-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DR8sV/u5yQAmiE++6H6Y7SQDgiYCfdQNKvs464SfT8B/G+CzLYsNY+HtQlMPegGH iF0UieZ77dkM4AMGVvLWqQ== 0000950144-97-006764.txt : 19970612 0000950144-97-006764.hdr.sgml : 19970612 ACCESSION NUMBER: 0000950144-97-006764 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970610 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUINTILES TRANSNATIONAL CORP CENTRAL INDEX KEY: 0000919623 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 561714315 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-28919 FILM NUMBER: 97622122 BUSINESS ADDRESS: STREET 1: 4709 CREEKSTONE DR STREET 2: STE 300 CITY: DURHAM STATE: NC ZIP: 27703-8411 BUSINESS PHONE: 9199412000 MAIL ADDRESS: STREET 1: 4709 CREEKSTONE DR STREET 2: STE 300 CITY: DURHAM STATE: NC ZIP: 27703-8411 S-3 1 QUINTILES TRANSNATIONAL CORP S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1997 REGISTRATION NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- QUINTILES TRANSNATIONAL CORP. (Exact name of registrant as specified in its charter) NORTH CAROLINA 56-1714315 (State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.) organization)
4709 CREEKSTONE DRIVE RIVERBIRCH BUILDING, SUITE 300 DURHAM, NORTH CAROLINA 27703-8411 (919) 941-2000 (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 300 DURHAM, NORTH CAROLINA 27703-8411 (919) 941-2000 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------- COPIES TO: GERALD F. ROACH, ESQ. CHRISTOPHER B. CAPEL, 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
=========================================================================================================================== PROPOSED PROPOSED TITLE EACH CLASS MAXIMUM MAXIMUM AMOUNT OF OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION TO BE REGISTERED BE REGISTERED PER SHARE* OFFERING PRICE* FEE - --------------------------------------------------------------------------------------------------------------------------- Common Stock, $.01 par value per share.... 1,214,305 $60.75 $73,769,028 $22,354.25 ===========================================================================================================================
* 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 June 3, 1997 in accordance with Rule 457(c). 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. ================================================================================ 2 PROSPECTUS - ------------------- QUINTILES TRANSNATIONAL CORP. 1,214,305 SHARES COMMON STOCK, PAR VALUE $.01 PER SHARE --------------------- The shares offered hereby (the "Shares") consist of 1,214,305 shares of common stock, par value $.01 per share (the "Common Stock"), of Quintiles Transnational Corp., a North Carolina corporation ("Quintiles" or the "Company"), which are owned by the selling stockholders listed herein under "Selling Stockholders" (collectively, the "Selling Stockholders"). The Shares were acquired by the Selling Stockholders pursuant to business combinations between the Company and (i) Innovex Limited ("Innovex"); and (ii) Butler Communications Inc. (and companies affiliated with Butler Communications Inc.) ("Butler") (collectively, the "Transactions"). The Common Stock issued in the Transactions to the Selling Stockholders was issued pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). In accordance with the terms of the Transactions, the Company has agreed to register the Shares for resale by such Selling Stockholders. SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE COMMON STOCK. The Shares may be offered from time to time by the Selling Stockholders after the date of this Prospectus. The Company shall pay all expenses of registration incurred in connection with this offering, except that each Selling Stockholder shall pay any commissions, discounts, or other fees payable to broker-dealers in connection with any sale of the Shares, as well as legal and accounting fees and expenses incurred by the Selling Stockholders. None of the Shares have been registered prior to the filing of the Registration Statement of which this Prospectus is a part. The Company will not receive any of the proceeds from the sale of the Shares by the Selling Stockholders. The Selling Stockholders have not advised Quintiles of any specific plans for the distribution of the Shares covered by this Prospectus, but it is anticipated that the Shares will be sold from time to time primarily in transactions (which may include block transactions) on the Nasdaq National Market of The Nasdaq Stock Market (the "Nasdaq National Market") at the market price then prevailing, although sales may also be made in negotiated transactions or otherwise. The Selling Stockholders and the brokers and dealers through whom sales of the Common Stock may be made may be deemed to be "underwriters" within the meaning of the Securities Act, and their commissions or discounts and other compensation may be regarded as underwriters' compensation. See "Plan of Distribution." The Company's Common Stock is quoted on the Nasdaq National Market under the symbol "QTRN." On June , 1997, the last reported sale price of the Common Stock was $ per share. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------- The date of this Prospectus is June , 1997. 3 AVAILABLE INFORMATION Quintiles is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by Quintiles may be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's regional offices located at 7 World Trade Center, New York, New York 10048 and Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and copies of such materials may be obtained from the Public Reference Section of the Commission, Washington, D.C. 20549, at prescribed rates. Copies of such materials may also be obtained from the web site that the Commission maintains at http://www.sec.gov. Quotations relating to Quintiles' Common Stock appear on the Nasdaq National Market and such reports and other information concerning Quintiles also can be inspected and copied at the offices of The Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C. 20006-1506. The Company has filed with the Commission a Registration Statement on Form S-3 (herein, together with all amendments and exhibits, referred to as the "Registration Statement") under the Securities Act with respect to the Shares offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement, certain portions of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission (File No. 340-23520) pursuant to the Exchange Act are incorporated herein by reference: (1) Quintiles' Annual Report on Form 10-K for the fiscal year ended December 31, 1996; (2) Quintiles' Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1997; (3) Quintiles' Current