If
either of these acquisitions fails to meet our performance expectations,
our results of operation and financial condition could be materially
adversely affected. We could encounter a number of difficulties in the
integration of these businesses, such as:
- retaining PMSI's customers among pharmaceutical companies;
- retaining ENVOY's EDI customers among pharmacies, health
insurance companies, hospitals and other healthcare providers;
- maintaining and increasing PMSI's and ENVOY's competitive
presence in the healthcare industry;
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- the ability to operate and expand the data analysis portion of
ENVOY's business;
- continuing to operate each of PMSI's and ENVOY's businesses
efficiently; or
- retaining key PMSI and ENVOY employees.
For example, if either acquired company's current customers are uncertain
about our commitment to support their existing products and services, they
could cancel or refuse to renew current contracts. In addition, the
combined company may be unsuccessful in expanding or retaining its
competitive position in the current and new sectors of the healthcare
industry in which it now operates as a result of factors such as its
inability to properly market either acquired company's services and
products. Furthermore, the successful integration of PMSI and ENVOY depends
on the contribution of certain key PMSI and ENVOY employees. The loss of
any key personnel could result in less efficient business operations for
the combined company and could seriously harm its business.
If Companies We Acquire Do Not Perform as Expected or if We Are Unable to Make
Strategic Acquisitions, Our Business Could Be Adversely Affected
A key element of our growth strategy depends on our ability to complete
acquisitions that complement or expand our business and successfully
integrate the acquired companies into our operations. If we are unable to
successfully execute our acquisition strategy, there could be a material
adverse effect on our business, results of operations and financial
condition. In the past, some of our acquisitions performed below our
expectations in the short term, but we experienced no impact to our
expectations for our overall results, due in part to the size of such
acquisitions and the performance of other areas of our business. In the
future, if we are unable to operate the business of an acquired company so
that its results meet our expectations, those results could have a negative
impact on our results as a whole. The risk that our results may be affected
if we are unable to successfully operate the businesses we acquire may
increase in proportion with (1) the size of the businesses we acquire, (2)
the lines of business we acquire and (3) the number of acquisitions we
complete in any given time period.
In 1998, we completed 11 acquisitions and announced agreements to acquire
PMSI and ENVOY. As of June 30, 1999, we have completed another 6
acquisitions, including PMSI and ENVOY. In addition, we are currently
reviewing many acquisition candidates and continually evaluating and
competing for new acquisition opportunities. Other risk factors we face as
a result of our aggressive acquisition strategy include the following:
- the ability to achieve anticipated synergies from combined
operations;
- integrating the operations and personnel of acquired
companies, especially those in lines of business that differ
from our current lines of business;
- the ability of acquired companies to meet anticipated revenue
and net income targets;
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- potential loss of the acquired companies' key employees;
- the possibility that we may be adversely affected by risk
factors present at the acquired companies, including Year 2000
risks;
- potential losses resulting from undiscovered liabilities of
acquired companies that are not covered by the indemnification
we may obtain from the sellers;
- risks of assimilating differences in foreign business
practices and overcoming language barriers (for acquisitions
of foreign companies); and
- risks experienced by companies in general that are involved in
acquisitions.
Due to these risks, we may not be able to successfully execute our
acquisition strategy.
If We Are Unable to Successfully Develop and Market Potential New Services, Our
Growth Could Be Adversely Affected
Another key element of our growth strategy is the successful development
and marketing of new services which complement or expand our existing
business. If we are unable to succeed in (1) developing new services and
(2) attracting a customer base for those newly developed services, we will
not be able to implement this element of our growth strategy, and our
future business, results of operations and financial condition could be
adversely affected.
For example, as a result of our acquisition of ENVOY, we are expanding our
pharmaceutical and healthcare information and market research services.
Providers of these services analyze healthcare information to study aspects
of current healthcare products and procedures for use in producing new
products and services or in analyzing sales and marketing of existing
products. We believe that the healthcare information ENVOY processes in its
current business could be utilized to create new data analysis services. In
addition to the other difficulties associated with the development of any
new service, our ability to develop this line of service may be limited
further by contractual provisions limiting our use of the healthcare
information or the legal rights of others that may prevent or impair our
use of the healthcare information. Due to these and other limitations, we
cannot assure you that we will be able to develop this type of service
successfully. Our inability to develop new products or services or any
delay in development may adversely affect our ability to realize some of
the synergies we anticipate from the acquisition of ENVOY and to maintain
our rate of growth in the future.
Our Results Could Be Adversely Affected by the Potential Loss or Delay of Our
Large Contracts
Many of our contract research customers can terminate our contracts upon
15-90 days' notice. In the event of termination, our contracts often
provide for fees for winding down the project. Still, the loss or delay of
a large contract or the loss or delay of multiple contracts could adversely
affect our future net revenue and profitability. In addition, EDI customers
under certain circumstances may enter into contracts with other providers
which lessen the number of transactions processed by or under our
contracts.
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Our Backlog May Not Be Indicative of Future Results
We report backlog based on anticipated net revenue from uncompleted
projects that a customer has authorized. Backlog does not include
anticipated net revenue from our transaction processing services since the
contracts do not quantify the volume of transactions processed. We cannot
assure you that the backlog we have reported will be indicative of our
future results. A number of factors may affect our backlog, including:
- the variable size and duration of projects (some are performed
over several years);
- the loss or delay of projects; and
- a change in the scope of work during the course of a project.
We Face Risks Concerning the Year 2000 Issue
If We or Our Vendors Do Not Adequately Prepare for the Year 2000 Issue, Our
Operations Could be Disrupted
We have established a Year 2000 Program to address the Year 2000 issue,
which results from computer processors and software failing to process date
values correctly, potentially causing system failures or data corruption.
The Year 2000 issue could cause disruptions of our operations, including,
among other things, a temporary inability to process information, such as
real-time transaction processing for pharmacies and other healthcare
providers and payors; receive information, services or products from third
parties; interface with customers in the performance of contracts; or
operate or communicate in some or all of the regions in which we do
business. Our computing infrastructure is based on industry standard
systems. The scope of our Year 2000 Program includes unique software
systems and tools in each of our service groups, especially our product
development group, embedded systems in our laboratory and manufacturing
operations, mainframe systems in our QUINTERNET(TM) informatics service
group, which includes PMSI and ENVOY, facilities such as elevators and fire
alarms in over 70 offices (which also involve embedded technology) and
numerous supplier and other business relationships. We have identified
critical systems within each service group and are devoting our resources
to address these items first.
Our Year 2000 Program is directed by the Year 2000 Executive Steering Team,
which is comprised of our Chief Information Officer and representatives
from regional business units, together with legal, quality assurance and
information technology personnel. We have established a Year 2000 Program
Management Office, staffed by consultants and internal staff, which
develops procedures and instructions at a centralized level and oversees
performance of the projects that make up the program. Project teams
organized by service group and geographic region are responsible for
implementation of the individual projects.
The framework for our Year 2000 Program prescribes broad inventory,
assessment and planning phases which generally guide our projects. Each
project generally includes launch, analysis, remediation, testing and
deployment phases. We are in the process of assessing those systems,
facilities and business relationships which we believe may be vulnerable to
the Year 2000 issue and which we believe could impact our operations.
Although we cannot control whether and how third parties will address the
Year 2000 issue, our assessment also will include a limited evaluation of
certain services on which we are substantially dependent, and we plan to
develop contingency plans
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for possible deficiencies in those services. For example, we believe that
among our most significant third party service providers are physician
investigators who participate in clinical studies conducted through our
contract research services and external organizations (such as pharmacies,
insurance providers and medical offices) linked to the QUINTERNET(TM)
informatics services consequently; we are developing a specialized process
to assess and address Year 2000 issues arising from these relationships. We
do not plan to assess how our customers, such as pharmaceutical and large
biotechnology companies, are dealing with the Year 2000 issue.
