<PAGE> 1
As filed with the Securities and Exchange Commission on January 27, 1999
Registration No. 333-65743
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
QUINTILES TRANSNATIONAL CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NORTH CAROLINA 56-1714315
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
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)
-------------------------
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. [ ]
================================================================================
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.
================================================================================
<PAGE> 2
QUINTILES TRANSNATIONAL CORP.
1,209,784 SHARES OF COMMON STOCK
The shareholders listed inside are offering to
sell 1,209,784 shares of Quintiles common
stock. The selling shareholders obtained their
shares when we acquired one of seven different
companies, including Crossbox, Ltd., ClinData
International (Proprietary) Limited, Data
Analysis Systems, Inc., Simirex, Inc., The
Royce Consultancy plc, QED International, Inc,
and H2V S.A., and when we acquired certain
business assets from Richard J. Fordham.
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
January 26, 1999, the last reported sale price
of our common stock was $46.375 per share.
===============================================
You should consider carefully the risk factors
beginning on page 3 before making a decision to
purchase our stock.
===============================================
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.
<PAGE> 3
ABOUT QUINTILES
Quintiles is a market leader in providing full-service contract research, sales,
marketing and health care policy consulting and health information management
services to the global pharmaceutical, biotechnology, medical device and health
care 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 contract research services include a full range of
development services focused on helping our clients through the development and
regulatory approval of a new drug or medical device. Our contract sales
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 offer healthcare policy research and management consulting which
emphasize improving the quality, availability and cost-effectiveness of
healthcare.
Recent Transactions
On December 14, 1998, we agreed to acquire all of the outstanding stock of
Pharmaceutical Marketing Services Inc. ("PMSI") in a merger that would result in
PMSI becoming a subsidiary of Quintiles. Through its Scott-Levin subsidiary in
the United States. PMSI provides a range of information and market research
services to pharmaceutical and healthcare companies to enable them to optimize
the performance of their sales and marketing activities. As a result of the
merger, the PMSI shareholders would exchange their PMSI common stock for
Quintiles common stock either by exchanging all their shares at closing, or
electing to exchange half of their shares at closing and deferring receipt of
the other half for 75 days. A PMSI shareholder who elects to defer will receive
a contingent value payment for each share of Quintiles common stock received on
the 75th day after closing. Payment under the contingent value payments, if any,
will equal the difference between the Quintiles stock price used to determine
the final exchange ratio of the PMSI transaction and the average Quintiles stock
price over a defined period ending on the 75th day after closing of the PMSI
transaction. The final exchange ratio for determining the number of Quintiles
shares to be issued to PMSI shareholders will be determined by dividing $15.40
by the average closing price of Quintiles common stock for the 10 trading days
ending on the day that is two days immediately before the closing. PMSI
shareholders must approve the transaction. PMSI common stock is listed on the
Nasdaq National Market under the symbol "PMRX". As of December 31, 1998,
12,418,921 shares of PMSI common stock were outstanding.
On December 15, 1998 Quintiles agreed to acquire all of the outstanding stock
of ENVOY Corporation ("ENVOY") in a merger that would result in ENVOY becoming
a subsidiary of Quintiles. ENVOY common stock is listed on the Nasdaq National
Market under the symbol "ENVY". As of January 26, 1999, there were 24,389,000
shares of ENVOY common stock and 2,800,000 shares of ENVOY Series B Convertible
Preferred Stock outstanding. ENVOY shareholders would receive 1.166 shares of
Quintiles common stock in exchange for each outstanding share of ENVOY common
stock and Series B convertible preferred stock. The transaction requires
shareholder approval of both Quintiles and ENVOY. ENVOY's directors and holders
of Series B Convertible Preferred Stock have agreed to vote in favor of the
proposed transaction.
Effective January 1, 1999, we completed our previously announced acquisition of
substantial assets of Hoechst Marion Roussel's Kansas City-based Drug
Innovation and Approval organization and the opening of a Kansas City contract
research facility.
