EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
Dated as of August 27, 1998
REGISTRATION RIGHTS AGREEMENT, dated as of August 27, 1998, by
McKesson Corporation, a Delaware corporation (the "Company"), and the other
undersigned parties hereto.
1. Introduction; Term of Agreement. The Company is a party to the
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separate Agreement and Plan of Merger (the "Merger Agreement"), dated as of
August 27, 1998, among the Company, Red Acquisition Corp., a Louisiana
corporation, Automated Prescription Systems, Inc., a Louisiana corporation, and
the selling stockholders parties thereto (the "Stockholders") pursuant to which
the Company has agreed, among other things, to acquire through merger APS and,
in connection therewith, to issue to the Stockholders shares of common stock of
the Company (the "Common Stock") as specified in the Merger Agreement. This
Agreement shall become effective upon the Effective Time (as defined in the
Merger Agreement). This Agreement shall terminate and be of no further force and
effect on the second anniversary date of the Effective Time. Notwithstanding the
preceding sentence, with respect to Registrable Securities being placed in
escrow pursuant to the Merger Agreement, (i) section 2.1 hereof shall terminate
and be of no further force and effect on the second anniversary date of the
Effective Time, and (ii) the other provisions hereof shall terminate and be of
no further force and effect on the third anniversary date of the Effective Time.
Certain capitalized terms used in this Agreement are defined in section 3
hereof; references to sections shall be to sections of this Agreement.
2. Registration under Securities Act, etc.
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2.1 Registration on Request.
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(a) Demand Request. Upon the written request of the Initiating
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Holders (on their own and/or on behalf of the other Stockholders), requesting
that the Company effect the registration under the Securities Act of all or part
of such Initiating Holders' Registrable Securities or the Registrable Securities
owned by other Stockholders and specifying the intended method or methods of
disposition thereof (a "Demand Request"), the Company will, as promptly as
reasonably practicable but in no event later than 20 days after such request,
give written notice of such requested registration to all registered holders of
Registrable Securities who would be entitled to participate in such
registration, and thereupon the Company will, subject to the terms of this
Agreement, use its best efforts to effect the registration under the Securities
Act of:
(i) the Registrable Securities which the Company has
been so requested to register by such Initiating Holders (on their own
and/or on behalf of the other Stockholders) for disposition in
accordance with the intended method or methods of disposition stated
in such request;
(ii) all other Registrable Securities the holders of
which shall have made a written request to the Company for
registration
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thereof within 30 days after the receipt of such written notice from
the Company (which request shall specify the intended method or
methods of disposition of such Registrable Securities);
(iii) all shares of Common Stock which the Company may
elect to register in connection with the offering of Registrable
Securities pursuant to this section 2.1; and
(iv) all shares of Common Stock which the Company may be
required to register in connection with "piggyback" or incidental
registration rights granted to any other Person;
all to the extent requisite to permit the disposition (in accordance with the
intended method or methods of distribution specified in the Demand Request) of
the Registrable Securities and the additional shares of Common Stock, if any, so
to be registered, provided, however, that such Demand Request shall be for not
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less than 400,000 shares of Common Stock. Subject to the provisions of section
2.1(d), the Initiating Holders will have the right pursuant to this section
2.1(a) to make one Demand Request.
Without limiting the generality of the foregoing, the Initiating
Holders shall have the right to request registration pursuant to this section
2.1 and specify that one of the methods of disposition of Registrable Securities
shall be a block trade or trades involving Registrable Securities held by such
Initiating Holders and/or other Stockholders and that, in connection therewith,
the Company shall file with the Commission a registration statement under Rule
415 covering all of the Registrable Securities to be sold in the block trade or
trades. In such case, the Company shall file an appropriate shelf registration
statement with the Commission as promptly as reasonably practicable and in
accordance with the provisions of section 2.3. Subject to the provisions of
section 2.1(d), a shelf registration which involves a block trade or block
trades as an intended method of disposition, whether or not any such block trade
is made, shall be considered as the exercise of the Demand Request permitted by
this section 2.1(a).
Notwithstanding anything herein to the contrary, it is understood and
agreed that the Initiating Holders may make a Demand Request for registration
pursuant to this section 2.1(a) 30 days prior to the date on which it is agreed
by the parties that the restricted period under Accounting Series Release No.
135 would expire.
(b) Registration Statement Form. The registration under this
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section 2.1 shall be on such appropriate registration form of the Commission (i)
as shall be selected by the Company and, as shall be reasonably acceptable to
the Initiating Holders of the Registrable Securities so to be registered and
(ii) as shall permit the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition specified in the
request for such registration.