As we complete the assessment of our systems, we are developing plans to
renovate, replace or retire them, as appropriate, if they are affected by
the Year 2000 issue. Such plans generally include testing of new or
renovated systems upon completion of the remedial actions. We will utilize
both internal and external resources to implement these plans. We have
addressed and substantially completed our assessment, remediation, testing
and deployment of our systems relating to our healthcare consulting
services and our commercialization services. Our product development
services utilize numerous systems, which we must address independently on
disparate schedules, depending on the magnitude and complexity of the
particular system. We have successfully remediated, replaced and migrated a
substantial majority of these systems and anticipate that substantial
completion of these systems will occur by the end of the third quarter of
1999. We have evaluated the state of readiness of our recent acquisitions,
including ENVOY, PMSI and SMG, which form the core of our QUINTERNET(TM)
informatics services, and have integrated these acquisitions into our Year
2000 Program. Our QUINTERNET(TM) informatics services utilize real-time and
batch systems linked to external organizations, and PC-based audit and
syndicated data systems. Significant progress has been made in remediating
and testing these systems. We are substantially complete with respect to
the systems formerly owned by PMSI and anticipate that remediation and
testing of former ENVOY and SMG systems will be substantially complete by
the end of the third quarter of 1999. Testing with external organizations
which work with our QUINTERNET(TM) informatics service group will occur
throughout the second half of 1999. We expect to complete the core
components of our Year 2000 Program before there is a significant risk that
internal Year 2000 problems will have a material impact on our operations.
If Our Costs of Addressing the Year 2000 Issue Exceed Our Estimates, Our
Net Income Could Be Adversely Affected
We estimate that the aggregate costs of our Year 2000 Program, including
recent acquisitions, will be approximately $20.7 million, including costs
already incurred. A significant portion of these costs, approximately $8.1
million, are not likely to be incremental costs, but rather will represent
the redeployment of existing resources. This reallocation of resources is
not expected to have a significant impact on our day-to-day operations. We
incurred total Year 2000 Program costs of $8.6 million through March 31,
1999, of which approximately $6.4 million represented incremental expense.
Our estimates regarding the cost, timing and impact of addressing the Year
2000 issue are based on numerous assumptions of future events, including
the continued availability of certain resources, our ability to meet
deadlines and the cooperation of third parties. We cannot assure you our
assumptions will be correct and that these estimates will be achieved.
Actual results could differ materially from our expectations as a result of
numerous factors, including the availability and cost of personnel trained
in this area, unforeseen circumstances that would cause us to allocate our
resources elsewhere and similar uncertainties.
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Our Business Could Be Adversely Affected if Year 2000 Issues Are Not
Adequately Addressed in Other Parts of the World or by Companies With Which
We Do Business
We face both internal and external risks from the Year 2000 issue. If
realized, these risks could have a material adverse effect on our business,
results of operations or financial condition. Our primary internal risk is
that our systems will not be Year 2000 compliant on time. The magnitude of
this risk depends on our ability to achieve compliance of both internally
and externally developed systems or to migrate to alternate systems in a
timely fashion. The decentralized nature of our business may compound this
risk if we are unable to coordinate efforts across our global operations on
a timely basis. We believe that our Year 2000 Program will successfully
address these risks, however, we cannot assure you that this program will
be completed in a timely manner. Notwithstanding our Year 2000 Program, we
also face external risks that may be beyond our control. Our international
operations and our relationships with foreign third parties create
additional risks for us, as many countries outside the United States have
been less attuned to the Year 2000 issue. These risks include the
possibility that infrastructural systems, such as electricity, water,
natural gas or telephony, will fail in some or all of the regions in which
we operate, as well as the danger that the internal systems of our foreign
suppliers, service providers and customers will fail. Our business also
requires considerable travel, and our ability to perform services under our
customer contracts could be negatively affected if air travel is disrupted
by the Year 2000 issue.
In addition, our business depends heavily on the healthcare industry,
including third party physician investigators, pharmacies, insurance
providers and medical offices. The healthcare industry, and physicians'
groups in particular, to date may not have focused on the Year 2000 issue
to the same degree as some other industries, especially outside of major
metropolitan centers. As a result, we face increased risk that our
physician investigators will be unable to provide us with the data that we
need to perform under our contracts on time, if at all. Thus, the clinical
study involved could be slowed or brought to a halt. The failure due to a
Year 2000 issue of an external organization on whose services we rely
significantly could also impact our ability to process transactions in our
informatics services. Also, the failure of our customers to address the
Year 2000 issue could negatively impact their ability to utilize our
services. While we intend to develop contingency plans to address certain
of these risks, we cannot assure you that any developed plans will
sufficiently insulate us from the effects of these risks. Any disruptions
resulting from the realization of these risks would affect our ability to
perform our services. If we are unable to receive or process information,
or if third parties are unable to provide information or services to us, we
may not be able to meet milestones or obligations under our customer
contracts, which could have a material adverse effect on our business,
results of operations and financial condition.
We are in the process of developing business continuity plans for each
service area. We anticipate that the development of these plans will occur
primarily in the second half of 1999.
If We Lose the Services of Dennis Gillings or Other Key Personnel, Our Business
Could Be Adversely Affected
Our success substantially depends on the performance, contributions and
expertise of our senior management team, led by Dennis B. Gillings, Ph.D.,
our Chairman of the Board of Directors and Chief Executive Officer. We
maintain key man life insurance on Dr. Gillings in the amount of $3
million. Our performance also depends on our ability to attract and retain
qualified management and professional, scientific and technical operating
staff, as well as our ability to recruit qualified representatives for our
contract sales services. The departure of Dr. Gillings, or any key
executive,
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or our inability to continue to attract and retain qualified personnel
could have a material adverse effect on our business, results of operations
or financial condition.
Our Product Development Services Create a Risk of Liability From Clinical Trial
Participants
We contract with physicians to serve as investigators in conducting
clinical trials to test new drugs on human volunteers. Such testing creates
risk of liability for personal injury to or death of volunteers,
particularly to volunteers with life-threatening illnesses, resulting from
adverse reactions to the drugs administered during testing. It is possible
third parties could claim that we should be held liable for losses arising
from any professional malpractice of the investigators with whom we
contract or in the event of personal injury to or death of persons
participating in clinical trials. We do not believe we are legally
accountable for the medical care rendered by third party investigators, and
we would vigorously defend any such claims. Nonetheless, it is possible we
could be found liable for those types of losses.
In addition to supervising such tests, we also own a number of labs where
Phase I clinical trials are conducted. Phase I clinical trials involve
testing a new drug on a limited number of healthy individuals, typically 20
to 80 persons, to determine the drug's basic safety. We also could be
liable for the general risks associated with ownership of such a facility.
These risks include, but are not limited to, adverse events resulting from
the administration of drugs to clinical trial participants or the
professional malpractice of Phase I medical care providers.
Relaxation of Government Regulation Could Decrease the Need For the Services We
Provide
Governmental agencies throughout the world, but particularly in the United
States, highly regulate the drug development/approval process. A large part
of our business involves helping pharmaceutical and biotechnology companies
through the regulatory drug approval process. Any relaxation in regulatory
approval standards could eliminate or substantially reduce the need for our
services, and, as a result, our business, results of operations and
financial condition could be materially adversely affected. Potential
regulatory changes under consideration in the United States and elsewhere
include mandatory substitution of generic drugs for patented drugs,
relaxation in the scope of regulatory requirements or the introduction of
simplified drug approval procedures. These and other changes in regulation
could have an impact on the business opportunities available to us.
Failure to Comply With Existing Regulations Could Result in a Loss of Revenue
Any failure on our part to comply with applicable regulations could result
in the termination of ongoing clinical research or sales and marketing
projects or the disqualification of data for submission to regulatory
authorities, either of which could have a material adverse effect on us.
For example, if we were to fail to verify that informed consent is obtained
from patient participants in connection with a particular clinical trial,
the data collected from that trial could be disqualified, and we could be
required to redo the trial under the terms of our contract at no further
cost to our customer, but at substantial cost to us.
Proposed Regulations May Increase the Cost of Our Business or Limit Our Service
Offerings
Certain of our current services relate to the diagnosis and treatment of
disease. The confidentiality of patient-specific information and the
circumstances under which such patient-specific records may be released for
inclusion in our databases or used in other aspects of our business, are
subject to
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substantial government regulation. Additional legislation governing the
possession, use and dissemination of medical record information and other
personal health information has been proposed at both the state and federal
levels. This legislation may (1) require us to implement security measures
that may require substantial expenditures or (2) limit our ability to offer
some of our products and services. These and other changes in regulation
could limit our ability to offer some of our products or have an impact on
the business opportunities available to us.