Reports on Form 8-K dated February 7, 1997 and March 5, 1997; (4) the description of Quintiles' Common Stock contained in its Registration Statement on Form 8-A as filed with the Commission on April 11, 1994; and (5) all other documents filed by Quintiles pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Shares. Any statement contained in a document, all or a portion of which is incorporated or deemed to be incorporated by reference herein, shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified shall not be deemed to constitute a part of this Prospectus except as so modified, and any statement so superseded shall not be deemed to constitute part of this Prospectus. The Company will provide without charge to each person, including a beneficial owner, to whom this Prospectus is delivered, upon written or oral request of any such person, a copy of any and all of the documents which are incorporated herein by reference, other than exhibits to such information (unless such exhibits are specifically incorporated by reference into such documents). Requests for such information should be directed to the Company, 4709 Creekstone Drive, Riverbirch Building, Suite 300, Durham, North Carolina, 27703-8411, Attention: Corporate Secretary, telephone number (919) 941-2000. 2 4 FORWARD LOOKING STATEMENTS Information incorporated by reference herein contains various "forward looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which statements represent the Company's judgment concerning the future and are subject to risks and uncertainties that could cause the Company's actual operating results and financial position to differ materially. Such forward looking statements can be identified by the use of forward looking terminology, such as "may," "will," "expect," "anticipate," "estimate," or "continue" or the negative thereof or other variations thereof or comparable terminology. The Company cautions that any such forward looking statements are further qualified by important factors that could cause the Company's actual operating results and financial position to differ materially from the forward looking statements, including without limitation considerations described in connection with specific forward looking statements, factors set forth in this Prospectus under the caption "Risk Factors," and other cautionary elements specified in documents incorporated by reference in this Prospectus. THE COMPANY Quintiles is a leading provider of full-service contract research, sales and marketing services to the global pharmaceutical, biotechnology and medical device industries. Quintiles, through the use of its extensive information technology capabilities, provides a broad range of fully-integrated contract services in order to accelerate the time from discovery to peak market acceptance of a new therapy by offering traditional contract research services as well as contract sales and marketing services. In addition, Quintiles provides health economics and healthcare policy consulting and disease and health information management services to support the growing information needs of the healthcare industry. The Company's principal executive offices are located at 4709 Creekstone Drive, Riverbirch Building, Suite 300, Durham, North Carolina 27703-8411 and its telephone number is (919) 941-2000. RISK FACTORS In addition to the other information contained or incorporated by reference in this Prospectus, prospective purchasers should consider the following factors carefully in evaluating the Company and its business. See also "Forward Looking Statements." DEPENDENCE ON CERTAIN INDUSTRIES AND CLIENTS Quintiles' revenues are highly dependent upon the research and development and sales and marketing expenditures of the pharmaceutical and biotechnology industries. Quintiles has benefited to date from the growing tendency of pharmaceutical and biotechnology companies to engage independent outside organizations to conduct large clinical research and sales and marketing projects. Quintiles' operations could be materially and adversely affected by a general economic decline in these industries or by any reduction in the outsourcing of development or sales and marketing expenditures. Quintiles has in the past derived, and may in the future derive, a significant portion of its net revenue from a relatively limited number of major projects or clients. In 1996, ten clients accounted for approximately 48% of Quintiles' consolidated net revenue. As pharmaceutical companies continue to outsource large projects and studies to fewer full-service global providers, the concentration of business could increase. Quintiles is likely to experience such concentration in 1997 and in future years. The loss of any such client could materially and adversely affect Quintiles. MANAGEMENT OF GROWTH Quintiles has experienced rapid growth over the past 10 years. Quintiles believes that its sustained growth places a strain on operational, human and financial resources. In order to manage its growth, Quintiles must continue to improve its operating and administrative systems and to attract and retain qualified management, professional, scientific and technical personnel. Foreign operations may involve the additional risks of assimilating differences in foreign business practices, hiring and retaining qualified personnel, and overcoming language barriers. Quintiles has a transnational organizational structure, comprised of three operating divisions performing 3 5 complementary functions with a holding company performing management functions. While this transnational structure has successfully supported Quintiles' growth to date, Quintiles recently has completed a number of acquisitions, and there can be no assurance that this structure will continue to be effective. Failure to manage growth effectively could have a material adverse effect on Quintiles. ACQUISITION RISKS Acquisitions involve numerous risks, including difficulties and expenses incurred in connection with the acquisition and the assimilation of the operations and services of the acquired companies, the diversion of management's attention from other business concerns and the potential loss of key employees of the acquired companies. Acquisitions of foreign companies also may involve the additional risks of assimilating differences in foreign business practices and overcoming language barriers. Since February 1996, Quintiles has completed six acquisitions, both within the United States and internationally. There can be no assurance that Quintiles' past and any future acquisitions will be successfully integrated into its