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(c) Expenses. The Company will pay all Registration Expenses in
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connection with the registration requested pursuant to this section 2.1
(including any registration deemed not to be "effected" under section 2.1).
(d) Effective Registration Statement. The registration requested
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pursuant to this section 2.1 shall not be deemed to have been effected (and
therefore shall not constitute the Demand Request) (i) unless the registration
statement with respect thereto has become effective in accordance with the
manner of disposition specified by the requesting holders, provided that a
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registration which does not become effective after the Company has filed the
registration statement with respect thereto solely by reason of the refusal to
proceed of the Initiating Holders (other than a refusal to proceed based upon
the advice of counsel relating to a matter with respect to the Company) shall be
deemed to have been effected by the Company at the request of the Initiating
Holders unless the Initiating Holders shall have elected to pay all Registration
Expenses in connection with such registration, (ii) if, after it has become
effective, such registration becomes subject to any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason, or (iii) if the conditions to closing specified in the
purchase agreement or underwriting agreement, if any, entered into in connection
with such registration are not satisfied, other than by reason of some act or
omission by a holder of Registrable Securities.
(e) Selection of Underwriters. If a requested registration pursuant
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to this section 2.1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the Company, subject to the approval
of the holders of a majority of the Registrable Securities which the Company has
been requested to register, which approval shall not be unreasonably withheld.
(f) Priority in Requested Registrations. If the requested
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registration pursuant to this section 2.1 involves an underwritten offering, and
the managing underwriter shall advise the Company in writing (with a copy to
each holder of Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Securities)
exceeds the number which can be sold in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities requested
to be included in such registration, the Company will include in such
registration, to the extent of the number which the Company is so advised can be
sold in such offering, (i) first, Registrable Securities requested to be
included in such registration by the holders of Registrable Securities, pro rata
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among such holders requesting such registration on the basis of the number of
such securities requested to be included by such holders, and (ii) second,
subject to section 2.1(a) hereof, securities the Company proposes to sell and
other securities of the Company included in such registration by other holders
who may have "piggyback" or incidental registration rights.
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(g) Delay Periods. The Company shall be entitled to postpone the
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filing of any registration statement otherwise required to be prepared and filed
by the Company pursuant to this section 2.1, or suspend the use of any effective
registration statement under this section 2.1, for a reasonable period of time,
but not in excess of 90 days (a "Delay Period"), if (i) such postponement or
suspension is required by applicable law arising from events outside of the
control of the Company or (ii) any senior executive officer of the Company
determines that in such senior executive officer's reasonable good faith
judgment the registration and distribution of the Registrable Securities covered
or to be covered by such registration statement would interfere with any pending
material financing, acquisition, corporate reorganization, business combination,
joint venture, strategic alliance, commercial alliance, customer contract or
other transaction involving the Company or any of its subsidiaries or would
require premature disclosure thereof and promptly gives the Initiating Holders
written notice of such determination, and an approximation of the period of the
anticipated delay; provided, however, that (i) the aggregate number of days
included in all Delay Periods during any consecutive 12 months shall not exceed
the aggregate of 180 days and (ii) a period of at least 90 days shall elapse
between the termination of any Delay Period and the commencement of the
immediately succeeding Delay Period. Immediately upon receipt of a written
notice of suspension, each holder of Registrable Securities who made a request
to participate in the underwritten offering pursuant to this section 2.1 shall
cease all disposition efforts with respect to Registrable Securities held by
such holder. If the Company shall so postpone the filing of a registration
statement, the Holders of Registrable Shares to be registered shall
automatically be deemed to have withdrawn the request for registration and such
request shall not constitute the Demand Request for registration to which the
Initiating Holders of Registrable Shares are entitled pursuant to this section
2.1. The time period for which the Company is required to maintain the
effectiveness of the registration statement shall be extended by the aggregate
Delay Periods during such registration.