Industry Regulation May Restrict Our Ability to Analyze and Disseminate
Pharmaceutical and Healthcare Data
As described above, the pharmaceutical industry is subject to extensive
regulations at the federal, state and international levels, including
limitations on the prices drug companies may charge. Such regulations may
cause our pharmaceutical company clients to revise or reduce their
marketing programs. In addition, we are directly subject to certain
restrictions on the collection and use of data. Laws relating to the
collection and use of data are evolving, as are contractual rights. We
cannot assure you that contractual restrictions imposed by our customers,
legislation or regulations will not, now or in the future, directly or
indirectly restrict the analysis or dissemination of the type of
information we gather and therefore materially adversely affect our
operations.
Consolidation in the Healthcare Industry May Adversely Affect Our Business
Many healthcare providers and payors are consolidating to create larger
healthcare organizations. This consolidation reduces the number of
potential customers for our EDI and data analysis services, and the
increased bargaining power of these organizations could lead to reductions
in the amounts paid for such services. For example, payors and other
healthcare information companies, such as billing services and practice
management vendors, which currently utilize our EDI services, have
developed or acquired transaction processing and networking capabilities
and may cease utilizing our EDI services in the future. Industry
developments are increasing the amount of capitation-based care and
reducing the need for providers to make claims or reimbursements for
products or services. The impact of these developments in the healthcare
EDI and transaction processing industry, as well as the import for the
development of new data analysis products, is difficult to predict and
could materially adversely affect our business.
Our Services Are Subject to Evolving Industry Standards and Rapid Technological
Changes
The markets for our services, particularly our QUINTERNET(TM) informatics
services, which include our EDI and data analysis services, are
characterized by rapidly changing technology, evolving industry standards
and frequent introduction of new and enhanced services. To succeed, we must
continue to:
- enhance our existing services;
- introduce new services on a timely and cost-effective basis to
meet evolving customer requirements;
- achieve market acceptance for new services; and
- respond to emerging industry standards and other technological
changes.
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Particularly, the current industry standard EDI platform for processing
transactions could be replaced or supplemented by an internet platform to
handle these transactions. Some of our competitors in the EDI business are
beginning to implement such a platform. If others succeed in implementing
an internet platform and are able to gain market acceptance of that
platform, whether or not we develop and execute an internet platform, our
EDI business could be materially adversely affected.
Exchange Rate Fluctuations May Affect Our Results of Operations and Financial
Condition
We derive a large portion of our net revenue from international operations;
for example, we derived approximately 44.3% of our 1998 net revenue from
outside the United States. Our financial statements are denominated in U.S.
dollars; thus, factors associated with international operations, including
changes in foreign currency exchange rates, could significantly affect our
results of operations and financial condition. Exchange rate fluctuations
between local currencies and the U.S.
dollar create risk in several ways, including:
- Foreign Currency Translation Risk. The revenue and expenses of
our foreign operations are generally denominated in local
currencies.
- Foreign Currency Transaction Risk. Our service contracts may
be denominated in a currency other than the currency in which
we incur expenses related to such contracts.
We try to limit these risks through exchange rate fluctuation provisions
stated in our service contracts, or we may hedge our transaction risk with
foreign currency exchange contracts or options. Despite these efforts, we
may still experience fluctuations in financial results from our operations
outside the United States, and we cannot assure you that we will be able to
favorably reduce our currency transaction risk associated with our service
contracts.
On January 1, 1999, a new currency, the euro, became the legal currency for
11 of the 15 member countries of the European Economic Community. Between
January 1, 1999 and January 1, 2002, governments, companies and individuals
may conduct business in these countries in both the euro and existing
national currencies. On January 1, 2002, the euro will become the sole
currency in these countries. We are evaluating the impact conversion to the
euro will have on our business. In particular we are reviewing (1) whether
we may have to change the prices of our services in the different countries
because they will now be dominated in the same currency in each country and
(2) whether we will have to change the terms of any financial instruments
in connection with our hedging activities described above. Based on current
information and our initial evaluation, we do not expect the cost of any
necessary corrective action to seriously harm our business. However, we
will continue to evaluate the impact of these and other possible effects of
the conversion to the euro on our business. We cannot assure you that the
costs associated with the conversion to the euro will not in the future
seriously harm our business, results of operations or financial condition.
We May Be Adversely Affected By Customer Concentration
We have one customer that accounted for 10% of our revenues for the three
months ended March 31, 1999. These revenues resulted from services provided
by our product development and commercialization service groups. If this or
any future customer of similar size decreases or terminates its
relationship with us, our business, results of operations or financial
condition could be materially adversely affected.
11
<PAGE> 13
We Rely on Specific Data Centers for Our EDI Business
Our EDI business relies on a host computer system to perform real-time EDI
transaction processing. This host computer system is contained in a single
data facility. The host computer system does not have a remote backup data
center. Although the host computer system is insured, if there is a fire or
other disaster at the data facility, our EDI business could be materially
adversely affected.
Our EDI business also relies on a data center operated by a third party to
perform many of our other healthcare EDI transaction processing services.
The facility is located in Tampa, Florida and is operated by GTE Data
Services Incorporated, with whom we have contracted for such processing
services. Our EDI business relies primarily on this facility to process
batch claims and other medical EDI transaction sets. Our contract with GTE
requires GTE to maintain continuous processing capability and a "hot site"
disaster recovery system. This contract expires in December 2003. If the
GTE facility's services are disrupted or delayed, our EDI business could be
materially adversely affected.
We Cannot Predict the Need for Independent Healthcare EDI Processing
Our EDI business strategy anticipates that providers of healthcare services
and payors will increase their use of electronic processing of healthcare
transactions in the future. The development of the business of
electronically transmitting healthcare transactions is affected, and
somewhat hindered, by the complex nature and types of transactions that
must be processed. Furthermore, while the wide variety of processing forms
used by different payors has fostered the need for healthcare EDI and
transaction processing clearinghouses such as ENVOY to date, if such forms
become standardized, through consolidation of payors or otherwise, then the
need for independent third party healthcare EDI processing could become
less prevalent. We cannot assure you that the electronic processing of
healthcare transactions will increase or that our EDI business will grow.
Direct Links May Bypass Need for Our EDI Services
Some third party payors provide electronic data transmission systems to
healthcare providers, thereby directly linking the payor to the provider.
These direct links bypass third party processors like us. An increase in
the use of direct links between payors and providers would materially
adversely affect our EDI business.
Increased Competition in the Healthcare EDI Business Could Adversely Impact Our
Results
Increased competition in the healthcare EDI and transaction processing
business could force us to reduce, or even eliminate, per transaction fees,
which could adversely affect our results of operations. Our EDI services
face different types of competition, any or all of which could affect our
EDI business. Some of our competitors are similarly specialized, such as
former regional partners of ENVOY that have direct provider relationships,
and others are involved in more highly developed areas of the business. In
addition, some vendors of provider information management systems include
or may include, in their offered products, their own electronic transaction
processing systems. If electronic transaction processing becomes the
standard method of processing healthcare claims and information, other
companies with significant capital resources could enter the industry.
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<PAGE> 14
New Healthcare Legislation or Regulation Could Restrict Our EDI Business
The Health Insurance Portability and Accountability Act of 1996 requires
the use of standard transactions, standard identifiers, security and other
administrative simplification provisions and instructs the Secretary of
Health and Human Services to promulgate regulations regarding these
standards. The Act also requires the Secretary of Health and Human Services
to develop recommendations regarding the privacy of individually
identifiable health information. On September 11, 1997, the Secretary
presented her recommendations, which, among other things, advise that
patient information should not be disclosed except when authorized by the
patient. This Act further establishes an August 1999 deadline for Congress
to enact privacy legislation. If Congress does not meet this deadline, the
Secretary is directed to issue regulations setting privacy standards to
protect health information that is transmitted electronically. Such changes
could occur as early as the year 2000, and their impact cannot be
predicted. Such legislation or regulations could materially affect our EDI
business. This Act also specifically names clearinghouses as the compliance
facilitators for providers and payors, and permits clearinghouses to
convert non-standard transactions to standard transactions on behalf of
their clients. We are preparing to comply with the mandated standards
within three to six months after they are published. Whether we are
successful in complying with these standards may depend on whether
providers, payors and others are also successful in complying with the
standards.
In addition, broad-based health information privacy legislation which may
restrict third-party processors from using, transmitting or disclosing
certain patient data without specific patient consent has recently been
introduced in the United States Congress. If this legislation is adopted,
it could inhibit third party processors in using, transmitting or
disclosing certain treatment and clinical data, or make such activities
more expensive to undertake, and hence less profitable to the EDI business.
It is difficult to predict the impact of the legislation described above,
but such legislation could materially adversely affect our EDI business.