operations. Quintiles reviews many acquisition candidates in the ordinary course of business, and Quintiles continually is evaluating new acquisition opportunities. Given the CRO industry consolidation which is occurring, Quintiles expects to continue to evaluate and compete for suitable acquisition candidates. There can be no assurance that Quintiles will successfully complete future acquisitions nor that acquisitions, if completed, will contribute favorably to Quintiles' operations and future financial condition. Although Quintiles performs due diligence investigations on each company or business it seeks to acquire, there may be liabilities which Quintiles fails or is unable to discover for which Quintiles, as a successor owner, may be liable. Quintiles generally seeks to minimize its exposure to such liabilities by obtaining indemnification from each seller, which may be supported by deferring payment of a portion of the purchase price. However, there is no assurance that such indemnifications, even if obtainable, enforceable and collectible (as to which there also is no assurance), will be sufficient in amount, scope or duration to fully offset the potential liabilities arising from the acquisitions. RISKS RELATING TO CONTRACT SALES SERVICES Outsourced contract sales services is a relatively new industry outside the U.K. Quintiles believes that the contract sales industry emerged in the 1980s, primarily in the U.K., because of regulatory cost containment pressure on pharmaceutical companies. As a result, large pharmaceutical companies began to outsource their sales and marketing activities incident to product launch. There is a relatively low level of market penetration for outsourced sales and marketing services in most other countries, including the United States. As such, companies in this industry are subject to all of the risks inherent in a new or emerging industry, including an inability to attract and retain clients, changes in the regulatory regime, an absence of an established earnings history, the availability of adequately trained sales representatives and additional and unforeseen costs and expenses. There can be no assurance that Quintiles will be able to market successfully its contract sales and marketing services outside the U.K. COMPETITION; INDUSTRY CONSOLIDATION The market for Quintiles' contract research services is highly competitive, and Quintiles competes against traditional CROs, the in-house research and development departments of pharmaceutical companies, as well as universities and teaching hospitals. In sales and marketing services, Quintiles competes against the in-house sales and marketing departments of pharmaceutical companies and small local contract sales organizations in each country in which it operates. Quintiles also competes against consulting firms offering healthcare consulting services, including boutique firms specializing in the healthcare industry and the healthcare departments of large firms. Expansion by these competitors into other areas in which Quintiles operates could affect Quintiles' competitive position. Increased competition may lead to price and other forms of competition that may affect Quintiles' margins. Consolidation within the pharmaceutical industry, as well as a trend by pharmaceutical companies to limit outsourcing to fewer organizations, has heightened the competition for contract research services. As a result, consolidation also has occurred among the providers of contract research services, and several large, full-service providers have emerged, including Quintiles. If these consolidation trends continue, 4 6 they may result in greater competition among the larger contract research providers for clients and acquisition candidates. LOSS OR DELAY OF LARGE CONTRACTS; FIXED PRICE NATURE OF CONTRACTS Most of Quintiles' contracts are terminable upon 15-90 days' notice by the client. Although the contracts typically provide for payment of certain fees for winding down the study and, in some cases, a termination fee, the loss or delay of a large contract or the loss or delay of multiple contracts could adversely affect Quintiles' future net revenue and profitability. Contracts may be terminated for a variety of reasons, including the failure of a product to satisfy safety requirements, unexpected or undesired results of the product, the client's decision to forego a particular study or insufficient patient enrollment or investigator recruitment. Quintiles contracts with investigators who undertake to recruit large numbers of patients in many of its studies. There can be no assurance that Quintiles will always be able to satisfy recruitment targets, particularly in large studies for which there is little precedent. In addition, most of Quintiles' contracts for the provision of its services are fixed price or fee-for-service subject to a cap. Since Quintiles' contracts are predominantly structured in this manner, Quintiles bears the risk of cost overruns. Underpricing of contracts or significant cost overruns could have a material adverse effect on Quintiles. DEPENDENCE ON PERSONNEL Quintiles relies on a number of key executives, including Dennis B. Gillings, Ph.D., its Chairman of the Board of Directors and Chief Executive Officer. Quintiles maintains key man life insurance on Dr. Gillings in the amount of $3 million. The loss of the services of any key executive could have a material adverse effect on Quintiles. In addition, Quintiles' performance depends on its ability to attract and retain qualified management and professional, scientific and technical operating staff, as well as its ability to recruit qualified representatives for its contract sales services. There can be no assurance that Quintiles will be able to continue to attract and retain qualified personnel. POTENTIAL LIABILITY In connection with its provision of contract research services, Quintiles contracts 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. Although Quintiles does not believe it is legally accountable for the medical care rendered by third party investigators, it is possible that Quintiles could be held liable for the claims and expenses arising from any professional malpractice of the investigators with whom it contracts or in the event of personal injury to or death of persons participating in clinical trials. Quintiles also could be held liable for errors or omissions in connection with the services it performs. In addition, as a result of its Phase I clinical trials facilities, Quintiles could be liable for the general risks associated with a Phase I facility including, but 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. Quintiles