2
<PAGE> 4
RISK FACTORS YOU SHOULD CONSIDER
===============================================================================
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 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 21.
===============================================================================
Our Operating Results Depend on Trends in the Pharmaceutical and Biotechnology
Industries
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. We have benefited from this practice. 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 Must Manage Our Growth
We have grown rapidly over the past 10 years and intend to continue to
pursue an aggressive growth strategy, both through acquisitions and
internal expansion of products and services. Our continuing growth places
significant demands on our existing operational, human and financial
resources. We may not be able to grow effectively or manage our growth
successfully, and the failure to do so could have a material adverse effect
on our business, results of operations and financial condition.
In order to meet the current and future demands caused by our growth, we
must continue to (1) improve our operating and administrative systems, (2)
attract and retain qualified management, professional, scientific and
technical personnel, (3) assimilate differences in foreign business
practices and overcome language barriers, and (4) successfully integrate
acquired companies, including those in new lines of business.
3
<PAGE> 5
Our Growth Depends on Our Ability to Implement Our Acquisition Strategy and
Successfully Integrate Acquisitions
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 1998, we completed 11 acquisitions and announced agreements to acquire
PMSI and ENVOY. The PMSI and ENVOY acquisitions would expand our lines of
business and involve new risks. In addition, we are currently reviewing
many acquisition candidates and continually evaluating and competing for
new acquisition opportunities. We plan to continue to take an aggressive
approach to our acquisition strategy; however, such a course of action
poses a number of challenges and risks, including 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;
- potential loss of the acquired companies' key employees;
- Year 2000 risks of the acquired companies;
- the possibility that we may be adversely affected by risk factors
present at the acquired companies;
- potential losses resulting from undiscovered liabilities of acquired
companies that are not covered by the indemnification we may obtain
from the sellers;
- the ability to expand the data analyses portion of ENVOY's business,
if the ENVOY acquisition is completed;
4
<PAGE> 6
- 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.
Our Growth Depends on Our Ability to Successfully Develop and Market Potential
New Services
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.
As a result of our proposed acquisition of ENVOY, we are currently
considering expanding our pharmaceutical and healthcare information and
market research services. This type of service, often called data mining,
employs healthcare information to analyze aspects of current healthcare
products and procedures for use in producing new products and services. It
is also used to evaluate trends in medical treatment and effectiveness or
to analyze the effectiveness of sales and marketing of existing products.
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 the necessity to obtain additional rights to use data in
connection with new products or services and by laws and regulations that
may limit our use of 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 the development of them may adversely affect our ability to
realize some of the synergies we anticipate from the proposed acquisition
of ENVOY.
Our Contract Sales Services Are Subject to the Risks of an Emerging Market
The market for outsourced contract sales services, or hiring outside
organizations to perform sales and marketing projects, is still emerging in
some countries where we operate,
5
<PAGE> 7
including the United States. The rate at which pharmaceutical and
biotechnology companies have begun to outsource sales and marketing
projects has varied significantly by market and geographical region and we
expect to continue to experience such variations with respect to our target
markets in the future. Consequently, we face the risks inherent in a new or
emerging industry. These risks include the risk that an established market
may not develop.
The Markets in Which We Operate Are Highly Competitive
If we are unable to maintain or improve our competitive position or
successfully compete in the markets in which we do business, our financial
results could be adversely affected. Since we offer an extensive range of
services, we confront a broad range of competitors. Some of our competitors
compete against us only with respect to a single service or group of
services, while others may compete across a broader portion of our service
lines. Our competitors generally fall within two categories: contract
research organizations and contract sales organizations.
Contract Research Organizations: Contract research organizations offer
a variety of services that facilitate and advance the development of
new drugs and medical devices. These services include pre-clinical
planning, clinical trial supervision and regulatory submission and
approval. Our competitors providing services of this type include
traditional contract research organizations; the in-house research and
development departments of pharmaceutical companies; universities and
teaching hospitals; and consulting firms, including boutique firms
specializing in the healthcare industry and the healthcare departments
of large consulting firms.