2.2 Incidental Registration.
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(a) Right to Include Registrable Securities. If the Company at
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any time proposes to register any of its shares of Common Stock (other than in
connection with a registration of securities which are convertible or
exchangeable into Common Stock) under the Securities Act (other than by a
registration on Form S-4 or S-8, or any successor or similar forms and other
than pursuant to section 2.1), whether or not for sale for its own account, it
will each such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
section 2.2. Upon the written request of any such holder made within 30 days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method or methods of disposition thereof), the Company will, subject to
the terms of this Agreement, use its best efforts to effect the registration
under the Securities Act of all Registrable Securities
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which the Company has been so requested to register by the holders thereof, to
the extent requisite to permit the disposition (in accordance with the intended
method or methods of distribution thereof specified in the requests of such
holders) of the Registrable Securities so to be registered, by inclusion of such
Registrable Securities in the registration statement which covers the securities
which the Company proposes to register; provided that if, at any time after
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giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with the
registration of the Registrable Securities and the securities which the Company
proposes to sell, the Company shall determine for any reason either not to
register or to delay registration of the securities which the Company proposes
to sell, the Company may, at its election, postpone or withdraw the registration
statement and give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith), without prejudice,
however, to the rights of any holder or holders of Registrable Securities
entitled to do so to request that such registration be effected as a
registration under section 2.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities. No
registration effected under this section 2.2 shall relieve the Company of its
obligation to effect any registration upon request under section 2.1, nor shall
any such registration hereunder be deemed to have been effected pursuant to
section 2.1. The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant to this section
2.2, and each holder whose Registrable Securities are included in a registration
requested pursuant to this section 2.2 will pay any underwriting discounts and
commissions and fees of such holder's counsel in connection therewith.
(b) Priority in Incidental Registrations. If (i) a registration
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pursuant to this section 2.2 involves an underwritten offering of the securities
so being registered, whether or not for sale for the account of the Company, to
be distributed (on a firm commitment basis) by or through one or more
underwriters of recognized standing under underwriting terms appropriate for
such a transaction, and (ii) the managing underwriter of such underwritten
offering shall inform the Company and holders of the Registrable Securities
requesting such registration by letter of its belief that the number of
securities requested to be included in such registration exceeds the number
which can be sold in (or during the time of) such offering, then the Company
will include in such registration:
(i) first, all the securities the Company proposes to sell
for its own account,
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(ii) second, all securities of any other holder who has
made a demand for registration, and
(iii) third, to the extent that the number of securities
which the Company and any such other holders proposed to include
pursuant to clauses (i) and (ii) is less than the number of securities
which the Company has been advised can be sold in such offering, the
number of (x) such Registrable Securities requested to be included in
such registration by the holders of Registrable Securities pursuant to
section 2.2(a) hereof and (y) other equity securities of the Company
requested to be included in such registration by holders of such
securities who are entitled to incidental registration rights under
any other registration rights agreements with the Company shall be
allocated pro rata among all such holders on the basis of the relative
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number of Registrable Securities and other equity securities each such
holder has requested to be included in such registration.
2.3 Registration Procedures. If and whenever the Company is
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required to effect the registration of any Registrable Securities under the
Securities Act as provided in sections 2.1 and 2.2, the Company shall, as
expeditiously as reasonably possible:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration (including such
audited financial statements as may be required by the Securities Act
or the rules and regulations promulgated thereunder) and thereafter
cause such registration statement to become and remain effective for a
period of at least 120 days, provided however that the Company may
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discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in
section 2.2(a), its securities which are Registrable Securities) at
any time prior to the effective date of the registration statement
relating thereto;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective for a period of at least 120 days (30 days in the
case of any registration pursuant to section 2.2) and to comply with
the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement until the
earlier of such time as all of such securities have been disposed of
in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement or such
other time as is required by the Securities Act;
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(iii) furnish to each seller of Registrable Securities
covered by such registration statement and each underwriter, if any,
of the securities being sold by such seller such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and
any other prospectus filed pursuant to Rule 424 under the Securities
Act, in conformity with the requirements of the Securities Act, and
such other documents, as such seller and underwriter, if any, may
reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other state securities laws or blue
sky laws of such jurisdictions as any seller thereof and any
underwriter of the securities being sold by such seller shall
reasonably request, to keep such registrations or qualifications in
effect for so long as such registration statement remains in effect,
and take any other action which may be reasonably necessary or
advisable to enable such seller and underwriter to consummate the
disposition in such jurisdictions of the securities owned by such
seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not but for the requirements of
this subsection (iv) be obligated to be so qualified or to consent to
general service of process in any such jurisdiction;
(v) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller and the underwriters, if
any, of:
(X) an opinion of counsel for the Company (which shall
be outside counsel if outside counsel is rendering such
opinion in the transaction and otherwise may be the
Company's inside counsel), dated the effective date of such
registration statement (or, if such registration includes an
underwritten public offering, an opinion dated the date of
the closing under the underwriting agreement), customary for
a transaction of such type, and
(Y) a "comfort" letter (or, in the case of any such
Person which does not satisfy the conditions for receipt of
a "comfort" letter specified in Statement on Auditing
Standards No. 72, as amended by Statements on Auditing
Standards Nos. 76 and 86, an "agreed upon procedures"
letter), dated the effective date of such registration
statement
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(and, if such registration includes an underwritten public
offering, a letter of like kind dated the date of the
closing under the underwriting agreement), signed by the
independent public accountants who have certified the
Company's financial statements included in such registration
statement, covering substantially the same matters with
respect to such registration statement (and the prospectus
included therein) and, in the case of the accountants'
letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters
delivered to the underwriters in underwritten public
offerings of securities (with, in the case of an "agreed
upon procedures" letter, such modifications or deletions as
may be required under Statement on Auditing Standards No.
