EXHIBIT 99.2
REGISTRATION RIGHTS AGREEMENT
Dated as of January 28, 1997
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of January 28, 1997,
among 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
separate Agreement and Plan of Merger (the "Merger Agreement"), dated as
of January __, 1997, among the Company, Spider Acquisition Corporation, a
Delaware corporation, General Medical Inc., a Delaware corporation
("GMI"), Kelso Investment Associates IV, L.P., a Delaware limited
partnership("KIA IV"), Kelso Equity Partners II, L.P., a Delaware limited
partnership ("KEP II"), Chase Equity Associates, a California limited
partnership ("CEA"), John Rutledge Partners, L.P., a Delaware limited
partnership ("Rutledge Partners"), Princes Gate Investors L.P., a
Delaware limited partnership ("Princes Gate"), Acorn Partnership I, L.P.,
a Delaware limited partnership ("Acorn Partnership"), PGI Investments
Limited, a British Virgin Islands corporation ("PGI"), PGI Sweden AB, a
Swedish corporation ("PGI Sweden"), Gregor Von Opel, The Lewis and
Patricia Kelso Trust, William A. Marquard, The Frank T. Nickell IRA,
David M. Roderick, George L. Shinn, Steven B. Nielsen, F. De Wight Titus
and Donald B. Garber, pursuant to which the Company has agreed, among
other things, to acquire through merger GMI and, in connection therewith,
to issue to the Investor Group cash and 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 earlier to occur of (i) the third
anniversary date of the Effective Time or (ii) such time as the holders
of Registrable Securities in the aggregate own less than 2% of the
outstanding shares of Common Stock. 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.
2.1 Registration on Request.
(a) Demand Request. Upon the written request of the
Initiating Holder (on its own and/or on behalf of the other members of
the Investor Group), requesting that the Company effect the registration
under the Securities Act of all or part of such Initiating Holder's
Registrable Securities or the Registrable Securities owned by other
members of the Investor Group 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 Holder (on its own
and/or on behalf of the other members of the Investor Group) 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 thereof within 30 days after the giving of such
written notice by 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 each
such Demand Request shall be for a number of shares of Common Stock which
represent at least 2% of the then outstanding shares of Common Stock,
unless the Demand Request is the last Demand Request available hereunder,
in which event the Demand Request may cover the remainder of the
Registrable Securities even if such amount of Registrable Securities is
less than 2% of such then outstanding shares. Subject to the provisions
of section 2.1(d), the Initiating Holder (on its own and/or on behalf of
the other members of the Investor Group) will have the right pursuant to
this section 2.1(a) to make an aggregate of two Demand Requests.
Without limiting the generality of the foregoing, the Initiating
Holder 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 the Initiating Holder and/or other members
of the Investor Group 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), any 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 one of the three Demand Requests permitted
by this section 2.1(a). Notwithstanding anything herein to the contrary,
it is understood and agreed that the Initiating Holder shall not be
entitled to make a Demand Request for registration pursuant to this
section 2.1(a) until the date which is the sixtieth day after the
Effective Time and, in the event the Initiating Holder makes such a
request, the Company shall use its best efforts to file a registration
statement with the Commission with respect to such request not later than
the thirtieth day following such request. It is furthermore understood
and agreed that if the Initiating Holder makes a Demand Request on or
within ten days after such sixtieth day, the provisions of section 2.1(g)
shall not apply and the Company shall not be entitled to initiate a Delay
Period as therein provided, except as required by applicable law arising
from events outside of the control of the Company.
(b) Registration Statement Form. Registrations under this 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 Holder 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.
(c) Expenses. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this section 2.1
(including any registration deemed not to be "effected" under section
2.1).
(d) Effective Registration Statement. A registration requested
pursuant to this section 2.1 shall not be deemed to have been effected
(and therefore not requested for purposes of the limitations in section
2.1(a) on the number of requests for registration that can be made
pursuant to section 2.1(a)) (i) unless a registration statement with
respect thereto has become effective, provided that a registration which
does not become effective after the Company has filed a registration
statement with respect thereto solely by reason of the refusal to proceed
of the Initiating Holder (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 Holder unless the Initiating Holder 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 entered into in connection with such registration are not
satisfied, other than by reason of some act or omission by the Initiating
Holder or any other holder of Registrable Securities.
(e) Selection of Underwriters. If a requested registration pursuant
to this section 2.1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the Initiating Holder from a
list of underwriters to be agreed upon by the Initiating Holder and the
Company.