believes that its risks are reduced by contractual indemnification provisions with clients and investigators, insurance maintained by clients and investigators and by Quintiles, various regulatory requirements, including the use of institutional review boards and the procurement of each volunteer's informed consent to participate in the study. The contractual indemnifications generally do not protect Quintiles against certain of its own actions such as negligence. The contractual arrangements are subject to negotiation with clients and the terms and scope of such indemnification vary from client to client and from trial to trial. The financial performance of these indemnities is not secured. Therefore, Quintiles bears the risk that the indemnifying party may not have the financial ability to fulfill its indemnification obligations. Quintiles maintains professional liability insurance that covers worldwide territories in which Quintiles currently does business and includes drug safety issues as well as data processing errors and omissions. There can be no assurance that Quintiles will be able to maintain such insurance coverage on terms acceptable to Quintiles. Quintiles could be materially and adversely affected if it were required to pay damages or bear the costs of defending any claim outside the scope of or in excess of a contractual indemnification provision 5 7 or beyond the level of insurance coverage or in the event that an indemnifying party does not fulfill its indemnification obligations. DEPENDENCE ON GOVERNMENT REGULATION Quintiles' contract research business has benefited from the extensive governmental regulation of the drug development process, particularly in the United States. In Europe, the general trend has been towards establishing common standards for clinical testing of new drugs, leading to changes in the various requirements currently imposed by each country. Quintiles believes that the level of regulation is generally less burdensome outside the United States. From time to time legislation is introduced in the U.S. Congress to substantially modify regulations administered by the Food and Drug Administration ("FDA") governing the drug approval process. Changes in regulation in the United States or elsewhere, including mandatory substitution of generic drugs for patented drugs, relaxation in the scope of regulatory requirements or the introduction of simplified drug approval procedures, could decrease the business opportunities available to Quintiles. In addition, the failure on the part of Quintiles 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 Quintiles. UNCERTAINTY IN HEALTHCARE INDUSTRY AND POSSIBLE HEALTHCARE REFORM The healthcare industry is subject to changing political, economic and regulatory influences that may affect the pharmaceutical, biotechnology and medical device industries. Numerous governments have undertaken efforts to control growing healthcare costs through legislation, regulation and voluntary agreements with medical care providers and pharmaceutical companies. Implementation of government healthcare reform may adversely affect research and development expenditures by pharmaceutical, biotechnology and medical device companies which could decrease the business opportunities available to Quintiles. Management is unable to predict the likelihood of healthcare reform legislation being enacted or the effects such legislation would have on Quintiles. EXCHANGE RATE FLUCTUATIONS Approximately 56.5%, 59.2% and 57.0% of Quintiles' net revenue for the years ended December 31, 1996, 1995, and 1994, respectively, were derived from Quintiles' operations outside the United States. Quintiles' operations and financial results could be significantly affected by factors associated with international operations such as changes in foreign currency exchange rates and uncertainties relative to regional economic circumstances, as well as by other risks sometimes associated with international operations. Since the revenue and expenses of Quintiles' foreign operations are generally denominated in local currencies, exchange rate fluctuations between such local currencies and the U.S. dollar will subject Quintiles to currency translation risk with respect to the reported results of its foreign operations. Also, Quintiles may be subject to foreign currency transaction risks when Quintiles' service contracts are denominated in a currency other than the currency in which Quintiles incurs expenses related to such contracts. Quintiles limits its foreign currency transaction risks through exchange rate collars stated in its contracts with clients or Quintiles hedges the transaction risk with foreign exchange contracts or options. There can be no assurance that Quintiles will not experience fluctuations in financial results from Quintiles' operations outside the United States, and there can be no assurance Quintiles will be able to contractually or otherwise favorably reduce its currency transaction risk associated with its service contracts. VARIATION IN QUARTERLY OPERATING RESULTS Quintiles' results of operations have been and can be expected to be subject to quarterly fluctuations. Quarterly results can fluctuate as a result of a number of factors, including the timing of start-up expenses for new offices, acquisitions, the completion or commencement of significant contracts, changes in the mix of services offered and foreign exchange fluctuations. Quintiles believes that quarterly comparisons of its financial results should not be relied upon as an indication of future performance. 6 8 VOLATILITY OF STOCK PRICE The market price of Quintiles' Common Stock has been and may continue to be subject to wide fluctuations in response to variations in operating results from quarter to quarter, changes in earnings estimates by analysts, market conditions in the industry and general economic conditions. USE OF PROCEEDS The Shares being offered hereby are for the account of the Selling Stockholders and the Company is not selling any of the Shares. Accordingly, the Company will not receive any proceeds from the sale of Shares. See "Plan of Distribution." SELLING STOCKHOLDERS The Selling Stockholders are former stockholders of Innovex and Butler that received the Shares in connection with the Transactions. The following table sets forth certain information as of the date of this Prospectus. All of the Shares held by the Selling Stockholders may be sold pursuant to this Prospectus. The Shares are being registered to permit public secondary trading in the Shares and the Selling Stockholders may offer the Shares for resale from time to time. See "Plan of Distribution."