75) and, in the case of the accountants' letter, such other
financial matters customarily covered in a transaction of
such type;
(vi) notify the holders of Registrable Securities and
the managing underwriter or underwriters, if any, promptly:
(V) when the registration statement, the
prospectus or any prospectus supplement related thereto or
post-effective amendment to the registration statement has
been filed, and, with respect to the registration statement
or any post-effective amendment thereto, when the same has
become effective;
(W) of any request by the Commission for
amendments or supplements to the registration statement or
the prospectus or for additional information;
(X) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration
statement or the initiation of any proceedings by any Person
for that purpose;
(Y) if at any time the representations and
warranties of the Company made as contemplated by section
2.4 below cease to be true and correct; and
(Z) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of any Registrable Securities for sale under
the securities or
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blue sky laws of any jurisdiction or the initiation or
threat of any proceeding for such purpose;
(vii) notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon the Company's discovery that, or upon the happening of any event
as a result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made, and at the request of any such seller promptly prepare and
furnish to such seller and each underwriter, if any, a reasonable
number of copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the purchasers
of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made;
(viii) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement as promptly as possible;
(ix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and, if required,
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with the
first day of the Company's first full calendar quarter after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder, and use its best efforts to
furnish to each such seller at least one business day prior to the
filing thereof a copy of any amendment or supplement to such
registration statement or prospectus and shall not file any thereof to
which any such seller shall have reasonably objected on the grounds
that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the rules
or regulations thereunder;
(x) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the
effective date of such registration statement; and
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(xi) use its best efforts to list all Registrable
Securities covered by such registration statement on any securities
exchange on which any of the securities of the same class as the
Registrable Securities are then listed.
The Company will not file any registration statement or amendment
thereto or any prospectus or any supplement thereto to which the holders of at
least a majority of the Registrable Securities covered by such registration
statement or the underwriter or underwriters, if any, shall reasonably object.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing in order to assure compliance
with applicable securities laws and applicable rules and regulations of
securities exchanges.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in paragraph (vii) of this section
2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by paragraph (vii) of this
section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in paragraph (ii) of
this section 2.3 shall be extended by the length of the period from and
including the date when each seller of any Registrable Securities covered by
such registration statement shall have received such notice to the date on which
each such seller has received the copies of the supplemented or amended
prospectus contemplated by paragraph (vii) of this section 2.3.
2.4. Underwritten Offerings.
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(a) Requested Underwritten Offerings. If requested by the
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underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under section 2.1, the Company will enter
into an underwriting or similar agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in substance and form to
the Company, each such holder and the underwriters, and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of this type, including, without limitation,
indemnities to the effect and to the extent provided in section 2.6. The
holders of the Registrable Securities will cooperate with the Company in the
negotiation of the underwriting or similar agreement and will give consideration
to the reasonable
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suggestions of the Company regarding the form thereof, provided that nothing
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herein contained shall diminish the foregoing obligations of the Company. The
holders of Registrable Securities to be distributed by such underwriters shall
be parties to such underwriting agreement, which agreement shall provide that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement shall be conditions precedent to
the obligations of such holders of Registrable Securities. No underwriting or
similar agreement shall require any holder of Registrable Securities to make any
representations or warranties to or agreements with the Company or the
underwriters, other than representations and warranties or agreements regarding
such holder, such holder's Registrable Securities and such holder's intended
method or methods of distribution and any other representation required by law,
or to make any agreements with the Company or the underwriters with respect to
indemnification of any Person or the contribution obligations of any Person that
would impose any obligation which is broader than the indemnity furnished by
such holder pursuant to the provisions of section 2.6. In addition, the holders
of Registrable Securities shall cooperate with the Company in an effort to
provide that any such agreement will contain a provision modifying the
indemnification of the underwriter to the effect that neither the Company nor
the holders of the Registrable Securities will be liable to any Person who
participates as an underwriter in the offering or sale of Registrable Securities
with respect to any preliminary prospectus, to the extent that any such loss,
claim, damage or liability of such underwriter results from such underwriter
having sold Registrable Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the final
prospectus, if the Company has previously furnished copies thereof to such
underwriter and such final prospectus as then amended or supplemented, has
corrected any such misstatement or omission.