Contract Sales Organizations: Contract sales organizations offer
services designed to promote and assist in the development of a
commercial market for drugs and medical devices, as well as health
management services. Our competitors providing services of this type
include in-house sales and marketing departments of pharmaceutical
companies; contract sales organizations in countries where we operate;
and consulting firms offering medical communications services.
The highly competitive nature of the market for contract services may lead
to price and other forms of competition that could have an effect on our
profit margins. In addition, the trend towards consolidation within the
pharmaceutical industry and among the providers of contract research and
contract sales services could result in greater competition among the
6
<PAGE> 8
larger contract research and contract sales providers for customers and
acquisition candidates. We also are likely to face new competition if we
expand in new lines of business through acquisitions.
Our Results Could Be Adversely Affected by the Potential Loss or Delay of Our
Large Contracts
Many of our 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.
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. 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 cannot assure you that the backlog we have reported will be indicative
of our future results.
Cost Overruns on Our Fixed Price Contracts Could Affect Our Results of
Operations
Most of our service contracts have either a fixed price, a fixed price with
variable components or a fee-for-service subject to a cap. Under this
structure, we bear the risk of cost overruns. Underpricing of contracts or
significant cost overruns could have a material adverse effect on us.
We Face Risks Concerning the Year 2000 Issue
The Year 2000 issue 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; 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.
7
<PAGE> 9
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 operation 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 established a Year 2000 Program to address the Year
2000 issue, which management believes will successfully address these
risks, however, we cannot assure you that this program will be completed in
a timely manner. For a more complete discussion of our Year 2000 Program
and progress to date, you should refer to the explanation of it in
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in our most recent Form 10-Q.
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,
particularly on third party physician investigators. 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. 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.
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 our
deadlines and the cooperation of third parties. We cannot
8
<PAGE> 10
assure you that 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, the ability to locate and
correct all relevant computer codes, unforeseen circumstances that would
cause us to allocate our resources elsewhere and similar uncertainties.
We Depend on Key Executives and Personnel
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, 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.
We Face Exposure to Potential Liabilities
Potential Liabilities Arising From Our Contract Research Services
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.
9
<PAGE> 11
Potential Liabilities Arising From Our Other Services
We also could be held liable for errors or omissions in connection with the
services each of our service groups perform.
Measures We Take to Reduce Our Risk From Potential Liabilities.
We attempt to reduce risk from potential liabilities through:
- contractual indemnification provisions with customers and
investigators;
- insurance maintained by us, our customers and our investigators;
- various regulatory requirements, including the use of institutional
review boards; and
- the procurement of each volunteer's informed consent to participate
in a study.
You should note several aspects about our contractual indemnifications.
First, they generally do not fully protect us against some of our own
actions, such as negligence. Second, the terms and scope of each
indemnification vary from customer to customer and from clinical trial to
clinical trial. Finally, the financial performance of any of these
indemnities is not secured. As a result, we bear the risk that the
indemnifying party may not have the financial ability to fulfill its
indemnification obligations.
Our professional liability insurance covers the worldwide territories in
which we operate and includes drug safety issues, as well as data
processing errors and omissions. We can offer you no assurance that we will
be able to maintain this insurance on terms acceptable to us or that this
insurance will cover all of our losses. We caution you that our financial
condition could be materially and adversely affected if we were required to
pay damages or bear the costs of defending any claim (1) outside the scope
of or in excess of a contractual indemnification provision, (2) beyond the
level of insurance coverage or (3) in the event that an indemnifying party
does not fulfill its indemnification obligations.
Government Regulation May Affect Our Business
Governmental agencies throughout the world, but particularly in the United
States, highly regulate the drug development/approval process. Changes in
governmental regulations could have a material adverse effect on our
operations or financial condition. For instance, potential regulatory
changes under consideration in the United States and elsewhere include
10
<PAGE> 12
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. In addition, 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.