SHARES BENEFICIALLY SHARES SHARES BENEFICIALLY OWNED PRIOR BEING OWNED AFTER TO OFFERING(1) OFFERED OFFERING(1) -------------------- ------- -------------------- NAME NUMBER PERCENT NUMBER PERCENT ---- --------- ------- --------- ------- FORMER INNOVEX STOCKHOLDERS (2) Barrie S. Haigh (3)...................... 4,724,993 13.5 588,916 3,961,078 11.3 Stella D. Haigh (4)...................... 4,724,993 13.5 62,815 3,961,078 11.3 Barrie Haigh Children's Settlement No. 1...................................... 131,092 * 31,092 100,000 * Barrie Haigh Children's Settlement No. 2...................................... 181,092 * 81,092 100,000 * Paul Knott Trust No. 1 (5)............... 28,503 * 28,503 0 - Paul Knott Trust No. 2 (5)............... 28,503 * 28,503 0 - Lloyds Development Capital Limited....... 127,204 * 127,204 0 - David Stack (6).......................... 31,923 * 11,971 19,952 * David Stack Family Limited Partnership (6).................................... 8,000 * 8,000 0 - David F. White (7)....................... 89,981 * 39,904 50,077 * David F. White Trust (7)................. 11,971 * 11,971 0 - FORMER BUTLER STOCKHOLDERS (8) Jean B. Bender........................... 14,287 * 14,287 0 - Robert B. Butler......................... 47,623 * 47,623 0 - Sally T. Butler.......................... 47,623 * 47,623 0 - Lani M. Hashimoto........................ 7,144 * 7,144 0 - Penny E. McCann.......................... 23,812 * 23,812 0 - Bryan P. McIntyre........................ 35,717 * 35,717 0 - Sonja M. Stephenson...................... 14,287 * 14,287 0 - Robert F. Wolfe, Jr...................... 23,812 * 23,812 0 -
- --------------- * Less than one percent (1) Based on 35,094,171 shares of Common Stock outstanding as of June 9, 1997 and the same number of shares outstanding after the offering. Pursuant to the rules of the Commission, certain shares of the Common Stock which 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) The stockholders listed under this heading received shares on November 29, 1996 in connection with a share exchange with Innovex. 7 9 (3) Includes 462,185 shares held by Mr. Haigh's wife Stella D. Haigh, 131,092 shares held by Barrie Haigh Children's Settlement No. 1 and 181,092 shares held by Barrie Haigh Children's Settlement No. 2. Pursuant to this Prospectus, Mr. Haigh may sell 588,916 shares, Stella D. Haigh may sell 62,815 shares, Barrie Haigh Children's Settlement No. 1 may sell 31,092 shares and Barrie Haigh Children's Settlement No. 2 may sell 81,092 shares. Mr. Haigh is Vice Chairman of the Board of Directors and Chief Customer Officer of Quintiles. Mr. Haigh also serves on the Nominations Committee of Quintiles' Board of Directors. (4) Includes 3,950,624 shares held by Mrs. Haigh's husband, Barrie S. Haigh. Also includes 131,092 shares held by Barrie Haigh Children's Settlement No. 1 and 181,092 shares held by Barrie Haigh Children's Settlement No. 2. Pursuant to this Prospectus, Mrs. Haigh may sell 62,815, Barrie Haigh Children's Settlement No. 1 may sell 31,092 shares and Barrie Haigh Children's Settlement No. 2 may sell 81,092 shares. (5) Dr. Paul Knott, Senior Vice-President, International Strategic Development and Director of Quintiles is a beneficiary and serves as a trustee of the trusts selling shares pursuant to this Prospectus. Dr. Knott also owns in his own name 24,549 shares. (6) Includes 19,952 shares subject to presently exercisable stock options and 8,000 shares held by the David Stack Family Limited Partnership. Mr. Stack is the President of Innovex (North America) Inc., a wholly-owned subsidiary of Quintiles. (7) Includes 10,672 shares held by Mr. White's wife, and 11,971 shares held in a trust of which Mr. White is a trustee. Mr. White is Chief Executive Officer of the Innovex Division of Quintiles. Pursuant to this Prospectus, Mr. White may sell 27,933 shares and the David White Trust may sell 11,971 shares. (8) The stockholders listed under this heading received shares on June 2, 1997 in connection with the Company's acquisition of Butler. 8 10 PLAN OF DISTRIBUTION The Shares offered hereby by the Selling Stockholders may be sold from time to time by the Selling Stockholders, or by pledgees, donees, transferees or other successors in interest. The decision to offer and sell the Shares, and the timing and amount of any offers or sales that are made, is and will be within the sole discretion of the Selling Stockholders. The Shares may be sold from time to time on the Nasdaq National Market, or otherwise at prices and at terms then prevailing, or in negotiated transactions. The Shares may be sold by one or more of the following methods, without limitation: (a) a block trade in which the broker-dealer so engaged will attempt to sell the Shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; (b) purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this Prospectus; (c) ordinary brokerage transactions and transactions in which the broker solicits purchasers; and (d) face-to-face transactions between the Selling Stockholders and purchasers without a broker-dealer. In effecting sales, brokers or dealers engaged by the Selling Stockholders may arrange for other brokers or dealers to participate. Such brokers or dealers may receive commissions or discounts from the Selling Stockholders in amounts to be negotiated immediately prior to the sale. Such brokers or dealers and any other participating brokers or dealers may be deemed to be "underwriters" within the meaning of the Securities Act, in connection with such sales. In addition, any securities covered by this Prospectus that qualify for sale pursuant to Rule 144 under the Securities Act might be sold under Rule 144 rather than pursuant to this Prospectus. Upon the Company being notified by a Selling Stockholder that any material arrangement has been entered into with a broker or dealer for the sale of Shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplemented Prospectus will be filed, if required, pursuant