Unauthorized Access To Data Centers Could Adversely Affect Our EDI Business
Unauthorized access to our EDI data centers and misappropriation of our
proprietary information could have a material adverse effect on our EDI
business and financial results. While we believe our current security
measures and the security measures used by third parties for whom we
process or transmit healthcare information are adequate, such unauthorized
access or misappropriation could occur.
Use of Proceeds
The selling shareholders will receive all net proceeds from the sale of their
shares. We will not receive any proceeds from the sale of the shares.
13
<PAGE> 15
Selling Shareholders
The selling shareholders obtained their shares when we acquired one of four
different companies, including Oak Grove Technologies, Inc., SMG Marketing
Group, Inc., Minerva Medical Limited and Medlab (Pty) Limited, and when we
acquired certain business assets of the Niehaus & Botha partnership. Pursuant to
the terms of each acquisition, we agreed to register certain amounts of each
selling shareholder's shares for resale by the selling shareholder. We are
registering this common stock to permit public secondary trading in the shares.
The selling shareholders may offer and sell the shares from time to time
pursuant to this prospectus, as further discussed under the caption, "Plan of
Distribution."
The following table sets forth important information about each selling
shareholder provided to us as of July 2, 1999. This table assumes that each
selling shareholder will sell all of the shares offered; however, we are unable
to determine the exact number of shares that will actually be sold or when or if
those sales will occur. None of the selling shareholders own 1% or more of our
outstanding common stock as of July 2, 1999.
<TABLE>
<CAPTION>
Shares Owned Shares Shares Owned
Prior Being After
Name To Offering Offered Offering
- ---- ------------ ------- ------------
<S> <C> <C> <C>
Former Oak Grove Technologies, Inc. Shareholders
Mitchell Januszewski (1) ........................ 65,961 13,192 52,769
Thomas Dzierozynski (2) ......................... 21,987 4,397 17,590
Former SMG Marketing Group, Inc. Shareholders
John A. Henderson Revocable Trust (3) ........... 883,570 883,570 0
Barbara E. Wallace (4) .......................... 286,721 286,721 0
Former Minerva Medical Limited Shareholders and
Holders of Related Interests
Melvyn John Percy (5) ........................... 498,520 149,556 348,694
Christopher Packard (6) ......................... 244,373 73,311 171,062
Andrew Mark Percy (7) ........................... 234,598 70,379 164,219
Minerva Medical Projects Limited Directors' Small
Self-Administered Pension Scheme (8) ............ 19,318 5,795 13,523
Michael Murphy (9) .............................. 73,408 22,022 51,386
Brendan M. Buckley (10) ......................... 73,408 22,022 51,386
Former Medlab (Pty) Limited Shareholders
and Holders of Niehaus & Botha Assets
Charles Edward Niehaus (11) ..................... 67,689 55,413 12,276
Andreas Johannes Hamman (12) .................... 68,022 55,746 12,276
Pieter Frederik Wessels (13) .................... 65,777 53,501 12,276
Louise Marcus-Finn (14) ......................... 65,813 53,537 12,276
</TABLE>
- ----------------
(1) Includes 7,917 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Mr.
Januszewski is President and a director of Quintiles -- Oak Grove, Inc. a
wholly-owned subsidiary of Quintiles.
14
<PAGE> 16
(2) Includes 2,639 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Mr.
Dzierozynski is Secretary/Treasurer of Quintiles - Oak Grove, Inc., a
wholly-owned subsidiary of Quintiles.
(3) Includes 44,178 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder not earlier than March 31, 2000 under the terms of the
escrow. John A. Henderson is the sole trustee of the Trust, of which Mr.
Henderson and his family are the beneficiaries. Mr. Henderson is President of
SMG Marketing Group, Inc., a wholly-owned subsidiary of Quintiles.
(4) Includes 14,336 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder not earlier than March 31, 2000 under the terms of the
escrow.
(5) Includes 49,852 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Excludes
shares held by the Minerva Medical Projects Limited Directors' Small
Self-Administered Pension Scheme, of which Mr. Percy is a trustee and a
beneficiary. Mr. Percy is a director of Minerva Medical Limited, a wholly-owned
subsidiary of Quintiles.
(6) Includes 24,437 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Mr.
Packard is currently a part-time consultant to Minerva Medical Limited, a
wholly-owned subsidiary of Quintiles.
(7) Includes 23,460 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Excludes
shares held by the Minerva Medical Projects Limited Directors' Small
Self-Administered Pension Scheme, of which Mr. Percy is a trustee and a
beneficiary. Mr. Percy was employed by Minerva Medical Limited, a wholly-owned
subsidiary of Quintiles, until July 1, 1999 and from that date has served as a
consultant to Minerva.
(8) Melvyn John Percy and Andrew Mark Percy are two of the trustees of the
Scheme. Messrs. Percy and Percy are also beneficiaries of the Scheme.
(9) Includes 7,341 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Dr.
Murphy is a consultant to Minerva (Ireland) Limited, a wholly-owned subsidiary
of Quintiles.
(10) Includes 7,341 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Dr.
Buckley is a consultant to Minerva (Ireland) Limited, a wholly-owned subsidiary
of Quintiles.
(11) Includes 12,276 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Mr.
Niehaus is a director of Medlab (Pty) Limited, a wholly-owned subsidiary of
Quintiles.
(12) Includes 12,276 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Mr.
Hamman is a director of Medlab (Pty) Limited, a wholly-owned subsidiary of
Quintiles.
(13) Includes 12,276 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Mr.
Wessels is a director of Medlab (Pty) Limited, a wholly-owned subsidiary of
Quintiles.
(14) Includes 12,276 shares held in escrow pursuant to the terms of the
acquisition. Shares held in escrow are not offered by this prospectus. Ms.
Marcus Finn is a director of Medlab (Pty) Limited, a wholly-owned subsidiary of
Quintiles.
15
<PAGE> 17
Plan of Distribution
Methods of Offers and Sales
The selling shareholders may sell the shares at various times in one or
more of the following transactions (which may include block transactions):
- on the Nasdaq National Market;
- in negotiated transactions;
- through put or call transactions related to the shares;
- in connection with short sales of Quintiles stock; or
- in a combination of any of the above transactions.
The selling shareholders may sell their shares at market prices prevailing
at the time of sale, at prices related to the prevailing market price or at
negotiated prices.
If any selling shareholder uses broker-dealers, such broker-dealers may
receive commissions or discounts from the selling shareholders, or they may
receive commissions from the purchaser for whom they acted as agent or to
whom they sell as principal (or both). There is the possibility that the
selling shareholders and the broker-dealers (who effect sales) may be
deemed to be "underwriters" under the Securities Act, and their commissions
or discounts regarded as underwriters' compensation. Because of this
possibility, the selling shareholders must comply with the prospectus
delivery requirements of the Securities Act.
Each selling shareholder has agreed to notify us upon entering into an
arrangement with a broker- dealer for the sale of shares through any one or
more of the following methods:
- a block trade,
- a special offering,
- an exchange distribution or secondary distribution, or
- a purchase by a broker or a dealer.
Once we receive such notification, if required, we will file a prospectus
supplement pursuant to Rule 424(b) of the Securities Act describing: (1)
the broker-dealer's name; (2) the number of shares involved; (3) the
commissions paid to the broker-dealer; (4) the discounts given or
concessions allowed to the broker dealer; (5) a statement that the
broker-dealer did not conduct any investigation to verify the information
contained in or incorporated by reference in this prospectus (if
applicable); and (6) other material facts of the transaction. To our
knowledge, as of July 2, 1999 none of the selling shareholders have entered
into any arrangement described above with a broker-dealer.
16
<PAGE> 18
The selling shareholders also may sell all or a portion of the shares in
open-market transactions in reliance on Rule 144 under the Securities Act,
provided that they can satisfy the requirements of that rule.
The selling shareholders' rights to be included in this registration
statement and prospectus are not transferable. Nevertheless, we may permit
certain donees, such as charitable organizations, who may receive shares
from a selling shareholder after the date of this prospectus, to sell their
shares under this prospectus. Any such donee may sell the shares in
accordance with the terms described in this plan of distribution. We will
not receive any of the proceeds from such sales.
Duration of Resale Period Under This Prospectus
We anticipate that the registration statement shall remain effective as to
each selling shareholder group until the earlier of (1) the date when all
of his or her shares included in the registration statement have been
distributed to the public; or (2) the date as set forth in the table below
with respect to each group.