(f) Priority in Requested Registrations. If a requested
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 any member of the Investor Group which is a holder
of Registrable Securities, pro rata among such holders requesting such
registration on the basis of the number of such securities then
beneficially owned by such holders, (ii) second, Registrable Securities
requested to be included in such registration by any other holder of
Registrable Securities, pro rata among such other holders requesting such
registration on the basis of the number of such securities requested to
be included by such holders and (iii) third, 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.
(g) Delay Periods. The Company shall be entitled to postpone the
filing of any registration statement otherwise required to be prepared
and filed by the Company pursuant to this section 2, or suspend the use
of any effective registration statement under this section 2, for a
reasonable period of time, but not in excess of 90 days (a "Delay
Period"), if any executive officer of the Company determines that in such
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 materially interfere with any pending
material financing, acquisition or corporate reorganization or other
material corporate development involving the Company or any of its
subsidiaries or would require premature disclosure thereof and promptly
gives the Initiating Holder 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 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 have
the right to withdraw the request for registration by giving written
notice within 45 days after receipt of the notice of postponement or, if
earlier, the termination of such Delay Period (and, in the event of such
withdrawal, such request shall not be counted for purposes of determining
the number of Demand Requests for registration to which the Initiating
Holder of Registrable Shares is entitled pursuant to this section 2). The
time period for which the Company is required to maintain the
effectiveness of any registration statement shall be extended by the
aggregate number of days of all Delay Periods during such registration.
The Company shall not be entitled to initiate a Delay Period unless it
shall (A) to the extent permitted by agreements with other security
holders of the Company, concurrently prohibit sales by such other
security holders under registration statements covering securities held
by such other security holders and (B) in the case of a delay arising as
a result of premature disclosure, in accordance with the Company's
policies from time to time in effect, forbid purchases and sales in the
open market by senior executives of the Company.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at 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 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 giving written notice of its intention to register any
securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine
for any reason either not to register or to delay registration of such
securities, the Company may, at its election, 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 Requesting
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
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, (ii) the
Registrable Securities so requested to be registered for sale for the
account of holders of Registrable Securities are not also to be included
in such underwritten offering (either because the Company has not been
requested so to include such Registrable Securities pursuant to section
2.4(b) or, if requested to do so, is not obligated to do so under section
2.4(b)), and (iii) 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,
(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 such Registrable Securities requested to be
included in such registration by the Requesting Holders pursuant to
this section 2.2(a) hereof shall be allocated pro rata among all
such Requesting Holders on the basis of the relative number of
Registrable Securities each such holder has requested to be
included in such registration.
2.3 Registration Procedures. Subject to section 2.1(a), if and
whenever the Company is 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 ro a period of at least 120 days, provided however that
the Company may 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 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;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement and each Requesting Holder
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 and any
Requesting Holder 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 or process in any such jurisdiction;
(v) furnish to each seller of Registrable Securities
and each Requesting Holder a signed counterpart, addressed to such
seller, such Requesting Holder 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, an "agreed upon procedures"
letter), dated the effective date of such registration
statement (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 procedure" letter, such modifications or deletions as may be
required under Statement on Auditing Standards No. 35) 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 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 and each Requesting Holder,
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 or Requesting Holder promptly prepare and furnish to
such seller or Requesting Holder 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 at the earliest possible moment;
(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 will use
its best efforts to furnish to each such seller and each Requesting
Holder 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
or any Requesting Holder 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
(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.
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 (viii)
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 (viii) 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 (viii) of
this section 2.3.
If any such registration statement refers to any holder of
Registrable Securities by name or otherwise as the holder of any
securities of the Company, then such holder shall have the right to
require (i) the insertion therein of language, in form and substance
satisfactory to such holder, to the effect that the holding by such
holder of such securities does not necessarily make such holder a
"controlling person" of the Company within the meaning of the Securities
Act is not to be construed as a recommendation by such holder of the
investment quality of the Company's securities covered thereby and that
such holding does not imply that such holder will assist in meeting any
future financial requirements of the Company, or (ii) in the event that
such reference to such holder by name or otherwise is not required by the
Securities Act or any similar federal statute then in force, the deletion
of the reference to such holder.
2.4 Underwritten Offerings:
(a) Requested Underwritten Offerings. If requested by the
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 2.7. 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 suggestions of the Company regarding the form thereof,
provided that nothing 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 and may, at their option, require 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 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 2.7. In addition, the
Requesting Holders 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 the Company will
not 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 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
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 and may,
at their option, require 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 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 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
2.7. In addition, the Requesting Holders 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 the
Company will not 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 thereof to such underwriter and such final prospectus as then
amended or supplemented, has corrected any such misstatement or omission.