The confidentiality of healthcare information is subject to government
regulation and may be the subject of additional government regulation,
particularly in the United States and Europe. Additional legislation
governing the possession, use and dissemination of healthcare information
is in various stages of proposal and adoption at both the state and federal
levels in the United States and among the countries of the European Union.
This legislation may (1) limit the use of some healthcare information in
the data bases we plan to employ for analytical products; or (2) require us
to develop compliance and security measures in connection with products
that may require substantial expenditures to implement. These and other
changes in regulation could limit our ability to offer some products or
have an impact on the business opportunities available to us.
Exchange Rate Fluctuations May Affect Our Results of Operations and Financial
Condition
Because we derive a large portion of our net revenue from our operations
outside the United States, factors associated with international
operations, including changes in foreign currency exchange rates and
uncertainties relative to regional economic circumstances, 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.
11
<PAGE> 13
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 denominated 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 guarantee 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.
Our Quarterly Results May Vary
The results of our operations have been, and can be expected to be, subject
to quarterly fluctuations. Our quarterly results can fluctuate as a result
of a number of factors, such as (1) the timing of start-up expenses for the
new offices we open; (2) the completion of any of our acquisitions; (3) the
completion or commencement of significant contracts; (4) changes in the mix
of services we offer to our clients; and (5) foreign exchange rate
fluctuations.
Because of these factors, we believe that you should not rely on quarterly
comparisons of our financial results as an indication of our future
performance.
We May Become Subject to Risks Applicable to PMSI and ENVOY
If we successfully complete the pending mergers with either PMSI or ENVOY,
we will become subject to the risks applicable to their businesses. These
risks are not described in this prospectus. You may learn more about those
companies, and the risk factors associated with their operations, by
obtaining copies of the reports and information which PMSI and ENVOY each
file with the SEC. Copies of these materials are
12
<PAGE> 14
available at the SEC's reference room in Washington D.C. or on the SEC's
web site at http://www.sec.gov.
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 seven
different companies, including Crossbox, Ltd., ClinData International
(Proprietary) Limited, Data Analysis Systems, Inc., Simirex, Inc., The Royce
Consultancy plc, QED International, Inc, and H2V S.A., and when we acquired
certain business assets from Richard J. Fordham. 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 as of October 14, 1998.
<TABLE>
<CAPTION>
Shares Beneficially Shares Shares Beneficially
Owned Prior Being Owned After
Name To Offering(1) Offered Offering(1)
- ---- --------------------------- ------- -------------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Former Crossbox, Ltd. Shareholders
Michael F. Parker (2)............................ 23,581 * 7,070 16,511 *
Georgiana W. Bronfman (3)........................ 23,581 * 7,070 16,511 *
Hampshire Investment Company (4)................. 23,581 * 7,000 16,581 *
Former ClinData International (Proprietary) Limited Shareholders
Hermanus G. Luus (5)............................. 41,293 * 41,293 0 *
Robert Schall (6)................................ 41,293 * 41,293 0 *
Theodorus P. Erasmus(7).......................... 41,293 * 41,293 0 *
Former Data Analysis Systems, Inc. Shareholders
James N. Arvesen (8)............................. 85,320 * 15,000 70,320 *
Richard W. Johnston (9).......................... 85,320 * 9,000 76,320 *
Aditya K. Jha (10)............................... 41,429 * 16,000 25,429 *
David L. Schellenberg (11)....................... 41,019 * 5,000 36,019 *
Walter J. Farrar (12)............................ 19,738 * 8,880 10,858 *
Stephen A LoSardo (13)........................... 19,738 * 9,184 10,554 *
Cynthia K. Yule (14)............................. 1,903 * 950 953 *
Sharon L. Behrends (15).......................... 869 * 434 435 *