(b) Incidental Underwritten Offerings. If the Company at any time
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proposes to register any of its securities under the Securities Act as
contemplated by section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities as provided in section 2.2 and subject to the
provisions of section 2.2(b), use its best efforts to arrange for such
underwriters to include all the Registrable Securities to be offered and sold by
such holder among the securities to be distributed by such underwriters. The
holders of Registrable Securities to be distributed by such underwriters shall
be parties to the underwriting agreement between the Company and such
underwriters, which agreement shall provide that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of
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Registrable Securities. Any such holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters, other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method or methods of distribution and any other representation
required by law, or to make any agreements with the Company or the underwriters
with respect to indemnification of any Person or the contribution obligations of
any Person that would impose any obligation which is broader than the indemnity
furnished by such holder pursuant to the provisions of section 2.6. In addition,
the holders of Registrable Securities shall cooperate with the Company in an
effort to provide that any such agreement will contain a provision modifying the
indemnification of the underwriter to the effect that neither the Company nor
the holders of the Registrable Securities will be liable to any Person who
participates as an underwriter in the offering or sale of Registrable Securities
with respect to any preliminary prospectus, to the extent that any such loss,
claim, damage or liability of such underwriter results from such underwriter
having sold Registrable Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the final
prospectus, if the Company has previously furnished copies thereof to such
underwriter and such final prospectus as then amended or supplemented, has
corrected any such misstatement or omission.
(c) Holdback Agreements.
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(i) Each holder of Registrable Securities agrees by
acquisition of such Registrable Securities, if and to the extent so
required by the managing underwriter, not to sell, make any short sale
of, loan, grant any option for the purchase of, effect any public sale
or distribution of or otherwise dispose of any securities of the
Company, during the 7 days prior to and the 90 days after any
underwritten registration pursuant to section 2.1 or 2.2 has become
effective and in which the holders of Registrable Securities have the
opportunity to participate, except as part of such underwritten
registration, whether or not such holder participates in such
registration, unless the underwriters managing the registered public
offering otherwise agree, provided that the foregoing restrictions
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shall not apply with regard to any Stockholder to the transfer to any
Affiliate of such Person, or to any bona fide pledge of such
Registrable Securities, provided that such Affiliate or other
transferee and/or lender or creditor acknowledges in writing that it
is bound by the provisions of this section 2.4(c). Each holder of
Registrable Securities agrees that the Company may instruct its
transfer agent to place stop transfer notations in its records to
enforce this section 2.4(c).
(ii) The Company agrees (X) if so required by the
managing underwriter not to sell, make any short sale of, loan, grant
any
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option for the purchase of, effect any sale or distribution of or
otherwise dispose of its equity securities or securities convertible
into or exchangeable or exercisable for any of such securities during
the seven days prior to and the 90 days after any underwritten
registration pursuant to section 2.1 or 2.2 has become effective,
except as part of such underwritten registration and except pursuant
to registrations on Form S-4, S-8, or any successor or similar forms
thereto, and (Y) to cause each holder of its securities purchased from
the Company, or any securities convertible into or exchangeable or
exercisable for such securities, at any time after the date of this
Agreement (other than in a public offering) to agree not to sell, make
any short sale of, loan, grant any option for the purchase of, effect
any sale or distribution of or otherwise dispose of such securities
during such periods, unless the underwriters managing the registered
public offering otherwise agree.
(d) Participation in Underwritten Offerings. No Person may
---------------------------------------
participate in any underwritten offering hereunder unless such Person (i) agrees
to sell such Person's securities on the basis provided in any underwriting
arrangements approved, subject to the terms and conditions hereof, by the
Company and the holders of a majority of the Registrable Securities to be
included in such underwritten offering and the Initiating Holders, if
applicable, and (ii) completes and executes all questionnaires, indemnities,
underwriting agreements and other documents (other than powers of attorney)
required under the terms of such underwriting arrangements. Notwithstanding the
foregoing, no underwriting agreement (or other agreement in connection with such
offering) shall require any holder of Registrable Securities to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations and warranties regarding such holder,
such holder's Registrable Securities and such holder's intended method or
methods of distribution and any other representation required by law, or to make
any agreements with the Company or the underwriters with respect to
indemnification of any Person or the contribution obligations of any Person that
would impose any obligation which is broader than the indemnity furnished by
such holder pursuant to the provisions of section 2.6.