to Rule 424(c) under the Securities Act, setting forth: the name of each such broker-dealer; the number of Shares involved; the price at which such Shares were sold; the commissions paid or discounts or concessions allowed to such broker-dealer(s); where applicable, that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this Prospectus, as supplemented; and other facts material to the transaction. The Company anticipates that the Registration Statement shall remain effective until the earlier of (i) the date on which all of the Shares included in the Registration Statement have been distributed to the public; and (ii) as to the Shares offered by the Selling Stockholders who are former stockholders of Innovex, until December 1, 1997, and as to the remaining Selling Stockholders until June 1, 1998. In accordance with the terms of the Innovex transaction, the Selling Stockholders who are former stockholders of Innovex are limited to offering no more than 500,000 Shares in any 90 day period. Because of the restrictions imposed by pooling of interests accounting rules, and notwithstanding the effectiveness of the Registration Statement, current affiliates of Quintiles, including directors and executive officers (such as certain Innovex Selling Stockholders), and those former Butler stockholders who were affiliates of Butler or who have become affiliates of Quintiles, are prohibited from selling or otherwise reducing their risk relative to the Shares that they hold until Quintiles has published consolidated financial statements covering 30 days combined operations of Quintiles and Butler. The Company shall pay its own legal and accounting fees, all registration and filing fees attributable to the registration of the Shares, all 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 herewith. Each Selling Stockholder shall pay his, her or its own legal and accounting fees and any other expenses incurred by the Selling Stockholder. Any commissions, discounts or other fees payable to broker-dealers in connection with any sale of the Shares shall be borne by the Selling Stockholder selling such Shares. The Company has agreed to indemnify the Selling Stockholders in certain circumstances, against certain liabilities, including liabilities arising under the Securities Act. Each Selling Stockholder has agreed to indemnify the Company and its directors and officers against certain liabilities, including liabilities arising under the Securities Act. There can be no assurance that the Selling Stockholders will sell any or all of the Shares offered by them hereunder. 9 11 LEGAL MATTERS Certain legal matters in connection with this offering will be passed upon for the Company by Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., 2500 First Union Capitol Center, Raleigh, North Carolina 27601. EXPERTS The consolidated financial statements of the Company incorporated herein by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1996 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 10 12 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.
SEC Registration Fee........................................ $22,354.25 Legal Fees and Expenses..................................... $10,000.00 Accounting Fees and Expenses................................ $ 7,500.00 Nasdaq Listing Fee.......................................... $ 4,286.10 Printing and Related Expenses............................... $ 1,500.00 Miscellaneous Expenses...................................... $ 359.65 ---------- Total........................................ $45,000.00 ==========
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 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 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- II-1 13 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, (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(4) -- Registration Rights Agreement dated as of November 29, 1996 among Quintiles and the Shareholders of Innovex 4.05(5) -- Amendment to Registration Rights Agreement filed as Exhibit 4.04 hereto 4.06 -- Terms of registration rights granted by Quintiles to shareholders of Butler 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 Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, (included in Exhibit 5.01 hereto) 24.01 -- Powers of Attorney (included on the signature page hereof)
- --------------- (1) Exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-75766) as filed February 28, 1994 and incorporated herein by reference. (2) Exhibit to the Company's Registration Statement on Form S-3 (Registration No. 333-19009) as filed December 30, 1996 and incorporated herein by reference. (3) Exhibit to the Company's Annual Report on Form 10-K as filed with the Commission on for the fiscal year ended December 31, 1995 and incorporated herein by reference. (4) Exhibit to the Company's Form 8-K dated November 22, 1996, as amended, and incorporated herein by reference. (5) Exhibit to the Company's Form 8-K dated March 5, 1997 and incorporated herein by reference. II-2 14 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 the 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; (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 (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and 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 section 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, each 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. (4) That, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act 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 Securities Act and will be governed by the final adjudication of such issue. II-3 15 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 June 10, 1997. QUINTILES TRANSNATIONAL CORP. By: /s/ DENNIS B. GILLINGS ------------------------------------ Dennis B. Gillings Chairman of the Board of Directors and Chief Executive Officer 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 June 10, 1997 in the capacities indicated.