John L. Badolato (16)............................ 7,662 * 3,831 3,831 *
David R. Stokar (17)............................. 3,576 * 1,788 1,788 *
Former Simirex, Inc. Shareholders
Peter Bernardo (18).............................. 383,273 * 63,240 256,793 *
Loretta Bernardo (19)............................ 383,273 * 63,240 256,793 *
Former Royce Consultancy PLC Shareholders
Harold W. Clark(20).............................. 581,170 * 581,170 0 *
Ian C. Hogan (21)................................ 83,024 * 83,024 0 *
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
Shares Beneficially Shares Shares Beneficially
Owned Prior Being Owned After
Name To Offering(1) Offered Offering(1)
- ---- --------------------------- ------- -------------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Former QED International, Inc. Shareholders
Richard Johnson, M.D (22)........................ 392,640 * 129,571 263,069 *
Robert Blink (23)................................ 130,880 * 43,190 87,690 *
Former H2V S.A. Shareholders
Alain Volle (24)................................. 63,070 * 22,070 41,000 *
Henri Vincent (25)............................... 7,403 * 2,590 4,813 *
Pierre Henriot (26).............................. 7,403 * 2,590 4,813 *
Former Owner of certain business assets
Richard J. Fordham............................... 4,013 * 4,013 0 *
</TABLE>
- --------------------
* Less than one percent
(1) Based on 76,765,856 shares of Common Stock outstanding as of September 30,
1998, and the same number of shares outstanding after the offering. Pursuant to
the rules of the Commission, certain shares of the Common Stock that a person
has the right to acquire within 60 days pursuant to the exercise of stock
options are deemed to be outstanding for the purpose of computing the percentage
ownership of such person but are not deemed outstanding for the purpose of
computing the percentage ownership of any other person.
(2) Includes 2,358 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(3) Includes 2,358 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(4) Includes 2,358 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(5) Includes 4,129 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(6) Includes 4,129 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(7) Includes 4,129 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(8) Includes 8,532 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow. Dr. Arvesen is President and
a director of Innovex DAS, Inc., a wholly-owned subsidiary of Quintiles.
(9) Includes 8,532 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow. Mr. Johnston is Vice
President, Operations and a director of Innovex DAS, Inc., a wholly-owned
subsidiary of Quintiles.
15
<PAGE> 17
(10) Includes 4,142 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow. Mr. Jha is Vice President,
International of Innovex DAS, Inc., a wholly-owned subsidiary of Quintiles.
(11) Includes 4,101 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow. Mr. Schellenberg is Vice
President, Market Research of Innovex DAS, Inc., a wholly-owned subsidiary of
Quintiles.
(12) Includes 1,973 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow. Mr. Farrar is Vice President,
Software Development of Innovex DAS, Inc., a wholly-owned subsidiary of
Quintiles.
(13) Includes 1,973 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow. Mr. LoSardo is Vice
President, Advanced Technologies of Innovex DAS, Inc., a wholly-owned subsidiary
of Quintiles.
(14) Includes 190 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(15) Includes 86 shares held in escrow pursuant to the terms of the acquisition,
which escrowed shares may be sold only upon distribution to the selling
shareholder under the terms of the escrow.
(16) Includes 766 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(17) Includes 357 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(18) Includes 172,473 shares acquired in connection with the acquisition which
are held by Mr. Bernardo's wife, Loretta Bernardo. Also includes 38,327 shares
held in escrow pursuant to the terms of the acquisition, which escrowed shares
may be sold only upon distribution to Mr. Bernardo and Loretta Bernardo under
the terms of the escrow. In the offering, Mr. Bernardo and Loretta Bernardo each
are selling 63,240 shares. Mr. Bernardo is Chief Operating Officer and a
director of Simirex, Inc. and is Vice President and a director of Simirex
International, Ltd., both wholly-owned subsidiaries of Quintiles.