2.5 Preparation; Reasonable Investigation. In connection with
-------------------------------------
the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the
holders of Registrable Securities registered under such registration
statement, their underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give
each of them such reasonable access during normal business hours to its
books, records, and properties, and cause the Company's officers, employees
and the independent public accountants who have certified its financial
statements to supply all information reasonably requested by such
-14-
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
2.6 Indemnification.
---------------
(a) Indemnification by the Company. In the event of any
------------------------------
registration of any securities of the Company under the Securities Act pursuant
to section 2.1 or 2.2, the Company will, and hereby does agree to, indemnify and
hold harmless the holder of any Registrable Securities covered by such
registration statement and its partners, if any, its and their respective
directors, officers, partners, agents and Affiliates, each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such holder or any such underwriter
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or partner thereof or any
such director or officer or partner or agent or Affiliate or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, 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 the Company will reimburse such holder, its
respective partners and each such director, officer, partner, agent, Affiliate,
underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding, provided, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by such holder, specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such holder or partner thereof or any such director, officer, partner,
agent, Affiliate, underwriter or controlling person and shall survive the
transfer of such securities by such holder. The indemnity agreement contained in
this section 2.6 shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, action or proceeding if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld.
-15-
(b) Indemnification by the Sellers. The Company may require, as
------------------------------
a condition to including any Registrable Securities in any registration
statement filed pursuant to section 2.3, that the Company shall have received an
undertaking reasonably satisfactory to it from the prospective seller of such
Registrable Securities, to indemnify severally, not jointly and severally, and
hold harmless (in the same manner and to the same extent as set forth in
subsection (a) of this section 2.6) the Company, each director of the Company,
each officer of the Company and each other person, if any, who controls the
Company within the meaning of the Securities Act, with respect to any statement
or alleged statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by the
prospective seller of the Registrable Securities through an instrument duly
executed by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Any such indemnity
shall remain in full force and effect, regardless of any investigation made by
or on behalf of the Company or any such director, officer or controlling person
and shall survive the transfer of such securities by such seller. The indemnity
agreement provided for in this section 2.6(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, action or proceeding if
such settlement is effected without the consent of such seller (which consent
shall not be unreasonably withheld). The parties hereto hereby acknowledge and
agree that, unless otherwise expressly agreed to in writing by holders of
Registrable Securities to the contrary, for all purposes of this Agreement the
only information furnished or to be furnished to the Company for use in any
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto are
statements specifically relating to (i) the beneficial ownership of shares of
Common Stock by such holders and its Affiliates, (ii) the name and address of
such holder and (iii) the method or methods of distribution of such holders. The
indemnity provided for under this section 2.6(b) shall be limited in amount to
the net amount of proceeds actually received by such seller from the sale of
Registrable Securities pursuant to such registration statement.
(c) Notices of Claims, etc. Promptly after receipt by an
----------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections of this section 2.6,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
--------
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subsections of this section 2.6, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
-16-
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability, or a covenant not to sue, in respect to such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party, which consent
shall not be unreasonably withheld.
(d) Indemnification Payments. The indemnification required by
------------------------
this section 2.6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in the
------------
preceding subsections of this section 2.6 is unavailable to an indemnified party
in respect of any expense, loss, claim, damage or liability referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or liability in such proportion as
is appropriate to reflect the relative benefits and the relative fault of the
Company on the one hand and the holder or underwriter, as the case may be, on
the other in connection with the distribution of the Registrable Securities and
the statements or omissions which result in any expense, loss, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the holder or underwriter, as the
case may be, on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission to state a material fact relates to information supplied by the
Company, by the holder or by the underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this subsection (e)
were determined by pro rata allocation (even if the holders and any underwriters
--- ----
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the
-17-
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth in
the preceding sentence and subsection (c) of this section 2.6, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (e), no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder the net
proceeds actually received by such holder from the sale of Registrable
Securities or (ii) in the case of an underwriter, the total price at which the
Registrable Securities purchased by it and distributed to the public were
offered to the public exceeds, in any such case, the amount of any damages that
such holder or underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. No party shall be liable for contribution under
this section 2.6 except to the extent and under such circumstances as such party
would have been liable to indemnify under this section 2.6 if such
indemnification were enforceable under applicable law.