<TABLE>
<CAPTION>
Selling Shareholder Group Termination of Offering
=================================================== =======================================================
<S> <C>
Oak Grove Technologies, Inc. February 17, 2000 (the date the selling shareholders'
shares become eligible for resale under Rule 144 of
the Securities Act)
SMG Marketing Group, Inc.* June 3, 2000
Minerva Medical Limited* May 19, 2000 (the date the selling shareholders'
shares become eligible for resale under Rule 144 of
the Securities Act)
Medlab (Pty) Limited/Niehaus & Botha March 31, 2000 (the date the selling shareholders'
shares become eligible for resale under Rule 144 of
the Securities Act)
</TABLE>
- ---------------------
* Certain of the selling shareholders may not sell (or otherwise reduce
their risk relative to their shares) for a certain period of time as
required by the pooling of interests accounting rules. The restricted
period ends once we have published financial statements covering at
least 30 days of our operations combined with each pooled or merged
company. Thus, the selling shareholders may be unable to immediately
sell all or any of the shares.
Costs and Indemnification
We will pay our own legal and accounting fees, all registration and filing
fees attributable to the registration of the shares, any legal fees and
filing fees relating to state securities or "blue sky" filings, the filing
fee payable to The Nasdaq Stock Market, and all printing fees incurred in
connection with the preparation of the registration statement. Each selling
shareholder will pay his, her or its own legal fees. The selling
shareholders will pay any selling discounts and commissions and stock
transfer taxes applicable to a sale of shares.
17
<PAGE> 19
We have agreed to indemnify certain of the selling shareholders and their
officers and directors, and each person who controls such selling
shareholder, in certain circumstances against certain liabilities,
including liabilities arising under the Securities Act. The same selling
shareholders have agreed to indemnify us and our directors and officers and
each person who controls us in similar terms.
Where You Can Find More Information About Quintiles
We file reports, proxy statements and other information with the SEC. You may
read and copy any of these materials at the SEC's public reference room in
Washington, D.C. You may obtain information on the operation of the public
reference room by calling the SEC at 1-800-SEC-0330. You can also find our SEC
filings on the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" in this prospectus the
information we file with them. This means that we can disclose important
information to you by referring you to those documents. Any information we
incorporate by reference is considered part of this prospectus, and any
information we later file with the SEC will automatically update and supersede
the information in this prospectus.
We incorporate by reference in this prospectus and refer you to the documents
listed below (File No. 000-23520):
1. Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, as amended by Form 10-K/A;
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999;
3. Our Current Reports on Form 8-K dated April 22, 1999, April
30, 1999 and July 15, 1999;
4. The description of our Common Stock contained in our
Registration Statement on Form 8-A, filed with the SEC on
February 28, 1994 and amended on April 11, 1994; and
5. All other documents we file with the SEC pursuant to Section
13(a), 13(c) or 15(d) of the Exchange Act of 1934 after the
date of this prospectus and before the end of this offering.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following:
Investor Relations
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Building, Suite 200
Durham, North Carolina 27703-8411
(919) 998-2300
You should also note that the SEC considers this prospectus to be part of a
registration statement filed with the SEC (Registration No. 333-________). Since
this prospectus omits certain portions of the information provided in the
registration statement, we also refer you to that document.
18
<PAGE> 20
================================================================================
You should rely only on the information incorporated by reference or provided in
this prospectus. We have not authorized anyone to give you different
information. The selling shareholders will not make an offer of these shares in
any state where the offer is not permitted. You should not assume that the
information in this prospectus, or any supplement, is accurate as of any date
other than the date on the front of those documents.
================================================================================
Forward Looking Statements
We make statements in this prospectus and in the documents incorporated by
reference that fall within the definition of "forward looking statements" found
in Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. You can identify these statements by our use of words like
"may," "will," "expect," "anticipate," "estimate," or "continue" or comparable
terms and phrases.
Forward looking statements represent our judgment about the future and are not
guarantees of our future performance. Certain risks and uncertainties could
cause our actual operating results and financial position to differ materially
from our projections, including the considerations described in connection with
specific forward looking statements, factors discussed in this prospectus under
the caption "Risk Factors You Should Consider" and other cautionary statements
you may find in this prospectus and in the documents we incorporate by
reference. Therefore, we caution you not to place undue reliance on forward
looking statements. Such forward looking statements represent our estimates and
assumptions only as of the date of this prospectus.
Legal Matters
Our lawyers, Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., will
issue a legal opinion concerning the legality of the selling shareholders'
shares. Smith Anderson lawyers own in the aggregate approximately 3,800 shares
of Quintiles common stock.
Experts
The supplemental consolidated financial statements of Quintiles as of and for
the year ended December 31, 1998, as restated for pooling of interest
acquisitions in the Current Report on 8-K dated July 15, 1999, incorporated by
reference in this prospectus and elsewhere in the registration statement, have
been audited by Arthur Andersen LLP, independent public accountants. In that
report, Arthur Andersen LLP states that with respect to the financial statements
of ENVOY Corporation, a company acquired during March 1999 in a transaction
accounted for as a pooling of interests, its opinion is based on the report of
other independent auditors, Ernst & Young LLP. The supplemental financial
statements referred to above have been incorporated by reference herein in
reliance on those firms' reports, given on their authority as experts in
accounting and auditing.
Ernst & Young LLP, independent auditors, have audited our supplemental
consolidated financial statements at December 31, 1997 and the years ended
December 31, 1997 and 1996 included in our Current Report on Form 8-K dated July
15, 1999, as set forth in their report, which is incorporated by reference in
this prospectus and elsewhere in the registration statement. Our supplemental
consolidated financial statements are incorporated by reference in reliance on
Ernst & Young LLP's report, given on their authority as experts in accounting
and auditing.
19
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table shows the estimated expenses of the issuance and
distribution of securities offered hereby. The selling shareholders will not
bear any of these expenses.
SEC Registration Fee......................................... $ 18,433
Legal Fees and Expenses...................................... $ 15,000
Accounting Fees and Expenses................................. $ 21,000
Printing and Related Expenses................................ $ 5,000
Miscellaneous Expenses....................................... $ 1,567
-------
Total............................................... $ 61,000
=======
Item 15. Indemnification of Directors and Officers
Sections 55-8-50 through 55-8-58 of the North Carolina Business
Corporation Act permit a corporation to indemnify its directors, officers,
employees or agents under either or both a statutory or nonstatutory scheme of
indemnification. Under the statutory scheme, a corporation may, with certain
exceptions, indemnify a director, officer, employee or agent of the corporation
who was, is, or is threatened to be made, a party to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative, because of the fact that such person was a
director, officer, agent or employee of the corporation, or is or was serving at
the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. This indemnity may include the obligation to
pay any judgment, settlement, penalty, fine (including an excise tax assessed
with respect to an employee benefit plan) and reasonable expenses incurred in
connection with a proceeding (including counsel fees), but no such
indemnification may be granted unless such director, officer, agent or employee
(i) conducted himself in good faith, (ii) reasonably believed (1) that any
action taken in his official capacity with the corporation was in the best
interest of the corporation or (2) that in all other cases his conduct at least
was not opposed to the corporation's best interest, and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. Whether a director has met the requisite standard of conduct for the
type of indemnification set forth above is determined by the board of directors,
a committee of directors, special legal counsel or the shareholders in
accordance with Section 55-8-55. A corporation may not indemnify a director
under the statutory scheme in connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to the corporation or
in connection with a proceeding in which a director was adjudged liable on the
basis of having received an improper personal benefit.
In addition to, and separate and apart from the indemnification
described above under the statutory scheme, Section 55-8-57 of the North
Carolina Business Corporation Act permits a corporation to indemnify or agree to
indemnify any of its directors, officers, employees or agents against liability
and expenses (including attorney's fees) in any proceeding (including
proceedings brought by or on behalf of the corporation) arising out of their
status as such or their activities in any of the foregoing capacities; provided,
however, that a corporation may not indemnify or agree to indemnify a person
against liability
II-1
<PAGE> 22
or expenses such person may incur on account of activities that were, at the
time taken, known or believed by the person to be clearly in conflict with the
best interests of the corporation. The Company's bylaws provide for
indemnification to the fullest extent permitted under the North Carolina
Business Corporation Act, provided, however, that the Company will indemnify any
person seeking indemnification in connection with a proceeding initiated by such
person only if such proceeding was authorized by the Board of Directors of the
Company. Accordingly, the Company may indemnify its directors, officers and
employees in accordance with either the statutory or the non-statutory standard.