(19) Includes 172,473 shares acquired in connection with the acquisition which
are held by Mrs. Bernardo's husband, Peter Bernardo. Includes 38,327 shares held
in escrow pursuant to the terms of the acquisition, which escrowed shares may be
sold only upon distribution to Mrs. Bernardo and Peter Bernardo under the terms
of the escrow. In the offering, Peter Bernardo and Mrs. Bernardo each are
selling 63,240 shares. Mrs. Bernardo is Senior Director and Chief Financial
Officer and a director of Simirex, Inc. and is President and Treasurer and a
director of Simirex International, Ltd., both wholly-owned subsidiaries of
Quintiles.
(20) Includes 58,117 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(21) Includes 8,302 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(22) Includes 39,264 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow. Dr. Johnson is President and
serves on the board of directors of QED International, Inc., a wholly-owned
subsidiary of Quintiles.
16
<PAGE> 18
(23) Includes 13,088 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow. Mr. Blink is Vice President
and serves on the board of directors of QED International, Inc., a wholly-owned
subsidiary of Quintiles.
(24) Includes 6,307 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(25) Includes 740 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
(26) Includes 740 shares held in escrow pursuant to the terms of the
acquisition, which escrowed shares may be sold only upon distribution to the
selling shareholder under the terms of the escrow.
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:
17
<PAGE> 19
- a block trade,
- a special offering,
- an exchange distribution or secondary distribution, or
- 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.
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 the 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>
Crossbox, Ltd. May 31, 1999
ClinData International (Proprietary) Limited May 26, 1999 (the date the selling
shareholders' shares become eligible
for resale under Rule 144 of the
Securities Act)
Data Analysis Systems, Inc.* 120 days following the lapse of the pooling
restriction (which is expected to occur in early 1999)
Simirex, Inc.* October 8, 1999
</TABLE>
18
<PAGE> 20
<TABLE>
<CAPTION>
Selling Shareholder Group Termination of Offering
=================================================== =====================================================
<S> <C>
The Royce Consultancy, plc* August 24, 1999 (the date the
selling shareholders' shares become
eligible for resale under Rule 144
of the Securities Act)
QED International, Inc.* October 12, 1999
H2V S.A. October 9, 1999 (the date the selling shareholders'
shares become eligible for resale under Rule 144 of
the Securities Act)
Richard J. Fordham October 31, 1999
</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.
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 on similar terms.
19
<PAGE> 21
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, 1997;
2. Our Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998;
3. Our Current Reports on Form 8-K dated February 2, 1998, February 4,
1998, February 26, 1998, February 26, 1998 (as amended March 20,
1998 on Form 8-K/A), March 20, 1998, April 22, 1998, July 22, 1998,
October 21, 1998, December 16, 1998, December 17, 1998, January 27,
1999 and January 27, 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) 998-2000
You should also note that the SEC considers this prospectus to be part of a
registration statement filed with the SEC (Registration No. 333-65743). Since
this prospectus omits certain portions of the information provided in the
registration statement, we also refer you to that document.
20
<PAGE> 22
================================================================================
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 4,319 shares
of Quintiles stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated financial
statements included in our Current Report on Form 8-K dated January 27, 1999, as
set forth in their report, which is incorporated by reference in this
prospectus. Our consolidated financial statements are incorporated by reference
in reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
21
<PAGE> 23
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.