2.7 Limitations on Registrations of Registrable Securities. The
------------------------------------------------------
Company shall not be required to effect any registration of Registrable
Securities pursuant to section 2.1 or 2.2 hereof (other than with respect to a
registration pursuant to section 2.1 of Registrable Securities of the Initiating
Holders) if it shall deliver (i) to the requesting holder of Registrable
Securities an opinion of counsel (which opinion and counsel shall be reasonably
satisfactory to the Initiating Holders, or other requesting holder of
Registrable Securities, if applicable) to the effect that all Registrable
Securities held by such Initiating Holders, or other requesting holder of
Registrable Securities, if applicable, may be sold immediately in the public
market without registration under the Securities Act and any applicable state
securities laws and (ii) to the Company's stock transfer agent a letter of
instruction removing any stop order and restrictive legends on such Registrable
Securities.
3. Definitions. As used herein, unless the context otherwise
-----------
requires, the following terms have the following respective meanings.
Affiliate: As defined in Rule 12b-2 promulgated under the
---------
Exchange Act.
Beneficially Own or Beneficial Ownership: With respect to any
----------------- --------------------
securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the
Exchange
-18-
Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities
Beneficially Owned by a person shall include securities
Beneficially Owned by all Affiliates of such Person and all other
Persons with whom such person would constitute a "group" within
the meaning of Section 13 (d) of the Exchange Act and the rules
promulgated thereunder.
Commission: The Securities and Exchange Commission or any other
----------
Federal agency at the time administering the Securities Act.
Common Stock: As defined in section 1.
------------
Company: As defined in the introductory paragraph of this
-------
Agreement.
Delay Period: As defined in section 2.1(g).
------------
Demand Request: As defined in section 2.1(a).
--------------
Effective Time: As defined in the Merger Agreement.
--------------
Exchange Act: The Securities Exchange Act of 1934, 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. Reference to a particular section of the Securities
Exchange Act of 1934 shall include a reference to the comparable
Section, if any, of any such similar federal statute.
Initiating Holders: Any holder or holders of not less than 50%
------------------
of the aggregate number of Registrable Securities held by all
holders of Registrable Securities.
Merger Agreement: As defined in section 1.
----------------
Person: A corporation, an association, a partnership, an
------
organization, business, an individual, a governmental or
political subdivision thereof or a governmental agency.
Registrable Securities: The Common Stock issued pursuant to the
----------------------
transactions contemplated by the Merger Agreement and any
securities issued or issuable with respect to any Common Stock by
way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
-19-
other reorganization or otherwise. As to any particular
Registrable Securities, once issued, such securities shall cease
to be Registrable Securities when (a) a registration statement
with respect to the sale of such securities shall have become
effective under the Securities Act and such securities have been
disposed of in accordance with such registration statement, (b)
they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (c)
all of the Registrable Securities held by such holder shall be
eligible for disposition under Rule 144, or (d) they shall have
ceased to be outstanding.
Registration Expenses: All expenses incident to the Company's
---------------------
performance of or compliance with section 2, including, without
limitation, all registration, filing and NASD fees, all stock
exchange listing fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits
or "cold comfort" letters required by or incident to such
performance and compliance, and any fees and disbursements of
underwriters customarily paid by issuers or sellers or
securities, but excluding underwriting discounts and commissions
and transfer taxes, if any.
Securities Act: The Securities Act of 1933, or any similar
--------------
Federal statute, and the rules and regulations of the Commission
thereunder, all as of the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933
shall include a reference to the comparable Section, if any, of
any such similar Federal statute.
Transfer: A transfer, sale, pledge, hypothecation, encumbrance,
--------
assignment or other conveyance or disposition except an
assignment by operation of law.
4. Rule 144. The Company shall timely file the reports required to
--------
be filed by it under the Securities Act and the Exchange Act (including but not
limited to the reports under sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder and will take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from time to time, or
(b) any
-20-
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Registrable Securities, the Company will (a) deliver to
such holder a written statement as to whether it has complied with the
requirements of this section 4 or (b) take such action as is necessary to allow
transfer of such Registrable Securities in accordance with the provisions of
Rule 144(k) (or any successor provision) under the Securities Act, including
without limitation, if necessary, the issuance of new certificates for such
Registrable Securities bearing a legend restricting further transfer.