SIGNATURE TITLE --------- ----- /s/ DENNIS B. GILLINGS Chairman of the Board of Directors and Chief - ----------------------------------------------------- Executive Officer Dennis B. Gillings /s/ BARRIE S. HAIGH Vice Chairman of the Board of Directors and - ----------------------------------------------------- Chief Customer Officer Barrie S. Haigh /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 Director (Principal Rachel R. Selisker accounting and financial officer) /s/ ROBERT C. BISHOP Director - ----------------------------------------------------- Robert C. Bishop /s/ VAUGHN D. BRYSON Director - ----------------------------------------------------- Vaughn D. Bryson /s/ CHESTER W. DOUGLASS Director - ----------------------------------------------------- Chester W. Douglass /s/ JOHN G. FRYER Director - ----------------------------------------------------- John G. Fryer
II-4 16
SIGNATURE TITLE - --------- ----- /s/ PAUL KNOTT Director - ----------------------------------------------------- Paul Knott /s/ LAWRENCE S. LEWIN Director - ----------------------------------------------------- Lawrence S. Lewin /s/ ARTHUR M. PAPPAS Director - ----------------------------------------------------- Arthur M. Pappas /s/ LUDO J. REYNDERS Director - ----------------------------------------------------- Ludo J. Reynders /s/ RICHARD H. THOMPSON Director - ----------------------------------------------------- Richard H. Thompson
II-5 17 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(4) Registration Rights Agreement dated as of November 29, 1996 among Quintiles and the Shareholders of Innovex Limited 4.05(5) Amendment to Registration Rights Agreement filed as Exhibit 4.04 hereto 4.06 Terms of registration rights granted by Quintiles to shareholders of Butler 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 Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. (included in Exhibit 5.01 hereto) 24.01 Powers of Attorney (included on the signature page hereof)
- --------------- (1) Exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-75766) as filed February 28, 1994 and incorporated herein by reference. (2) Exhibit to the Company's Registration Statement on Form S-3 (Registration No. 333-19009) as filed December 30, 1996 and incorporated herein by reference. (3) Exhibit to the Company's Annual Report on Form 10-K as filed with the Commission on for the fiscal year ended December 31, 1995 and incorporated herein by reference. (4) Exhibit to the Company's Form 8-K dated November 22, 1996, as amended, and incorporated herein by reference. (5) Exhibit to the Company's Form 8-K dated March 5, 1997 and incorporated herein by reference. EX-4.06 2 TERMS OF REGISTRATION RIGHTS GRANTED BY QUINTILES 1 EXHIBIT 4.06 QUINTILES TRANSNATIONAL CORP. TERMS OF REGISTRATION RIGHTS GRANTED BY QUINTILES TO SHAREHOLDERS OF BUTLER 7.2. Registration Rights. (a) As used in this Section 7.2, the following terms shall have the following respective meanings: (i) "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act; (ii) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time; (iii) "Holder" shall mean any Stockholder holding Registrable Securities; (iv) "Registrable Securities" shall mean the shares of Common Stock of the Purchaser issued to certain of the Stockholders pursuant to Section 1.1 above and the Plan of Merger; (v) "Register," "registered" and "registration" shall refer to a registration effected by preparing and filing with the Commission a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement; (vi) "Registration Expenses" shall mean expenses, except Selling Expenses, incurred by the Purchaser in complying with subsection (b) hereof, including without limitation with respect to registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Purchaser, and blue sky fees and expenses, in the event of the registration provided for in subsection (b) below; (vii) "Registration Statement" shall have the meaning set forth in subsection (b), below; (viii) "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time; (ix) "Selling Expenses" shall mean all expenses except Registration Expenses, including, without limitation, all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by any Holder and all fees and disbursements of counsel for any Holder; and (x) "Suspension Notice" shall have the meaning set forth in subsection (c)(i)(B), hereof. (b) Subject to Subsection (c) hereof, the Purchaser shall (i) use its best efforts to file by August 1, 1997 a registration statement under the Securities Act with respect to the Registrable Securities (the "Registration Statement"), and (ii) thereafter use best reasonable efforts to cause such Registration Statement to be declared effective by the Commission under the Securities Act. (c) Notwithstanding the foregoing, (i) the Purchaser [Quintiles] shall not be required to take any action with respect to the registration or declaration of effectiveness of the Registration Statement following notice to Holders (which shall be made to the Representative, and to each Stockholder as provided in Section 9.7) 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 Commission 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 2 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 (provided that, for not less than two continuous periods of two weeks, ending not later than November 30, 1997, no Suspension Notice shall be issued or in effect with respect to the Registrable Securities); and (ii) upon receipt of a Suspension Notice from the Purchaser, the Holders will forthwith discontinue disposition of the Registrable Securities pursuant to the Registration Statement until the Shareholders' receipt 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 Holders will deliver to the Purchaser all copies in their possession of the prospectus covering such Registrable Securities current at the time of receipt of any Suspension Notice. (d) Underwriting. In the event that a registration pursuant to this Section 7.2 is for a registered public offering involving an underwriting, the Purchaser shall so advise the Holders. In such event, the right of the Holders to registration pursuant to this Section 7.2 shall be conditioned upon the Holders' participation in the underwriting arrangements required by this Section 7.2, and the inclusion of the Holders' Registrable Securities in the underwriting to the extent requested shall be limited as provided herein. The Purchaser (together with all Holders proposing to distribute their securities through such underwriting) shall enter into an underwriting agreement in customary form with the managing underwriter(s) selected for such underwriting by the Purchaser. Notwithstanding any other provision of this Section 7.2, if the managing underwriter(s) advise(s) the Purchaser in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Purchaser shall so advise the Holders participating and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among the Holders (and any other participants in such registration, including the Purchaser) thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders (and such other participants) at the time of filing the registration statement. No Registrable Securities excluded from the underwriting by reason of the underwriters' marketing limitation shall be included in such registration, and any such excluded shares will be otherwise included in the Registration Statement. To