<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1994
REGISTRATION NO.
33-55093
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CARDINAL HEALTH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
OHIO 31-0958666
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION) NO.)
655 METRO PLACE SOUTH, SUITE
925
DUBLIN, OHIO 43017
(614) 761-8700
</TABLE>
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ROBERT D. WALTER, CHAIRMAN
655 METRO PLACE SOUTH, SUITE 925
DUBLIN, OHIO 43017
(614) 761-8700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C> <C>
R. STEVEN KESTNER DANIEL A. NEFF JOHN J. MCCARTHY, JR.
BAKER & HOSTETLER WACHTELL, LIPTON, ROSEN & KATZ DAVIS POLK & WARDWELL
3200 NATIONAL CITY CENTER 51 WEST 52ND STREET 450 LEXINGTON AVENUE
CLEVELAND, OHIO 44114 NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10017
(216) 621-0200 (212) 403-1000 (212) 450-4000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- -------------------------------------------------------------------------------------------------
Common Shares, without par value... 8,050,000 shares $39.125 $311,182,812 $107,306
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 1,050,000 Common Shares being registered in connection with an
overallotment option granted to the U.S. Underwriters.
(2) Estimated solely for the purpose of computing the registration fee pursuant
to rule 457(c).
(3) Of this amount, $80,154 was paid with the filing of the original
Registration Statement on August 17, 1994 for the registration of 6,037,500
Common Shares based on a proposed maximum offering price of $38.50.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be
used in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in connection with a concurrent international
offering outside the United States and Canada (the "International Prospectus").
The U.S. Prospectus and the International Prospectus are identical except for
the front and back cover pages. The U.S. Prospectus is included herein and is
followed by the alternate front and back cover pages to be used in the
International Prospectus. Each of the pages for the International Prospectus
included herein is labelled "Alternate Page for International Prospectus."
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any State in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 1994
PROSPECTUS
7,000,000 SHARES
[LOGO]
COMMON SHARES
------------------
Of the 7,000,000 Common Shares offered hereby, 1,600,000 are being sold by
Cardinal Health, Inc. ("Cardinal" or the "Company") and 5,400,000 are being sold
by certain shareholders of the Company (the "Selling Shareholders"). See
"Selling Shareholders." The Company will not receive any of the proceeds from
the sale of Common Shares by the Selling Shareholders. Of the 7,000,000 Common
Shares offered hereby, 5,600,000 are being offered hereby in the United States
and Canada (the "U.S. Offering") by the U.S. Underwriters (as defined herein)
and 1,400,000 are being offered in a concurrent international offering (the
"International Offering" and, together with the U.S. Offering, the "Combined
Offering") outside of the United States and Canada by the Managers (as defined
herein). See "Underwriting."
The Common Shares are listed on the New York Stock Exchange under the
symbol "CAH." On September 16, 1994, the last reported sale price for the
Company's Common Shares on the New York Stock Exchange was $39.125 per share.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------
Per Share $ $ $ $
- ---------------------------------------------------------------------------------------------------------
Total(3) $ $ $ $
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the U.S.
Underwriters against certain liabilities, including certain liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses of the Combined Offering payable by the Company,
estimated at $400,000.
(3) The Company and certain of the Selling Shareholders have granted the U.S.
Underwriters an option, exercisable within 30 days after the date hereof, to
purchase up to 1,050,000 additional Common Shares on the same terms per
share solely for the purpose of covering overallotments, if any. If the U.S.
Underwriters exercise such option in full, the Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company and Proceeds to Selling
Shareholders will be $ , $ , $ , and $ ,
respectively. See "Underwriting."
------------------
The Common Shares are offered by the several U.S. Underwriters when, as and
if delivered to and accepted by them and subject to their right to reject orders
in whole or in part. It is expected that the Common Shares will be available for
delivery at the offices of Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013 or through the facilities of The Depository Trust Company, on or
about September , 1994.
------------------
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
WILLIAM BLAIR & COMPANY
September , 1994
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). These reports and other information (including
proxy and information statements) filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at its
principal office at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10007 and Chicago
Regional Office, 500 West Madison, 14th Floor, Chicago, Illinois 60661-2511.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. This Prospectus constitutes part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and related exhibits for
further information with respect to the Company and the Common Shares offered
hereby. Statements contained herein concerning the provisions of any document
are not necessarily complete and, in each instance, reference is made to the
copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference in this Prospectus: (1)
Annual Report on Form 10-K for the fiscal year ended June 30, 1994, and (2)
Current Report on Form 8-K dated September 12, 1994. All reports and other
documents filed with the Commission pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Combined Offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the respective dates of filing of
said reports and other documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. The Company hereby undertakes to provide without charge to each
person to whom this Prospectus has been delivered, upon the written or oral
request of such person, a copy of any and all documents incorporated herein by
reference (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be submitted in writing to Cardinal Health, Inc., 655 Metro Place
South, Suite 925, Dublin, Ohio 43017, Attn: David Bearman, Executive Vice
President and Chief Financial Officer, (614) 761-8700.
------------------------
IN CONNECTION WITH THE COMBINED OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
SHARES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 5
THE COMPANY
Cardinal is one of the nation's largest wholesale distributors of
pharmaceutical and related health care products. The Company's customer base
includes hospitals and managed care facilities (50%), independent retail drug
stores (21%), chain drug stores and the pharmacy departments of supermarkets and
mass merchandisers (23%), as well as customers for specialty products, including
physicians and clinics (6%). Cardinal operates approximately 40 distribution
facilities nationwide.
Wholesale Drug Industry
The wholesale drug industry in the United States has experienced rapid
growth. As reported by the National Wholesale Druggists' Association (the
"NWDA"), industry sales grew from $11.9 billion in 1983 to $47.5 billion in
1993. An aging population, new product introductions, and a higher concentration
of distribution through wholesalers are all factors which have contributed to
this growth. Drug wholesaling is also a competitive industry, undergoing
significant change and consolidation. Reflecting this consolidation, the number
of NWDA wholesalers has declined from 139 in 1980 to fewer than 70 in 1993.
In response to cost containment pressure from private and governmental
payors and the current focus on health care reform in the United States,
customers are consolidating into super-regional and national affiliations while
manufacturers are under increased pressure to slow the rate of drug price
inflation and to seek more cost-effective methods of marketing and distributing
their products. In this regard, drug wholesalers will be challenged to service
customers over a wider geographic base, offer manufacturers innovative marketing
and distribution services, and provide both manufacturers and customers with
standardized distribution and information systems and reporting links necessary
to streamline the efficient flow of product and information among distribution
partners.
Cardinal's Strategy
Cardinal's strategy is to grow by expanding its existing wholesale and
specialty distribution businesses and to make selective complementary
acquisitions. Cardinal's internal sales growth has occurred primarily as a
result of market share gains, geographic expansion, an increased reliance on
drug wholesaling by both customers and pharmaceutical manufacturers, and new
pharmaceutical products and price increases. Complementing this internal growth,
Cardinal has acquired or merged with ten drug distribution companies and a
specialty distributor of oncology products over the past ten years. As a result
of its strategy, Cardinal's net sales have increased from $2.1 billion in fiscal
1990 to $5.8 billion in fiscal 1994, a compound annual growth rate of 28%.
Cardinal believes it is well-positioned to continue its growth and maintain
operating margins by: (a) providing superior distribution services to its
customers, including inventory management systems and logistical support
functions; (b) developing advanced information systems that improve internal and
customer operations; (c) providing merchandising and marketing programs for
manufacturers and customers; (d) further expanding its specialty wholesaling
businesses and leveraging these activities over larger volume; and (e)
supplementing the above strategies through selective acquisitions.
Cardinal has achieved earnings growth due in part to its successful
management of the Company's changing business equation. This equation has
changed over the last several years due to: (a) a greater mix of higher volume
customers, where the lower cost of distribution and better asset management and
cash flow enable Cardinal to offer lower pricing to the customer; (b) reduced
inventory gains associated with lower drug price inflation, which are partially
offset by corresponding decreases in last-in, first-out (LIFO) earnings charges
and inventory carrying costs; (c) increased merchandising funding from
manufacturers, particularly related to the growth in generic pharmaceuticals;
(d) improved selling, general and administrative cost absorption due to
significant productivity investments and the operating leverage associated with
sales growth and acquisitions; and (e) increased sales and earnings from
specialty distribution services.
3
<PAGE> 6
Cardinal's Business
As a full-service wholesale distributor, Cardinal complements its
distribution activities by offering a broad range of value-added support
services to assist customers and suppliers in maintaining and improving their
market positions and to strengthen Cardinal's role in the channel of
distribution. These support services include computerized order entry and order
confirmation systems, customized invoicing, generic sourcing programs, product
movement and management reports, consultation on store operation and
merchandising, and customer training.
Most customers transmit merchandise orders directly to Cardinal's data
processing system through computerized order entry devices. Cardinal's
proprietary software systems feature customized databases specially designed to
help its customers order more efficiently, contain costs and monitor their
purchases which are covered by group contract purchasing arrangements. Upon
receipt of the customer's order at a distribution center, Cardinal's warehouse
management system processes the order and provides customized price information
to facilitate the customer's pricing of items. Customer orders are routinely
processed for next-day delivery, enabling the Company's customers to minimize
the size and carrying cost of their own inventories. In addition, Cardinal's
AccuNet,(R) Otis(R) and Network(TM) proprietary software systems facilitate
primary supply relationships between Cardinal and its customers and enable
Cardinal's customers to reduce their costs. These systems provide a variety of
information which assist the customer to identify the best price available under
group purchasing contracts with pharmaceutical manufacturers, maintain formulary
compliance, and better manage their own inventories. Over 2,800 of these systems
have been placed with hospital, managed care, and chain drug customers located
throughout the United States.
In addition to its core drug wholesaling activities, Cardinal operates
several specialty health care businesses which offer value-added services to its
customers and suppliers while providing Cardinal with opportunities for growth
and profitability. For example, Cardinal's National PharmPak subsidiary operates
a pharmaceutical repackaging program for both independent and chain customers.
In January 1992, Cardinal formed National Specialty Services, Inc., which
distributes therapeutic plasma products and other specialty pharmaceuticals to
hospitals, clinics, and other managed care facilities on a nationwide basis
through the utilization of telemarketing and direct mail programs. Cardinal
recently expanded its specialty wholesaling business through a merger with PRN
Services, Inc., a distributor of oncology and other specialty products to
clinics and physician groups across the United States. These specialty
distribution activities are part of Cardinal's overall strategy of developing
diversified products and services to enhance the profitability of its business
and the businesses of its customers and suppliers.
Whitmire Merger
In February 1994, Cardinal completed its largest transaction when it merged
with Whitmire Distribution Corporation ("Whitmire"), a Folsom, California based
drug wholesaler with sales of approximately $2.9 billion for calendar 1993 (the
"Whitmire Merger"). The majority of Whitmire's sales were concentrated in the
western and central United States, complementing Cardinal's former concentration
of sales in the eastern United States and positioning the combined company to
service both customers and manufacturers on a national basis.
As a result of the Whitmire Merger, Cardinal now maintains a network of
approximately 40 distribution centers enabling it to routinely serve the entire
population of the continental United States on a next-day basis. In addition, a
majority of Whitmire's business was with hospital, managed care and large retail
chain customers, complementing Cardinal's rapidly expanding presence in these
customer categories and Cardinal's well-developed programs and services for
independent retail pharmacies.
4
<PAGE> 7
Recent Transactions
On July 1, 1994, Cardinal acquired Humiston-Keeling, Inc., a Calumet City,
Illinois based drug wholesaler, with annualized sales of approximately $330
million, serving customers located primarily in the upper midwest region of the
United States. On July 18, 1994, Cardinal completed a merger with Behrens Inc.,
a Waco, Texas based drug wholesaler, with annualized sales of approximately $185
million, serving customers located primarily in Texas and adjoining states.
Summary
While the wholesale drug industry continues to undergo rapid change and
consolidation, Cardinal believes that the trend in health care distribution is
toward selection by both customers and manufacturers of fewer, more efficient
wholesalers that can cover a broader geographic territory or customer group. In
this regard, Cardinal believes that, due to its internal growth and recent
mergers and acquisitions, it provides capabilities increasingly valued in the
marketplace, including: (a) single-supplier distribution capability for
customers who are themselves becoming more national or super-regional in scope;
(b) innovative marketing and merchandising support for manufacturers and
customers; (c) advanced information systems support for both customers and
manufacturers on a consistent basis; and (d) benefits of scale and leverage with
respect to investments in new technology, systems and services.
Cardinal's principal executive offices are located at 655 Metro Place
South, Suite 925, Dublin, Ohio 43017, and its telephone number is (614)
761-8700.
5
<PAGE> 8
USE OF PROCEEDS
The net proceeds to the Company from its sale of 1,600,000 Common Shares
offered hereby are estimated to be approximately $59,740,000 (assuming a public
offering price of $38.75 per share and no exercise of the U.S. Underwriters'
overallotment option). The net proceeds will be used to finance working capital
growth and for other general corporate purposes, including, to the extent
required, acquisitions. Although the Company continually evaluates possible
candidates for acquisition and intends to continue to seek opportunities to
expand its health care distribution operations, no acquisition has been agreed
upon or become the subject of a letter of intent or agreement in principle.
Pending application of the net proceeds as described above, the proceeds will be
used to reduce short-term notes payable-banks, if any, and to invest in
short-term, interest bearing securities.
The Company will not receive any of the proceeds from the sale of Common
Shares by the Selling Shareholders and, if any, proceeds from the U.S.
Underwriters' exercise of the portion of the overallotment option allocated to
certain Selling Shareholders.
MARKET PRICE AND DIVIDEND DATA
Since September 7, 1994, the Common Shares have been listed on the New York
Stock Exchange under the symbol "CAH." Prior to that date, the Common Shares
were quoted on the Nasdaq National Market under the symbol "CDIC." The following
table reflects, for the periods indicated, the range of the reported high and
low last sale prices of Common Shares as reported on the Nasdaq National Market
through September 6, 1994 and on the New York Stock Exchange since September 7,
1994, and the per share dividends declared thereon. The information in the table
has been adjusted to reflect retroactively all stock splits and stock dividends
and also to reflect the Company's decision, as of March 1, 1994, to change its
fiscal year end from March 31 to June 30.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
FISCAL 1993
Quarter Ended
June 30, 1992................................................. $24.00 $19.80 $.016
September 30, 1992............................................ 25.80 21.60 .016
December 31, 1992............................................. 24.20 20.20 .020
March 31, 1993................................................ 23.80 19.60 .020
Three Months Ended June 30, 1993................................ 23.70 20.60 .020
FISCAL 1994
Quarter Ended
September 30, 1993............................................ 30.00 21.80 .020
December 31, 1993............................................. 38.40 28.80 .024
March 31, 1994................................................ 40.60 33.30 .024
June 30, 1994................................................. 40.80 34.40 .030
FISCAL 1995
Through September 16, 1994.................................... 41.25 36.625 .030
</TABLE>
On August 8, 1994, there were approximately 1,150 holders of record of the
Common Shares. The last reported sales price of the Common Shares on the New
York Stock Exchange on September 16, 1994 was $39.125.
The Company anticipates that it will continue to pay quarterly cash
dividends in the future. The timing and amount of any future dividends, however,
remain within the discretion of the Company's board of directors and will depend
upon the Company's future earnings, financial condition, capital requirements
and other factors.
6
<PAGE> 9
CAPITALIZATION
The following table sets forth the short-term obligations and total
capitalization of the Company at June 30, 1994, and as adjusted to reflect the
issuance and sale by the Company of 1,600,000 Common Shares offered hereby and
the application of the net proceeds therefrom (assuming a public offering price
of $38.75 per share and no exercise of the U.S. Underwriters' overallotment
option, see "Underwriting") to in part reduce notes payable-banks. See "Use of
Proceeds."
<TABLE>
<CAPTION>
JUNE 30, 1994
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term obligations:
Notes payable-banks................................................. $ 25,000 $ 0
Current portion of long-term obligations............................ 2,929 2,929
-------- -----------
Total short-term obligations................................ $ 27,929 $ 2,929
======== =========
Long-term obligations:
Other long-term obligations including capital leases................ $ 10,086 $ 10,086
8% Notes due 1997................................................... 100,000 100,000
6 1/2% Notes due 2004............................................... 100,000 100,000
-------- -----------
Total long-term obligations................................. 210,086 210,086
-------- -----------
Shareholders' equity:
Common Shares, without par value, authorized 60,000,000 shares;
issued 35,042,713 shares; as adjusted 39,027,713 shares; Class B
Common Shares, without par value, authorized 5,000,000 shares;
issued 2,971,375 shares; as adjusted 586,375 shares(1)........... $255,458 $ 315,198
Retained earnings................................................... 120,399 120,399
Common Shares in treasury, at cost 179,878 shares................... (3,390) (3,390)
Unamortized restricted stock awards................................. (3,973) (3,973)
-------- -----------
Total shareholders' equity.................................. 368,494 428,234
-------- -----------
Total capitalization.................................................. $578,580 $ 638,320
======== =========
</TABLE>
- ---------------
(1) The number of outstanding Common Shares and Class B Common Shares has been
adjusted to reflect the conversion of Class B Common Shares into Common
Shares for sale in this Combined Offering by Chemical Equity Associates, the
only holder of Class B Common Shares. Under the Company's Amended and
Restated Articles of Incorporation, as amended, holders of Class B Common
Shares have the right to convert such shares into Common Shares, subject to
certain conditions, if (i) such holder reasonably believes that the
converted shares will be transferred within fifteen (15) days pursuant to
certain Conversion Events (which term is defined in the Company's Amended
and Restated Articles of Incorporation, as amended, and includes any public
offering or sale of the Company's securities); (ii) such holder has agreed
not to vote any such Common Shares prior to a Conversion Event; and (iii)
such holder undertakes to promptly convert such shares back into Class B
Common Shares if such shares are not transferred pursuant to a Conversion
Event. See "Description of Capital Stock." Chemical Equity Associates has
informed the Company that, immediately prior to the consummation of the
Combined Offering, it intends to convert 2,385,000 Class B Common Shares
into Common Shares to be sold in the Combined Offering, assuming no exercise
by the U.S. Underwriters of the overallotment option.
7
<PAGE> 10
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial data concerning Cardinal has
been prepared giving retroactive effect to the business combination of Cardinal
and Whitmire on February 7, 1994, which has been accounted for as a
pooling-of-interests transaction. On March 1, 1994, the Company made the
decision to change its fiscal year end from March 31 to June 30. As such, for
the fiscal year ended March 31, 1993 and prior years, the information presented
is derived from consolidated financial statements which combine data from
Cardinal for the fiscal years ended March 31, 1990, March 31, 1991, March 31,
1992, and March 31, 1993, with data from Whitmire for the fiscal years ended
June 30, 1990, June 29, 1991, June 27, 1992 and July 3, 1993, respectively. For
the twelve months ended June 30, 1993 and the fiscal year ended June 30, 1994,
the information presented is derived from consolidated financial statements
which combine data from Cardinal for the twelve months ended June 30, 1993 and
the fiscal year ended June 30, 1994 with data from Whitmire for the fiscal years
ended July 3, 1993 and June 30, 1994. Due to the different fiscal year ends of
the merged companies, Whitmire's results of operations for the three months
ended July 3, 1993 have been included in both the fiscal year ended March 31,
1993 and the twelve months ended June 30, 1993. The selected consolidated
financial data below should be read in conjunction with the consolidated
financial statements and related notes incorporated herein by reference. See
"Incorporation of Certain Documents by Reference." All share and per share data
have been adjusted to give retroactive effect to stock splits and stock
dividends.
<TABLE>
<CAPTION>
|| TWELVE FISCAL
|| MONTHS YEAR
FISCAL YEAR ENDED || ENDED ENDED
------------------------------------------------- || ---------- ----------
MARCH 31, MARCH 31, MARCH 31, MARCH 31, || JUNE 30, JUNE 30,
1990 1991 1992 1993 || 1993 1994
---------- ---------- ---------- ---------- || ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA) ||
<S> <C> <C> <C> <C> || <C> <C>
EARNINGS STATEMENT DATA(1)(2): ||
Net sales...................................... $2,137,896 $2,803,111 $3,680,678 $4,633,375 || $4,709,085 $5,790,411
Gross margin................................... 170,529 206,197 256,833 297,293 || 300,245 355,172
Selling, general and administrative expenses... (128,864) (152,769) (184,523) (203,740) || (205,161) (233,305)
Unusual items ||
Merger costs................................. -- -- -- -- || -- (35,880)
Termination fee.............................. -- -- -- 13,466 || 13,466 --
Nonrecurring charges......................... -- -- (1,973) (18,904) || (18,904) --
---------- ---------- ---------- ---------- || ---------- ----------
Operating earnings............................. 41,665 53,428 70,337 88,115 || 89,646 85,987
Interest expense and other, net................ (20,579) (22,616) (22,684) (21,858) || (21,127) (15,227)
---------- ---------- ---------- ---------- || ---------- ----------
Earnings before income taxes and cumulative ||
effect of change in accounting principle..... 21,086 30,812 47,653 66,257 || 68,519 70,760
Income taxes................................... (8,176) (11,123) (19,291) (25,710) || (26,345) (35,624)
---------- ---------- ---------- ---------- || ---------- ----------
Earnings before cumulative effect of change in ||
accounting principle......................... 12,910 19,689 28,362 40,547 || 42,174 35,136
Preferred dividends declared/accretion......... (2,840) (2,840) (2,840) (2,876) || (2,876) (1,205)
---------- ---------- ---------- ---------- || ---------- ----------
Earnings available for Common Shares before ||
cumulative effect of change in accounting ||
principle.................................... 10,070 16,849 25,522 37,671 || 39,298 33,931
Cumulative effect of change in accounting ||
principle.................................... -- -- -- (10,000) || -- --
---------- ---------- ---------- ---------- || ---------- ----------
Net earnings available for Common Shares....... $ 10,070 $ 16,849 $ 25,522 $ 27,671 || $ 39,298 $ 33,931
========== ========== ========== ========== || ========== ==========
Earnings per Common Share: ||
Primary: ||
Earnings before cumulative effect of change ||
in accounting principle.................. $ 0.34 $ 0.53 $ 0.74 $ 1.10 || $ 1.14 $ 0.86
Cumulative effect of change in accounting ||
principle................................ -- -- -- (0.29) || -- --
---------- ---------- ---------- ---------- || ---------- ----------
Net earnings............................... $ 0.34 $ 0.53 $ 0.74 $ 0.81 || $ 1.14 $ 0.86
========== ========== ========== ========== || ========== ==========
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
| | TWELVE FISCAL
| | MONTHS YEAR
FISCAL YEAR ENDED | | ENDED ENDED
------------------------------------------------- | | ---------- ----------
MARCH 31, MARCH 31, MARCH 31, MARCH 31, | | JUNE 30, JUNE 30,
1990 1991 1992 1993 | | 1993 1994
---------- ---------- ---------- ---------- | | ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA) | |
<S> <C> <C> <C> <C> | | <C> <C>
Fully diluted: | |
Earnings before cumulative effect of change | |
in accounting principle.................. $ 0.34 $ 0.53 $ 0.74 $ 1.06 | | $ 1.10 $ 0.86
Cumulative effect of change in accounting | |
principle................................ -- -- -- (0.26)| | -- --
---------- ---------- ---------- ---------- | | ---------- ----------
Net earnings............................... $ 0.34 $ 0.53 $ 0.74 $ 0.80 | | $ 1.10 $ 0.86
========= ========= ========= ========= | | ========= =========
Cash dividends declared per Common Share....... $ 0.04 $ 0.05 $ 0.06 $ 0.07 | | $ 0.08 $ 0.10
========= ========= ========= ========= | | ========= =========
Weighted average number of shares outstanding: | |
Primary...................................... 29,904 31,581 34,291 34,311 | | 34,349 39,392
Fully diluted................................ 31,213 34,691 38,571 38,616 | | 38,653 39,477
| |
| |
| |
| |
MARCH 31, MARCH 31, MARCH 31, MARCH 31, | | JUNE 30, JUNE 30,
1990 1991 1992 1993 | | 1993 1994
--------- --------- --------- ---------- | | ---------- ----------
(IN THOUSANDS) | |
<S> <C> <C> <C> <C> | | <C> <C>
BALANCE SHEET DATA(1)(2): | |
Current assets................................... $454,482 $711,825 $845,877 $ 995,832 | | $1,032,902 $1,287,124
Property and equipment-net....................... 29,188 48,572 57,548 59,313 | | 61,595 60,029
Other assets..................................... 29,772 39,816 43,656 44,705 | | 55,926 48,449
--------- --------- --------- ----------- | | ---------- ----------
Total assets............................. $513,442 $800,213 $947,081 $1,099,850 | | $1,150,423 $1,395,602
========= ========= ========= ========== | | ========= =========
Current liabilities.............................. $265,302 $381,087 $408,874 $ 555,094 | | $ 594,188 $ 816,042
Long-term obligations............................ 111,721 213,986 304,943 275,789 | | 274,908 210,086
Other liabilities................................ 816 822 1,266 705 | | 3,010 980
Redeemable preferred stock....................... 17,480 18,320 19,560 20,400 | | 20,400 --
Shareholders' equity............................. 118,123 185,998 212,438 247,862 | | 257,917 368,494
--------- --------- --------- ----------- | | ---------- ----------
Total liabilities and shareholders' | |
equity................................. $513,442 $800,213 $947,081 $1,099,850 | | $1,150,423 $1,395,602
========= ========= ========= ========== | | ========== ==========
<FN>
- ---------------
(1) Amounts reflect business combinations in fiscal 1991, 1992, the twelve
months ended June 30, 1993, and fiscal 1994.