(c) Holdback Agreements.
(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, except as part of such underwritten
registration, whether or not such holder participates in such
registration, provided that the foregoing restrictions shall not
apply with regard to any member of the Investor Group in a
distribution of Registrable Securities to its partners or to the
transfer to any Affiliate of such Persons or to any other
transferee in a private transaction not requiring registration
under the Securities Act, 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 option for the purchase of, effect any public 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 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 public sale or
distribution of or otherwise dispose of such securities during such
periods.
(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 Registrable
Securities to be included in such underwritten offering 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 2.7.
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, each Requesting Holder 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 and records and such
opportunities to discuss the business of the Company with its officers
and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' and
such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
2.6 Rights of Requesting Holders. The Company will not file any
registration statement relating to Common Stock under the Securities Act
(other than by a registration on Form S-4 or Form S-8 or in connection
with a registration of securities which are convertible into or
exchangeable for Common Stock), unless it shall first have given to each
holder of Registrable Securities (who would be entitled to participate in
such registration) at the time outstanding (other than any such Person
who acquired all such securities held by such Person in a public offering
registered under the Securities Act or as the direct or indirect
transferee of shares initially issued in such an offering), at least 30
days prior written notice thereof. Any such Person who shall so request
within 30 days after such notice (a "Requesting Holder") shall have the
rights of a Requesting Holder provided in sections 2.3, 2.5 and 2.7. In
addition, if any such registration statement refers to any Requesting
Holder by name or otherwise (other than through a document filed by or on
behalf of any Requesting Holder which is incorporated by reference) as
the holder of any securities of the Company, then such holder shall have
the right to require (a) the insertion therein of language, in form and
substance satisfactory to such holder, to the effect that the holding by
such holder of such securities does not necessarily make such holder a
"controlling person" of the Company within the meaning of the Securities
Act and is not to be construed as a recommendation by such holder of the
investment quality of the Company's debt or equity securities covered
thereby and that such holding does not imply that such holder will assist
in meeting any future financial requirements of the Company, or (b) in
the event that such reference to such holder by name or otherwise is not
required by the Securities Act or any rules and regulations promulgated
thereunder, the deletion of the reference to such holder.
2.7 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act,
the Company will, and hereby does agree to, indemnify and hold harmless
(i) in the case of any registration statement filed pursuant to section
2.1 or 2.2, 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, and (ii) in
the case of any registration statement of the Company, any Requesting
Holder and its partners, if any, its and their respective directors,
officers, partners, agents and Affiliates and each other Person, if any,
who controls such Requesting Holder within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or
several, to which such holder or Requesting 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, such
Requesting Holder, their 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 or Requesting Holder, as the case may be, 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 such Requesting 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 2.7(a) 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.
(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
and hold harmless (in the same manner and to the same extent as set forth
in subsection (a) of this section 2.7) 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 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 2.7(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) transactions between such holder
and its Affiliates, on the one hand, and the Company, on the other hand,
(ii) the beneficial ownership of shares of Common Stock by such holders
and its Affiliates,(iii) the name and address of such holder and (iv)
solely in offerings that are underwritten offerings, the method or
methods of distribution of such holders. The indemnity provided for under
this section 2.7(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 2.7, 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 2.7, 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 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.
(d) Indemnification Payments. The indemnification required by this
section 2.7 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 2.7 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, Requesting 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 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 2.7, 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 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 2.7 except to the extent and under such circumstances as such
party would have been liable to indemnify under this section 2.7 if such
indemnification were enforceable under applicable law.
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
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 Holder: KIA IV.
Investor Group: Collectively, KIA IV, KEP II, CEA, Rutledge
Partners, Princes Gate, Acorn Partnership, PGI, PGI Sweden, Gregor
Von Opel, The Lewis and Patricia Kelso Trust, William A. Marquard,
The Frank T. Nickell IRA, David M. Roderick, George L. Shinn,
Steven B. Nielsen, F. De Wight Titus and Donald B. Garber.
KIA IV: As defined in section 1.
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.
Purchase Notice: As defined in section 15.
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
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) a disposition of
all of them by the holder thereof shall not require registration or
qualification of them under the Securities Act or 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.
Requesting Holder: As defined in section 2.6.
Sale Notice: As defined in section 15.