5. Amendments and Waivers. This Agreement may be amended and the
----------------------
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of more than 50% of the shares of Registrable Securities and in the case
of any such amendment, action or omission to act in respect of the first
sentence of section 4, the written consent of each holder affected thereby. Each
holder of any Registrable Securities at the time or thereafter outstanding shall
be bound by any consent authorized by this section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any
------------------------------
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the holder of
such Registrable Securities for purposes of any request or other action by any
holder or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
7. Notices. Except as otherwise provided in this Agreement, all
-------
notices, requests and other communications to any Person provided for hereunder
shall be in writing and shall be given to such Person (a) in the case of any
Stockholder, addressed to such party as provided in the Merger Agreement, or at
such other address as such party shall have furnished to the Company in writing,
(b) in the case of any other holder of Registrable Securities, at the address
that such holder shall have furnished to the Company in writing, or, until any
such other holder so furnishes to the Company an address, then to and at the
address of the last holder of such Registrable Securities who has furnished an
address to the Company or (c) in the case of the Company, at McKesson
Corporation, One Post Street, San Francisco, California 94104, to the attention
of its General Counsel, or at such other address, or to the attention of such
other officer, as the Company shall have furnished to each holder of Registrable
Securities at the time outstanding. Each such notice, request or other
communication shall be effective (i) if given by mail, on the second business
day after such communication is deposited in the
-21-
mail with first class postage prepaid, addressed as aforesaid or (ii) if given
by any other means (including without limitation, by air courier), when
delivered at the address specified above, provided that any such notice, request
--------
or communication to any holder of Registrable Securities shall not be effective
until received.
8. Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. No holder of Registrable Securities shall assign this
Agreement or any rights hereunder without the prior written consent of the
Company (which consent may be withheld for any reason in the sole discretion of
the Company), except that this Agreement and any rights hereunder may be
assigned by operation of law and may be assigned to any Affiliate of any
Stockholder. Notwithstanding the foregoing, the provisions of this Agreement may
be assigned by any holder of Registrable Securities (the "Assignor") to a
subsequent holder (the "Assignee") if (i) the Assignor assigned to the Assignee
all of his, her or its Registrable Securities and (ii) such Assignee did not
acquire such Registrable Securities in a registered public offering of such
Registrable Securities or pursuant to a sale made in accordance with the
provisions of Rule 144 under the Act or (directly or indirectly) from a holder
who acquired the Registrable Securities through such a public offering or sale.
9. Descriptive Headings. The descriptive headings of the several
--------------------
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
-------------
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE STATE OF DELAWARE WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS.
11. Counterparts. This Agreement may be executed simultaneously in
------------
any number of counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument.
12. Entire Agreement. This Agreement embodies the entire agreement
----------------
and understanding between the Company and each other party hereto relating to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
13. Severability. If any provision of this Agreement, or the
------------
application of such provisions to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provisions
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
-22-
14. Disposition of Shares. In the event of any public sales or
---------------------
distribution of the Registrable Securities effected pursuant to section 2 of
this Agreement, the Stockholders shall use their reasonable best efforts to
effect, or cause to be effected, such public sale or distribution, so that,
without the prior written consent of the Company (which shall not be
unreasonably withheld), no participant or purchaser would Beneficially Own in
the aggregate 3% or more of all outstanding Common Stock of the Company. The
holders of Registrable Securities shall use their respective reasonable efforts
in cooperation with the Company to effect as broad a disposition in any such
public sale or distribution as is reasonably practicable.
-23-
EXHIBIT 99.2
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
McKESSON CORPORATION
By:_________________________________________
Name:
Title:
STOCKHOLDERS:
The James R. Baker, Sr. & Mary Parker Baker Trust for
the Benefit of the Baker Grandchildren
By:_________________________________________
Its:________________________________________
Baker Family Limited Partnership I
By:_________________________________________
Its:________________________________________
____________________________________________
Mary P. Baker
Rusty Baker Family Limited Partnership
By:_________________________________________
Its:________________________________________
____________________________________________
James R. Baker, Jr.
____________________________________________
Diana Baker Foshee
-24-
Baker Family Trust for the Benefit of Diana Baker White
By:_________________________________________
James R. Baker, Jr., Trustee
____________________________________________
Sharon Baker White
Baker Family Trust for the Benefit of Sharon Baker
Petrovsky
By:_________________________________________
James R. Baker, Jr., Trustee
Baker Family Trust for the Benefit of Sharon Baker
White
By:_________________________________________
James R. Baker, Jr., Trustee
____________________________________________
Brian Jefferson Hurst
____________________________________________
Janelle Hurst Holstrom
____________________________________________
Walter Pearson
____________________________________________
Mrs. Lena Smith
____________________________________________
Rex Ponthie
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