(2) The consolidated financial information includes the impact of the following
unusual items: (a) an equity transaction expense of approximately $2.0
million recorded by Whitmire in fiscal 1992, (b) a termination fee of
approximately $13.5 million received by Cardinal in fiscal 1993, resulting
from the termination by Durr-Fillauer Medical, Inc. of its agreement to
merge with Cardinal, (c) certain nonrecurring charges of approximately $9.9
million and $3.8 million recorded by Cardinal and Whitmire, respectively in
fiscal 1993, (d) a stock option compensation charge of approximately $5.2
million recorded by Whitmire in fiscal 1993, and (e) a nonrecurring charge
to reflect the estimated Whitmire Merger costs of approximately $35.9
million ($28.2 million net of tax) recorded by Cardinal in fiscal 1994.
</TABLE>
<TABLE>
The following supplemental information summarizes the results of operations
of the Company, adjusted on a pro forma basis to reflect: (a) the
elimination of the effect of the unusual items discussed above; and (b) the
redemption of Whitmire's preferred stock pursuant to the terms of the
Agreement and Plan of Reorganization between Cardinal and Whitmire. Solely
for purposes of the summary presented below, such redemption is assumed to
have been funded from the liquidation of investments in tax-exempt
marketable securities.
<CAPTION>
TWELVE
FISCAL YEAR ENDED MONTHS FISCAL YEAR
-------------------- ENDED ENDED
MARCH 31, MARCH 31, JUNE 30, JUNE 30,
1992 1993 1993 1994
--------- --------- ----------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Operating earnings.............................................. $72,310 $93,553 $ 95,084 $ 121,867
Earnings before cumulative effect of change in accounting
principle..................................................... $29,252 $42,865 $ 44,510 $ 63,044
Earnings per common share before cumulative effect of change in
accounting principle:
Primary....................................................... $0.85 $1.25 $1.30 $1.60
Fully diluted................................................. 0.84 1.19 1.24 1.60
</TABLE>
9
<PAGE> 12
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of each of the Selling Shareholders of the Company's Common
Shares as of August 8, 1994, and as adjusted to reflect the sale of the shares
offered hereby. The following table assumes the conversion of all 2,971,375
outstanding Class B Common Shares into Common Shares both prior to and after the
Combined Offering.
<TABLE>
<CAPTION>
COMMON COMMON
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE OWNED AFTER THE
COMBINED OFFERING COMMON COMBINED OFFERING
NAME OF --------------------- SHARES ------------------------
SELLING SHAREHOLDER(1) NUMBER PERCENT BEING NUMBER PERCENT(2)
- ---------------------------------- --------- ------- OFFERED(2) --------- ----------
---------
<S> <C> <C> <C> <C> <C>
Apollo Investment Fund,
L.P.(3)(4)...................... 3,333,921 8.50% 2,385,000 948,921 2.32%
Chemical Equity Associates(3)..... 3,261,803(5) 8.32 2,385,000 876,803(5) 2.15
Melburn G. Whitmire(3)(6)......... 1,205,134 3.03 375,000 830,134 2.01
Gary E. Close(6).................. 271,985 * 100,000 171,985 *
James E. Clare(6)................. 114,812 * 45,000 69,812 *
Philip Solomons, Sr.(7)........... 145,637 * 5,000 140,637 *
Philip Solomons, Jr.(7)........... 633,293 1.61 4,000 629,293 1.54
Ralph S. Solomons(7).............. 81,540 * 500 81,040 *
Richard M. Solomons(7)............ 78,009 * 500 77,509 *
William L. Clifton, Jr.(8)........ 306,934 * 25,685 281,249 *
James R. Clifton(8)............... 304,939 * 23,690 281,249 *
The Mary Lacy Clifton Separate
Property Trust(8)............... 331,874 * 50,625 281,249 *
</TABLE>
- ---------------
* Less than 1%
(1) Except as otherwise noted below, the persons named above have sole voting
and investment power with respect to all shares shown as being beneficially
owned by them.
(2) Excludes any Common Shares issuable upon exercise by the U.S. Underwriters
of the overallotment option granted by certain of the Selling Shareholders
to purchase Common Shares. See "Underwriting" for the allocation of the
overallotment option among the Company and certain of the Selling
Shareholders. To the extent that the overallotment option is exercised, the
Common Shares beneficially owned after the Combined Offering would be
reduced accordingly.
(3) Cardinal has entered into a Registration Rights Agreement, dated as of
October 11, 1993, as amended, with Apollo Investment Fund, L.P., Chemical
Equity Associates and Mr. Whitmire whereby each such shareholder has certain
rights to require the Company to register under the Securities Act Common
Shares owned by them through the period ending April 25, 1999, subject to
extensions under certain circumstances. See "Selling Shareholders --
Whitmire Registration Rights."
(4) As a result of the Company's merger with Whitmire on February 7, 1994 (the
"Whitmire Merger"), Apollo Investment Fund, L.P. has the right to designate
two nominees for election as directors of the Company for so long as (A)
Apollo Investment Fund, L.P., including any of its affiliates and any of its
accounts under common management and control (the "Apollo Group"), and (B)
any former shareholder of Whitmire (exclusive of Apollo Advisors, L.P. and
any such shareholders who were current or former employees of Whitmire as of
October 11, 1993 or any family members of such employees or trusts for their
benefit ("Management Shareholders")) each continue to have a pecuniary
interest in 1,250,000 or more Common Shares and Class B Common Shares issued
to such person in the Whitmire Merger (the "Threshold Amount"). Further,
Apollo Advisors, L.P. has the right to designate one individual for so long
as only one of the Apollo Group or any former shareholder of Whitmire
(exclusive of Apollo Advisors, L.P. or Management Shareholders) shall
continue to have a pecuniary interest in the Common Shares and Class B
Common Shares which equal or exceed the Threshold Amount. In connection with
the Whitmire Merger, Apollo Investment Fund, L.P. has designated as
directors of Cardinal Michael S. Gross, Vice President of Apollo Capital
Management, Inc., and Mitchell J. Blutt, M.D., Executive Partner of Chemical
Venture Partners. Upon completion of the Combined Offering, neither the
Apollo Group nor any other former shareholder of Whitmire will have a
pecuniary interest in the Common Shares or the Class B Common Shares which
equals or exceeds the Threshold Amount.
In addition, until the Apollo Group no longer has a pecuniary interest in
the Common Shares equal to or exceeding the Threshold Amount, Cardinal must
include as a member of the audit committee of its board of directors one
individual on the board of directors of Cardinal designated by the Apollo
Group and, if Mr. Whitmire ceases to be a
10
<PAGE> 13
member of the executive committee of the board of directors of Cardinal,
Cardinal is required to include as a member of the executive committee of
the board of directors one individual on the board of directors of Cardinal
designated by the Apollo Group.
(5) Chemical Equity Associates owns all of the 2,971,375 outstanding Class B
Common Shares. The share ownership amounts are calculated assuming the
conversion of all such outstanding Class B Common Shares into Common Shares
immediately prior to this Combined Offering. See "Description of Capital
Stock." Prior to the conversion of such Class B Common Shares, Chemical
Equity Associates owns of record 290,428 Common Shares and 2,971,375 Class B
Common Shares. Chemical Equity Associates has informed the Company that,
immediately prior to the consummation of the Combined Offering, it intends
to convert 2,385,000 Class B Common Shares into Common Shares to be sold in
the Combined Offering assuming no exercise by the U.S. Underwriters of the
overallotment option.
(6) In connection with the Whitmire Merger in February 1994, Mr. Whitmire
entered into a three-year employment agreement with the Company and serves
as a director and Vice Chairman of the Company. Gary E. Close and James E.
Clare also entered into three-year employment agreements with the Company
and serve as its Executive Vice President -- Western Region and Executive
Vice President -- Southern Region, respectively. The shares shown above as
being beneficially owned by Mr. Whitmire include 532,333 Common Shares which
he has the right to acquire pursuant to options currently exercisable and
4,801 Common Shares which he holds as custodian for a minor child. The
shares shown above as being beneficially owned by Mr. Close include 146,125
Common Shares which he has the right to acquire pursuant to options which
are currently exercisable. The shares shown as being beneficially owned by
Mr. Clare include 52,187 Common Shares which he has the right to acquire
pursuant to options which are currently exercisable.
(7) In connection with the merger of Solomons Company, a Savannah, Georgia based
drug wholesaler, with Cardinal on May 4, 1993 (the "Solomons Merger"),
Philip Solomons, Sr. entered into a seven-year consulting agreement with and
serves as the Senior Chairman of Solomons Company, a wholly-owned subsidiary
of the Company. Philip Solomons, Jr., Ralph Solomons and Richard Solomons
(sons of Philip Solomons, Sr.) each entered into five-year employment
agreements with Solomons Company in connection with the Solomons Merger.
Philip Solomons, Jr. serves as the President of Solomons Company. The shares
shown above as being beneficially owned by Philip Solomons, Sr. include
51,441 Common Shares owned by Mr. Solomons' wife. The shares shown above as
being beneficially owned by Philip Solomons, Jr. include 17,948 Common
Shares held in his individual retirement account, 250,756 Common Shares held
in a trust established by Philip Solomons, Sr., as to which Philip Solomons,
Jr. acts as sole trustee and 264,793 Common Shares held in a trust
established by Shirley Solomons (the wife of Philip Solomons, Sr.), as to
which Philip Solomons, Jr. acts as sole trustee. The shares shown above as
being beneficially owned by Ralph Solomons include 6,290 Common Shares held
in his individual retirement account. The shares shown above as being
beneficially owned by Richard Solomons include 3,911 Common Shares held in
his individual retirement account.
(8) In connection with the merger of Behrens Inc., a Waco, Texas based drug
wholesaler, with Cardinal on July 18, 1994 (the "Behrens Merger"), William
L. Clifton, Jr. and James R. Clifton each entered into two-year employment
agreements with Behrens Inc., a wholly-owned subsidiary of the Company.
William L. Clifton, Jr. serves as the President of Behrens Inc., and James
R. Clifton serves as the Vice President -- Operations of Behrens Inc. The
shares shown above as being beneficially owned by James R. Clifton, include
74,974 held by James R. Clifton and his wife, Barbara Clifton, as community
property, and all of the shares being sold in the Combined Offering are held
as community property. The shares shown above as being beneficially owned by
William L. Clifton, Jr. do not include 331,874 Common Shares held by The
Mary Lacy Clifton Separate Property Trust, of which Mr. Clifton is the Co-
Trustee.
WHITMIRE REGISTRATION RIGHTS
In connection with the Whitmire Merger, Cardinal granted to Apollo
Investment Fund, L.P., Chemical Equity Associates ("CEA") and Mr. Whitmire
(collectively, the "Whitmire Stockholders") certain rights to require Cardinal
to register under the Securities Act Common Shares held by them (including
Common Shares issuable to CEA upon conversion of Class B Common Shares). These
rights include "demand" and "piggyback" registration rights and are contained in
the Registration Rights Agreement dated as of October 11, 1993 (the
"Registration Rights Agreement"), as amended, among Cardinal, the Whitmire
Stockholders and Robert D. Walter, Chairman of Cardinal. Under the Registration
Rights Agreement, the Whitmire Stockholders are entitled to require Cardinal to
file a registration statement under the Securities Act
11
<PAGE> 14
with the Commission covering the sale of their shares (a "Required
Registration") up to seven times in the five-year period ending April 25, 1999,
unless earlier terminated or extended as provided below. The Whitmire
Stockholders may only request up to four Required Registrations during the
three-year period ending April 25, 1997. Cardinal will pay all expenses incurred
in connection with up to four Required Registrations, exclusive of the fees and
expenses of counsel for selling stockholders. In addition, the selling Whitmire
Stockholders will be responsible for any underwriters' discounts and commissions
attributable to the sale of their shares.
Cardinal is not required to effect the first Required Registration under
the Registration Rights Agreement unless Whitmire Stockholders (together with
certain permitted transferees) making the request hold at least 1,250,000 Common
Shares and Class B Common Shares, and Cardinal is not required to effect
subsequent Required Registrations unless such persons hold (i) at least 937,500
Common Shares and Class B Common Shares acquired in the Whitmire Merger, or (ii)
Common Shares and Class B Common Shares acquired in the Whitmire Merger with a
fair market value of at least $25 million. The Whitmire Stockholders may not
make a request for a Required Registration until 180 days have elapsed since the
completion of a prior Required Registration. In addition, Cardinal has the right
to delay for up to 90 days the filing of a registration statement with respect
to a Required Registration if Cardinal's Board of Directors determines such
action is in the best interests of Cardinal's shareholders, but Cardinal may not
invoke a delay if at least 12 months have not elapsed from the end of any
previous delay period. These delays and certain other events will extend on a
day-for-day basis the five- and three-year periods referred to in the preceding
and following paragraphs.
The Registration Rights Agreement also provides that the Whitmire
Stockholders have the right to include their Common Shares in registration
statements filed by Cardinal in connection with primary or secondary offerings
for cash (with certain exceptions). These "piggyback" registration rights also
terminate on April 25, 1999 unless earlier terminated or extended.
The demand and piggyback registration rights granted to (i) CEA, its
affiliates and successors (the "Chemical Holders"), and (ii) Apollo Investment
Fund, L.P., its affiliates and successors (the "Apollo Holders"), terminate
prior to April 25, 1999, if the Chemical Holders or the Apollo Holders, as the
case may be, either (i) shall beneficially own fewer than 312,500 Common Shares
and Class B Common Shares or (ii) shall acquire more than an additional 625,000
Common Shares and Class B Common Shares without the Company's consent. The
Registration Rights Agreement also limits the grant by Cardinal of additional
registration rights.
SOLOMONS REGISTRATION RIGHTS
Cardinal has granted to the former shareholders of Solomons Company
("Solomons Stockholders") the right until May 4, 1995 (exercisable by holders
representing a majority of all Common Shares issued to Solomons Stockholders in
the Solomons Merger) to include Common Shares received in the Solomons Merger in
registration statements filed by Cardinal in connection with offerings of Common
Shares. This participation by Solomons Stockholders is limited to 10% of the
number of Common Shares offered in such registration statement.
BEHRENS REGISTRATION RIGHTS
Cardinal has granted to the former shareholders of Behrens Inc. ("Behrens
Stockholders") the right until July 18, 1996 (exercisable by holders
representing a majority of all Common Shares issued to Behrens Stockholders in
the Behrens Merger) to include up to an aggregate of 187,500 Common Shares
received in the Behrens Merger in registration statements filed by Cardinal in
connection with offerings of Common Shares. The Common Shares to be included in
a registration statement at the request of Behrens Stockholders, when combined
with Common Shares included in such a registration statement at the request of
Solomons Stockholders, shall not exceed 10% of the number of Common Shares
offered in such a registration statement. Upon completion of the Combined
Offering and assuming no exercise by the U.S. Underwriters of the overallotment
option, 87,500 Common Shares will remain subject to the registration rights of
Behrens Stockholders.
12
<PAGE> 15
SHARES ELIGIBLE FOR FUTURE SALE
Pursuant to the Registration Rights Agreement described above, Cardinal has
granted to certain of the Whitmire Stockholders the right, exercisable during
the five-year period ending April 25, 1999, to register 7,800,858 Common Shares
(which number reflects all stock splits and stock dividends and assumes
conversion of all 2,971,375 Class B Common Shares and the exercise of options to
purchase all 532,333 Common Shares held by Mr. Whitmire) issued or issuable to
the Whitmire Stockholders as a result of the Whitmire Merger. Assuming the sale
of 5,145,000 Common Shares hereunder and no exercise by the U.S. Underwriters of
the overallotment option, the Whitmire Stockholders will continue to have
2,655,858 Common Shares available for future sale.
In connection with the Solomons Merger, Solomons Stockholders received, in
a private placement, 1,062,000 Common Shares (which number reflects all stock
splits and stock dividends). Assuming the sale of 10,000 Common Shares
hereunder, Solomons Stockholders will continue to have 1,052,000 Common Shares
available for future sale, which shares are restricted under the Securities Act.
Solomons Stockholders will be able to sell such Common Shares under Rule 144 of
the Securities Act beginning May 4, 1995, and they have certain registration
rights described above until such date.
In connection with the Behrens Merger, Behrens Stockholders received, in a
private placement, 943,747 Common Shares (which number reflects all stock splits
and stock dividends). Assuming the sale of 100,000 Common Shares hereunder, and
no exercise by the U.S. Underwriters of the overallotment option, Behrens
Stockholders will continue to have 843,747 Common Shares available for future
sale, which shares are restricted under the Securities Act. The Behrens
Stockholders will be able to sell such Common Shares under Rule 144 of the
Securities Act beginning July 18, 1996, and they have certain registration
rights described above until such date.
The Company and the Selling Shareholders (who will beneficially own after
the Combined Offering 4,669,881 Common Shares, assuming no exercise by the U. S.
Underwriters of the overallotment option, and the conversion of all Class B
Common Shares into Common Shares) have agreed that, for a period of 90 days from
the date of this Prospectus, they will not, without the prior written consent of
Smith Barney Inc., sell, contract to sell, or otherwise dispose of, any Common
Shares, or any securities convertible into, or exercisable or exchangeable for,
Common Shares, except under certain circumstances set forth in the U.S.
Underwriting Agreement and the International Underwriting Agreement.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital shares consist of: (a) 60,000,000 Common
Shares, without par value, of which at August 8, 1994, 36,247,148 were
outstanding, 3,930,000 were reserved for issuance under stock incentive plans
(including approximately 1,020,000 Common Shares reserved for issuance under
stock option agreements entered into between the Company and former holders of
options to purchase shares of common stock of Whitmire), and 2,971,375 were
reserved for issuance upon conversion of the Company's outstanding Class B
Common Shares (as defined below); (b) 5,000,000 Class B common shares, without
par value (the "Class B Common Shares"), of which, at August 8, 1994, 2,971,375
were outstanding; and (c) 500,000 non-voting preferred shares, without par value
(the "Preferred Shares"), none of which has been issued. The Class B Common
Shares were authorized in February 1994 in connection with the Whitmire Merger
because Chemical Equity Associates ("CEA"), one of the former Whitmire
Stockholders, is regulated under the Bank Holding Company Act and is thus
prohibited from holding voting stock of Cardinal in excess of certain
limitations. All of the outstanding Class B Common Shares are held by CEA.
All of the outstanding Common Shares and Class B Common Shares are fully
paid and nonassessable. Holders of the Common Shares and Class B Common Shares
do not have preemptive rights. All holders of the Common Shares and the Class B
Common Shares share equally in dividends, when and as declared by the Board of
Directors. Generally, holders of Common Shares have no rights to convert their
shares into any other security; except, however, any Regulated Shareholder (a
defined term in the Company's Amended and Restated Articles of Incorporation, as
amended (the "Articles")), is entitled to convert at any time any or all
13
<PAGE> 16
of its Common Shares into the same number of Class B Common Shares. Holders of
Class B Common Shares may convert such shares into Common Shares only if the
holder reasonably believes that the converted shares will be transferred within
15 days pursuant to a Conversion Event (a defined term in the Articles which
generally involves a disposition of the Class B Common Shares), such holder
agrees not to vote any such Common Shares prior to such Conversion Event and
such holder undertakes to promptly convert such shares into Class B Common
Shares if the Common Shares are not transferred pursuant to that Conversion
Event. In the event of liquidation of the Company, holders of the Common Shares
and the Class B Common Shares are entitled to share ratably in any assets
remaining after payment of all liabilities, subject to prior distribution rights
of any Preferred Shares then outstanding. Holders of the Common Shares are
entitled to one vote per share for the election of directors and upon all
matters on which shareholders are entitled to vote. Holders of Class B Common
Shares are entitled to one-fifth of one vote per share in the election of
directors and upon all matters on which shareholders are entitled to vote.
Holders of Common Shares and Class B Common Shares are entitled to vote their
shares cumulatively for the election of directors subject to compliance with
provisions of applicable law.
Pursuant to the Company's Restated Code of Regulations (the "Regulations"),
the Company's board of directors consists of fourteen members, divided into two
classes of five members each and a third class of four members. The Regulations
provide that the number of directors may be increased or decreased by action of
the board of directors upon the majority vote of the board, but in no case shall
the number of directors be fewer than nine or more than fourteen without an
amendment approved by the affirmative vote of the holders of not less than 75%
of the shares having voting power with respect to that proposed amendment. The
Regulations require that any proposal to either remove a director during his
term of office or to further amend the Regulations relating to the
classification or removal of directors be approved by the affirmative vote of
the holders of not less than 75% of the shares having voting power with respect
to such proposal. The board of directors may fill any vacancy with a person who
shall serve until the shareholders hold an election to fill the vacancy. The
purpose of these provisions is to prevent directors from being removed from
office prior to the expiration of their respective terms, thus protecting the
safeguards inherent in the classified board structure unless dissatisfaction
with the performance of one or more directors is widely shared by the Company's
shareholders. These provisions could also have the effect of increasing from one
year to two or three years (depending upon the number of Common Shares and Class
B Common Shares held) the amount of time required for an acquiror to obtain
control of the Company by electing a majority of the board of directors and may
also make the removal of incumbent management more difficult and discourage or
render more difficult certain mergers, tender offers, proxy contests, or other
potential takeover proposals.