<TABLE>
<S> <C>
SEC Registration Fee........................................................... $ 15,078.45
Legal Fees and Expenses........................................................ $ 50,000.00
Accounting Fees and Expenses................................................... $ 100,000.00
Printing and Related Expenses.................................................. $ 1,500.00
Miscellaneous Expenses......................................................... $ 5,421.55
-------------
Total................................................................. $ 172,000.00
=============
</TABLE>
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> 24
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.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ----- ----------------------
<S> <C>
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
Crossbox, Ltd selling stockholders
4.05* Terms of registration rights granted by Quintiles to the
ClinData International (Proprietary) Ltd. selling
shareholders
4.06* Terms of registration rights granted by Quintiles to the
Data Analysis Systems, Inc. selling shareholders
</TABLE>
II-2
<PAGE> 25
<TABLE>
<S> <C>
4.07* Terms of registration rights granted by Quintiles to the
Simirex, Inc. selling shareholders
4.08* Terms of registration rights granted by Quintiles to the
Royce Consultancy, plc selling shareholders
4.09* Terms of registration rights granted by Quintiles to the QED
International, Inc. selling shareholders
4.10* Terms of registration rights granted by Quintiles to the H2V
S.A. selling shareholders
4.11* Terms of registration rights granted by Quintiles to Richard
J. Fordham
5.01 Opinion of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. regarding legality of securities being
registered
23.01 Consent of Ernst & Young LLP
23.02 Consent of PricewaterhouseCoopers LLP
23.03 Consent of KPMG
23.04 Consent of PricewaterhouseCoopers LLP
23.05 Consent of Ernst & Young LLP
23.06 Consent of Arthur Andersen LLP
23.07 Consent of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. (included in Exhibit 5.01 hereto)
24.01* Power of Attorney
</TABLE>
---------------
* Previously filed
(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 Registration Statement on Form S-3,
as amended, (Registration No. 333-19009) as filed with the
Commission, effective February 21, 1997, 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
II-3
<PAGE> 26
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.
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> 27
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 Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Durham, State of North
Carolina, on Janaury 27, 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> 28
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement has been signed by the following
persons as of January 27, 1999 in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/ Dennis B. Gillings Chairman of the Board of Directors and Chief Executive Officer
- -------------------------------------
Dennis B. Gillings, Ph.D.
* President, Chief Operating Officer and Director
- -------------------------------------
Santo J. Costa
/s/ Rachel R. Selisker Chief Financial Officer, Executive Vice President Finance,
- ------------------------------------- and Director (Principal accounting and financial officer)
Rachel R. Selisker
* Director
- -------------------------------------
Robert C. Bishop, Ph.D.
* Director
- -------------------------------------
E.G. F. Brown
* Director
- -------------------------------------
Vaughn D. Bryson
* Director
- -------------------------------------
Chester W. Douglass, Ph.D.
* Director
- -------------------------------------
Lawrence S. Lewin
* Director
- -------------------------------------
Arthur M. Pappas
* Director
- -------------------------------------
Ludo J. Reynders, Ph.D
* Director
- -------------------------------------
Eric J. Topol, M.D.
* Director
- -------------------------------------
Virginia V. Weldon, M.D.
* Director
- -------------------------------------
David F. White
* By: /s/ Rachel R. Selisker * By: /s/ Dennis B. Gillings
------------------------------ -------------------------------
Rachel R. Selisker Dennis B. Gillings, Ph.D.
</TABLE>
II-6
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
<S> <C>
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
Crossbox, Ltd selling stockholders
4.05* Terms of registration rights granted by Quintiles to the
ClinData International (Proprietary) Ltd. selling
shareholders
4.06* Terms of registration rights granted by Quintiles to the
Data Analysis Systems, Inc. selling shareholders
4.07* Terms of registration rights granted by Quintiles to the
Simirex, Inc. selling shareholders
4.08* Terms of registration rights granted by Quintiles to the
Royce Consultancy, plc selling shareholders
4.09* Terms of registration rights granted by Quintiles to the QED
International, Inc. selling shareholders
4.10* Terms of registration rights granted by Quintiles to the H2V
S.A. selling shareholders
4.11* Terms of registration rights granted by Quintiles to Richard
J. Fordham
5.01 Opinion of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. regarding legality of securities being
registered
23.01 Consent of Ernst & Young LLP
23.02 Consent of PricewaterhouseCoopers LLP
23.03 Consent of KPMG
23.04 Consent of PricewaterhouseCoopers LLP
23.05 Consent of Ernst & Young LLP
23.06 Consent of Arthur Andersen LLP
23.07 Consent of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P. (included in Exhibit 5.01 hereto)
24.01* Power of Attorney
</TABLE>
---------------
* Previously filed
(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 Registration Statement on Form S-3,
as amended, (Registration No. 333-19009) as filed with the
Commission, effective February 21, 1997, 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
SMITH, ANDERSON, BLOUNT
DORSETT, MITCHELL & JERNIGAN, L.L.P.