facilitate the allocation of shares in accordance with the above provisions, the Purchaser or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares. If any Holder disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Purchaser and the managing underwriter. The Registrable Securities so withdrawn shall also be withdrawn from registration, and such Registrable Securities shall not be transferred in a public distribution prior to ninety (90) days after the effective date of such registration, or such other shorter period of time as the underwriters may require. (e) Expenses of Registration. All Registration Expenses incurred in connection with the registration pursuant to this Section 7.2 shall be borne by the Purchaser. Unless otherwise provided in this Section 7.2, all Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered. (f) Registration Procedures. In the case of the registration, qualification or compliance effected by the Purchaser pursuant to this Section 7.2, the Purchaser will keep each Holder advised in writing as to the initiation and conduct of the registration, qualification and compliance and as to the completion thereof. The Purchaser shall use its best efforts to keep the Registration Statement effective for such period which the Purchaser shall determine in its reasonable discretion is not adverse to the best interests of the Purchaser; provided, however, that under no circumstances shall the Purchaser have any obligation to keep the Registration Statement effective after May 31, 1998. 3 (g) Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Purchaser such information regarding such Holder or Holders, the Registrable Securities held by them and the distribution proposed by such Holder or Holders as the Purchaser may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 7.2. Each Holder shall notify the Purchaser as promptly as practicable of any inaccuracy or change in information previously furnished by such Holder 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 Holder or such Holder's intended method of distribution of the Registrable Securities or omits to state any material fact regarding such Holder or such Holder's intended method of distribution of Registrable Securities 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 Holder or the distribution of such Registrable Securities, 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. (h) Indemnification. (i) The Purchaser will, if securities of the Purchaser other than the Registrable Securities are included in the securities as to which such registration, qualification or compliance is being effected pursuant to this Section 7.2, indemnify each Holder with respect to which registration, qualification or compliance has been effected pursuant to this Section 7.2 and each underwriter, if any, and each person who controls any underwriter 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, qualification or compliance, 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, qualification or compliance, and the Purchaser will reimburse each such Holder and each such underwriter and each person who controls any such underwriter 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 reliance upon and in conformity with written information furnished to the Purchaser by an instrument duly executed by such Holder and stated to be specifically for use therein. (ii) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected pursuant to this Section 7.2, indemnify the Purchaser, each of the Purchaser's directors and officers, each underwriter, if any, of the Purchaser's securities covered by such a registration statement, each person who controls the Purchaser or any such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder 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, such Holders, such directors, officers, persons, underwriters or control 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 4 statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Purchaser by an instrument duly executed by such Holder and stated to be specifically for use therein. (i) Transfer of Registration Rights. The registration rights in this Section 7.2 are not transferable by any Holder, except by law or upon the death or incompetence of such Holder. (j) Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 7.2. (k) Standoff Agreement. Each Holder agrees, in connection with any public offering of the Purchaser's securities, that upon the request of the Purchaser or the underwriters managing an underwritten offering, such Holder shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Purchaser or such underwriters, as the case may be, for such period of time (not to exceed one hundred twenty (120) days) from the effective date of such registration as may be requested by the underwriters; provided that the officers and directors of the Purchaser who own stock in the Purchaser also agree to such restrictions. EX-5.01 3 OPINION OF SMITH ANDERSON ET AL REGARDING LEGALITY 1 EXHIBIT 5.01 SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L.L.P. Lawyers 2500 First Union Capitol Center Raleigh, North Carolina 27601 Phone: 919-821-1220 Fax: 919-821-6800 June 10, 1997 Quintiles Transnational Corp. 4709 Creekstone Drive Riverbirch Building, Suite 300 Durham, North Carolina 27560 Re: Registration Statement on Form S-3 Ladies and Gentlemen: We have acted as counsel to 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 1,214,305 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 Stockholders. 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, minutes of meetings of its Board of Directors, and such other corporate records of the Company and other documents and have made such examinations of law as we have deemed necessary for purposes of this opinion. We also have relied upon a certificate of an officer of the Company, dated of even date herewith, relating to the Registration Statement. Based on and subject to the foregoing and to the additional qualifications set forth below, it is our opinion that the Shares are validly issued, fully paid and nonassessable. 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. The opinion expressed herein does not extend to compliance with federal and state securities law relating to the sale of the Shares. Our opinion is as of the date hereof, and we do not undertake to advise you of matters which might come to our attention subsequent to the date hereof which may affect our legal opinion expressed herein. This opinion is rendered solely for your benefit in connection with the transaction described above and may not be used or relied upon by any other person without our prior written consent in each instance. Sincerely yours, SMITH, ANDERSON, BLOUNT, DORSETT, MITCHELL & JERNIGAN, L.L.P. By: /s/ Christopher B. Capel ---------------------------------------- Christopher B. Capel EX-23.01 4 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.01 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 1,214,305 shares of its common stock and to the incorporation by reference therein of our report dated January 29, 1997, with respect to the consolidated financial statements and schedules of Quintiles Transnational Corp. included in its Annual Report (Form 10-K) for the year ended December 31, 1996, filed with the Securities and Exchange Commission. Ernst & Young LLP Raleigh, North Carolina June 10, 1997 -----END PRIVACY-ENHANCED MESSAGE-----