The foregoing descriptions of the Common Shares, Class B Common Shares and
Preferred Shares and the provisions relating to the Articles and Regulations are
not complete and are qualified in their entirety by reference to the Articles
and the Regulations, which are incorporated by reference into the Registration
Statement of which this Prospectus is a part. See "Available Information."
TRANSFER AGENT AND REGISTRAR
The Company's transfer agent and registrar for the Common Shares is Bank
One, Indianapolis, NA, Indianapolis, Indiana.
14
<PAGE> 17
UNDERWRITING
Upon the terms and subject to the conditions contained in the U.S.
Underwriting Agreement dated the date hereof, each of the underwriters of the
United States and Canadian offering of Common Shares named below (the "U.S.
Underwriters"), for whom Smith Barney Inc., Goldman, Sachs & Co., Bear, Stearns
& Co. Inc., and William Blair & Company are acting as Representatives (the
"Representatives"), has severally agreed to purchase, and the Company has agreed
to sell to each U.S. Underwriter, the number of Common Shares set forth opposite
the name of such U.S. Underwriter.
<TABLE>
<CAPTION>
U.S. UNDERWRITER NUMBER OF COMMON SHARES
------------------------------------------------------------- -----------------------
<S> <C>
Smith Barney Inc.............................................
Goldman, Sachs & Co..........................................
Bear, Stearns & Co. Inc......................................
William Blair & Company......................................
------------
Total.............................................. 5,600,000
====================
</TABLE>
Under the terms and subject to the conditions contained in the International
Underwriting Agreement dated the date hereof, each of the managers of the
concurrent international offering of Common Shares named below (the "Managers"),
for whom Smith Barney Inc., Goldman Sachs International, Bear, Stearns
International Limited, and William Blair & Company are acting as lead managers
(the "Lead Managers"), has severally agreed to purchase, and the Company has
agreed to sell to each Manager, the number of Common Shares set forth opposite
the name of such Manager.
<TABLE>
<CAPTION>
MANAGER NUMBER OF COMMON SHARES
------------------------------------------------------------- -----------------------
<S> <C>
Smith Barney Inc.............................................
Goldman Sachs International..................................
Bear, Stearns International Limited..........................
William Blair & Company......................................
------------
Total.............................................. 1,400,000
====================
</TABLE>
15
<PAGE> 18
The obligations of the several U.S. Underwriters and Managers to pay for
and accept delivery of the Common Shares are subject to approval of certain
legal matters by counsel and to certain other conditions. The U.S. Underwriters
and Managers are obligated to take and pay for all Common Shares offered hereby
(other than those covered by the overallotment option described below) if any
such Common Shares are taken.
The Representatives and Lead Managers have advised the Company that the
U.S. Underwriters and Managers propose to offer part of the Common Shares
directly to the public at the public offering price set forth in the cover page
of this Prospectus and part of the Common Shares to certain dealers at a price
which represents a concession not in excess of $ per Common Share under
the public offering price. Any U.S. Underwriter or Manager may allow, and such
dealers may reallow, a concession not in excess of $ per Common Share
to any other U.S. Underwriter or Manager, respectively, or to certain other
dealers.
The Company and certain of the Selling Shareholders have granted to the
U.S. Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to 1,050,000 additional Common Shares at the price to
the public set forth on the cover page of this Prospectus minus the underwriting
discounts and commissions. The overallotment option will be allocated among the
Company and the following Selling Shareholders in the amount set forth opposite
their names: Cardinal -- 266,949 Common Shares; Apollo Investment Fund, L.P. --
383,184 Common Shares; Chemical Equity Associates -- 383,184 Common Shares;
William L. Clifton, Jr. -- 4,285 Common Shares; James R. Clifton -- 3,952 Common
Shares; and The Mary Lacy Clifton Separate Property Trust -- 8,446 Common
Shares. To the extent that the overallotment option is exercised for less than
1,050,000 Common Shares, the option will be exercised pro rata among the Company
and the foregoing Selling Shareholders. The U.S. Underwriters may exercise such
option solely for the purpose of covering overallotments, if any, made in
connection with the sales of the Common Shares offered hereby. To the extent
such option is exercised, each U.S. Underwriter will be obligated, subject to
certain conditions, to purchase approximately the same percentage of such
additional Common Shares as the number of Common Shares set forth opposite each
U.S. Underwriter's name in the preceding table bears to the total number of
Common Shares listed in such table.
Any offer of Common Shares in Canada will be made only pursuant to an
exemption from the requirement to file a prospectus in the relevant province of
Canada in which such offer is made.
Each Manager has represented and agreed that (i) it has not offered or sold
and will not offer or sell in the United Kingdom, by means of any document, any
Common Shares other than to persons whose ordinary business is to buy or sell
shares or debentures, whether as principal or agent (except under circumstances
that do not constitute an offer to the public within the meaning of the
Companies Act 1985), (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to anything done by
it in relation to the Common Shares in, from, or otherwise involving, the United
Kingdom, and (iii) it has only issued or passed on or will only issue or pass on
to any person in the United Kingdom any investment document (within the meaning
of the Financial Services Act 1986) relating to the Common Shares if that person
is of the kind described in Article 9(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1988.
No action has been or will be taken in any jurisdiction by the Company, any
Selling Shareholder, or the Managers that would permit an offering to the
general public of the Common Shares offered hereby in any jurisdiction other
than the United States.
Purchasers of the Common Shares offered hereby may be required to pay stamp
taxes and other charges in accordance with the laws and practices of the country
of the purchase in addition to the offering price set forth on the cover page of
this Prospectus.
The Company and the Selling Shareholders (who will beneficially own after
the Combined Offering 4,669,881 Common Shares, assuming no exercise by the U. S.
Underwriters of the overallotment option and the conversion of all Class B
Common Shares to Common Shares) have agreed that, for a period of 90 days from
the date of this Prospectus, they will not, without the prior written consent of
Smith Barney Inc., sell,
16
<PAGE> 19
contract to sell, or otherwise dispose of, any Common Shares, or any securities
convertible into, or exercisable or exchangeable for, Common Shares, except
Common Shares issued (i) pursuant to outstanding options and employee benefit
plans, (ii) in any acquisitions or (iii) upon conversion of Class B Common
Shares of the Company.
The Company, the U.S. Underwriters and the Managers have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.
The U.S. Underwriters and the Managers have entered into an Agreement
between U.S. Underwriters and Managers pursuant to which each U.S. Underwriter
has agreed that, as part of the distribution of 5,600,000 Common Shares offered
in the U.S. Offering (i) it is not purchasing any such Common Shares for the
account of anyone other than a U.S. or Canadian Person and (ii) it has not
offered or sold, and will not offer, sell, resell or deliver, directly or
indirectly, any of such Common Shares or distribute any prospectus relating to
the U.S. Offering outside the United States or Canada or to anyone other than a
U.S. or Canadian Person. In addition, each Manager has agreed that as part of
the distribution of the 1,400,000 Common Shares offered in the International
Offering (i) it is not purchasing any such Common Shares for the account of any
U.S. or Canadian Person and (ii) it has not offered or sold, and will not offer,
sell, resell or deliver, directly or indirectly, any of such Common Shares or
distribute any prospectus relating to the International Offering in the United
States or Canada or to any U.S. or Canadian Person. Each U.S. Underwriter and
Manager has also agreed that it will offer to sell Common Shares only in
compliance with all relevant requirements of any applicable laws.
The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the U.S. Underwriting Agreement, the
International Underwriting Agreement and the Agreement between U.S. Underwriters
and Managers including, (i) certain purchases and sales between the U.S.
Underwriters and the Managers, (ii) certain offers, sales, resales, deliveries
or distributions to or through investment advisors or other persons exercising
investment discretion, (iii) purchases, offers or sales by a U.S. Underwriter
who is also acting as a U.S. Underwriter, and (iv) other transactions
specifically approved by the Representatives and the Lead Managers. As used
herein, "U.S. or Canadian Person" means any resident or national of the United
States or Canada, any corporation, partnership or other entity created or
organized in or under the laws of the United States or Canada or any estate or
trust the income of which is subject to United States or Canadian income
taxation regardless of the source of its income (other than the foreign branch
of any U.S. or Canadian Person), and includes any United States or Canadian
branch of a person other than a U.S. or Canadian Person.
LEGAL MATTERS
Certain legal matters in connection with the offering of the Common Shares
will be passed upon for the Company by Baker & Hostetler, Columbus, Ohio.
Michael E. Moritz, a director of the Company, is a partner of Baker & Hostetler
and is the beneficial owner of 551,233 Common Shares. Certain legal matters in
connection with the Common Shares offered hereby will be passed upon for the
Underwriters by Davis Polk & Wardwell. Certain legal matters in connection with
the Common Shares offered hereby will be passed upon for certain of the Selling
Shareholders by Wachtell, Lipton, Rosen & Katz.
17
<PAGE> 20
EXPERTS
The consolidated financial statements of the Company and its consolidated
subsidiaries as of June 30, 1994 and for the year then ended and the
consolidated financial statements of the Company and its consolidated
subsidiaries, except Whitmire Distribution Corporation, as of March 31, 1993 and
1992 and for the years then ended, incorporated in this Prospectus by reference
from the Company's Annual Report on Form 10-K for the year ended June 30, 1994
have been audited by Deloitte & Touche LLP as stated in their report which is
incorporated herein by reference (which report expresses an unqualified opinion
and includes an explanatory paragraph referring to the change in the method of
accounting for income taxes). The financial statements of Whitmire Distribution
Corporation (consolidated with those of the Company in the consolidated
financial statements for the years ended March 31, 1993 and 1992) have been
audited by Arthur Andersen LLP, as stated in its report which is incorporated
herein by reference from the Company's Annual Report on Form 10-K for the year
ended June 30, 1994. Such consolidated financial statements of the Company and
its consolidated subsidiaries are incorporated by reference herein in reliance
upon the respective reports of such firms given upon their authority as experts
in accounting and auditing. Both of the foregoing firms are independent
auditors.
18
<PAGE> 21
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
The Company.......................... 3
Use of Proceeds...................... 6
Market Price and Dividend Data....... 6
Capitalization....................... 7
Selected Consolidated Financial
Information........................ 8
Selling Shareholders................. 10
Description of Capital Stock......... 13
Underwriting......................... 15
Legal Matters........................ 17
Experts.............................. 18
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
7,000,000 SHARES
[Logo]
COMMON SHARES
----------------------------------
PROSPECTUS
SEPTEMBER , 1994
----------------------------------
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
WILLIAM BLAIR & COMPANY
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 22
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 1994
PROSPECTUS
7,000,000 SHARES
[LOGO]
COMMON SHARES
------------------
Of the 7,000,000 Common Shares offered hereby, 1,600,000 are being sold by
Cardinal Health, Inc. ("Cardinal" or the "Company") and 5,400,000 are being sold
by certain shareholders of the Company (the "Selling Shareholders"). See
"Selling Shareholders." The Company will not receive any of the proceeds from
the sale of Common Shares by the Selling Shareholders. Of the 7,000,000 Common
Shares being offered, 1,400,000 are being offered hereby in an international
offering outside of the United States and Canada (the "International Offering")
by the Managers (as defined herein) and 5,600,000 Common Shares are being
offered in a concurrent offering in the United States and Canada (the "U.S.
Offering" and, together with the International Offering, the "Combined
Offering") by the U.S. Underwriters (as defined herein). See "Underwriting."
The Common Shares are listed on the New York Stock Exchange under the
symbol "CAH." On September 16, 1994, the last reported sale price for the
Company's Common Shares on the New York Stock Exchange was $39.125 per share.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
- ---------------------------------------------------------------------------------------------------------
Per Share $ $ $ $
- ---------------------------------------------------------------------------------------------------------
Total $ $ $ $
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the
Managers against certain liabilities, including certain liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses of the Combined Offering payable by the Company,
estimated at $400,000.
(3) The Company and certain of the Selling Shareholders have granted the U.S.
Underwriters an option, exercisable within 30 days after the date hereof, to
purchase up to 1,050,000 additional Common Shares for sale in the U.S.
Offering only on the same terms per share solely for the purpose of covering
overallotments, if any. If the U.S. Underwriters exercise such option in
full, the Price to Public, Underwriting Discounts and Commissions, Proceeds
to Company and Proceeds to Selling Shareholders will be $ ,
$ , $ , and $ , respectively. See "Underwriting."
------------------
The Common Shares are offered by the several Managers when, as and if
delivered to and accepted by them and subject to their right to reject orders in
whole or in part. It is expected that the Common Shares will be available for
delivery at the offices of Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013 or through the facilities of the Depository Trust Company, on or
about September , 1994.
------------------
SMITH BARNEY INC.
GOLDMAN SACHS INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
WILLIAM BLAIR & COMPANY
September , 1994
<PAGE> 23
[ALTERNATIVE PAGE FOR INTERNATIONAL PROSPECTUS]
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
The Company.......................... 3
Use of Proceeds...................... 6
Market Price and Dividend Data....... 6
Capitalization....................... 7
Selected Consolidated Financial
Information........................ 8
Selling Shareholders................. 10
Description of Capital Stock......... 13
Underwriting......................... 15
Legal Matters........................ 17
Experts.............................. 18
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
7,000,000 SHARES
[Logo]
COMMON SHARES
---------------------------------
PROSPECTUS
SEPTEMBER , 1994
---------------------------------
SMITH BARNEY INC.
GOLDMAN SACHS
INTERNATIONAL
BEAR, STEARNS
INTERNATIONAL LIMITED
WILLIAM BLAIR & COMPANY
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The fees and expenses in connection with the issuance and distribution of
the securities being registered are as follows:
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission.......................... $107,306
NASD Fee........................................................................ 23,744
Accounting Fees and Expenses*................................................... 50,000
Blue Sky Fees and Expenses (including related fees and expenses of counsel)*.... 15,000
Legal Fees and Expenses*........................................................ 70,000
Printing Expenses*.............................................................. 120,000
Miscellaneous Expenses*......................................................... 13,950
--------
TOTAL................................................................. $400,000
========
</TABLE>
- ---------------
* Estimated
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1701.13(E) of the Ohio Revised Code sets forth conditions and
limitations governing the indemnification of officers, directors, and other
persons.
Article 6 of the Regulations contains certain indemnification provisions
adopted pursuant to authority contained in Section 1701.13(E) of the Ohio
Revised Code. The Regulations provide for the indemnification of its officers,
directors, employees, and agents against all expenses with respect to any
judgments, fines, and amounts paid in settlement, or with respect to any
threatened, pending, or completed action, suit, or proceeding to which they were
or are parties or are threatened to be made parties by reason of acting in such
capacities, provided that it is determined, either by a majority vote of a
quorum of disinterested directors of the Company or the shareholders of the
Company or otherwise as provided in Section 1701.13(E) of the Ohio Revised Code,
that (a) they acted in good faith and in a manner they reasonably believed to be
in or not opposed to the best interest of the Company; (b) in any action, suit,
or proceeding by or in the right of the Company, they were not, and have not
been adjudicated to have been, negligent or guilty of misconduct in the
performance of their duties to the Company; and (c) with respect to any criminal
action or proceeding, that they had no reasonable cause to believe that their
conduct was unlawful. Section 1701.13(E) provides that to the extent a director,
officer, employee, or agent has been successful on the merits or otherwise in
defense of any such action, suit, or proceeding, he shall be indemnified against
expenses reasonably incurred in connection therewith. At present there are no
material claims, actions, suits, or proceedings pending where indemnification
would be required under these provisions, and the Company does not know of any
such threatened claims, actions, suits, or proceedings which may result in a
request for such indemnification.
The Company has entered into indemnification contracts with each of its
directors and executive officers. These contracts generally: (i) confirm the
existing indemnity provided to them under the Regulations and assure that this
indemnity will continue to be provided; (ii) provide that if the Company does
not maintain directors' and officers' liability insurance, the Company will, in
effect, become a self-insurer of the coverage; and (iii) provide that, in
addition, the directors and officers shall be indemnified to the fullest extent
permitted by law against all expenses (including legal fees), judgments, fines,
and settlement amounts paid or incurred by them in any action or proceeding,
including any action by or in the right of the Company, on account of their
service as a director, officer, employee, or agent of the Company or at the
request of the Company as a director, officer, employee, or agent of another
corporation or enterprise. Coverage under the contracts is excluded: (A) on
account of conduct which is finally adjudged to be knowingly fraudulent,
deliberately dishonest, or willful misconduct; or (B) if a final court of
adjudication shall determine that such indemnifica-
II-1
<PAGE> 25
tion is not lawful; or (C) in respect of any suit in which judgment is rendered
for violations of Section 16(b) of the Securities and Exchange Act of 1934, as
amended, or similar provisions of any federal, state, or local statutory law; or
(D) on account of any remuneration paid which is finally adjudged to have been
in violation of law; or (E) as to officers who are not directors, with respect
to any act or omission which is finally adjudged to have been a violation, other
than in good faith, of Cardinal's Standards of Business Conduct of which the
officer then most recently has received written notice. The indemnification
agreements are applicable to claims asserted after their effective date, whether
arising from acts or omissions occurring before or after their effective date,
and associated legal expenses.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -------------------------------------------------------------------------------
<C> <C> <S>
1.1 Form of U.S. Underwriting Agreement
1.2 Form of International Underwriting Agreement
4.1 * Amended and Restated Articles of Incorporation, as amended, of the Company
4.2 * Restated Code of Regulations of the Company
4.3 ** Registration Rights Agreement dated as of October 11, 1993, as amended, among
Cardinal, the Whitmire Stockholders and Robert D. Walter
5 Opinion of Baker & Hostetler
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Baker & Hostetler (contained in Exhibit 5)
24 *** Powers of Attorney
</TABLE>
- ---------------
* Incorporated by reference from Exhibits 3.01 and 3.02, respectively, of the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1994, filed with the Commission on May 11, 1994.
** Incorporated by reference from Exhibit 4.04 of the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1994, filed with the
Commission on September 2, 1994.
*** Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Securities Act"), each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended, that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person of the Registrant in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled
II-2
<PAGE> 26
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against the public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Columbus, State of Ohio, on September 19, 1994.
CARDINAL HEALTH, INC.
By: /s/ George H. Bennett, Jr.
------------------------------------
George H. Bennett, Jr.
Title: Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on September 19, 1994.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------
<S> <C>
* Chairman and Chief Executive Officer
- --------------------------------------------- (principal executive officer)
Robert D. Walter
* Executive Vice President and Chief Financial
- --------------------------------------------- Officer (principal financial officer and
David Bearman principal accounting officer)
* Director
- ---------------------------------------------
Mitchell J. Blutt, M.D.
</TABLE>
<TABLE>
<S> <C>
* Director
- ---------------------------------------------
John F. Finn
* Director
- ---------------------------------------------
Robert L. Gerbig
* Director
- ---------------------------------------------
Michael S. Gross
* Director
- ---------------------------------------------
John F. Havens
* Director
- ---------------------------------------------
James L. Heskett
* Director
- ---------------------------------------------
John C. Kane
* Director
- ---------------------------------------------
George R. Manser
* Director
- ---------------------------------------------
John B. McCoy
* Director
- ---------------------------------------------
Michael E. Moritz
</TABLE>
II-4
<PAGE> 28
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------
<S> <C>
* Director
- ---------------------------------------------
Jerry E. Robertson
* Director
- ---------------------------------------------
L. Jack Van Fossen
* Director
- ---------------------------------------------
Melburn G. Whitmire
</TABLE>
* George H. Bennett, Jr. by signing his name hereto does sign this Amendment to
the Registration Statement on behalf of the persons indicated above pursuant
to the powers of attorney duly executed by such persons and filed as part of
the Registration Statement.
By: /s/ George H. Bennett, Jr.
----------------------------------------------------------
George H. Bennett, Jr., Attorney-in-Fact
II-5
<PAGE> 29
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
- ------
<C> <C> <S>
1.1 Form of U.S. Underwriting Agreement
1.2 Form of International Underwriting Agreement
4.1 * Amended and Restated Articles of Incorporation, as amended, of the Company
4.2 * Restated Code of Regulations of the Company
4.3 ** Registration Rights Agreement dated as of October 11, 1993, as amended, among
Cardinal, the Whitmire Stockholders and Robert D. Walter
5 Opinion of Baker & Hostetler
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Baker & Hostetler (contained in Exhibit 5)
24 *** Powers of Attorney
</TABLE>
- ---------------
* Incorporated by reference from Exhibits 3.01 and 3.02, respectively, of the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1994, filed with the Commission on May 11, 1994.
** Incorporated by reference from Exhibit 4.04 of the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1994 filed with the
Commission on September 2, 1994.
*** Previously filed.
II-6
<PAGE> 30
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE> 1
Exhibit 1.1
5,600,000 Shares
CARDINAL HEALTH, INC.
Common Shares
U.S. UNDERWRITING AGREEMENT
September , 1994
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
WILLIAM BLAIR & COMPANY
As Representatives of the Several Underwriters
c/o SMITH BARNEY INC.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
Cardinal Health, Inc., an Ohio corporation (the "Company"), proposes
to issue and sell an aggregate of 1,280,000 common shares, without par value,
and the persons named in Part A of Schedule I hereto (the "Selling
Shareholders") propose to sell an aggregate of 4,320,000 common shares of the
Company (together with the 1,280,000 common shares to be issued and sold by the
Company, the "Firm Shares") to the several Underwriters named in Schedule II
hereto (the "U.S. Underwriters") for whom Smith Barney Inc., Goldman, Sachs &
Co., Bear, Stearns & Co. Inc., and William Blair & Company are acting as
representatives (the "Representatives"). In addition, solely for the purpose
of covering overallotments, the Company and the Selling Shareholders listed in
Part B of Schedule I hereto also propose to sell to the U.S. Underwriters, upon
the terms and conditions set forth in Section 2 hereof, up to an additional
1,050,000 common shares (the "Additional Shares"). The Company and the Selling
Shareholders are hereinafter sometimes referred to as the "Sellers." The Firm
Shares and the Additional Shares are hereinafter collectively referred to as
the "Shares." The Company's common shares, without par value, including the
Shares and the International
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Shares (as defined herein), are hereinafter referred to as the "Common Shares."
It is understood that the Company and the Selling Shareholders
are concurrently entering into an International Underwriting Agreement, dated
the date hereof (the "International Underwriting Agreement"), providing for the
sale of 1,400,000 common shares (the "International Shares"), of which 320,000
shares will be sold by the Company and 1,080,000 shares will be sold by the
Selling Shareholders through arrangements with certain underwriters outside the
United States and Canada (the "Managers"), for whom Smith Barney Inc., Goldman
Sachs International, Bear, Stearns International Limited and William Blair &
Company are acting as lead Managers (the "Lead Managers"). All Common Shares
proposed to be offered to the Managers pursuant to the International
Underwriting Agreement, are herein called the "International Shares"; the
International Shares and the Shares, collectively, are herein called the
"Underwritten Shares" and the offering of the Underwritten Shares pursuant to
this Agreement and the International Underwriting Agreement is herein called
the "Combined Offering."