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.
Standstill Period: As defined in section 16.
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 form time to time, or (b)
any 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; provided however, for so
long as any shares of Common Stock are held by any member of the Investor
Group, any amendment, action or omission to act is also subject to the
prior written consent of KIA IV. 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 member of the Investor Group, addressed to such party
care of Kelso & Company, 320 Park Avenue, 24th Floor, New York, New York
10022 to the attention of James J. Connors, III, Esquire 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, 72 hours after such communication is
deposited in the 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.
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. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
DELAWARE OR OF THE UNITED STATES OF AMERICA FOR THE STATE OF DELAWARE
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND APPELLATE
COURTS FROM ANY THEREOF. EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF TO SUCH PARTY BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED,
TO SUCH PARTY AT ITS ADDRESS SPECIFIED IN SECTION 7. THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVE TRIAL BY JURY AND ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENCE WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
14. 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.
15. Restrictions on Transfer; Disposition of Shares. (a) Registered
Offerings. In the event of any public sales or distribution of the
Registrable Securities effected pursuant to Section 2 of this Agreement,
the Investor Group 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 4% or more of all outstanding Common Stock of the Company. The
Investor Group agrees to 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.
(b) Limitations on Dispositions. The Investor Group agrees that
during the Standstill Period (as defined), they will not, and will cause
their Affiliates not to, directly or indirectly, without the prior
written consent of the Company (which consent shall not be unreasonably
withheld), transfer, sell, pledge, hypothecate, encumber, assign or
otherwise dispose of or convey a legal or beneficial interest
("Transfer") (A) to any Person, an aggregate of 2% or more of the Common
Stock of the Company then outstanding; or (B) to any person, any of the
Common Stock of the Company if, to the knowledge of the Investor Group or
any of their Affiliates, after due inquiry which is reasonable in the
circumstances, immediately following such transaction the acquiror of
such Common Stock of the Company, together with its Affiliates, would
Beneficially Own in the aggregate 4% or more of the Common Stock of the
Company then outstanding; provided, however, the foregoing limitations on
Transfer shall not apply to any Transfer to a passive institutional
investor such as (x) a "qualified institutional buyer" (as such term is
defined in Rule 144A of the Securities Act) or (y) an "accredited"
investor (within the meaning of Rule 501(a)(1), (2), (3) or (7) of the
Securities Act) which, in each case, would be eligible to file a Schedule
13G with respect to the shares of Common Stock owned by such Person and
provided, further, that such person has not disclosed, pursuant to Item 4
of Schedule of 13D, an intent, or reserved the right, to engage in any
change in control transaction or to engage in a contested proxy or
consent solicitation or to otherwise seek to control or influence the
business, management or policies of the Company.
(c) Right of First Refusal; Procedures. The Investor Group shall,
prior to effecting any Transfer of the Common Stock of the Company
representing more than 1% of the outstanding shares of Common Stock to
any Person, offer the Company a right of first refusal to purchase the
shares proposed to be Transferred on the following terms. The Investor
Group shall provide the Company with written notice (the "Sale Notice")
of any proposed sale, which Sale Notice shall contain the identity of the
purchaser, the number of shares of the Common Stock of the Company
proposed to be Transferred to such purchaser, the purchase price for such
shares and the form of consideration payable for such shares. The Sale
Notice shall also contain an irrevocable offer to sell the shares subject
to such Sale Notice to the Company for cash at a price equal to the price
contained in such Sale Notice. The Company shall have the right and
option, by written notice delivered to the Investor Group (the "Purchase
Notice") within 15 days of receipt of the Sale Notice, to accept such
offer as to all, but not less than all, of the Common Stock of the
Company subject to such Sale Notice. The Company shall have the right to
assign to any Person such right to purchase the shares subject to the
Sale Notice. In the event the Company (or its assignee) elects to
purchase the shares subject to the Sale Notice, the closing of the
purchase of the Common Stock of the Company shall occur at the principal
office of the Company (or its assignee) on or before the 10th day
following such Shareholder's receipt of the Purchase Notice. In the event
the Company does not elect to purchase the shares subject to the Sale
Notice, such Shareholder shall be free, for a period of 60 days following
the receipt of notice from the Company of its election not to purchase
such shares or, in the absence of any such notice, for a period of 60
days following the 15th day after receipt by the Company of the Sale
Notice, to sell the shares subject to the Sale Notice in accordance with
the terms of, and to the person identified in, the Sale Notice. If such
sale is not effected within such 60 day period such shares shall remain
subject to the provisions of this Agreement.
