EXHIBIT 99.1
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
AMENDMENT NO. 1 TO RIGHTS AGREEMENT, dated as of October 19, 1998
(this "Amendment"), by and between McKesson Corporation, a Delaware corporation
(the "Company"), and First Chicago Trust Company of New York, a New York trust
company (the "Rights Agent").
RECITALS
WHEREAS, the Company and the Rights Agent are parties to a Rights
Agreement, dated as of October 21, 1994, by and between McKesson Corporation and
the Rights Agent (the "Rights Agreement");
WHEREAS, the Company, HBO & Company, a Delaware corporation ("HBOC"),
and McKesson Merger Sub, Inc. ("Merger Sub"), a Delaware corporation and a
wholly owned subsidiary of the Company, have entered into an Agreement and Plan
of Merger, dated as of October 17, 1998 (the "Merger Agreement"), pursuant to
which Merger Sub will merge with and into HBOC, with HBOC as the surviving
corporation and becoming a wholly owned subsidiary of the Company (the
"Merger");
WHEREAS, the Company, as a condition of and inducement to its
willingness to enter into the Merger Agreement, contemporaneously with the
execution thereof, entered into a Stock Option Agreement (the "Company Stock
Option Agreement") granting to HBOC an option to purchase, upon the occurrence
of certain events set forth in the Company Stock Option Agreement, 19,759,717
shares of Common Stock, as such shares are defined in the Company Stock Option
Agreement, equal to 19.9% of the shares of Common Stock outstanding as of the
date of the Company Stock Option Agreement, subject to adjustment pursuant to
certain customary anti-dilution provisions contained therein, together with any
Rights issued pursuant to the Rights Agreement, at a purchase price of
$88.6875 per share;
WHEREAS, the board of directors of the Company (the "Board of
Directors") has approved the Merger Agreement, the Merger, the Company Stock
Option Agreement and the transactions contemplated under each of the Merger
Agreement and the Company Stock Option Agreement; and
WHEREAS, pursuant to Section 26 of the Rights Agreement, the Board of
Directors has determined that this Amendment is necessary, desirable and in the
best interests of the stockholders of the Company.
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Accordingly, the parties agree as follows:
1. AMENDMENT TO SECTION 1(a). Section 1(a) of the Rights Agreement
is hereby amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Amendment to the contrary, HBOC
shall not be deemed to be an "Acquiring Person" solely as a result of (i) the
execution of the Merger Agreement, (ii) the execution of the Company Stock
Option Agreement or (iii) the consummation of the transactions contemplated by
the Merger Agreement and the Company Stock Option Agreement."
2. AMENDMENT TO SECTION 1. Section 1 of the Rights Agreement is
hereby amended by adding the following subsections (al), (am), (an), (ao) and
(ap) at the end thereof:
"(al) "McKesson Merger Sub" shall mean McKesson Merger Sub, Inc.,
a Delaware corporation and a wholly owned subsidiary of the Company.
(am) "HBOC" shall mean HBO & Company, a Delaware corporation, and its
subsidiaries.
(an) "Company Stock Option Agreement" shall mean that certain Stock
Option Agreement, dated October 17, 1998, pursuant to which the Company has
granted to HBOC an option to purchase 19,759,717 shares of Common Stock
equal to 19.9% of the shares of Common Stock outstanding as of the date of
the Company Stock Option Agreement, together with any Rights issued
pursuant to this Agreement, at a purchase price of $ 88.6875 per share.
(ao) "Merger" shall mean the merger of McKesson Merger Sub with and
into HBOC, with HBOC as the surviving corporation and becoming a wholly
owned subsidiary of the Company, pursuant to the terms and conditions of
the Merger Agreement.
(ap) "Merger Agreement" shall mean that certain Agreement and Plan of
Merger, dated as of October 17, 1998, by and among the Company, HBOC and
McKesson Merger Sub."
3. AMENDMENT TO SECTION 11(a)(ii). Section 11(a)(ii) of the Rights
Agreement is hereby amended to add the following sentence at the end thereof:
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"Notwithstanding anything in this Amendment to the contrary, (i) the
execution of the Merger Agreement, (ii) the execution of the Company Stock
Option Agreement or (iii) the consummation of the transactions contemplated
by the Merger Agreement or the Company Stock Option Agreement, shall not be
deemed to be a Section 11(a)(ii) Event and shall not cause the Rights to be
adjusted or exercisable under this Agreement."
4. AMENDMENT TO SECTION 13(d). Section 13(d) of the Rights
Agreement is hereby amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Amendment to the contrary, (i) the
execution of the Merger Agreement, (ii) the execution of the Company Stock
Option Agreement or (iii) the consummation of the transactions contemplated
by the Merger Agreement or the Company Stock Option Agreement, shall not be
deemed to be a Section 13 Event and shall not cause the Rights to be
adjusted or exercisable under this Agreement."
5. EFFECTIVENESS. This Amendment shall be deemed effective as of
the date hereof. Except as amended hereby, the Rights Agreement shall remain in
full force and effect and shall be otherwise unaffected by this Amendment.
6. SEVERABILITY. If any provision, covenant or restriction of this
Amendment is held by a court of competent jurisdiction or other authority to be
invalid, illegal or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Amendment shall remain in full force and
effect and shall in no way be effected, impaired or invalidated.
7. GOVERNING LAW. This Amendment shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by, and construed in accordance with, the laws of such state applicable
to contracts to be made and performed entirely within such state.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument.
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9. MISCELLANEOUS. All capitalized terms in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to them in the Rights
Agreement.
EXECUTED as of the date set forth above.
McKESSON CORPORATION
By: /s/ Nancy A. Miller
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Name: Nancy A. Miller
Title: Vice President and
Corporate Secretary
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: /s/ Joanne Gorostiola
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Name: Joanne Gorostiola
Title: Assistant Vice President
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