The Company and the Selling Shareholders also understand that
the Representatives and the Lead Managers have entered into an agreement (the
"Agreement Between U.S. Underwriters and Managers") contemplating the
coordination of certain transactions between the U.S. Underwriters and the
Managers and that, pursuant thereto and subject to the conditions set forth
therein, the U.S. Underwriters may purchase from the Managers a portion of the
International Shares or sell to the Managers a portion of the Shares. The
Company and the Selling Shareholders understand that any such purchases and
sales between the U.S. Underwriters and the Managers shall be governed by the
Agreement Between U.S. Underwriters and Managers and shall not be governed by
the terms of this Agreement or the International Underwriting Agreement.
The Company and the Selling Shareholders wish to confirm as
follows their respective agreements with you and the other several Underwriters
on whose behalf you are acting, in connection with the several purchases of the
Shares by the Underwriters.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 (Registration
No. 33-55093) under the Act (the "registration statement"), including a
prospectus subject to completion relating to the Shares. The
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term "Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Shares may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. The term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b). The term "Prepricing Prospectus" as used in this
Agreement means the prospectus subject to completion in the form included in
the registration statement at the time of the initial filing of the
registration statement with the Commission, and as such prospectus shall have
been amended from time to time prior to the date of the Prospectus. Any
reference in this Agreement to the registration statement, the Registration
Statement, any Prepricing Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 under the Act, as of the date of the registration statement, the
Registration Statement, such Prepricing Prospectus or the Prospectus, as the
case may be, and any reference to any amendment or supplement to the
registration statement, the Registration Statement, any Prepricing Prospectus
or the Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") which, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the registration statement, the Registration Statement, any
Prepricing Prospectus, the Prospectus, or any amendment or supplement thereto.
It is understood that two forms of Prepricing Prospectus and
two forms of Prospectus are to be used in connection with the offering and sale
of the Underwritten Shares: a Prepricing Prospectus and a Prospectus relating
to the Shares that are to be offered and sold in the United States (as defined
herein) or Canada (as defined herein) to U.S. or Canadian Persons
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(the "U.S. Prepricing Prospectus" and the "U.S. Prospectus," respectively), and
a Prepricing Prospectus and a Prospectus relating to the International Shares
which are to be offered and sold outside the United States and Canada to
persons other than U.S. or Canadian Persons (the "International Prepricing
Prospectus" and the "International Prospectus," respectively). The U.S.
Prospectus and the International Prospectus are herein collectively called the
"Prospectuses," and the U.S. Prepricing Prospectus and the International
Prepricing Prospectus are herein called the "Prepricing Prospectuses." For
purposes of this Agreement: "Rules and Regulations" means the rules and
regulations adopted by the Commission under either the Act or the Exchange Act,
as applicable; "U.S. or Canadian Person" means any resident or national of the
United States or Canada, any corporation, partnership or other entity created
or organized in or under the laws of the United States or Canada or any estate
or trust the income of which is subject to United States or Canadian income
taxation regardless of the source of its income (other than the foreign branch
of any U.S. or Canadian Person), and includes any United States or Canadian
branch of a person other than a U.S. or Canadian Person; "United States" means
the United States of America (including the states thereof and the District of
Columbia) and its territories, possessions and other areas subject to its
jurisdiction; and "Canada" means Canada (including each of the provinces
thereof) and its territories, possessions and other areas subject to its
jurisdiction.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each U.S. Underwriter and, upon the basis of the representations, warranties
and agreements of the Company and the Selling Shareholders herein contained and
subject to all the terms and conditions set forth herein, each U.S.
Underwriter agrees, severally and not jointly, to purchase from the Company, at
a purchase price of $___ per Share (the "purchase price per share"), the number
of Firm Shares which bears the same proportion to the aggregate number of Firm
Shares to be issued and sold by the Company as the number of Firm Shares set
forth opposite the name of such U.S. Underwriter in Schedule II hereto (or such
number of Firm Shares increased as set forth in Section 12 hereof) bears to the
aggregate number of Firm Shares to be sold by the Company and the Selling
Shareholders.
Each Selling Shareholder agrees, subject to all the terms and
conditions set forth herein, to sell to each U.S. Underwriter and, upon the
basis of the representations, warranties and agreements of the Company and the
Selling Shareholders herein contained and subject to all the terms and
conditions set forth herein, each U.S. Underwriter, severally and not jointly,
agrees to purchase from each Selling Shareholder at the purchase price per
share the number of Firm Shares which
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bears the same proportion to the number of Firm Shares set forth opposite the
name of such Selling Shareholder in Schedule I hereto as the number of Firm
Shares set forth opposite the name of such U.S. Underwriter in Schedule I
hereto (or such number of Firm Shares increased as set forth in Section 12
hereof) bears to the aggregate number of Firm Shares to be sold by the Company
and the Selling Shareholders.
The Company and the Selling Shareholders listed in Part B of
Schedule I hereto also agree, subject to all the terms and conditions set forth
herein, to sell to the U.S. Underwriters, and upon the basis of the
representations, warranties and agreements of the Company and the Selling
Shareholders herein contained, subject to all the terms and conditions set
forth herein, the U.S. Underwriters shall have the right to purchase from the
Company and the Selling Shareholders listed in Part B of Schedule I hereto, at
the purchase price per share, pursuant to an option (the "over-allotment
option") which may be exercised prior to 9:00 p.m., New York City time, on the
30th day after the date of the U.S. Prospectus (or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when the
New York Stock Exchange is open for trading), up to an aggregate of 266,949
Additional Shares from the Company and up to an aggregate of 783,051 Additional
Shares from the Selling Shareholders listed in Part B of Schedule I hereto (the
maximum number of Additional Shares that each of them agrees to sell upon the
exercise by the U.S. Underwriters of the over-allotment option is set forth
opposite their respective names in Part B of Schedule I). Additional Shares
may be purchased only for the purpose of covering overallotments made in
connection with the offering of the Firm Shares. The number of Additional
Shares that the U.S. Underwriters elect to purchase upon any exercise of the
over-allotment option shall be provided by the Company and each Selling
Shareholder who has agreed to sell Additional Shares in proportion to the
respective maximum numbers of Additional Shares that each such Selling
Shareholder has agreed to sell. Upon any exercise of the over-allotment
option, each U.S. Underwriter, severally and not jointly, agrees to purchase
from the Company and each Selling Shareholder who has agreed to sell Additional
Shares the number of Additional Shares (subject to such adjustments as you may
determine in order to avoid fractional shares) that bears the same proportion
to the number of Additional Shares to be sold by the Company and each Selling
Shareholder who has agreed to sell Additional Shares as the number of Firm
Shares set forth opposite the name of such U.S. Underwriter in Schedule II
hereto (or such number of Firm Shares increased as set forth in Section 12
hereof) bears to the aggregate number of Firm Shares to be sold by the Company
and the Selling Shareholders.
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Certificates in transferable form for (or for Class B Common
Shares of the Company convertible into, or notices of exercise of options in
respect of) the Shares (including any Additional Shares) that each of the
Selling Shareholders agrees to sell pursuant to this Agreement have been placed
in custody with the person set forth opposite the name of such Selling
Shareholder in Part A of Schedule I (the "Custodian") for delivery under this
Agreement pursuant to a Custody Agreement and Power of Attorney (the "Custody
Agreement") executed by each of the Selling Shareholders appointing the person
set forth opposite the name of such Selling Shareholder in Part A of Schedule I
as agents and attorneys-in-fact (the "Attorneys-in-Fact"). Each Selling
Shareholder agrees that (i) the Shares represented by the certificates held in
custody pursuant to the Custody Agreement are subject to the interests of the
U.S. Underwriters, the Company and each other Selling Shareholder, (ii) the
arrangements made by the Selling Shareholders for such custody are, except as
specifically provided in the Custody Agreement, irrevocable, and (iii) the
obligations of the Selling Shareholders hereunder and under the Custody
Agreement shall not be terminated by any act of such Selling Shareholder or by
operation of law, whether by the death or incapacity of any Selling Shareholder
or the occurrence of any other event or, if the Selling Shareholder is not a
natural person, upon any dissolution, winding up, distribution of assets or
other event affecting the legal existence of such Selling Shareholder. If any
Selling Shareholder shall die or be incapacitated or if any other event shall
occur before the delivery of the Shares hereunder or if the Selling Shareholder
is not a natural person, shall dissolve, wind up, distribute assets or if any
other event affecting the legal existence of such Selling Shareholder shall
occur before the delivery of the Shares hereunder, certificates for the Shares
of such Selling Shareholder shall be delivered to the Underwriters by the
Attorneys-in-Fact in accordance with the terms and conditions of this Agreement
and the Custody Agreement as if such death or incapacity, dissolution, winding
up or distribution of assets or other event had not occurred, regardless of
whether or not the Attorneys-in-Fact or any U.S. Underwriter shall have
received notice of such death, incapacity, dissolution, winding up or
distribution of assets or other event. Each Attorney-in-Fact is authorized,
on behalf of each of the Selling Shareholders, to execute this Agreement and
any other documents necessary or desirable in connection with the sale of the
Shares to be sold hereunder by such Selling Shareholder, to make delivery of
the certificates for such Shares, to receive the proceeds of the sale of such
Shares, to give receipts for such proceeds, to pay therefrom any expenses to be
borne by such Selling Shareholder in connection with the sale and public
offering of such Shares, to distribute the balance thereof to such Selling
Shareholder, and to take such other action as may be necessary or desirable in
connection with the transactions contemplated by this Agreement.
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Each Attorney-in-Fact agrees to perform his duties under the Custody Agreement.
3. TERMS OF PUBLIC OFFERING. The Company and the Selling
Shareholders have been advised by you that the U.S. Underwriters propose to
make a public offering of their respective portions of the Shares as soon after
the Registration Statement and this Agreement have become effective as in your
judgment is advisable and initially to offer the Shares upon the terms set
forth in the U.S. Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
U.S. Underwriters of and payment for the Firm Shares shall be made at the
office of Smith Barney Inc., 1345 Avenue of the Americas, New York, NY 10105,
at 10:00 A.M., New York City time, on , 1994 (the "Closing
Date"). The place of closing for the Firm Shares and the Closing Date may be
varied by agreement among you, the Company and the Attorneys-in-Fact.
Delivery to the U.S. Underwriters of and payment for any
Additional Shares to be purchased by the U.S. Underwriters shall be made at the
aforementioned office of Smith Barney Inc. at such time on such date (the
"Option Closing Date"), which may be the same as the Closing Date but shall in
no event be earlier than the Closing Date nor earlier than three nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from you on behalf of the U.S.
Underwriters to the Attorneys-in-Fact of the U.S. Underwriters' determination
to purchase a number, specified in such notice, of Additional Shares. The
place of closing for any Additional Shares and the Option Closing Date for such
Shares may be varied by agreement between you, the Company and the
Attorneys-in-Fact.
Certificates for the Firm Shares and for any Additional Shares
to be purchased hereunder shall be registered in such names and in such
denominations as you shall request by written notice, it being understood that
a facsimile transmission shall be deemed written notice, prior to 1:00 P.M.,
New York City time, on the third business day preceding the Closing Date or any
Option Closing Date, as the case may be. Such certificates shall be made
available to you in New York City for inspection and packaging not later than
9:30 A.M., New York City time, on the business day next preceding the Closing
Date or the Option Closing Date, as the case may be. The certificates and
stockpowers evidencing the Firm Shares and any Additional Shares to be
purchased hereunder shall be delivered to you on the Closing Date or the Option
Closing Date, as the case may be, against payment of the purchase price
therefor by certified or official bank check or checks payable in New York
Clearing House
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(next day) funds to the order of the Company or the Selling Shareholders, as
the case may be.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
U.S. Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the Company will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as reasonably practical
and will advise you promptly and, if requested by you, will confirm such advice
in writing, when the Registration Statement or such post-effective amendment
has become effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectuses or the Prospectuses or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the Shares
for offering or sale in any jurisdiction or the initiation of any proceeding
for such purpose; and (iii) within the period of time referred to in paragraph
(f) below, of the happening of any event, including the filing of any
information, documents or reports pursuant to the Exchange Act, that makes any
statement of a material fact made in the Registration Statement or the
Prospectuses (as then amended or supplemented) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectuses (as then amended or supplemented) in order to state a material
fact required by the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectuses (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i) five
signed copies of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial statements and
all exhibits to the Registration Statement, (ii) such number of conformed
copies of the Registration Statement as originally filed and of each amendment
thereto, but without exhibits, as you may reasonably
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request, (iii) such number of copies of the Incorporated Documents, without
exhibits, as you may reasonably request, and (iv) five copies of the exhibits
to the Incorporated Documents.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectuses
or, prior to the end of the period of time referred to in the first sentence in
subsection (f) below, file any document which, upon filing becomes an
Incorporated Document, of which you shall not previously have been advised or
to which you shall object after being so advised or (ii) so long as, in the
written opinion of counsel for the U.S. Underwriters (a copy of which shall be
delivered to the Company), a prospectus is required to be delivered in
connection with sales by any U.S. Underwriter or dealer, file any information,
documents or reports pursuant to the Exchange Act, without delivering a copy of
such information, documents or reports to you, as Representatives of the U.S.
Underwriters, prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement,
the Company has delivered or will deliver to you, without charge, in such
quantities as you have reasonably requested or may hereafter reasonably
request, copies of each form of the U.S. Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are
offered by the several U.S. Underwriters and by dealers, prior to the date of
the U.S. Prospectus, of each U.S. Prepricing Prospectus so furnished by the
Company.
(f) As soon after the execution and delivery of this
Agreement as reasonably practical and thereafter from time to time for such
period as in the written opinion of counsel for the U.S. Underwriters a U.S.
Prospectus is required by the Act to be delivered in connection with sales by
any U.S. Underwriter or dealer, the Company will deliver to each U.S.
Underwriter and each dealer, without charge, as many copies of the U.S.
Prospectus (and of any amendment or supplement thereto) as you may reasonably
request. The Company consents to the use of the U.S. Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several U.S. Underwriters and by all dealers to whom
Shares may be sold, both in connection with the offering and sale of the Shares
and for such period of time thereafter as the U.S. Prospectus is required by
the Act to be delivered in connection with sales by any U.S. Underwriter or
dealer. If during such period of time any event shall occur that in the
judgment of the Company or in the opinion of counsel for the U.S. Underwriters
is required to be set forth in the U.S. Prospectus (as then amended or
supplemented) or should be set forth therein
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in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary to supplement
or amend the U.S. Prospectus to comply with the Act or any other law, the
Company will forthwith prepare and, subject to the provisions of paragraph (d)
above, file with the Commission an appropriate supplement or amendment thereto
and will expeditiously furnish to the U.S. Underwriters and dealers a
reasonable number of copies thereof. In the event that the Company and you, as
Representatives of the several U.S. Underwriters, agree that the U.S.
Prospectus should be amended or supplemented, the Company, if requested by you,
will promptly consider issuing a press release announcing or disclosing the
matters to be covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel for
the U.S. Underwriters in connection with the registration or qualification of
the Shares for offering and sale by the several U.S. Underwriters and by
dealers under the securities or Blue Sky laws of such jurisdictions as you may
reasonably designate and will file such consents to service of process or other
documents necessary or appropriate in order to effect such registration or
qualification; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering
a twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as reasonably
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(i) During the period of three years hereafter, the Company
will furnish to you (i) as soon as available, a copy of each report of the
Company mailed to shareholders or filed with the Commission or the New York
Exchange and (ii) from time to time such other information concerning the
Company as you may reasonably request.
(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 12 hereof or by notice given by you terminating
this Agreement pursuant to Section 12 or Section 13 hereof) or if this
Agreement shall be terminated by the U.S. Underwriters because of any failure
or refusal on the part of the Company or any of the
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Selling Shareholders to comply, in any material respect, with the terms or
fulfill, in any material respect, any of the conditions of this Agreement, the
Company agrees to reimburse the Representatives for all reasonable
out-of-pocket expenses (including reasonable fees and expenses of counsel for
the U.S. Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of
the Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectuses.
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectuses pursuant to Rule 424(b) under the Act and will
advise you of the time and manner of such filing.
(m) For a period of 90 days after the date hereof (the
"Lock-up Period"), the Company will not, without the prior written consent of
Smith Barney Inc., offer, sell, contract to sell or otherwise dispose of any
Common Shares (or any securities convertible into or exercisable or
exchangeable for Common Shares) or grant any options or warrants to purchase
Common Shares, except for sales to the U.S. Underwriters pursuant to this
Agreement and except for Common Shares issued pursuant to outstanding stock
options or issued pursuant to the Company's Stock Incentive or Directors'
Options Plans, or any Company 401(k) plan, issued in any acquisitions or issued
upon conversion of Class B Common Shares of the Company.
(n) Except as stated in this Agreement and in the
International Underwriting Agreement and in the Prepricing Prospectuses and
Prospectuses, the Company has not taken, nor will it take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Shares to facilitate the sale or resale of the Shares.
(o) The Company will use all reasonable efforts to have the
Common Shares listed, subject to notice of issuance, on the New York Stock
Exchange concurrently with the effectiveness of the registration statement.
(p) The Company will use all reasonable efforts to satisfy on
or before the Closing Date or any Option Closing Date, as the case may be, all
conditions to the U.S. Underwriters obligations to purchase the Shares.
6. AGREEMENTS OF THE SELLING SHAREHOLDERS. Each of the Selling
Shareholders agrees with the several U.S. Underwriters as follows:
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(a) Such Selling Shareholder will cooperate to the extent
necessary to cause the registration statement or any post-effective amendment
thereto to become effective at the earliest possible time.
(b) Such Selling Shareholder will pay all Federal and
other taxes, if any on the transfer or sale of such Shares that are sold by the
Selling Shareholder to the U.S. Underwriters.
(c) Such Selling Shareholder will do or perform all
things required to be done or performed by the Selling Shareholder prior to the
Closing Date or any Option Closing Date, as the case may be, to satisfy all
conditions precedent to the delivery of the Shares pursuant to this Agreement.
(d) Such Selling Shareholder will not sell, contract to
sell or otherwise dispose of any Common Shares, except for the sale of Shares
to the U.S. Underwriters pursuant to this Agreement, prior to the expiration of
90 days after the date of the U.S. Prospectus, without the prior written
consent of Smith Barney Inc.
(e) Except as stated in this Agreement and the
International Underwriting Agreement and in the Prepricing Prospectuses and the
Prospectuses, such Selling Shareholder has not taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Shares to facilitate the sale or resale of the Shares.
(f) Such Selling Shareholder will advise you promptly
upon becoming aware (it being acknowledged by you that no Selling Shareholder
is under any duty or obligation to undertake any independent investigation),
and if requested by you, will confirm such advice in writing, within the period
of time referred to in Section 5(f) hereof, of any change in the Company's
condition (financial or other), business, properties, net worth or results of
operations or of any change in information relating to such Selling Shareholder
or the Company or any new information relating to the Company or relating to
any matter stated in the Prospectuses or any amendment or supplement thereto
which comes to the attention of such Selling Shareholder that makes any
statement made in the Registration Statement or the Prospectuses (as then
amended or supplemented, if amended or supplemented) untrue in any material
respect or that the Registration Statement or Prospectuses (as then amended or
supplemented, if amended or supplemented) omit or may omit to state a material
fact or a fact necessary to be stated therein in order to make the statements
therein not misleading in any material respect, or of the necessity to amend or
supplement the Prospectuses (as then
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amended or supplemented, if amended or supplemented), in order to comply with
the Act or any other law.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each U.S. Underwriter that:
(a) Each U.S. Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act; except that
this representation and warranty does not apply to statements in or omissions
from such U.S. Prepricing Prospectus (or any amendment or supplement thereto)
made in reliance upon and in conformity with information relating to any
Selling Shareholder or to any U.S. Underwriter or Manager furnished to the
Company in writing by a U.S. Underwriter through the Representatives or by a
Manager through the Lead Managers or by a Selling Shareholder expressly for use
therein. The Commission has not issued any order preventing or suspending the
use of any Prepricing Prospectus.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
Registration Statement in the form in which it became or becomes effective and
also in such form as it may be when any post-effective amendment thereto shall
become effective and the Prospectuses and any supplement or amendment thereto
when filed with the Commission under Rule 424(b) under the Act, complied or
will comply in all material respects with the provisions of the Act and will
not at any such times contain 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; except that this representation and warranty
does not apply to statements in or omissions from the Registration Statement or
the Prospectuses made in reliance upon and in conformity with information
relating to any Selling Shareholder or to any U.S. Underwriter or Manager
furnished to the Company in writing by a U.S. Underwriter through the
Representatives or by a Manager through the Lead Managers or by a Selling
Shareholder expressly for use therein.
(c) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such document was filed,
when such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder, any
further Incorporated Documents so filed will, when they are filed, conform in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder; no such document when it was filed (or, if an
amendment with respect to any such document was filed, when such amendment was
filed),
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contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; and no such further document, when it is filed, will
contain an untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
(d) All the outstanding shares of Common Shares of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights; the Shares to
be issued and sold by the Company have been duly authorized and, when issued
and delivered to the U.S. Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and nonassessable and
free of any preemptive or similar rights; and the capital stock of the Company
conforms to the description thereof in the Registration Statement and the
Prospectuses.
(e) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Ohio with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectuses, and is duly registered and qualified to conduct its business and
is in good standing in each jurisdiction where the nature of its properties or
the conduct of its business requires such registration or qualification, except
where the failure so to register or qualify does not have a material adverse
effect on the condition (financial or other), business, properties, net worth
or results of operations of the Company and the Subsidiaries (as hereinafter
defined), taken as a whole (a "Material Adverse Effect").
(f) All of the Company's subsidiaries (collectively, the
"Subsidiaries") required to be disclosed pursuant to Item 601(b)(21) of
Regulation S-K are listed in an exhibit to the Company's Annual Report on Form
10-K which is incorporated by reference into the Registration Statement. Each
Subsidiary is a corporation duly organized, validly existing and in good
standing in the jurisdiction of its incorporation, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectuses, and
is duly registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its properties or
the conduct of its business requires such registration or qualification, except
where the failure so to register or qualify does not have a Material Adverse
Effect; all the outstanding shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable,
and (except for outstanding shares of preferred
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stock of Cardinal Syracuse, Inc. and 49% of the outstanding shares of Renlar
Inc. are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity or other encumbrance except for any such encumbrances that will not have
a Material Adverse Effect.
(g) There are no legal or governmental proceedings pending
or, to the knowledge of the Company, threatened, against the Company or any of
the Subsidiaries, or to which the Company or any of the Subsidiaries, or to
which any of their respective properties is subject, that are required to be
described in the Registration Statement or the Prospectuses but are not
described as required, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectuses or to be filed as an exhibit to the
Registration Statement or any Incorporated Document that are not described or
filed as required by the Act or the Exchange Act.
(h) Neither the Company nor any of the Subsidiaries is in (i)
violation of its certificate or articles of incorporation or by-laws, or other
organizational documents, (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company or
any of the Subsidiaries or of any decree of any court or governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries (except
where any such violation or violations in the aggregate would not have a
Material Adverse Effect), or (iii) in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, and no condition or state of facts exists, which with
the passage of time or the giving of notice or both, would constitute such a
default (except where any such default or defaults in the aggregate would not
have a Material Adverse Effect).