Sections 55-8-52 and 55-8-56 of the North Carolina Business Corporation
Act require a corporation, unless its articles of incorporation provide
otherwise, to indemnify a director or officer who has been wholly successful, on
the merits or otherwise, in the defense of any proceeding to which such director
or officer was a party. Unless prohibited by the articles of incorporation, a
director or officer also may make application and obtain court-ordered
indemnification if the court determines that such director or officer is fairly
and reasonably entitled to such indemnification as provided in Sections 55-8-54
and 55-8-56.
Finally, Section 55-8-57 of the North Carolina Business Corporation Act
provides that a corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee or agent of the
corporation against certain liabilities incurred by such persons, whether or not
the corporation is otherwise authorized by the North Carolina Business
Corporation Act to indemnify such party. The Company's directors and officers
are currently covered under directors' and officers' insurance policies
maintained by the Company.
As permitted by North Carolina law, Article XI of the Company's
Articles of Incorporation limits the personal liability of directors for
monetary damages for breaches of duty as a director provided that such
limitation will not apply to (i) acts or omissions that the director at the time
of the breach knew or believed were clearly in conflict with the best interests
of the Company, (ii) any liability for unlawful distributions under N.C. Gen.
Stat. Section 55-8-33 of the North Carolina Business Corporation Act, (iii) any
transaction from which the director derived an improper personal benefit, or
(iv) acts or omissions occurring prior to the date the provision became
effective.
Item 16. Exhibits
The following documents (unless indicated) are filed herewith and made
a part of this Registration Statement.
Exhibit
Number Description of Exhibit
- ------- ----------------------
4.01(1) Specimen Common Stock Certificate
4.02(2) Amended and Restated Articles of Incorporation, as amended
4.03(3) Amended and Restated Bylaws
4.04 Terms of registration rights granted by Quintiles to the Oak
Grove Technologies, Inc. selling shareholders
4.05 Terms of registration rights granted by Quintiles to the SMG
Marketing Group, Inc. selling shareholders
4.06 Terms of registration rights granted by Quintiles to the
Minerva Medical Limited selling shareholders
II-2
<PAGE> 23
4.07 Terms of registration rights granted by Quintiles to the
Medlab (Pty) Limited/Niehaus & Botha selling shareholders
5.01 Opinion of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. regarding legality of securities being
registered
23.01 Consent of Arthur Andersen LLP
23.02 Consent of Ernst & Young LLP
23.03 Consent of Ernst & Young LLP
23.04 Consent of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. (included in Exhibit 5.01 hereto)
24.01 Power of Attorney (included on the signature page hereof)
---------------
(1) Exhibit to the Company's Registration Statement on Form S-1,
as amended, (Registration No. 33-75766) as filed with the
Commission, effective April 20, 1994, and incorporated herein
by reference.
(2) Exhibit to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1999, as filed with the Commission on
May 14, 1999, and incorporated herein by reference.
(3) Exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 as filed with the
Commission on March 25 1996, as amended on May 16, 1996 and
incorporated herein by reference.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers and sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement.
II-3
<PAGE> 24
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Durham, State of North Carolina, on July 15, 1999.
QUINTILES TRANSNATIONAL CORP.
By: /s/ Dennis B. Gillings
----------------------------------
Dennis B. Gillings, Ph.D.
Chairman of the Board of Directors
and Chief Executive officer
II-5
<PAGE> 26
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Dennis B. Gillings and Rachel R. Selisker
and each of them, each with full power to act without the other, his true and
lawful attorneys-in-fact and agents, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement on Form
S-3 and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully for all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons as of July 15,
1999 in the capacities indicated.
Signature Title
- --------- -----
/s/ Dennis B. Gillings Chairman of the Board of Directors
- ------------------------------------ and Chief Executive Officer
Dennis B. Gillings, Ph.D.
/s/ Santo J. Costa President, Chief Operating Officer
- ------------------------------------ and Director
Santo J. Costa
/s/ Rachel R. Selisker Chief Financial Officer, Executive
- ------------------------------------ Vice President Finance, and
Rachel R. Selisker Director (Principal accounting
and financial officer)
/s/ Robert C. Bishop Director
- ------------------------------------
Robert C. Bishop, Ph.D.
/s/ E.G. F. Brown Director
- ------------------------------------
E.G. F. Brown
/s/ Vaughn D. Bryson Director
- ------------------------------------
Vaughn D. Bryson
/s/ Chester W. Douglass Director
- ------------------------------------
Chester W. Douglass, Ph.D.
/s/ William E. Ford Director
- ------------------------------------
William E. Ford
/s/ Fred C. Goad Director
- ------------------------------------
Fred C. Goad
/s/ Jim D. Kever Director
- ------------------------------------
Jim D. Kever
/s/ Arthur M. Pappas Director
- ------------------------------------
Arthur M. Pappas
Director
- ------------------------------------
Ludo J. Reynders, Ph.D
/s/ Eric J. Topol Director
- ------------------------------------
Eric J. Topol, M.D.
/s/ Virginia V. Weldon Director
- ------------------------------------
Virginia V. Weldon, M.D.
/s/ David F. White Director
- ------------------------------------
David F. White
II-6
<PAGE> 27
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
4.01(1) Specimen Common Stock Certificate
4.02(2) Amended and Restated Articles of Incorporation, as amended
4.03(3) Amended and Restated Bylaws
4.04 Terms of registration rights granted by Quintiles to the Oak
Grove Technologies, Inc. selling shareholders
4.05 Terms of registration rights granted by Quintiles to the SMG
Marketing Group, Inc. selling shareholders
4.06 Terms of registration rights granted by Quintiles to the
Minerva Medical Limited selling shareholders
4.07 Terms of registration rights granted by Quintiles to the
Medlab (Pty) Limited/Niehaus & Botha selling shareholders
5.01 Opinion of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. regarding legality of securities being
registered
23.01 Consent of Arthur Andersen LLP
23.02 Consent of Ernst & Young LLP
23.03 Consent of Ernst & Young LLP
23.04 Consent of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. (included in Exhibit 5.01 hereto)
24.01 Power of Attorney (included on the signature page hereof)
---------------
(1) Exhibit to the Company's Registration Statement on Form S-1,
as amended, (Registration No. 33-75766) as filed with the
Commission, effective April 20, 1994, and incorporated herein
by reference.
(2) Exhibit to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1999, as filed with the Commission on
May 14, 1999, and incorporated herein by reference.
(3) Exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 as filed with the
Commission on March 25 1996, as amended on May 16, 1996 and
incorporated herein by reference.
II-7
<PAGE> 1
EXHIBIT 4.04
Terms of Registration Rights Granted to Former Shareholders
of Oak Grove Technologies, Inc.
7.4 Registration Rights
(a) If, at any time after the Effective Time, the Purchaser
shall file a registration statement with the SEC which in form is suitable for
inclusion of shares of Purchaser Common Stock received by the Shareholders as
consideration for the Merger, the Purchaser shall so notify each Shareholder. In
such event, each Shareholder may include (only once) up to twenty percent (20%)
of his or her shares of Purchaser Common Stock received in the Merger in such
registration statement (the "Registration Statement") by completing and signing
the Purchaser's notification form and returning it within ten days of the date
of the notice, and thereafter taking such other related actions as the Purchaser
reasonably shall request; provided, however, that the foregoing right to have
shares included in any such Registration Statement shall (i) be subject to
cutback in the discretion of the managing underwriter in the case of an
underwritten offering; and (ii) expire if and when all of such Shareholder's
shares of Purchaser Common Stock received in the Merger may be sold during a
single three-month period under Rule 144 promulgated under the Securities Act.
(b) Notwithstanding subsection (a) above, the Purchaser shall
not be required to take any action with respect to the filing or the declaration
or continuation of effectiveness of the Registration Statement following notice
to the Shareholders from the Purchaser (a "Suspension Notice") of the existence
of any state of facts or the happening of any event (including without
limitation pending negotiations relating to, or the consummation of a
transaction) or the occurrence of any event which in the opinion of the
Purchaser might require additional disclosure of material, non-public
information by the Purchaser in the Registration Statement as to which the
Purchaser believes it has a bona fide business purpose for preserving
confidentiality or which renders the Purchaser unable to comply with the
published rules and regulations of the SEC promulgated under the Securities Act
or the Exchange Act, as in effect at any relevant time. Upon receipt of a
Suspension Notice from the Purchaser, the Shareholders will forthwith
discontinue disposition of all such shares pursuant to the Registration
Statement until receipt from the Purchaser of copies of prospectus supplements
or amendments prepared by or on behalf of the Purchaser, together with a
notification that the Suspension Notice is no longer in effect, and, if so
directed by the Purchaser, the Shareholders will deliver to the Purchaser all
copies in their possession of the prospectus covering such shares current at the
time of receipt of any Suspension Notice.