Notwithstanding the foregoing, the right of first refusal set forth
in this Section shall not apply to the sale by the Investor Group of the
Common Stock of the Company (i) made pursuant to section 2 of this
Agreement, or (ii) made in a tender offer, merger or other similar
business combination transaction, whether or not approved by the Board of
Directors of the Company.
16. Standstill and Related Provisions. The Investor Group agrees
that for a period commencing on the date of this Agreement and
terminating on the third anniversary of the Effective Time (the
"Standstill Period"), without the prior written consent of the Board of
Directors of the Company specifically expressed in a resolution adopted
by a majority of the directors of the Company, the Investor Group will
not, directly or indirectly, alone or in concert with others:
(a) acquire, offer or propose to acquire, or agree to acquire any
additional shares of Common Stock of the Company (or its rights to
acquire such Common Stock), except, in any case, by way of stock
dividends or other distributions or rights offerings made available to
holders of any shares of the Common Stock of the Company generally,
share-splits, reclassifications, recapitalizations, reorganizations and
any other similar action taken by the Company;
(b) make, or in any way participate, directly or indirectly, in any
"solicitation" (as such term is used in the proxy rules of the Securities
and Exchange Commission as in effect on the date hereof) of proxies or
consents (whether or not relating to the election or removal of
directors), seek to advise, encourage or influence any Person with
respect to the voting of any of the Common Stock of the Company,
initiate, propose or otherwise "solicit" (as such term is used in the
proxy rules of the Commission as in effect on the date hereof)
shareholders of the Company for the approval of shareholder proposals,
whether made pursuant to Rule 14a-8 of the Exchange Act or otherwise, or
induce or attempt to induce any other Person to initiate any such
shareholder proposal or otherwise communicate generally with the
Company's shareholders;
(c) otherwise act, alone or in concert with others, to control or
seek to control or influence or seek to influence the management, Board
of Directors or policies of the Company;
(d) seek, propose, or make any public statement with respect to,
any merger, consolidation, business combination, tender or exchange
offer, sale or purchase of assets, sale or purchase of securities,
dissolution, liquidation, reorganization, restructuring,
recapitalization, change in capitalization, change in corporate structure
or business or similar transaction involving the Company or its
subsidiaries;
(e) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any of
the Common Stock of the Company, other than groups consisting solely of
members of the Investor Group; and
(f) request or cause to be requested for any purpose, the Company's
stock ledger, a list of the Company's shareholders, or the Company's
other books and records; or to call or seek to have called any meeting of
the shareholders of the Company or execute any written consent with
respect to the Common Stock of the Company.
Notwithstanding the foregoing, Affiliates of the Investor Group in the
ordinary course of the conduct of such Affiliates' business may engage in
investment banking activities and purchases and sales of Common Stock and
other securities of the Company as broker-dealers or otherwise.
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: /s/ Ivan D. Meyerson
KELSO INVESTMENT ASSOCIATES IV, L.P.
By: /s/ Thomas R. Wall, IV
KELSO EQUITY PARTNERS II, L.P.
By: /s/ Thomas R. Wall, IV
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners
By: /s/ Brian Richmond, Partner
JOHN RUTLEDGE PARTNERS, L.P.
By: /s/ John Rutledge
PRINCES GATE INVESTORS, L.P.
By: /s/ David R. Powers
PG Investors, Inc. as General
Partner
ACORN PARTNERSHIP I, L.P.
By: /s/ David R. Powers
PG Investors, Inc. as General
Partner
PGI INVESTMENTS LIMITED
By: /s/ David R. Powers
PG Investors, Inc. as
Attorney-in-Fact
PGI SWEDEN AB
By: /s/ David R. Powers
PG Investors, Inc. as
Attorney-in-Fact
/s/ David R. Powers, Attorney-in-Fact
Gregor Von Opel
THE LOUIS AND PATRICIA KELSO TRUST
By: /s/ Patricia H. Kelso, Trustee
/s/ William A. Marquard
William A. Marquard
THE FRANK T. NICKELL IRA
By: /s/ Annamarie Simonelli
Assistant V.P.- Fleet Bank
/s/ David M. Roderick
David M. Roderick
/s/ George L. Shinn
George L. Shinn
/s/ Steven B. Nielsen
Steven B. Nielsen
/s/ F. De Wight Titus
F. De Wight Titus
/s/ Donald B. Garber
Donald B. Garber