(i) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement or the International
Underwriting Agreement by the Company nor the consummation by the Company of
the transactions contemplated hereby and thereby (i) requires any consent,
approval, authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental body,
agency or official (except such as may be required for the registration of the
Shares under the Act and compliance with the securities or Blue Sky laws of
various jurisdictions, all of which have been or will be effected in
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accordance with this Agreement) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the certificate
or articles of incorporation or bylaws, or other organizational documents, of
the Company or any of the Subsidiaries or (ii) conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, any material
agreement, indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to the
Company or any of the Subsidiaries or any of their respective properties, or
will result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(j) The accountants, Deloitte & Touche and Arthur Andersen &
Co., who have certified or shall certify the financial statements included or
incorporated by reference in the Registration Statement and the Prospectuses
(or any amendment or supplement thereto) are to the Company's knowledge
independent public accountants as required by the Act.
(k) The financial statements, together with related schedules
and notes, included or incorporated by reference in the Registration Statement
and the Prospectuses (and any amendment or supplement thereto), present fairly
in all material respects the consolidated financial position, results of
operations, cash flows and changes in shareholders' equity of the Company and
the Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein.
(l) The execution and delivery of, and the performance by the
Company of its obligations under, each of this Agreement and the International
Underwriting Agreement have been duly and validly authorized by the Company,
and each of this Agreement and the International Underwriting Agreement has
been duly executed and delivered by the Company and constitutes the valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except (i) the enforceability hereof or thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) the remedy of specific performance and other forms of
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equitable relief may be subject to certain equitable defenses and to the
discretion of the court before which the proceedings may be brought and (iii)
rights to indemnity and contribution hereunder or thereunder may be limited by
federal or state securities laws or the public policy underlying such laws.
(m) Except as disclosed in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectuses (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any material change in
the capital stock of the Company, or material increase in the long-term debt,
of the Company or any of the Subsidiaries, or any development having or which
may reasonably be expected to have, a Material Adverse Effect.
(n) Each of the Company and the Subsidiaries has good and
marketable title to all property (real and personal) described in the
Prospectuses as being owned by it, free and clear of all liens, claims,
security interests or other encumbrances except such as are described in the
Registration Statement and the Prospectuses or in a document filed as an
exhibit to the Registration Statement and all the property described in the
Prospectuses as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable leases with
only such exceptions in titled property or leases as in the aggregate will not
have a Material Adverse Effect.
(o) The Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("Permits") as are necessary to own its respective properties and
to conduct its business in the manner described in the Prospectuses, except
where the failure to have any such Permit would not have a Material Adverse
Effect and subject to such qualifications as may be set forth in the
Prospectuses; to their knowledge, the Company and each of the Subsidiaries has
fulfilled and performed all its material obligations with respect to such
Permits and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit, subject in each case
to such qualification as may be set forth in the Prospectuses, or such cases
would not have a Material Adverse Effect.
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(p) The Company and each Subsidiary is and, as of the Closing
Date will be, (i) in compliance with all applicable federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received, or as of the Closing
Date will receive, all Permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) is, or as of the Closing Date will be, in compliance with all terms and
conditions of any such Permit, license or approval, except, with respect to
clauses (i), (ii), and (iii) above, where such noncompliance with Environmental
Laws, failure to receive required Permits, licenses or other approvals or
failure to comply with the terms and conditions of such Permits, licenses or
approvals are otherwise disclosed in the Prospectus or would not, singly or in
the aggregate, have a Material Adverse Effect.
(q) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental laws or any Permit, license or approval, any related constraints
on operating activities and any liabilities to third parties or in connection
with off- site disposal of hazardous substances) that, as of the date hereof,
or as of the Closing Date will, singly or in the aggregate, have a Material
Adverse Effect.
(r) Except as described in the Prospectuses, no holder of any
security of the Company has any right to require registration of Common Shares
or any other security of the Company because of the filing of the registration
statement or consummation of the transactions contemplated by this Agreement or
the International Underwriting Agreement, or otherwise. No such rights with
respect to shares of Common Shares not listed in Schedule I hereto were
exercised nor will be exercised in connection with the sale of the Shares and
for a period of 90 days after the date hereof. Except as described in or
contemplated by the Prospectuses, there are no outstanding options, warrants or
other rights calling for the issuance of, and there are no commitments, plans
or arrangements to issue, any shares of Common Shares of the Company or any
security convertible into or exchangeable or exercisable for Common Shares of
the Company, except for Cardinal Exchange Options, Class B Common Shares and
such options or rights or Common Shares as may be awarded or issued pursuant to
the Company's Stock Incentive or Directors' Option Plans or issued in any
acquisition.
(s) The Company is not and, upon sale of the Shares to be
issued and sold in accordance herewith and upon application of the net proceeds
to the Company from such sale as described in
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the Prospectuses under the caption "Use of Proceeds," will not be an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(t) The Company has complied with all provisions of Florida
Statutes, Section 517.075, relating to issuers doing business with Cuba.
8. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder represents and warrants to each U.S. Underwriter that:
(a) Such Selling Shareholder now has, and on the Closing
Date and any Option Closing Date will have, valid and marketable title to the
Shares to be sold by such Selling Shareholder, free and clear of any lien,
claim, security interest or other encumbrance, including, without limitation,
any restriction on transfer, except as otherwise described in the Prospectuses
and except for the conversion of Class B Common Shares or exercise of options
for Common Shares offered in the Combined Offering.
(b) Such Selling Shareholder now has, and on the Closing
Date and any Option Closing Date will have, full legal right, power and
authorization, and any approval required by law, to sell, assign, transfer and
deliver such Shares in the manner provided in this Agreement and the
International Underwriting Agreement, and upon delivery of and payment for such
Shares hereunder, the several U.S. Underwriters will acquire valid and
marketable title to such Shares free and clear of any lien, claim, security
interest, or other encumbrance.
(c) This Agreement, the International Underwriting
Agreement and the Custody Agreement have been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder and are the valid and
binding agreements of such Selling Shareholder enforceable against such Selling
Shareholder in accordance with their terms, except that (i) the enforceability
hereof or thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, (ii) the remedy of specific performance and other
forms of equitable relief may be subject to certain equitable defenses and to
the discretion of the court before which the proceedings may be brought and
(iii) rights to indemnity and contribution hereunder or thereunder may be
limited by federal or state securities laws or the public policy underlying
such laws.
(d) Neither the sale of the Shares, the execution,
delivery or performance of this Agreement, the International Underwriting
Agreement or the Custody Agreement by or on behalf
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of such Selling Shareholder nor the consummation by or on behalf of such
Selling Shareholder of the transactions contemplated hereby and thereby (i)
requires any consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except such as may be required
for the registration of the Shares under the Act or compliance with the
securities or Blue Sky laws of various jurisdictions), or (ii) conflicts or
will conflict with or constitutes or will constitute a breach of, or a default
under, any agreement, indenture, lease or other instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder is or may
be bound, or violates or will violate any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to such Selling Shareholder,
or will result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of such Selling Shareholder pursuant to the terms
of any agreement or instrument to which such Selling Shareholder is a party or
by which such Selling Shareholder may be bound or to which any of the property
or assets of such Selling Shareholder is subject.
(e) The Registration Statement and the Prospectus, insofar as
they contain information relating to such Selling Shareholder, do not and will
not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(f) The representations and warranties of such Selling
Shareholder in the Custody Agreement are, and on the Closing Date and any
Option Closing Date will be, true and correct.
(g) Such Selling Shareholder has not taken, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Shares to facilitate the sale or resale of the Shares, except for the lock-up
arrangements referred to in the Prospectuses.
(h) Such Selling Shareholder (without undertaking any
independent investigation) does not have any knowledge that the Registration
Statement or the Prospectuses (or any amendment or supplement thereto) contains
any 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.
9. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless you and each other U.S. Underwriter and each
person, if any, who controls any U.S.
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Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any U.S. Prepricing Prospectus or in the Registration Statement or
the U.S. Prospectus or in any amendment or supplement thereto, or arising out
of or based upon 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, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
such U.S. Underwriter or Manager furnished in writing to the Company by or on
behalf of any U.S. Underwriter through you or by or on behalf of any Manager
through a Lead Manager expressly for use in connection therewith; provided,
that if any Prepricing Prospectus or the Prospectus (either prior to the
effective date of the Registration Statement or during the period specified in
Section 5(f) hereof) contained any alleged untrue statement or allegedly
omitted to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading and such statement or
omission shall have been corrected in a revised Prepricing Prospectus or in the
Prospectus or in an amended or supplemented Prospectus, the Company shall not
be liable to any U.S. Underwriter pursuant to this paragraph with respect to
such alleged untrue statement or alleged omission to the extent that any such
loss, claim, damage or liability of such U.S. Underwriter results from the fact
that such U.S. Underwriter sold Shares to a person to whom there was not sent
or given, at or prior to the written confirmation of such sale, a copy of a
revised Prepricing Prospectus, the Prospectus or the Prospectus as amended or
supplemented, as the case may be, containing a correction of such alleged
misstatement or omission, if the Company has made available a reasonable number
of copies thereof to such U.S. Underwriter prior to the confirmation of such
sale.
(b) Each Selling Shareholder agrees, severally and not
jointly, to indemnify and hold harmless you and each other U.S. Underwriter and
each person, if any, who controls any U.S. Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act with the same
exceptions and to the same extent as the foregoing indemnity from the Company
to each U.S. Underwriter, but only with respect to information relating to
such Selling Shareholder furnished in writing by or on behalf of such Selling
Shareholder expressly for use in the Registration Statement, the U.S.
Prospectus or any U.S. Prepricing Prospectus, or any amendment or supplement
thereto, up
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to an amount not to exceed the proceeds that each Selling Shareholder has
received from the Combined Offering.
(c) If any action, suit or proceeding shall be brought
against any U.S. Underwriter or any person controlling any U.S. Underwriter in
respect of which indemnity may be sought against the Company or any Selling
Shareholder, such U.S. Underwriter or such controlling person shall promptly
notify the parties against whom indemnification is being sought (the
"indemnifying parties"), and such indemnifying parties shall assume the defense
thereof, including the employment of counsel and payment of all fees and
expenses. Such U.S. Underwriter or any such controlling person shall have the
right to employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such U.S. Underwriter or such controlling person
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such U.S. Underwriter
or such controlling person and the indemnifying parties and such U.S.
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and any indemnifying party by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such U.S. Underwriter or such
controlling person). It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such U.S.
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by Smith Barney Inc., and that all such fees and expenses shall be
reimbursed as they are incurred. The indemnifying parties shall not be liable
for any settlement of any such action, suit or proceeding effected without
their written consent, but if settled with such written consent, or if there be
a final judgment of a court of competent jurisdiction for the plaintiff in any
such action, suit or proceeding, the indemnifying parties agree to indemnify
and hold harmless any U.S. Underwriter, to the extent provided in the preceding
paragraph, and any such controlling person from and
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<PAGE> 23
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.
(d) Each U.S. Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, any person who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and the
Selling Shareholders, to the same extent as the foregoing indemnity from the
Company and the Selling Shareholders to each U.S. Underwriter, but only with
respect to information relating to such U.S. Underwriter furnished in writing
by or on behalf of such U.S. Underwriter through you expressly for use in the
Registration Statement, the U.S. Prospectus or any U.S. Prepricing Prospectus,
or any amendment or supplement thereto. If any action, suit or proceeding
shall be brought against the Company, any of its directors, any such officer,
any such controlling person or any Selling Shareholder based on the
Registration Statement, the U.S. Prospectus or any U.S. Prepricing Prospectus,
or any amendment or supplement thereto, and in respect of which indemnity may
be sought against any U.S. Underwriter pursuant to this paragraph (d), such
U.S. Underwriter shall have the rights and duties given to the Company and the
Selling Shareholders by paragraph (c) above (except that if the Company or the
Selling Shareholders shall have assumed the defense thereof such U.S.
Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at such U.S. Underwriter's expense), and the Company, its
directors, any such officer, any such controlling person, and the Selling
Shareholders, shall have the rights and duties given to the U.S. Underwriters
by paragraph (c) above. The foregoing Indemnity Agreement shall be in addition
to any liabilities which any U.S. Underwriter may otherwise have.
(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a), (b) or (d) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an 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 losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Selling Shareholders on the one hand and the U.S.
Underwriters on the other hand from the offering of the Shares, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Shareholders on the one hand and the U.S. Underwriters on the
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other hand in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Selling Shareholders on the one hand and the U.S. Underwriters on the other
hand shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Shareholders bear to the total underwriting discounts and commissions
received by the U.S. Underwriters, in each case as set forth in the table on
the cover page of the U.S. Prospectus; provided that, in the event that the
U.S. Underwriters shall have purchased any Additional Shares hereunder, any
determination of the relative benefits received by the Company, the Selling
Shareholders or the U.S. Underwriters from the offering of the Shares shall
include the net proceeds (before deducting expenses) received by the Company
and the Selling Shareholders, and the underwriting discounts and commissions
received by the U.S. Underwriters, from the sale of such Additional Shares, in
each case computed on the basis of the respective amounts set forth in the
notes to the table on the cover page of the U.S. Prospectus. The relative
fault of the Company and the Selling Shareholders on the one hand and the U.S.
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Shareholders on the one hand
or by the U.S. Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(f) The Company, the Selling Shareholders and the U.S.
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by a pro rata allocation (even if
the U.S. 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 paragraph (e) above. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
and expenses referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 9, no U.S. Underwriter shall be required to
contribute any amount in excess of the amount by which the total price of the
Shares underwritten by it and distributed to the public exceeds the amount of
any damages which such U.S. Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent
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misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The U.S. Underwriters' obligations to contribute pursuant
to this Section 9 are several in proportion to the respective numbers of Firm
Shares set forth opposite their names in Schedule II hereto (or such numbers of
Firm Shares increased as set forth in Section 12 hereof) and not joint. No
Selling Shareholder shall be required to contribute any amount in excess of the
proceeds that such Selling Shareholder has received from the Combined Offering.
(g) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
(h) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 9 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any U.S.
Underwriter or any person controlling any U.S. Underwriter, the Company, its
directors or officers or the Selling Shareholders, any director, officer or
partner of a Selling Shareholder or any person controlling the Company or any
Selling Shareholder, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
U.S. Underwriter or any person controlling any U.S. Underwriter, or to the
Company, its directors or officers, or to a Selling Shareholder, any director,
officer or partner of a Selling Shareholder or any person controlling the
Company or any Selling Shareholder, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section 9.
10. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The several
obligations of the U.S. Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
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(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the Registration Statement or such post-effective amendment shall
have become effective not later than 5:30 P.M. New York City time, on the date
hereof, or at such later date and time as shall be consented to in writing by
you, and all filings, if any, required by Rules 424 and 430A under the Act
shall have been timely made; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that
purpose shall have been instituted or, to the knowledge of the Company or any
U.S. Underwriter, threatened by the Commission, and any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectuses or otherwise) shall have been complied with to
your satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred any change, or any development involving a prospective
change, that would have a Material Adverse Effect, not contemplated by the
Prospectuses, which in your opinion, as Representatives of the several U.S.
Underwriters, would materially, adversely affect the market for the Shares.
(c) You shall have received on the Closing Date an opinion of
Baker & Hostetler, counsel for the Company, dated the Closing Date and
addressed to you, as Representatives of the several U.S. Underwriters, to the
effect that:
(i) The Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Ohio
and is duly qualified and in good standing in all other jurisdictions
in which the nature of the business transacted or property owned or
leased by it makes such qualification necessary, except where the
failure so to qualify or be in good standing would not have a Material
Adverse Effect;
(ii) Each of James W. Daly, Inc., Bailey Drug Company,
Cardinal Syracuse, Inc., Ohio Valley-Clarksburg, Inc. and Whitmire
Distribution Corporation (collectively, the "Significant
Subsidiaries") is a corporation duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization
and is duly qualified to transact business and is in good standing in
each jurisdiction, if any, listed opposite its name on Exhibit A to
such opinion, and to the best of such counsel's knowledge, except for
outstanding shares of preferred stock of Cardinal Syracuse, Inc., the
Company, directly or through other Subsidiaries, owns all of the
outstanding shares of
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capital stock of all the Significant Subsidiaries free and clear of
any perfected security interest, or, to the best knowledge of such
counsel, any other security interest, lien, adverse claim, equity or
other encumbrance;
(iii) The authorized capital stock of the Company conforms
in all material respects as to legal matters to the description
thereof contained in the Prospectuses under the caption "Description
of Capital Stock";
(iv) The Shares to be issued and sold to the U.S.
Underwriters by the Company under this Agreement have been duly
authorized and when issued and delivered to the U.S. Underwriters
against payment therefor in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable and
free of any preemptive rights;
(v) The Shares to be sold to the U.S. Underwriters by the
Selling Shareholders under this Agreement are validly issued, fully
paid and nonassessable, and free of preemptive rights;
(vi) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the
best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectuses pursuant to
Rule 424(b) has been made in accordance with Rule 424(b);
(vii) The Company has the corporate power and authority to
enter into this Agreement and to issue, sell and deliver the Shares to
be sold by it to the U.S. Underwriters as provided herein, and the
U.S. Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(viii) Neither the issuance, sale or delivery of the Shares,
nor the execution, delivery or performance of this Agreement or
compliance by the Company with all provisions of this Agreement nor
consummation by the Company of the transactions contemplated hereby
conflicts with or constitutes a breach of, or a default under, the
certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Significant
Subsidiaries or any agreement, indenture, lease or other instrument to
which the Company or any of the Significant Subsidiaries is a party or
by which any of them or any of their respective properties is bound
that is an exhibit to the Registration Statement or to any
Incorporated Document, or is otherwise known to such counsel, which
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conflict, breach or default would have a Material Adverse Effect, or,
except as disclosed in the Registration Statement, will result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Significant
Subsidiaries under any such agreement, indenture, lease or other
instrument, nor will any such action result in any violation of any
existing Ohio or federal law (assuming compliance with all applicable
Ohio securities or Blue Sky laws), judgment, injunction, order or
decree known to such counsel and applicable to the Company or any of
the Significant Subsidiaries or any of their respective properties,
which violation would have a Material Adverse Effect;
(ix) No consent, approval, authorization or other order,
or registration or filing with, any U.S. court, regulatory body,
administrative agency or other governmental body, agency, or official
is required on the part of the Company (except as have been obtained
under the Act or such as may be required under state securities or
Blue Sky laws governing the purchase and distribution of the Shares)
for the valid issuance and sale of the Shares to the U.S.
Underwriters as contemplated by this Agreement;
(x) (A) The Registration Statement and the Prospectuses
and any supplements or amendments thereto (except for the financial
statements and the notes thereto and the schedules and other financial
data included or incorporated by reference therein, as to which such
counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act; and (B) each of
the Incorporated Documents (except for the financial statements and
the notes thereto and the schedules and other financial data included
therein, as to which counsel need not express any opinion) complies as
to form in all material respects with the Exchange Act and the rules
and regulations of the Commission thereunder;
(xi) To the best knowledge of such counsel, (A) other than
as described or contemplated in the Prospectuses, there are no legal
or governmental proceedings pending or threatened against the Company
or any of the Significant Subsidiaries, or to which the Company or any
of the Significant Subsidiaries, or any of their properties, is
subject, which are required to be described in the Registration
Statement or Prospectuses and (B) there are no agreements, contracts,
indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectuses or to be
filed as an exhibit to the Registration Statement that are not
described or filed as required, as the case may be;
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(xii) The statements in the Registration Statement and
Prospectuses under the caption "Description of Capital Stock", insofar
as such statements constitute a summary of the documents referred to
therein, fairly present the information called for by the Act with
respect to such documents; and
(xiii) Although counsel has not undertaken, except as
otherwise indicated in their opinion, to determine independently, and
does not assume any responsibility for, the accuracy, completeness or
fairness of the statements in the Registration Statement, such counsel
has participated in the preparation of the Registration Statement and
the Prospectuses, including general review and discussion of the
contents thereof but has made no independent check or verification
thereof, and nothing has come to the attention of such counsel that
has caused them to believe that the Registration Statement and the
Prospectuses (except for financial statements and notes thereto and
other financial data included or incorporated by reference therein, as
to which such counsel need not comment) at the time the Registration
Statement became effective or at the date of this Agreement contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectuses contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading.
In rendering their opinion as aforesaid, counsel may, as to
factual matters, rely upon written certificates or statements of officers of
the Company and, as to matters of law, may rely upon an opinion or opinions,
each dated the Closing Date, of other counsel retained by them or the Company
as to laws of any jurisdiction other than the United States or the State of
Ohio, provided that (1) each such local counsel is acceptable to the
Representatives, (2) such reliance is expressly authorized by each opinion so
relied upon and a copy of each such opinion is delivered to the Representatives
and is, in form and substance satisfactory to them and their counsel, and (3)
counsel shall state in their opinion that they believe that they and the U.S.
Underwriters are justified in relying thereon.
(d) You shall have received on the Closing Date an
opinion from each of (i) Wachtell, Lipton, Rosen & Katz, counsel for Apollo
Investment Fund, L.P., Chemical Equity Associates and Melburn G. Whitmire and
(ii) Baker & Hostetler, counsel for Gary E. Close and James E. Clare, and (iii)
Meadows, Owens, Collier, Reed, Cousins & Blair, L.L.P., counsel for William L.
Clifton, Jr., James R. Clifton and The Mary Lacy Clifton Separate Property
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Trust, dated the Closing Date and addressed to you, as Representatives of the
several U.S. Underwriters, to the effect that:
(i) This Agreement and the Custody Agreement have each
been duly executed and delivered by or on behalf of each of the
Selling Shareholders and are valid and binding agreements of each
Selling Shareholder;
(ii) Each Selling Shareholder has full legal right, power
and authorization, and any approval required by law, to sell, assign,
transfer and deliver good and marketable title to the Shares which
such Selling Shareholder has agreed to sell pursuant to this
Agreement; and
(iii) The execution and delivery of this Agreement, the
International Underwriting Agreement and the Custody Agreement by the
Selling Shareholders and the consummation of the transactions
contemplated hereby and thereby will not conflict with, violate,
result in a breach of or constitute a default under the terms or
provisions of the certificate of incorporation or bylaws of any
corporate Selling Shareholder, the partnership agreement of any
Selling Shareholder that is a partnership, the constituent document of
any Selling Shareholder that is a trust, or, to such counsel's
knowledge, any agreement, indenture, lease or other instrument to
which any Selling Shareholder is a party or by which any of them or
any of their assets or property is bound, or violate any statute, law,
regulation, court order or decree known to such counsel to be
applicable to any Selling Shareholder or to any of the property or
assets of any Selling Shareholder, except for any such conflicts,
breaches, defaults or violations that would not have a Material
Adverse Effect on the ability of such Selling Shareholder to
consummate the transactions contemplated by this Agreement.