(c) Expenses of Registration. All expenses incurred in
connection with the registration pursuant to this Section 7.4 shall be borne by
the Purchaser, except that all selling discounts and commissions (if any) and
stock transfer taxes applicable to the shares covered by the Registration
Statement and all fees and disbursements of counsel for the Shareholders
relating thereto shall be borne by the Shareholders.
(d) Transfer of Registration Rights. The registration rights
in this Section 7.4 are not transferable by any Shareholder.
<PAGE> 1
EXHIBIT 4.05
Registration Rights Granted to Former Shareholders
of SMG Marketing Group, Inc.
7.7 Registration Rights
(a) The Purchaser shall use its reasonable best efforts to (i)
file by July 16, 1999 a registration statement on Form S-3 (or another
applicable form of registration statement if Form S-3 is unavailable to the
Purchaser) under the Securities Act with respect to 100% of the shares of
Purchaser Common Stock to be issued to each Shareholder in connection with the
Merger (the "Registration Statement"), and thereafter to cause the Registration
Statement to be declared effective by the SEC as to resales by the Shareholders;
(ii) cause the Registration Statement to remain effective for not less than 12
months from the Closing Date; and (iii) cause the shares of Purchaser Common
Stock to be issued in the Merger to be approved for listing on the National
Market System of the Nasdaq Stock Market. No Shareholder shall, or shall be
entitled to, resell any such shares in reliance upon the Registration Statement
after the passage of such 12 month resale period.
(b) Notwithstanding subsection (a) above, the Purchaser shall
not be required to take any action with respect to the registration or the
declaration or continuation of effectiveness of the Registration Statement
following notice to the Shareholders from the Purchaser (a "Suspension Notice")
of the Purchaser's determination in good faith of the existence of any state of
facts or the happening of any event (including without limitation pending
negotiations relating to, or the consummation of a transaction, or the
occurrence of any event which in the opinion of the Purchaser might require
additional disclosure of material, non-public information by the Purchaser in
the Registration Statement as to which the Purchaser believes it has a bona fide
business purpose for preserving confidentiality or which renders the Purchaser
unable to comply with the published rules and regulations of the SEC promulgated
under the Securities Act or the Exchange Act, as in effect at any relevant time)
which might reasonably result in (1) the Registration Statement, any amendment
or post-effective amendment thereto, or any document incorporated therein by
reference containing an untrue statement of a material fact or omitting to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (2) the prospectus issued under the
Registration Statement, any prospectus supplement, or any document incorporated
therein by reference including an untrue statement of material fact or omitting
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. Upon
receipt of a Suspension Notice from the Purchaser, the Shareholders will
forthwith discontinue disposition of all such shares pursuant to the
Registration Statement until receipt from the Purchaser of copies of prospectus
supplements or amendments prepared by or on behalf of the Purchaser, together
with a notification that the Suspension Notice is no longer in effect, and, if
so directed by the Purchaser, the Shareholders will deliver to the Purchaser all
copies in their possession of the prospectus covering such shares current at the
time of receipt of any Suspension Notice.
<PAGE> 2
(c) Expenses of Registration. All expenses incurred in
connection with the registration pursuant to this Section 7.6 shall be borne by
the Purchaser, except that all selling discounts and commissions (if any) and
stock transfer taxes applicable to the shares covered by the Registration
Statement and all fees and disbursements of counsel for the Shareholders
relating thereto shall be borne by the Shareholders.
(d) Information by Shareholders. The Shareholders shall
furnish to the Purchaser such information regarding the Shareholders, their
shares and the distribution proposed by the Shareholders as the Purchaser may
reasonably request in writing and as shall be required in connection with any
registration referred to in this Section 7.7. Each Shareholder shall notify the
Purchaser as promptly as practicable of any inaccuracy or change in information
previously furnished by such Shareholder to the Purchaser or of the occurrence
of any event as a result of which any prospectus included in the Registration
Statement contains or would contain an untrue statement of a material fact
regarding such Shareholder or such Shareholder's intended method of distribution
of shares or omits to state any material fact regarding the Shareholder or the
Shareholder's intended method of distribution of shares necessary to make the
statements therein, in light of the circumstances then existing, not misleading,
and promptly to furnish to the Purchaser any additional information required to
correct and update any previously furnished information or required so that such
prospectus shall not contain, with respect to such Shareholder or the
distribution of such shares, an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances then existing, not misleading.
(e) Indemnification
(i) The Purchaser will indemnify each Shareholder,
each of such Shareholder's directors and officers, and each person who controls
a Shareholder within the meaning of Section 15 of the Securities Act against all
expenses, claims, losses, damages, or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration, or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by the
Purchaser of the Securities Act or any rule or regulation promulgated under the
Securities Act applicable to the Purchaser in connection with any such
registration, and the Purchaser will reimburse each Shareholder for any legal
and any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Purchaser will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission made in conformity with information furnished to the Purchaser by a
Shareholder.
<PAGE> 3
(ii) Each Shareholder will indemnify the Purchaser,
each of the Purchaser's directors and officers, each person who controls the
Purchaser within the meaning of Section 15 of the Securities Act, and each other
person or entity including securities in such registration and each controlling
person thereof against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Purchaser and all such directors, officers and persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in conformity with information
furnished to the Purchaser by such Shareholder.
(iii) Promptly after receipt by an indemnified party
of notice of the commencement of any action, such indemnified party will, if a
claim thereof is to be made against the indemnifying party pursuant thereto,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may otherwise have to any indemnified party. In case such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with any other indemnifying party,
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party.
(f) Transfer of Registration Rights. The registration rights
in this Section 7.7 are not transferable by any Shareholder.
<PAGE> 1
EXHIBIT 4.06
Registration Rights Granted In Connection With
the Acquisition of Minerva Medical Limited
Registration Rights Applicable to Melvyn Percy, Christopher Packard, Andrew
Percy and the Pension Trustees:
6.4 If, at any time after completion of the transactions contemplated hereby,
the Purchaser shall file a registration statement with the Securities and
Exchange Commission which in form is suitable for inclusion of shares owned by
the Private Placement Participants, then the Purchaser shall notify each Private
Placement Participant. Each Private Placement Participant may include up to 30%
of his or her Consideration Shares or Quintiles Shares in such registration
statement by completing and signing the Purchaser's notification form and
returning it within ten days of the date of the notice. If the Purchaser has not
filed such a registration statement by 15 July 1999 and afforded the Private
Placement Participants the opportunity to have shares included thereon, then the
Purchaser shall by such date use its best efforts to file a registration
statement on Form S-3 with respect to 30% of the shares received by each Private
Placement Participant and thereafter use its reasonable efforts to cause the
registration statement to be declared effective by the Securities and Exchange
Commission as soon as practicable thereafter. All expenses in connection with
any registration pursuant to this clause shall be borne by the Purchaser, except
that all selling discounts and commissions, if any, and stock transfer taxes, if
any, and all fees and disbursements of counsel, if any, for the Private
Placement Participants shall be borne by the Private Placement Participants. The
Purchaser may delay or suspend any such registration statement by notice to the
Private Placement Participants of the existence of any state of facts or the
happening of any event (including without limitation pending negotiations
relating to, or the consummation of, a transaction), or the occurrence of any
event which in the opinion of the Purchaser might require additional disclosure
of material, non-public information by the Purchaser in the registration
statement as to which the Purchaser believes it has a bona fide business purpose
for preserving confidentiality or which renders the Purchaser practically unable
to comply with the published rules and regulations of the Securities and
Exchange Commission as in effect at any relevant time; provided, however, that
the Purchaser shall not issue such a suspension notice for any period during
which the Purchaser's executive officers are not similarly restrained from
disposing of shares in the Purchaser's common stock. Upon receipt of any
suspension notice, the Private Placement Participants will discontinue
disposition of any shares pursuant to the registration statement until the
suspension is lifted. The registration rights contained herein are not
transferable.