OFFICES MAILING ADDRESS
2500 FIRST UNION CAPITOL CENTER P.O. BOX 2611
RALEIGH, NORTH CAROLINA 27601 RALEIGH, NORTH CAROLINA
27602-2611
January 27, 1999
TELEPHONE: (919) 821-1220
FACSIMILE: (919) 821-6800
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 1,209,784 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
January 27, 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 AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 2 to the Registration Statement (Form S-3, No. 333-65743) and related
Prospectus of Quintiles Transnational Corp. for the registration of 1,209,784
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
September 9, 1998, with respect to the consolidated financial statements of
Quintiles Transnational Corp., included in its Current Report (Form 8-K) dated
January 27, 1999 filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Raleigh, North Carolina
January 26, 1999
<PAGE> 1
EXHIBIT 23.02
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Quintiles Transnational Corp. ("Quintiles") on Form S-3 (Registration No.
333-65743)of our report dated May 15, 1996, on our audits of the consolidated
financial statements of BRI International, Inc. as of November 30, 1995 and
1994, and for the years then ended, which report is included as an exhibit to
Quintiles' Current Report on Form 8-K dated January 27, 1999.
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
January 27, 1999
<PAGE> 1
EXHIBIT 23.03
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Amendment No. 2 to the
Registration Statement on Form S-3 (File No. 333-65743) of Quintiles
Transnational Corp. of our report dated July 24, 1996, with respect to the
audited combined financial statements of the Innovex Companies for the year
ended March 31, 1996, which report appears in the Form 8-K of Quintiles
Transnational Corp. dated January 27, 1999.
/s/ KPMG
Reading, England
January 27, 1999
<PAGE> 1
EXHIBIT 23.04
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Quintiles Transnational Corp. ("Quintiles") on Form S-3 (File No.
333-65743) of our report dated August 14, 1998, except for Note 21, as to which
the date is September 2, 1998, on our audits of the consolidated financial
statements of Pharmaceutical Marketing Services Inc. and Subsidiaries as of June
30, 1998 and 1997 and for the years ended June 30, 1998, 1997 and 1996, which
report is included in Quintiles Current Report on Form 8-K, dated January 27,
1999.
/s/ PricewaterhouseCoopers LLP
Stamford, Connecticut
January 27, 1999
<PAGE> 1
EXHIBIT 23.05
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 333-65743) of Quintiles Transnational Corp. of our report dated March 5,
1998, except for the business combinations accounted for as poolings of
interests referred to in Notes 1 and 4, as to which the date is April 29, 1998;
the restatement for the beneficial conversion feature referred to in Note 2, as
to which the date is June 26, 1998; the restatement related to acquired
in-process technology referred to in Note 2 and the subsequent event referred to
in Note 22, as to which the date is November 9, 1998, with respect to the
consolidated financial statements of ENVOY Corporation included in Quintiles
Transnational Corp.'s Current Report on Form 8-K filed with the Securities and
Exchange Commission on January 27, 1999.
/s/ Ernst & Young LLP
Nashville, Tennessee
January 27, 1999
<PAGE> 1
EXHIBIT 23.06
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3, as amended, by Quintiles
Transnational Corp., of our report dated February 11, 1998 relating to the
financial statements of Professional Office Services, Inc. as of December 31,
1997 and 1996 and for each of the three years in the period ended December 31,
1997 and our report dated January 30, 1998 relating to the financial statements
of XpiData, Inc. as of December 31, 1997 and 1996 and for each of the three
years in the period ended December 31, 1997 included in Quintiles Transnational
Corp.'s Current Report on Form 8-K and to all references to our Firm included in
this registration statement.
/s/ ARTHUR ANDERSEN LLP
Nashville, Tennessee
January 26, 1999