In rendering their opinion as aforesaid, counsel may, as to
factual matters, rely upon written certificates or statements of officers of
the Selling Shareholders and, as to matters of law, may rely upon an opinion or
opinions, each dated the Closing Date, of other counsel retained by them or the
Selling Shareholders as to laws of any jurisdiction other than the United
States or the State of New York (in the case of Wachtell, Lipton, Rosen &
Katz), Ohio (in the case of Baker & Hostetler), or Texas (in the case of
Meadows, Owens, Collier, Reed, Cousins & Blair, L.L.P.), provided that (1) each
such local counsel is reasonably acceptable to the Representatives, (2) such
reliance is expressly authorized by each opinion so relied upon and a copy of
each such opinion is delivered to the Representatives and is, in form and
substance reasonably satisfactory to them and their counsel, and
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(3) counsel shall state in their opinion that they believe that they and the
U.S. Underwriters are justified in relying thereon.
(e) You shall have received on the Closing Date an opinion of
Davis Polk & Wardwell, counsel for the U.S. Underwriters, dated the Closing
Date, with respect to the matters referred to in clauses (iv), (vi), (vii),
(x)(A) and (xiii) of the foregoing paragraph (c) and such other related matters
as you may reasonably request.
(f) You shall have received letters addressed to you, as
Representatives of the several U.S. Underwriters, and dated the date hereof and
the Closing Date from Deloitte & Touche, independent certified public
accountants, substantially in the forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
threatened by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company nor any material
increase in the long-term debt of the Company (other than in the ordinary
course of business) from that set forth or contemplated in the Registration
Statement or the Prospectuses (or any amendment or Supplement thereto); (iii)
there shall not have been, since the respective dates as of which information
is given in the Registration Statement and the Prospectuses (or any amendment
or supplement thereto), except as may otherwise be stated in the Registration
Statement and Prospectuses (or any amendment or supplement thereto), any
Material Adverse Effect; (iv) the Company and the Subsidiaries shall not have
any liabilities or obligations, direct or contingent (not in the ordinary
course of business), that are material to the Company and the Subsidiaries,
taken as a whole, other than those reflected in the Registration Statement or
the Prospectuses (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on and as of the date hereof and
on and as of the Closing Date as if made on and as of the Closing Date, and you
shall have received a certificate, dated the Closing Date and signed by any
executive officer and, in each case, the chief financial officer of the Company
to the effect set forth in this Section 10(g) and in Section 10(h) hereof.
(h) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.
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(i) All the representations and warranties of the Selling
Shareholders contained in this Agreement shall be true and correct, on and as
of the date hereof and on and as of the Closing Date as if made on and as of
the Closing Date, and you shall have received a certificate, dated the Closing
Date and signed by or on behalf of the Selling Shareholders to the effect set
forth in this Section 10(i) and in Section 10(j) hereof.
(j) The Selling Shareholders shall not have failed at or
prior to the Closing Date to have performed or complied with any of their
agreements contained in this Agreement or the International Underwriting
Agreement and required to be performed or complied with by them at or prior to
the Closing Date.
(k) The Sellers shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.
(l) The Shares shall have been listed or approved for listing
subject to notice of issuance, on the New York Stock Exchange.
(m) The closing under the International Underwriting
Agreement shall have occurred on the Closing Date concurrently with the closing
hereunder.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction on and as of any
Option Closing Date of the conditions set forth in this Section 10, except
that, if any Option Closing Date is other than the Closing Date, the
certificates, opinions and letters referred to in this Section 10 shall be
dated the Option Closing Date in question and the opinions or letters called
for by paragraphs (c), (d), (e) and (f) shall be revised to reflect the sale of
Additional Shares.
11. EXPENSES. Except for costs and expenses to be paid for by the
Selling Shareholders, as set forth below, the Company agrees to pay the
following costs and expenses and all other costs and expenses incident to the
performance by them of their obligations hereunder: (i) the preparation,
printing or reproduction, and filing with the Commission of the registration
statement (including financial statements and exhibits thereto), each of the
Prepricing Prospectuses, the Prospectuses, and each amendment or supplement to
any of them; (ii) the printing (or reproduction) and delivery (including
postage, air freight
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charges and charges for counting and packaging) of such copies of the
registration statement, each U.S. Prepricing Prospectus, the U.S. Prospectus,
and all amendments or supplements to any of them as may be reasonably requested
for use in connection with the offering and sale of the Shares; (iii) the
preparation, printing, authentication, issuance and delivery of certificates
for the Shares, including any stamp taxes in connection with the original
issuance and sale of the Shares; (iv) the cost of production (or reproduction)
and delivery of this Agreement, the International Underwriting Agreement, the
Supplemental Agreement Among U.S. Underwriters, the Agreement Among Managers,
the Agreement Between U.S. Underwriters and Managers, the International Selling
Agreement, the Managers' Questionnaire, the preliminary and supplemental Blue
Sky Memoranda and all other agreements, memoranda, correspondence and other
documents printed (or reproduced) and delivered in connection with the original
issuance and sale of the Shares; (v) the registration of the Common Shares
under the Exchange Act and the listing of the Shares on the New York Stock
Exchange; (vi) the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of the several jurisdictions as
provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the U.S. Underwriters and Managers relating to the
preparation, printing or reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification); (vii)
the filing fees in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (viii) the transportation and
other expenses incurred by or on behalf of representatives of the Company in
connection with presentations to prospective purchasers of the Shares; (ix) the
fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company; and (x) the
performance by the Company of its other obligations under this Agreement and
the International Underwriting Agreement. The Selling Shareholders agree to
pay underwriting discounts and commissions and transfer taxes (in proportion of
the number of Shares being offered by each of them, including any Additional
Shares that the Managers have elected to purchase) and the fees and expenses of
each of their individual counsel (including local and special counsel) for the
Selling Shareholders, if any, incident to the performance by the Selling
Shareholders of their other obligations under this Agreement or the
International Underwriting Agreement.
12. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto;
or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, when
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notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company, by notifying you, or by you, as Representatives of the several U.S.
Underwriters, by notifying the Company and the Selling Shareholders.
If any one or more of the U.S. Underwriters shall fail or
refuse to purchase Shares which it or they are obligated to purchase hereunder
on the Closing Date, and the aggregate number of Shares which such defaulting
U.S. Underwriter or Underwriters are obligated but fail or refuse to purchase
is not more than one-tenth of the aggregate number of Shares which the U.S.
Underwriters are obligated to purchase on the Closing Date, each non-defaulting
U.S. Underwriter shall be obligated, severally, in the proportion which the
number of Firm Shares set forth opposite its name in Schedule II hereto bears
to the aggregate number of Firm Shares set forth opposite the names of all
non-defaulting U.S. Underwriters or in such other proportion as you may specify
in accordance with Section 20 of the Master Agreement Among Underwriters of
Smith Barney Inc., to purchase the Shares which such defaulting U.S.
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the U.S. Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase on the Closing Date and the
aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares which the U.S. Underwriters
are obligated to purchase on the Closing Date and arrangements satisfactory to
you and the Company for the purchase of such Shares by one or more
non-defaulting U.S. Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting U.S.
Underwriter or the Company. In any such case which does not result in
termination of this Agreement, either you or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting U.S. Underwriter
from liability in respect of any such default of any such U.S. Underwriter
under this Agreement. The term "U.S. Underwriter" as used in this Agreement
includes, for all purposes of this Agreement, any party not listed in Schedule
II hereto who, with your approval and the approval of the Company, purchases
Shares which a defaulting U.S. Underwriter is obligated, but fails or refuses,
to purchase.
Any notice under this Section 12 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
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13. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
U.S. Underwriter to the Company or any Selling Shareholder, by notice to the
Company, if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Shares), as the case
may be, (i) trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been suspended
or materially limited, (ii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or state
authorities, or (iii) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set forth on the cover page of the U.S.
Prospectus or to enforce contracts for the resale of the Shares by the U.S.
Underwriters.
Notice of such termination may be given by telegram, telecopy
or telephone and shall be subsequently confirmed by letter.
14. INFORMATION FURNISHED BY THE U.S. UNDERWRITERS. The
statements set forth in the last paragraph on the cover page, the stabilization
legend on the inside front cover page, and the statements in the first, second
and fourth paragraphs under the caption "Underwriting" in any U.S. Prepricing
Prospectus and in the U.S. Prospectus constitute the only information furnished
by or on behalf of the U.S. Underwriters through you as such information is
referred to in Sections 7(b) and 9 hereof.
15. MISCELLANEOUS. Except as otherwise provided in Sections 5, 12
and 13 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of
the Company at 655 Metro Place South, Suite 925, Dublin, Ohio 43017, Attention:
Robert D. Walter, Chairman; or (ii) if to you, as Representatives of the
several U.S. Underwriters, care of Smith Barney Inc., 1345 Avenue of the
Americas, New York, New York 10105, Attention: Manager, Investment Banking
Division; or (iii) if to Apollo Investment Fund, L.P., at
, Attention: ; with a copy to Wachtell, Lipton,
Rosen & Katz, at 51 West 52nd Street, New York, New York 10019, Attention:
David A. Katz, Esq.; or (iv) if to Chemical Equity Associates, at
, Attention:
; with a copy to Wachtell, Lipton, Rosen & Katz, at 51 West 52nd Street,
New York, New York 10019, Attention: David A. Katz, Esq.; or (v) if to Melburn
G. Whitmire, at
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; with a copy to Wachtell, Lipton, Rosen & Katz, at 51 West 52nd Street, New
York, New York 10019, Attention: David A. Katz, Esq.; or (vi) if to a member
of the Solomons family, at , Attention: Philip Solomons,
Jr.; with a copy to Cardinal Health, Inc., 655 Metro Place South, Suite 925,
Dublin, Ohio 43017, Attention: George H. Bennett, Jr., Esq.; or (vii) if to
any member of the Clifton family, or The Mary Lacy Clifton Separate Property
Trust, at
, Attention: William L. Clifton, Jr.; or (ix) if to Gary E. Close, at
; or (x) if to James E. Clare, at , Attention:
James E. Clare; with a copy to Cardinal Health, Inc., 655 Metro Place South,
Suite 925, Dublin, Ohio 43017, Attention: George H. Bennett, Jr., Esq.
This Agreement has been and is made solely for the benefit of
the several U.S. Underwriters, the Company, its directors and officers, the
other controlling persons referred to in Section hereof and the Selling
Shareholders and their respective successors and assigns, to the extent
provided herein, and no other person shall acquire or have any right under or
by virtue of this Agreement. Neither the term "successor" nor the term
"successors and assigns" as used in this Agreement shall include a purchaser
from any U.S. Underwriter of any of the Shares in his status as such purchaser.
16. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts,
this Agreement shall not become effective unless at least one counterpart
hereof shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Shareholders and the several U.S.
Underwriters.
Very truly yours,
CARDINAL HEALTH, INC.
By .......................
Title:
Each of the Selling Shareholders
named in Schedule I hereto
By ..........................
Attorney-in-Fact
By .......................
Attorney-in-Fact
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several U.S.
Underwriters named in Schedule II
hereto.
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
WILLIAM, BLAIR & COMPANY
As Representatives of the Several U.S. Underwriters
By SMITH BARNEY INC.
By ............................
Managing Director
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SCHEDULE I
CARDINAL HEALTH INC.
Part A - Firm Shares
<TABLE>
<CAPTION>
Number of
Selling Shareholders Custodian Attorney-in-Fact Firm Shares
- -------------------- --------- --------------- -----------
<S> <C> <C> <C>
______________
Total........ ______________
Part B - Additional Shares
- --------------------------
Number of
Selling Sharehold Additional Shares
- -------------------- -----------------
_______________
Total........ _______________
</TABLE>
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SCHEDULE II
CARDINAL HEALTH INC.
<TABLE>
<CAPTION>
Number of Number of
Underwriter Firm Shares Underwriter Firm Shares
----------- ----------- ----------- -----------
<S> <C> <C> <C>
Smith Barney Inc. ...
Goldman, Sachs & Co. . . .
Bear, Stearns & Co. Inc. .
William Blair & Company . .
Total..... -----------
-----------
</TABLE>
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<PAGE> 1
Exhibit 1.2
1,400,000 Shares
CARDINAL HEALTH, INC.
Common Shares
INTERNATIONAL UNDERWRITING AGREEMENT
September , 1994
SMITH BARNEY INC.
GOLDMAN SACHS INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
WILLIAM BLAIR & COMPANY
As Lead Managers for the Several Managers
c/o SMITH BARNEY INC.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
Cardinal Health, Inc., an Ohio corporation (the "Company"),
proposes to issue and sell an aggregate of 320,000 common shares, without par
value, and the persons named in Part A of Schedule I hereto (the "Selling
Shareholders") propose to sell an aggregate of 1,080,000 common shares of the
Company (together with the 320,000 common shares to be issued and sold by the
Company, the "Shares") to the several Underwriters named in Schedule II hereto
(the "Managers") for whom Smith Barney Inc., Goldman Sachs International, Bear,
Stearns International Limited, and William Blair & Company are acting as
representatives (the "Lead Managers"). The Company and the Selling
Shareholders are hereinafter sometimes referred to as the "Sellers." The
Company's common shares, without par value, including the Shares and the U.S.
Shares (as defined herein), are hereinafter referred to as the "Common Shares."
It is understood that the Company and the Selling Shareholders
are concurrently entering into a U.S. Underwriting Agreement, dated the date
hereof (the "U.S. Underwriting Agreement"), providing for the sale of 5,600,000
common shares (the "U.S. Shares"), of which 1,280,000 shares will be sold by
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<PAGE> 2
the Company and 4,320,000 shares will be sold by the Selling Shareholders
through arrangements with certain underwriters in the United States and Canada
(the "U.S. Underwriters"), for whom Smith Barney Inc., Goldman, Sachs & Co.,
Bear, Stearns & Co. Inc. and William Blair & Company are acting as
representatives (the "Representatives"). All Common Shares proposed to be
offered to the Representatives pursuant to the U.S. Underwriting Agreement are
herein called the "U.S. Shares"; the U.S. Shares and the Shares, collectively,
are herein called the "Underwritten Shares" and the offering of the
Underwritten Shares pursuant to this Agreement and the U.S. Underwriting
Agreement is herein called the "Combined Offering."
The Company and the Selling Shareholders also understand that
the Lead Managers and the Representatives have entered into an agreement (the
"Agreement Between U.S. Underwriters and Managers") contemplating the
coordination of certain transactions between the Managers and the U.S.
Underwriters and that, pursuant thereto and subject to the conditions set forth
therein, the Managers may purchase from the U.S. Underwriters a portion of the
U.S. Shares or sell to the U.S. Underwriters a portion of the Shares. The
Company and the Selling Shareholders understand that any such purchases and
sales between the Managers and the U.S. Underwriters shall be governed by the
Agreement Between U.S. Underwriters and Managers and shall not be governed by
the terms of this Agreement or the U.S. Underwriting Agreement.
The Company and the Selling Shareholders wish to confirm as
follows their respective agreements with you and the other several Managers on
whose behalf you are acting, in connection with the several purchases of the
Shares by the Managers.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-3 (Registration
No. 33-55093) under the Act (the "registration statement"), including a
prospectus subject to completion relating to the Shares. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Shares may commence, the
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term "Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. The term "Prospectus"
as used in this Agreement means the prospectus in the form included in the
Registration Statement, or, if the prospectus included in the Registration
Statement omits information in reliance on Rule 430A under the Act and such
information is included in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Act, the term "Prospectus" as used in this Agreement
means the prospectus in the form included in the Registration Statement as
supplemented by the addition of the Rule 430A information contained in the
prospectus filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectus" as used in this Agreement means the prospectus subject
to completion in the form included in the registration statement at the time of
the initial filing of the registration statement with the Commission, and as
such prospectus shall have been amended from time to time prior to the date of
the Prospectus. Any reference in this Agreement to the registration statement,
the Registration Statement, any Prepricing Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, such Prepricing Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As
used herein, the term "Incorporated Documents" means the documents which at the
time are incorporated by reference in the registration statement, the
Registration Statement, any Prepricing Prospectus, the Prospectus, or any
amendment or supplement thereto.
It is understood that two forms of Prepricing Prospectus and
two forms of Prospectus are to be used in connection with the offering and sale
of the Underwritten Shares: a Prepricing Prospectus and a Prospectus relating
to the Shares which are to be offered and sold outside the United States (as
defined herein) and Canada (as defined herein) to persons other than U.S. or
Canadian Persons (the "International Prepricing Prospectus" and the
"International Prospectus," respectively), and a Prepricing Prospectus and a
Prospectus relating to the Shares that are to be offered and sold in the United
States or Canada to U.S. or Canadian Persons (the "U.S. Prepricing Prospectus"
and the "U.S. Prospectus," respectively). The International Prospectus and the
U.S. Prospectus are herein collectively called the "Prospectuses," and the
International Prepricing Prospectus and the U.S. Prepricing Prospectus are
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herein called the "Prepricing Prospectuses." For purposes of this Agreement:
"Rules and Regulations" means the rules and regulations adopted by the
Commission under either the Act or the Exchange Act as applicable; "U.S. or
Canadian Person" means any resident or national of the United States or Canada,
any corporation, partnership or other entity created or organized in or under
the laws of the United States or Canada or any estate or trust the income of
which is subject to United States or Canadian income taxation regardless of the
source of its income (other than the foreign branch of any U.S. or Canadian
Person), and includes any United States or Canadian branch of a person other
than a U.S. or Canadian Person; "United States" means the United States of
America (including the states thereof and the District of Columbia) and its
territories, possessions and other areas subject to its jurisdiction; and
"Canada" means Canada (including each of the Provinces thereof) and its
territories, possessions and other areas subject to its jurisdiction.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Manager and, upon the basis of the representations, warranties and
agreements of the Company and the Selling Shareholders herein contained and
subject to all the terms and conditions set forth herein, each Manager agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
$___ per Share (the "purchase price per share"), the number of Shares which
bears the same proportion to the aggregate number of Shares to the issued and
sold by the Company as the number of Shares set forth opposite the name of such
Manager in Schedule II hereto (or such number of Shares increased as set forth
in Section 12 hereof) bears to the aggregate number of Shares to be sold by the
Company and the Selling Shareholders.
Each Selling Shareholder agrees, subject to all the terms and
conditions set forth herein, to sell to each Manager and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Shareholders herein contained and subject to all the terms and conditions set
forth herein, each Manager, severally and not jointly, agrees to purchase from
each Selling Shareholder at the purchase price per share the number of Shares
which bears the same proportion to the number of Shares set forth opposite the
name of such Selling Shareholder in Schedule I hereto as the number of Shares
set forth opposite the name of such Manager in Schedule II hereto (or such
number of Shares increased as set forth in Section 12 hereof) bears to the
aggregate number of Shares to be sold by the Company and the Selling
Shareholders.
Certificates in transferable form for (or for Class B Common
Shares of the Company convertible into, or notices of
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exercises of options in respect of) the Shares that each of the Selling
Shareholders agrees to sell pursuant to this Agreement have been placed in
custody with the person set forth opposite the name of such Selling Shareholder
in Schedule I (the "Custodian") for delivery under this Agreement pursuant to a
Custody Agreement and Power of Attorney (the "Custody Agreement") executed by
each of the Selling Shareholders appointing the person set forth opposite the
name of such Selling Shareholder in Schedule I as agents and attorneys-in-fact
(the "Attorneys-in-Fact"). Each Selling Shareholder agrees that (i) the Shares
represented by the certificates held in custody pursuant to the Custody
Agreement are subject to the interests of the Managers, the Company and each
other Selling Shareholder, (ii) the arrangements made by the Selling
Shareholders for such custody are, except as specifically provided in the
Custody Agreement, irrevocable, and (iii) the obligations of the Selling
Shareholders hereunder and under the Custody Agreement shall not be terminated
by any act of such Selling Shareholder or by operation of law, whether by the
death or incapacity of any Selling Shareholder or the occurrence of any other
event or, if the Selling Shareholder is not a natural person, upon any
dissolution, winding up, distribution of assets or other event affecting the
legal existence of such Selling Shareholder. If any Selling Shareholder shall
die or be incapacitated or if any other event shall occur before the delivery
of the Shares hereunder or if the Selling Shareholder is not a natural person,
shall dissolve, wind up, distribute assets or if any other event affecting the
legal existence of such Selling Shareholder shall occur before the delivery of
the Shares hereunder, certificates for the Shares of such Selling Shareholder
shall be delivered to the Managers by the Attorneys-in-Fact in accordance with
the terms and conditions of this Agreement and the Custody Agreement as if such
death or incapacity, dissolution, winding up or distribution of assets or other
event had not occurred, regardless of whether or not the Attorneys-in-Fact or
any Manager shall have received notice of such death, incapacity, dissolution,
winding up or distribution of assets or other event. Each Attorney-in-Fact is
authorized, on behalf of each of the Selling Shareholders, to execute this
Agreement and any other documents necessary or desirable in connection with the
sale of the Shares to be sold hereunder by such Selling Shareholder, to make
delivery of the certificates for such Shares, to receive the proceeds of the
sale of such Shares, to give receipts for such proceeds, to pay therefrom any
expenses to be borne by such Selling Shareholder in connection with the sale
and public offering of such Shares, to distribute the balance thereof to such
Selling Shareholder, and to take such other action as may be necessary or
desirable in connection with the transactions contemplated by this Agreement.
Each Attorney-in-Fact agrees to perform his duties under the Custody Agreement.
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<PAGE> 6
3. TERMS OF PUBLIC OFFERING. The Company and the Selling Shareholders
have been advised by you that the Managers propose to make a public offering of
their respective portions of the Shares as soon after the Registration
Statement and this Agreement have become effective as in your judgment is
advisable and initially to offer the Shares upon the terms set forth in the
International Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Managers of and payment for the Shares shall be made at the office of Smith
Barney Inc., 1345 Avenue of the Americas, New York, NY 10105, at 10:00 A.M.,
New York City time, on , 1994 (the "Closing Date"). The place of closing
for the Shares and the Closing Date may be varied by agreement among you, the
Company and the Attorneys-in-Fact.