Registration Rights Applicable to Brendan Buckley and Michael Murphy:
6.11 If, at any time after completion of the transactions contemplated hereby,
Quintiles shall file a registration statement with the Securities and Exchange
Commission which in form is suitable for inclusion of shares owned by the
Private Placement Participants, then Quintiles shall notify each Private
Placement Participant. Each Private Placement Participant may include up to 30%
of his Consideration Shares in such registration statement by completing and
signing
<PAGE> 2
Quintiles' notification form and returning it within ten days of the
date of the notice. If Quintiles has not filed such a registration statement by
15 July 1999 and afforded the Private Placement Participants the opportunity to
have shares included thereon, then Quintiles shall by such date use best efforts
to file a registration statement on Form S-3 with respect to 30% of the shares
received by each Private Placement Participant and thereafter use its reasonable
efforts to cause the registration statement to be declared effective by the
Securities and Exchange Commission as soon as practicable thereafter. All
expenses in connection with any registration pursuant to this clause shall be
borne by Quintiles, except that all selling discounts and commissions, if any,
and stock transfer taxes, if any, and all fees and disbursements of counsel, if
any, for the Private Placement Participants shall be borne by the Private
Placement Participants. Quintiles may delay or suspend any such registration
statement by notice to the Private Placement Participants of the existence of
any state of facts or the happening of any event (including without limitation
pending negotiations relating to, or the consummation of, a transaction), or the
occurrence of any event which in the opinion of Quintiles might require
additional disclosure of material, non-public information by Quintiles in the
registration statement as to which Quintiles believes it has a bona fide
business purpose for preserving confidentiality or which renders Quintiles
practically unable to comply with the published rules and regulations of the
Securities and Exchange Commission as in effect at any relevant time; provided,
however, that Quintiles shall not issue such a suspension notice for any period
during which Quintiles' executive officers are not similarly restrained from
disposing of shares in Quintiles' common stock. Upon receipt of any suspension
notice, the Private Placement Participants will discontinue disposition of any
shares pursuant to the registration statement until the suspension is lifted.
The registration rights contained herein are not transferable.
<PAGE> 1
EXHIBIT 4.07
Registration Rights Granted to Former Holders of
MedLab (Pty) Limited and Niehaus & Botha Assets
9.9 Registration Rights
9.9.1 If, at any time after completion of the transactions contemplated hereby,
the Purchaser shall file a registration statement with the Securities and
Exchange Commission which in form is suitable for inclusion of shares owned by
the Private Placement Participants, then the Purchaser shall notify each Private
Placement Participant. In compliance with the requirements of the Exchange
Control Authorities of South Africa, each Private Placement Participant may
include up to 100% of his Consideration Shares (other than any Consideration
Shares delivered to the Escrow Agent by him or on his behalf pursuant to the
provisions of this Agreement) in such registration statement by completing and
signing the Purchaser's notification form and returning it within 10 days of the
date of the notice. The Purchaser shall use reasonable commercial efforts to
file a registration statement by 16 July 1999 and afford the Private Placement
Participants the opportunity to have Consideration Shares included thereon. In
compliance with the requirements of the Exchange Control Authorities of South
Africa, the Purchaser shall in any event procure that a registration statement
is filed within 6 months from the Completion Date and shall use all reasonable
commercial efforts to have any such registration statement declared effective by
the Securities and Exchange Commission. All expenses in connection with any
registration pursuant to this clause shall be borne by the Purchaser, except
that all selling discounts and commissions, if any, and stock transfer taxes, if
any, and all fees and disbursements of counsel, if any, for the Private
Placement Participants shall be borne by the Private Placement Participants. The
Purchaser may delay or suspend any such registration statement by notice to the
Private Placement Participant of the existence of any state of fact or the
happenings of any events (including without limitation pending negotiations
relating to, or the consummation of, a transaction), or the occurrence of any
event which in the opinion of the Purchaser may require additional disclosure of
material, non-public information by the Purchaser in the registration statement
as to which the Purchaser believes it has a bona fide business purpose for
preserving confidentiality or which renders the Purchaser practically unable to
comply with the published Rules and Regulations of the Securities and Exchange
Commission as in effect at any relevant time; provided, however, that the
Purchaser shall not issue such a suspension notice for any period during which
the Purchaser's executive officers are not similarly restrained from disposing
of shares in the Purchaser's common stock. Upon receipt of any suspension
notice, the Private Placement Participants shall discontinue disposing of any
Consideration Shares pursuant to the registration statement until the suspension
is lifted. The registration rights contained herein are not transferable.
<PAGE> 1
SMITH, ANDERSON, BLOUNT, DORSETT,
MITCHELL & JERNIGAN, L.L.P.
LAWYERS
<TABLE>
<S> <C> <C>
OFFICES Mailing Address
2500 First Union Capitol Center P.O. Box 2611
Raleigh, North Carolina 27601 July 15, 1999 Raleigh, North Carolina
27602-2611
TELEPHONE: (919) 821-1220
FACSIMILE: (919) 821-6800
</TABLE>
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Building, Suite 200
Durham, North Carolina 27703
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We are counsel for Quintiles Transnational Corp. (the "Company"), in
connection with the preparation of a Registration Statement on Form S-3 (the
"Registration Statement") to be filed by the Company with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
relating to the registration of 1,749,162 shares (the "Shares") of the Company's
common stock, par value $.01 per share ("Common Stock"), which have been
included in the Registration Statement for the respective accounts of the
persons identified in the Registration Statement as selling shareholders. This
opinion is furnished pursuant to the requirement of Item 601(b)(5) of Regulation
S-K under the Act.
We have examined the Amended and Restated Articles of Incorporation, as
amended, and the Amended and Restated Bylaws of the Company, the minutes of the
meetings of the Board of Directors of the Company relating to the authorization
and the issuance of securities and such other corporate documents, records, and
matters of law as we have deemed necessary for purposes of this opinion. In our
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents as originals, the conforming to originals of all documents
submitted to us as certified copies or photocopies, and the authenticity of
originals of such latter documents. In rendering the opinion set forth below, we
have relied on a certificate of a Company officer, whom we believe is
responsible.
Based upon the foregoing and the additional qualifications set forth
below, it is our opinion that the Shares are validly issued, fully paid and
nonassessable.
<PAGE> 2
July 15, 1999
Page 2
The opinion expressed herein does not extend to compliance with federal
and state securities laws relating to the sale of the Shares.
We hereby consent to the reference to our firm in the Registration
Statement under the heading "Legal Matters" and to the filing of this opinion as
an exhibit to the Registration Statement. Such consent shall not be deemed to be
an admission that this firm is within the category of persons whose consent is
required under Section 7 of the Act or the regulations promulgated pursuant to
the Act.
This opinion is limited to the laws of the State of North Carolina, and
no opinion is expressed as to the laws of any other jurisdiction.
Our opinion is as of the date hereof, and we do not undertake to advise
you of matters that might come to our attention subsequent to the date hereof
which may affect our legal opinion expressed herein.
Sincerely yours,
/s/ SMITH, ANDERSON, BLOUNT, DORSETT,
MITCHELL & JERNIGAN, L.L.P.
<PAGE> 1
Exhibit 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Quintiles Transnational Corp.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated June 3, 1999 on the
Quintiles Transnational Corp. supplemental consolidated financial statements for
the year ended December 31, 1998 included in Quintiles Transnational Corp.'s
Current Report on Form 8-K dated July 15, 1999 and to all references to our Firm
included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Raleigh, North Carolina
July 15, 1999
<PAGE> 1
Exhibit 23.02
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Quintiles
Transnational Corp. for the registration of 1,749,162 shares of its common stock
and to the incorporation by reference therein of our report dated January 26,
1998, except for Note 3, as to which the date is June 3, 1999 with respect to
the supplemental consolidated financial statements of Quintiles Transnational
Corp., included in its Current Report on Form 8-K dated July 15, 1999 filed with
the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Raleigh, North Carolina
July 15, 1999
<PAGE> 1
Exhibit 23.03
Consent of Ernst & Young LLP Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Quintiles
Transnational Corp. for the registration of 1,749,162 shares of its common
stock and to the incorporation by reference therein of our report
dated January 29, 1999, with respect to the financial statements of
ENVOY Corporation included in Quintiles Transnational Corp.'s Current Report on
Form 8-K dated July 15, 1999 filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Nashville, Tennessee
July 15, 1999