Certificates for the Shares shall be registered in such names
and in such denominations as you shall request by written notice, it being
understood that a facsimile transmission shall be deemed written notice, prior
to 1:00 P.M., New York City time, on the third business day preceding the
Closing Date. Such certificates shall be made available to you in New York
City for inspection and packaging not later than 9:30 A.M., New York City time,
on the business day next preceding the Closing Date. The certificates and
stockpowers evidencing the Shares shall be delivered to you on the Closing Date
against payment of the purchase price therefor by certified or official bank
check or checks payable in New York Clearing House (next day) funds to the
order of the Company or the Selling Shareholders, as the case may be.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Managers as follows:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the Company will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as reasonably practical
and will advise you promptly and, if requested by you, will confirm such advice
in writing, when the Registration Statement or such post-effective amendment
has become effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectuses or the Prospectuses or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness
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of the Registration Statement or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time referred to in
paragraph (f) below, of the happening of any event, including the filing of any
information, documents or reports pursuant to the Exchange Act, that makes any
statement of a material fact made in the Registration Statement or the
Prospectuses (as then amended or supplemented) untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectuses (as then amended or supplemented) in order to state a material
fact required by the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectuses (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i) five
signed copies of the Registration Statement as originally filed with the
Commission and of each amendment thereto, including financial statements and
all exhibits to the Registration Statement, (ii) such number of conformed
copies of the Registration Statement as originally filed and of each amendment
thereto, but without exhibits, as you may reasonably request, (iii) such number
of copies of the Incorporated Documents, without exhibits, as you may
reasonably request, and (iv) five copies of the exhibits to the Incorporated
Documents.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectuses
or, prior to the end of the period of time referred to in the first sentence in
subsection (f) below, file any document which, upon filing becomes an
Incorporated Document, of which you shall not previously have been advised or
to which you shall object after being so advised or (ii) so long as, in the
written opinion of counsel for the Managers (a copy of which shall be delivered
to the Company), a prospectus is required to be delivered in connection with
sales by any Manager or dealer, file any information, documents or reports
pursuant to the Exchange Act, without delivering a copy of such information,
documents or reports to you, as Lead Managers of the Managers, prior to or
concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement,
the Company has delivered or will deliver to you, without charge, in such
quantities as you have reasonably requested or may hereafter reasonably
request, copies of each
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form of the International Prepricing Prospectus. The Company consents to the
use, in accordance with the provisions of the Act and with the securities laws
of the jurisdictions in which the Shares are offered by the several Managers
and by dealers, prior to the date of the International Prospectus, of each
International Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this
Agreement as reasonably practical and thereafter from time to time for such
period as in the written opinion of counsel for the Managers an International
Prospectus is required by the Act to be delivered in connection with sales by
any Manager or dealer, the Company will deliver to each Manager and each
dealer, without charge, as many copies of the International Prospectus (and of
any amendment or supplement thereto) as you may reasonably request. The
Company consents to the use of the International Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities laws of the jurisdictions in which the Shares are
offered by the several Managers and by all dealers to whom Shares may be sold,
both in connection with the offering and sale of the Shares and for such period
of time thereafter as the International Prospectus is required by the Act to be
delivered in connection with sales by any Manager or dealer. If during such
period of time any event shall occur that in the judgment of the Company or in
the opinion of counsel for the Managers is required to be set forth in the
International Prospectus (as then amended or supplemented) or should be set
forth therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the International Prospectus to comply with the Act or
any other law, the Company will forthwith prepare and, subject to the
provisions of paragraph (d) above, file with the Commission an appropriate
supplement or amendment thereto and will expeditiously furnish to the Managers
and dealers a reasonable number of copies thereof. In the event that the
Company and you, as Lead Managers of the several Managers, agree that the
International Prospectus should be amended or supplemented, the Company, if
requested by you, will promptly consider issuing a press release announcing or
disclosing the matters to be covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel for
the Managers in connection with the registration or qualification of the Shares
for offering and sale by the several Managers and by dealers under the
securities laws of such jurisdictions as you may reasonably designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided
that in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it
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is not now so qualified or to take any action that would subject it to service
of process in suits, other than those arising out of the offering or sale of
the Shares, in any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering
a twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as reasonably
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(i) During the period of three years hereafter, the Company
will furnish to you (i) as soon as available, a copy of each report of the
Company mailed to shareholders or filed with the Commission or the New York
Exchange and (ii) from time to time such other information concerning the
Company as you may reasonably request.
(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 12 hereof or by notice given by you terminating
this Agreement pursuant to Section 12 or Section 13 hereof) or if this
Agreement shall be terminated by the Managers because of any failure or refusal
on the part of the Company or any of the Selling Shareholders to comply, in any
material respect, with the terms or fulfill, in any material respect, any of
the conditions of this Agreement, the Company agrees to reimburse the Lead
Managers for all reasonable out-of-pocket expenses (including reasonable fees
and expenses of counsel for the Managers) incurred by you in connection
herewith.
(k) The Company will apply the net proceeds from the sale of
the Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectuses.
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectuses pursuant to Rule 424(b) under the Act and will
advise you of the time and manner of such filing.
(m) For a period of 90 days after the date hereof (the
"Lock-up Period"), the Company will not, without the prior written consent of
Smith Barney Inc., offer, sell, contract to sell or otherwise dispose of any
Common Shares (or any securities convertible into or exercisable or
exchangeable for Common Shares) or grant any options or warrants to purchase
Common Shares, except for sales to the Managers pursuant to this
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Agreement and except for Common Shares issued pursuant to outstanding stock
options or issued pursuant to the Company's Stock Incentive or Directors'
Options Plans, or any Company 401(k) plan, issued in any acquisitions or issued
upon conversion of Class B Common Shares of the Company.
(n) Except as stated in this Agreement and in the U.S.
Underwriting Agreement and in the Prepricing Prospectuses and Prospectuses, the
Company has not taken, nor will it take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Shares to facilitate
the sale or resale of the Shares.
(o) The Company will use all reasonable efforts to have the
Common Shares listed, subject to notice of issuance, on the New York Stock
Exchange concurrently with the effectiveness of the registration statement.
(p) The Company will use all reasonable efforts to satisfy on
or before the Closing Date all conditions to the Managers' obligations to
purchase the Shares.
6. AGREEMENTS OF THE SELLING SHAREHOLDERS. Each of the Selling
Shareholders agrees with the several Managers as follows:
(a) Such Selling Shareholder will cooperate to the extent
necessary to cause the registration statement or any post-effective amendment
thereto to become effective at the earliest possible time.
(b) Such Selling Shareholder will pay all Federal and other
taxes, if any on the transfer or sale of such Shares that are sold by the
Selling Shareholder to the Managers.
(c)Such Selling Shareholder will do or perform all things
required to be done or performed by the Selling Shareholder prior to the
Closing Date to satisfy all conditions precedent to the delivery of the Shares
pursuant to this Agreement.
(d) Such Selling Shareholder will not sell, contract to
sell or otherwise dispose of any Common Shares, except for the sale of Shares
to the Managers pursuant to this Agreement, prior to the expiration of 90 days
after the date of the International Prospectus, without the prior written
consent of Smith Barney Inc.
(e) Except as stated in this Agreement and the U.S.
Underwriting Agreement and in the Prepricing Prospectuses and the Prospectuses,
such Selling Shareholder has not taken, nor will it
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take, directly or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Shares to facilitate the sale or resale of the Shares.
(f) Such Selling Shareholder will advise you promptly
upon becoming aware (it being acknowledged by you that no Selling Shareholder
is under any duty or obligation to undertake any independent investigation),
and if requested by you, will confirm such advice in writing, within the period
of time referred to in Section 5(f) hereof, of any change in the Company's
condition (financial or other), business, properties, net worth or results of
operations or of any change in information relating to such Selling Shareholder
or the Company or any new information relating to the Company or relating to
any matter stated in the Prospectuses or any amendment or supplement thereto
which comes to the attention of such Selling Shareholder that makes any
statement made in the Registration Statement or the Prospectuses (as then
amended or supplemented, if amended or supplemented) untrue in any material
respect or that the Registration Statement or Prospectuses (as then amended or
supplemented, if amended or supplemented) omit or may omit to state a material
fact or a fact necessary to be stated therein in order to make the statements
therein not misleading in any material respect, or of the necessity to amend or
supplement the Prospectuses (as then amended or supplemented, if amended or
supplemented) in order to comply with the Act or any other law.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Manager that:
(a) Each International Prepricing Prospectus included as part
of the registration statement as originally filed or as part of any amendment
or supplement thereto, or filed pursuant to Rule 424 under the Act, complied
when so filed in all material respects with the provisions of the Act; except
that this representation and warranty does not apply to statements in or
omissions from such International Prepricing Prospectus (or any amendment or
supplement thereto) made in reliance upon and in conformity with information
relating to any Selling Shareholder or to any Manager or U.S. Underwriter
furnished to the Company in writing by a Manager through the Lead Managers or
by a U.S. Underwriter through the Representatives or by a Selling Shareholder
expressly for use therein. The Commission has not issued any order preventing
or suspending the use of any Prepricing Prospectus.
(b) The Company and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Act. The
Registration Statement in the form in which it became or becomes effective and
also in such form as it may be when any
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post-effective amendment thereto shall become effective and the Prospectuses
and any supplement or amendment thereto when filed with the Commission under
Rule 424(b) under the Act, complied or will comply in all material respects
with the provisions of the Act and will not at any such times contain 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;
except that this representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectuses made in reliance
upon and in conformity with information relating to any Selling Shareholder or
to any Manager or U.S. Underwriter furnished to the Company in writing by a
Manager through the Lead Managers or by a U.S. Underwriter through the
Representatives or by a Selling Shareholder expressly for use therein.
(c) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such document was filed,
when such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder, any
further Incorporated Documents so filed will, when they are filed, conform in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder; no such document when it was filed (or, if an
amendment with respect to any such document was filed, when such amendment was
filed), contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and no such further document, when it is
filed, will contain an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
(d) All the outstanding shares of Common Shares of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights; the Shares to
be issued and sold by the Company have been duly authorized and, when issued
and delivered to the Managers against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free of
any preemptive or similar rights; and the capital stock of the Company conforms
to the description thereof in the Registration Statement and the Prospectuses.
(e) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Ohio with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectuses, and is duly registered and qualified to conduct its business and
is in good
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standing in each jurisdiction where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and the Subsidiaries (as hereinafter defined),
taken as a whole (a "Material Adverse Effect").
(f) All of the Company's subsidiaries (collectively, the
"Subsidiaries") required to be disclosed pursuant to Item 601(b)(21) of
Regulation S-K are listed in an exhibit to the Company's Annual Report on Form
10-K which is incorporated by reference into the Registration Statement. Each
Subsidiary is a corporation duly organized, validly existing and in good
standing in the jurisdiction of its incorporation, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectuses, and
is duly registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its properties or
the conduct of its business requires such registration or qualification, except
where the failure so to register or qualify does not have a Material Adverse
Effect; all the outstanding shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable,
and (except for outstanding shares of preferred stock of Cardinal Syracuse,
Inc. and 49% of the outstanding shares of Renlar Inc. are owned by the Company
directly, or indirectly through one of the other Subsidiaries, free and clear
of any lien, adverse claim, security interest, equity or other encumbrance
except for any such encumbrances that will not have a Material Adverse Effect.
(g) There are no legal or governmental proceedings pending
or, to the knowledge of the Company, threatened, against the Company or any of
the Subsidiaries, or to which the Company or any of the Subsidiaries, or to
which any of their respective properties is subject, that are required to be
described in the Registration Statement or the Prospectuses but are not
described as required, and there are no agreements, contracts, indentures,
leases or other instruments that are required to be described in the
Registration Statement or the Prospectuses or to be filed as an exhibit to the
Registration Statement or any Incorporated Document that are not described or
filed as required by the Act or the Exchange Act.
(h) Neither the Company nor any of the Subsidiaries is in (i)
violation of its certificate or articles of incorporation or by-laws, or other
organizational documents, (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the Company or
any of the Subsidiaries
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or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries (except where any such
violation or violations in the aggregate would not have a Material Adverse
Effect), or (iii) in default in any material respect in the performance of any
obligation, agreement or condition contained in any bond, debenture, note or
any other evidence of indebtedness or in any material agreement, indenture,
lease or other instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound, and no condition or state of facts exists, which with the passage of
time or the giving of notice or both, would constitute such a default (except
where any such default or defaults in the aggregate would not have a Material
Adverse Effect).
(i) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement or the U.S. Underwriting
Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby and thereby (i) requires any consent,
approval, authorization or other order of or registration or filing with, any
court, regulatory body, administrative agency or other governmental body,
agency or official (except such as may be required for the registration of the
Shares under the Act and compliance with the securities or Blue sky laws of
various jurisdictions, all of which have been or will be effected in accordance
with this Agreement) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of the Subsidiaries or (ii) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, any material agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to the
Company or any of the Subsidiaries or any of their respective properties, or
will result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(j) The accountants, Deloitte & Touche and Arthur Andersen &
Co., who have certified or shall certify the financial statements included or
incorporated by reference in the Registration Statement and the Prospectuses
(or any amendment or supplement thereto) are to the Company's knowledge
independent public accountants as required by the Act.
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(k) The financial statements, together with related schedules
and notes, included or incorporated by reference in the Registration Statement
and the Prospectuses (and any amendment or supplement thereto), present fairly
in all material respects the consolidated financial position, results of
operations, cash flows and changes in shareholders' equity of the Company and
the Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein.
(l) The execution and delivery of, and the performance by the
Company of its obligations under, each of this Agreement and the U.S.
Underwriting Agreement have been duly and validly authorized by the Company,
and each of this Agreement and the U.S. Underwriting Agreement has been duly
executed and delivered by the Company and constitutes the valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except (i) the enforceability hereof or thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally, (ii) the remedy
of specific performance and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which the
proceedings may be brought and (iii) rights to indemnity and contribution
hereunder or thereunder may be limited by federal or state securities laws or
the public policy underlying such laws.
(m) Except as disclosed in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectuses (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any material change in
the capital stock of the Company, or material increase in the long-term debt,
of the Company or any of the Subsidiaries, or any development having or which
may reasonably be expected to have, a Material Adverse Effect.
(n) Each of the Company and the Subsidiaries has good and
marketable title to all property (real and personal) described in the
Prospectuses as being owned by it, free and clear of all liens, claims,
security interests or other encumbrances except such as are described in the
Registration Statement and the Prospectuses or in a document filed as an
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exhibit to the Registration Statement and all the property described in the
Prospectuses as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable leases with
only such exceptions in titled property or leases as in the aggregate will not
have a Material Adverse Effect.
(o) The Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("Permits") as are necessary to own its respective properties and
to conduct its business in the manner described in the Prospectuses, except
where the failure to have any such Permit would not have a Material Adverse
Effect and subject to such qualifications as may be set forth in the
Prospectuses; to their knowledge, the Company and each of the Subsidiaries has
fulfilled and performed all its material obligations with respect to such
Permits and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit, subject in each case
to such qualification as may be set forth in the Prospectuses, or such cases
would not have a Material Adverse Effect.
(p) The Company and each Subsidiary is and, as of the Closing
Date will be, (i) in compliance with all applicable federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) has received, or as of the Closing
Date will receive, all Permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) is, or as of the Closing Date will be, in compliance with all terms and
conditions of any such Permit, license or approval, except, with respect to
clauses (i), (ii), and (iii) above, where such noncompliance with Environmental
Laws, failure to receive required Permits, licenses or other approvals or
failure to comply with the terms and conditions of such Permits, licenses or
approvals are otherwise disclosed in the Prospectus or would not, singly or in
the aggregate, have a Material Adverse Effect.
(q) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental laws or any Permit, license or approval, any related constraints
on operating activities and any liabilities to third parties or in connection
with off- site disposal of hazardous substances) that, as of the date hereof,
or as of the Closing Date will, singly or in the aggregate, have a Material
Adverse Effect.
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(r) Except as described in the Prospectuses, no holder of any
security of the Company has any right to require registration of shares of
Common Shares or any other security of the Company because of the filing of the
registration statement or consummation of the transactions contemplated by this
Agreement or the U.S. Underwriting Agreement, or otherwise. No such rights
with respect to shares of Common Shares not listed in Schedule I hereto were
exercised nor will be exercised in connection with the sale of the Shares and
for a period of 90 days after the date hereof. Except as described in or
contemplated by the Prospectuses, there are no outstanding options, warrants or
other rights calling for the issuance of, and there are no commitments, plans
or arrangements to issue, any shares of Common Shares of the Company or any
security convertible into or exchangeable or exercisable for Common Shares of
the Company, except for Cardinal Exchange Options, Class B Common Shares and
such options or rights or Common Shares as may be awarded or issued pursuant to
the Company's Stock Incentive or Directors' Option Plans or issued in any
acquisition.
(s) The Company is not and, upon sale of the Shares to be
issued and sold in accordance herewith and upon application of the net proceeds
to the Company from such sale as described in the Prospectuses under the
caption "Use of Proceeds," will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(t) The Company has complied with all provisions of Florida
Statutes, Section 517.075, relating to issuers doing business with Cuba.
8. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder represents and warrants to each Manager that:
(a) Such Selling Shareholder now has, and on the Closing
Date will have, valid and marketable title to the Shares to be sold by such
Selling Shareholder, free and clear of any lien, claim, security interest or
other encumbrance, including, without limitation, any restriction on transfer,
except as otherwise described in the Prospectuses and except for the conversion
of Class B Common Shares or exercise of options for Common Shares offered in
the Combined Offering.
(b) Such Selling Shareholder now has, and on the Closing
Date will have, full legal right, power and authorization, and any approval
required by law, to sell, assign, transfer and deliver such Shares in the
manner provided in this Agreement and the U.S. Underwriting Agreement, and upon
delivery of and payment for such Shares hereunder, the several Managers will
acquire valid and marketable title to such Shares free and
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clear of any lien, claim, security interest, or other encumbrance.
(c) This Agreement, the U.S. Underwriting Agreement and
the Custody Agreement have been duly authorized, executed and delivered by or
on behalf of such Selling Shareholder and are the valid and binding agreements
of such Selling Shareholder enforceable against such Selling Shareholder in
accordance with their terms, except that (i) the enforceability hereof or
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) the remedy of specific performance and other forms of equitable
relief may be subject to certain equitable defenses and to the discretion of
the court before which the proceedings may be brought and (iii) rights to
indemnity and contribution hereunder or thereunder may be limited by federal or
state securities laws or the public policy underlying such laws.
(d) Neither the sale of the Shares, the execution, delivery or
performance of this Agreement, the U.S. Underwriting Agreement or the Custody
Agreement by or on behalf of such Selling Shareholder nor the consummation by
or on behalf of such Selling Shareholder of the transactions contemplated
hereby and thereby (i) requires any consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official (except
such as may be required for the registration of the Shares under the Act or
compliance with the securities laws of various jurisdictions), or (ii)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any agreement, indenture, lease or other instrument to
which such Selling Shareholder is a party or by which such Selling Shareholder
is or may be bound, or violates or will violate any statute, law, regulation or
filing or judgment, injunction, order or decree applicable to such Selling
Shareholder, or will result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of such Selling Shareholder pursuant
to the terms of any agreement or instrument to which such Selling Shareholder
is a party or by which such Selling Shareholder may be bound or to which any of
the property or assets of such Selling Shareholder is subject.
(e) The Registration Statement and the Prospectus, insofar as
they contain information relating to such Selling Shareholder, do not and will
not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
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(f) The representations and warranties of such Selling
Shareholder in the Custody Agreement are, and on the Closing Date will be, true
and correct.
(g) Such Selling Shareholder has not taken, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Shares to facilitate the sale or resale of the Shares, except for the lock-up
arrangements referred to in the Prospectuses.
(h) Such Selling Shareholder (without undertaking any
independent investigation) does not have any knowledge that the Registration
Statement or the Prospectuses (or any amendment or supplement thereto) contains
any 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.
9. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless you and each other Manager and each person, if any,
who controls any Manager within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any International Prepricing Prospectus or in the
Registration Statement or the International Prospectus or in any amendment or
supplement thereto, or arising out of or based upon 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, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to such Manager furnished in writing to the
Company by or on behalf of any Manager through a Lead Manager expressly for use
in connection therewith; provided, that if any Prepricing Prospectus or the
Prospectus (either prior to the effective date of the Registration Statement or
during the period specified in Section 5(f) hereof) contained any alleged
untrue statement or allegedly omitted to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
and such statement or omission shall have been corrected in a revised
Prepricing Prospectus or in the Prospectus or in an amended or supplemented
Prospectus, the Company shall not be liable to any Manager pursuant to this
paragraph with respect to such alleged untrue statement or alleged omission to
the extent that any such loss, claim, damage or liability of such
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Manager results from the fact that such Manager sold Shares to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of a revised Prepricing Prospectus, the Prospectus or the
Prospectus as amended or supplemented, as the case may be, containing a
correction of such alleged misstatement or omission, if the Company has made
available a reasonable number of copies thereof to such Manager prior to the
confirmation of such sale.
(b) Each Selling Shareholder agrees, severally and not
jointly, to indemnify and hold harmless you and each other Manager and each
person, if any, who controls any Manager within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act with the same exceptions and to
the same extent as the foregoing indemnity from the Company to each Manager,
but only with respect to information relating to such Selling Shareholder
furnished in writing by or on behalf of such Selling Shareholder expressly for
use in the Registration Statement, the International Prospectus or any
International Prepricing Prospectus, or any amendment or supplement thereto, up
to an amount not to exceed the proceeds that each Selling Shareholder has
received from the Combined Offering.
(c) If any action, suit or proceeding shall be brought
against any Manager or any person controlling any Manager in respect of which
indemnity may be sought against the Company or any Selling Shareholder, such
Manager or such controlling person shall promptly notify the parties against
whom indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Manager or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Manager or
such controlling person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Manager or such controlling person and the indemnifying parties and
such Manager or such controlling person shall have been advised by its counsel
that representation of such indemnified party and any indemnifying party by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Manager or such controlling
person). It is understood, however, that the indemnifying parties shall, in
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connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such Managers
and controlling persons not having actual or potential differing interests with
you or among themselves, which firm shall be designated in writing by Smith
Barney Inc., and that all such fees and expenses shall be reimbursed as they
are incurred. The indemnifying parties shall not be liable for any settlement
of any such action, suit or proceeding effected without their written consent,
but if settled with such written consent, or if there be a final judgment of a
court of competent jurisdiction for the plaintiff in any such action, suit or
proceeding, the indemnifying parties agree to indemnify and hold harmless any
Manager, to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(d) Each Manager agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, any person who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and the
Selling Shareholders, to the same extent as the foregoing indemnity from the
Company and the Selling Shareholders to each Manager, but only with respect to
information relating to such Manager furnished in writing by or on behalf of
such Manager through you expressly for use in the Registration Statement, the
International Prospectus or any International Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, any such
controlling person or any Selling Shareholder based on the Registration
Statement, the International Prospectus or any International Prepricing
Prospectus, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Manager pursuant to this paragraph (d),
such Manager shall have the rights and duties given to the Company and the
Selling Shareholders by paragraph (c) above (except that if the Company or the
Selling Shareholders shall have assumed the defense thereof such Manager shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Manager's expense), and the Company, its directors, any such
officer, any such controlling person, and the Selling Shareholders, shall have
the rights and duties given to the Managers by paragraph (c) above. The
foregoing Indemnity
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Agreement shall be in addition to any liabilities which any Manager may
otherwise have.
(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a), (b) or (d) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an 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 losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Selling Shareholders on the one hand and the Managers on
the other hand from the offering of the Shares, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Shareholders on the one hand and the Managers on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Selling Shareholders on the one hand and the Managers on the other hand
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Shareholders bear to the total underwriting discounts and commissions received
by the Managers, in each case as set forth in the table on the cover page of
the International Prospectus. The relative fault of the Company and the
Selling Shareholders on the one hand and the Managers on the other hand shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Selling Shareholders on the one hand or by the Managers on the other hand and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(f) The Company, the Selling Shareholders and the Managers
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by a pro rata allocation (even if the Managers 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
paragraph (e) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating any claim or
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defending any such action, suit or proceeding. Notwithstanding the provisions
of this Section 9, no Manager shall be required to contribute any amount in
excess of the amount by which the total price of the Shares underwritten by it
and distributed to the public exceeds the amount of any damages which such
Manager has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Managers' obligations to contribute pursuant
to this Section 9 are several in proportion to the respective numbers of Shares
set forth opposite their names in Schedule II hereto (or such numbers of Shares
increased as set forth in Section 12 hereof) and not joint. No Selling
Shareholder shall be required to contribute any amount in excess of the
proceeds that such Selling Shareholder has received from the Combined Offering.
(g) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
(h) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 9 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Manager or any
person controlling any Manager, the Company, its directors or officers or the
Selling Shareholders, any director, officer or partner of a Selling Shareholder
or any person controlling the Company or any Selling Shareholder, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Manager or any person
controlling any Manager, or to the Company, its directors or officers, or to a
Selling Shareholder, any director, officer or partner of a Selling Shareholder
or any person controlling the Company or any Selling Shareholder, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 9.
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<PAGE> 24
10. CONDITIONS OF MANAGERS' OBLIGATIONS. The several obligations
of the Managers to purchase the Shares hereunder are subject to the following
conditions:
(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the Registration Statement or such post-effective amendment shall
have become effective not later than 5:30 P.M. New York City time, on the date
hereof, or at such later date and time as shall be consented to in writing by
you, and all filings, if any, required by Rules 424 and 430A under the Act
shall have been timely made; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that
purpose shall have been instituted or, to the knowledge of the Company or any
Manager, threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectuses or otherwise) shall have been complied with to your satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred any change, or any development involving a prospective
change, that would have a Material Adverse Effect, not contemplated by the
Prospectuses, which in your opinion, as Lead Managers of the several Managers,
would materially, adversely affect the market for the Shares.
(c) You shall have received on the Closing Date an opinion of
Baker & Hostetler, counsel for the Company, dated the Closing Date and
addressed to you, as Lead Managers of the several Managers, to the effect that:
(i) The Company is a corporation duly incorporated and
validly existing in good standing under the laws of the State of Ohio
and is duly qualified and in good standing in all other jurisdictions
in which the nature of the business transacted or property owned or
leased by it makes such qualification necessary, except where the
failure so to qualify or be in good standing would not have a Material
Adverse Effect;
(ii) Each of James W. Daly, Inc., Bailey Drug Company,
Cardinal Syracuse, Inc., Ohio Valley-Clarksburg, Inc. and Whitmire
Distribution Corporation (collectively, the "Significant
Subsidiaries") is a corporation duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization
and is duly qualified to transact business and is in good standing in
each jurisdiction, if any, listed opposite its name on Exhibit A to
such opinion, and to the best of such counsel's
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<PAGE> 25
knowledge, except for outstanding shares of preferred stock of
Cardinal Syracuse, Inc., the Company, directly or through other
Subsidiaries, owns all of the outstanding shares of capital stock of
all the Significant Subsidiaries free and clear of any perfected
security interest, or, to the best knowledge of such counsel, any
other security interest, lien, adverse claim, equity or other
encumbrance;
(iii) The authorized capital stock of the Company conforms
in all material respects as to legal matters to the description
thereof contained in the Prospectuses under the caption "Description
of Capital Stock";
(iv) The Shares to be issued and sold to the Managers by
the Company under this Agreement have been duly authorized and when
issued and delivered to the Managers against payment therefor in
accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable and free of any preemptive rights;
(v) The Shares to be sold to the Managers by the Selling
Shareholders under this Agreement are validly issued, fully paid and
nonassessable, and free of preemptive rights;
(vi) The Registration Statement and all post-effective amendments,
if any, have become effective under the Act and, to the best knowledge
of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose are pending before or contemplated by the Commission; and any
required filing of the Prospectuses pursuant to Rule 424(b) has been
made in accordance with Rule 424(b);
(vii) The Company has the corporate power and authority to enter
into this Agreement and to issue, sell and deliver the Shares to be
sold by it to the Managers as provided herein, and this Agreement has
been duly authorized, executed and delivered by the Company;
(viii) Neither the issuance, sale or delivery of the Shares,
nor the execution, delivery or performance of this Agreement, or
compliance by the Company with all provisions of this Agreement nor
consummation by the Company of the transactions contemplated hereby
conflicts with or constitutes a breach of, or a default under, the
certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Significant
Subsidiaries or any agreement, indenture, lease or other instrument to
which the Company or any of the Significant Subsidiaries is a party or
by which any of them
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<PAGE> 26
or any of their respective properties is bound that is an exhibit to
the Registration Statement or to any Incorporated Document, or is
otherwise known to such counsel, which conflict, breach or default
would have a Material Adverse Effect, or, except as disclosed in the
Registration Statement, will result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or any of the Significant Subsidiaries under any such
agreement, indenture, lease or other instrument, nor will any such
action result in any violation of any existing Ohio or federal law
(assuming compliance with all applicable Ohio securities and Blue Sky
laws), judgment, injunction, order or decree known to such counsel and
applicable to the Company or any of the Significant Subsidiaries or
any of their respective properties, which violation would have a
Material Adverse Effect;
(ix) No consent, approval, authorization or other order, or
registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency, or official
is required on the part of the Company (except as have been obtained
under the Act or such as may be required under the securities laws of
jurisdictions governing the purchase and distribution of the Shares)
for the valid issuance and sale of the Shares to the Managers as
contemplated by this Agreement;
(x) (A) The Registration Statement and the Prospectuses
and any supplements or amendments thereto (except for the financial
statements and the notes thereto and the schedules and other financial
data included or incorporated by reference therein, as to which such
counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act; and (B) each of
the Incorporated Documents (except for the financial statements and
the notes thereto and the schedules and other financial data included
therein, as to which counsel need not express any opinion) complies as
to form in all material respects with the Exchange Act and the rules
and regulations of the Commission thereunder;
(xi) To the best knowledge of such counsel, (A) other than
as described or contemplated in the Prospectuses, there are no legal
or governmental proceedings pending or threatened against the Company
or any of the Significant Subsidiaries, or to which the Company or any
of the Significant Subsidiaries, or any of their properties, is
subject, which are required to be described in the Registration
Statement or Prospectuses and (B) there are no agreements, contracts,
indentures, leases or other instruments that are required to be
described in the
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<PAGE> 27
Registration Statement or the Prospectuses or to be filed as an
exhibit to the Registration Statement that are not described or filed
as required, as the case may be;
(xii) The statements in the Registration Statement and
Prospectuses under the caption "Description of Capital Stock", insofar
as such statements constitute a summary of the documents referred to
therein, fairly present the information called for by the Act with
respect to such documents; and
(xiii) Although counsel has not undertaken, except as
otherwise indicated in their opinion, to determine independently, and
does not assume any responsibility for, the accuracy, completeness or
fairness of the statements in the Registration Statement, such counsel
has participated in the preparation of the Registration Statement and
the Prospectuses, including general review and discussion of the
contents thereof but has made no independent check or verification
thereof, and nothing has come to the attention of such counsel that
has caused them to believe that the Registration Statement and the
Prospectuses (except for financial statements and notes thereto and
other financial data included or incorporated by reference therein, as
to which such counsel need not comment) at the time the Registration
Statement became effective or at the date of this Agreement contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectuses contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading.
In rendering their opinion as aforesaid, counsel may, as to
factual matters, rely upon written certificates or statements of officers of
the Company and, as to matters of law, may rely upon an opinion or opinions,
each dated the Closing Date, of other counsel retained by them or the Company
as to laws of any jurisdiction other than the United States or the Ohio
corporations law of the State of Ohio, provided that (1) each such local
counsel is acceptable to the Lead Managers, (2) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to the Lead Managers and is, in form and substance satisfactory to
them and their counsel, and (3) counsel shall state in their opinion that they
believe that they and the Managers are justified in relying thereon.
(d) You shall have received on the Closing Date an opinion
from each of (i) Wachtell, Lipton, Rosen & Katz, counsel
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for Apollo Investment Fund, L.P., Chemical Equity Associates and Melburn G.
Whitmire and (ii) Baker & Hostetler, counsel for Gary E. Close and James E.
Clare, and (iii) Meadows, Owens, Collier, Reed, Cousins & Blair, L.L.P.,
counsel for William L. Clifton, Jr., James R. Clifton and The Mary Lacy Clifton
Separate Property Trust, dated the Closing Date and addressed to you, as Lead
Managers of the several Managers, to the effect that:
(i) This Agreement and the Custody Agreement have each
been duly executed and delivered by or on behalf of each of the
Selling Shareholders and are valid and binding agreements of each
Selling Shareholder;
(ii) Each Selling Shareholder has full legal right, power
and authorization, and any approval required by law, to sell, assign,
transfer and deliver good and marketable title to the Shares which
such Selling Shareholder has agreed to sell pursuant to this Agreement
and the U.S. Underwriting Agreement; and
(iii) The execution and delivery of this Agreement and the
Custody Agreement by the Selling Shareholders and the consummation of
the transactions contemplated hereby and thereby will not conflict
with, violate, result in a breach of or constitute a default under the
terms or provisions of the certificate of incorporation or bylaws of
any corporate Selling Shareholder, the partnership agreement of any
Selling Shareholder that is a partnership, the constituent document of
any Selling Shareholder that is a trust, or, to such counsel's
knowledge, any agreement, indenture, lease or other instrument known
to such counsel to which any Selling Shareholder is a party or by
which any of them or any of their assets or property is bound, or
violate any statute, law, regulation, court order or decree known to
such counsel to be applicable to any Selling Shareholder or to any of
the property or assets of any Selling Shareholder, except for any such
conflicts, breaches, defaults or violations that would not have a
Material Adverse Effect on the ability of such Selling Shareholder to
consummate the transactions contemplated by this Agreement and the
U.S. Underwriting Agreement.
In rendering their opinion as aforesaid, counsel may, as to
factual matters, rely upon written certificates or statements of officers of
the Selling Shareholders and, as to matters of law, may rely upon an opinion or
opinions, each dated the Closing Date, of other counsel retained by them or the
Selling Shareholders as to laws of any jurisdiction other than the United
States or the State of New York (in the case of Wachtell, Lipton, Rosen &
Katz), Ohio (in the case of Baker & Hostetler), or Texas (in the case of
Meadows, Owens, Collier, Reed, Cousins & Blair),
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L.L.P.), provided that (1) each such local counsel is reasonably acceptable to
the Lead Managers, (2) such reliance is expressly authorized by each opinion so
relied upon and a copy of each such opinion is delivered to the Lead Managers
and is, in form and substance reasonably satisfactory to them and their
counsel, and (3) counsel shall state in their opinion that they believe that
they and the Managers are justified in relying thereon.
(e) You shall have received on the Closing Date an opinion of
Davis Polk & Wardwell, counsel for the Managers, dated the Closing Date, with
respect to the matters referred to in clauses (iv), (vi), (vii), (x)(A) and
(xiii) of the foregoing paragraph (c) and such other related matters as you may
reasonably request.
(f) You shall have received letters addressed to you, as Lead
Managers of the several Managers, and dated the date hereof and the Closing
Date from Deloitte & Touche, independent certified public accountants,
substantially in the forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
threatened by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company nor any material
increase in the long-term debt of the Company (other than in the ordinary
course of business) from that set forth or contemplated in the Registration
Statement or the Prospectuses (or any amendment or Supplement thereto); (iii)
there shall not have been, since the respective dates as of which information
is given in the Registration Statement and the Prospectuses (or any amendment
or supplement thereto), except as may otherwise be stated in the Registration
Statement and Prospectuses (or any amendment or supplement thereto), any
Material Adverse Effect; (iv) the Company and the Subsidiaries shall not have
any liabilities or obligations, direct or contingent (not in the ordinary
course of business), that are material to the Company and the Subsidiaries,
taken as a whole, other than those reflected in the Registration Statement or
the Prospectuses (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on and as of the date hereof and
on and as of the Closing Date as if made on and as of the Closing Date, and you
shall have received a certificate, dated the Closing Date and signed by any
executive officer and, in each case, the chief financial officer of the Company
to the effect set forth in this Section 10(g) and in Section 10(h) hereof.
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(h) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.
(i) All the representations and warranties of the Selling
Shareholders contained in this Agreement shall be true and correct, on and as
of the date hereof and on and as of the Closing Date as if made on and as of
the Closing Date, and you shall have received a certificate, dated the Closing
Date and signed by or on behalf of the Selling Shareholders to the effect set
forth in this Section 10(i) and in Section 10(j) hereof.
(j) The Selling Shareholders shall not have failed at or
prior to the Closing Date to have performed or complied with any of their
agreements contained in this Agreement or in the U.S. Underwriting Agreement
and required to be performed or complied with by them at or prior to the
Closing Date.
(k) The Sellers shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.
(l) The Shares shall have been listed or approved for listing
subject to notice of issuance, on the (1) New York Stock Exchange or (2) the
Nasdaq National Market.
(m) The closing under the U.S. Underwriting Agreement shall
have occurred on the Closing Date concurrently with the closing hereunder.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
11. EXPENSES. Except for costs and expenses to be paid for by the
Selling Shareholders, as set forth below, the Company agrees to pay the
following costs and expenses and all other costs and expenses incident to the
performance by them of their obligations hereunder: (i) the preparation,
printing or reproduction, and filing with the Commission of the registration
statement (including financial statements and exhibits thereto), each of the
Prepricing Prospectuses, the Prospectuses, and each amendment or supplement to
any of them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the registration statement, each International Prepricing Prospectus,
the International Prospectus, and all amendments or supplements to any of them
as may be reasonably requested for use in connection with the offering and sale
of the Shares; (iii) the
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preparation, printing, authentication, issuance and delivery of certificates
for the Shares, including any stamp taxes in connection with the original
issuance and sale of the Shares; (iv) the cost of production (or reproduction)
and delivery of this Agreement, the U.S. Underwriting Agreement, the Agreement
Among Managers, the Supplemental Agreement Among U.S. Underwriters, the
Agreement Between U.S. Underwriters and Managers, the International Selling
Agreement, the Managers' Questionnaire, the preliminary and supplemental Blue
Sky Memoranda and all other agreements, memoranda, correspondence and other
documents printed (or reproduced) and delivered in connection with the original
issuance and sale of the Shares; (v) the registration of the Common Shares
under the Exchange Act and the listing of the Shares on the New York Stock
Exchange; (vi) the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of the several jurisdictions as
provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the U.S. Underwriters and Managers relating to the
preparation, printing or reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification); (vii)
the filing fees and the fees and expenses of counsel for the Managers and U.S.
Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; (viii) the transportation and
other expenses incurred by or on behalf of representatives of the Company in
connection with presentations to prospective purchasers of the Shares; (ix) the
fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company; and (x) the
performance by the Company of its other obligations under this Agreement and
the U.S. Underwriting Agreement. The Selling Shareholders agree to pay
underwriting discounts and commissions and transfer taxes (in proportion of the
number of Shares being offered by each of them), fees and expenses of each of
their individual counsel (including local and special counsel) for the Selling
Shareholders, if any, incident to the performance by the Selling Shareholders
of their other obligations hereunder.
12. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto;
or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company, by notifying you, or by you, as Lead Managers of the several Managers,
by notifying the Company and the Selling Shareholders.
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If any one or more of the Managers shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting Manager
or Managers are obligated but fail or refuse to purchase is not more than
one-tenth of the aggregate number of Shares which the Managers are obligated to
purchase on the Closing Date, each non-defaulting Manager shall be obligated,
severally, in the proportion which the number of Shares set forth opposite its
name in Schedule II hereto bears to the aggregate number of Shares set forth
opposite the names of all non-defaulting Managers or in such other proportion
as you may specify in accordance with Section 20 of the Master Agreement Among
Underwriters of Smith Barney Inc., to purchase the Shares which such defaulting
Manager or Managers are obligated, but fail or refuse, to purchase. If any one
or more of the Managers shall fail or refuse to purchase Shares which it or
they are obligated to purchase on the Closing Date and the aggregate number of
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the Managers are obligated to purchase on the
Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares by one or more non-defaulting Managers or other party
or parties approved by you and the Company are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of
any non-defaulting Manager or the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Registration Statement
and the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Manager from
liability in respect of any such default of any such Manager under this
Agreement. The term "Manager" as used in this Agreement includes, for all
purposes of this Agreement, any party not listed in Schedule II hereto who,
with your approval and the approval of the Company, purchases Shares which a
defaulting Manager is obligated, but fails or refuses, to purchase.
Any notice under this Section 12 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
13. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Manager to the Company or any Selling Shareholder, by notice to the Company, if
prior to the Closing Date, (i) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq National Market shall
have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New
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<PAGE> 33
York shall have been declared by either federal or state authorities, or (iii)
there shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or
economic conditions, the effect of which on the financial markets of the United
States is such as to make it, in your judgment, impracticable or inadvisable to
commence or continue the offering of the Shares at the offering price to the
public set forth on the cover page of the International Prospectus or to
enforce contracts for the resale of the Shares by the Managers.
Notice of such termination may be given by telegram, telecopy
or telephone and shall be subsequently confirmed by letter.
14. INFORMATION FURNISHED BY THE MANAGERS. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside front cover page, and the statements in the first, second and fourth
paragraphs under the caption "Underwriting" in any International Prepricing
Prospectus and in the International Prospectus constitute the only information
furnished by or on behalf of the Managers through you as such information is
referred to in Sections 7(b) and 9 hereof.
15. MISCELLANEOUS. Except as otherwise provided in Sections 5, 12
and 13 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of
the Company at 655 Metro Place South, Suite 925, Dublin, Ohio 43017, Attention:
Robert D. Walter, Chairman; or (ii) if to you, as Lead Managers of the several
Managers, care of Smith Barney Inc., 1345 Avenue of the Americas, New York, New
York 10105, Attention: Manager, Investment Banking Division; or (iii) if to
Apollo Investment Fund, L.P., at
, Attention: ; with a copy to Wachtell, Lipton,
Rosen & Katz, at 51 West 52nd Street, New York, New York 10019, Attention:
David A. Katz, Esq.; or (iv) if to Chemical Equity Associates, at
, Attention:
; with a copy to Wachtell, Lipton, Rosen & Katz, at 51 West 52nd
Street, New York, New York 10019, Attention: David A. Katz, Esq.; or (v) if
to Melburn G. Whitmire, at ; with a copy to Wachtell, Lipton,
Rosen & Katz, at 51 West 52nd Street, New York, New York 10019, Attention:
David A. Katz, Esq.; or (vi) if to a member of the Solomons family, at
, Attention: Philip Solomons, Jr.; with a copy to Cardinal Health, Inc., 655
Metro Place South, Suite 925, Dublin, Ohio 43017, Attention: George H.
Bennett, Jr., Esq.; or (vii) if to any member of the Clifton family, or the
Mary Lacy Clifton Separate Property Trust at ,
Attention: William L. Clifton, Jr.; or (viii) if to Gary E. Close, at
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Attention: Gary E. Close; or (ix) if to James E. Clare, at
, Attention: James E. Clare; with a copy to Cardinal Health, Inc., 655 Metro
Place South, Suite 923, Dublin, Ohio 43017, Attn: George L. Bennett, Jr., Esq.
This Agreement has been and is made solely for the benefit of
the several Managers, the Company, its directors and officers, the other
controlling persons referred to in Section hereof and the Selling Shareholders
and their respective successors and assigns, to the extent provided herein, and
no other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns"
as used in this Agreement shall include a purchaser from any Manager of any of
the Shares in his status as such purchaser.
16. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts,
this Agreement shall not become effective unless at least one counterpart
hereof shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Shareholders and the several Managers.
Very truly yours,
CARDINAL HEALTH, INC.
By .......................
Title:
Each of the Selling Shareholders
named in Schedule I hereto
By .......................
Attorney-in-Fact
By .......................
Attorney-in-Fact
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Managers named in Schedule II hereto.
SMITH BARNEY INC.
GOLDMAN SACHS INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
WILLIAM, BLAIR & COMPANY
As Lead Managers of the Several Managers
By SMITH BARNEY INC.
By ............................
Managing Director
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SCHEDULE I
CARDINAL HEALTH INC.
<TABLE>
<CAPTION>
Selling Number of
Shareholders Custodian Attorney-in-Fact Shares
- ------------ --------- ---------------- ---------
<S> <C>
_______________
Total........ _______________
</TABLE>
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SCHEDULE II
CARDINAL HEALTH INC.
<TABLE>
<CAPTION>
Number of Number of
Manager Shares Manager Shares
------- --------- ------- ---------
<S> <C> <C> <C>
Smith Barney Inc. ...
Goldman Sachs International
Bear, Stearns
International Limited
William Blair & Company
_______________
Total........ _______________
</TABLE>
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<PAGE> 1
Exhibit 5
Baker & Hostetler
3200 National City Center
1900 East 9th Street
Cleveland, Ohio 44114-3485
September 19, 1994
Cardinal Health, Inc.
655 Metro Place South, Suite 925
Dublin, Ohio 43017
Gentlemen:
We have acted as counsel to Cardinal Health, Inc., an Ohio corporation
(the "Company"), in connection with the Company's Registration Statement on
Form S-3 (the "Registration Statement") filed under the Securities Act of 1933,
as amended (the "Act") relating to the offering of up to 7,000,000 of the
Company's Common Shares, without par value (the "Common Shares"), of which
1,600,000 are offered for the account of the Company (the "Company Shares"),
5,400,000 are offered for the account of certain selling shareholders
identified in the Registration Statement (the "Selling Shareholders' Shares")
and 1,050,000 are subject to an overallotment option granted to the underwriters
by the Company and certain of the selling shareholders (the "Overallotment
Shares").
In connection with the foregoing, we have examined: (a) the Company's
Amended and Restated Articles of Incorporation, as amended, as certified by the
Secretary of State of Ohio, (b) Certificate of Good Standing of the Company
issued by the Secretary of State of Ohio, (c) the Company's Restated Code of
Regulations, as certified by the Secretary of the Company, and (d) such records
of the corporate proceedings of the Company and such other documents as we
deemed necessary to render this opinion.
Based on such examination, we are of the opinion that:
1. The Company is a corporation duly incorporated and validly existing
under the laws of the State of Ohio.
2. The Company Shares and the Overallotment Shares to be offered by the
Company have been duly and validly authorized and, when issued and sold
pursuant to the U.S. Underwriting Agreement and the International Underwriting
Agreement in the manner contemplated by the Registration Statement, will be
legally issued, fully paid and nonassessable.
3. The Selling Shareholders' Shares and the overallotment Shares to be
offered by certain of the Selling Shareholders have been duly and validly
authorized and, when issued and sold pursuant to the U.S. Underwriting
Agreement and the International Underwriting Agreement in the manner
contemplated by the Registration Statement, will be legally issued, fully paid
and nonassessable.
<PAGE> 2
Cardinal Health, Inc.
September 19, 1994
Page 2
We hereby consent to the filing of this Opinion as Exhibit 5 to the
Registration Statement and the reference to our firm under the caption "Legal
Matters" in the prospectus which is a part of the Registration Statement.
Very truly yours,
/s/ Baker & Hostetler
---------------------
<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 33-55093 of Cardinal Health, Inc. on Form S-3 of our
report dated August 16, 1994 (which report expresses an unqualified opinion and
includes an explanatory paragraph relating to the change in the method of
accounting for income taxes) appearing in the Annual Report on Form 10-K of
Cardinal Health, Inc. for the year ended June 30, 1994 and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
DELOITTE & TOUCHE LLP
Columbus, Ohio
September 19, 1994
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to incorporation by
reference in this Amendment No. 1 to Registration Statement No. 33-55093 of our
report dated September 3, 1993 included in Cardinal Health, Inc.'s Form 10-K
for the year ended June 30, 1994 and to all references to our Firm included in
this registration statement.
/s/ Arthur Andersen LLP
-------------------------
Arthur Andersen LLP
Sacramento, California
September 13, 1994
