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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 11, 1997
(Date of Earliest Event Reported)
McKESSON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-13252 94-3207296
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification
Number)
McKesson Plaza, One Post Street, San Francisco, CA 94104
(Address of principal executive offices, including Zip Code)
(415) 983-8300
(Registrant's telephone number, including area code)
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Item 5 - Other Events.
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On June 11, 1997, McKesson Corporation (the "Company") executed an
Underwriting Agreement in connection with the previously announced secondary
offering of 2,791,738 shares of common stock of the Company, par value $.01 per
share ("Shares"), on behalf of certain selling stockholders. The Company is
filing this Current Report on Form 8-K in connection with the resale of the
Shares under the Company's shelf registration statement on Form S-3
(Registration No. 333-26103), which was declared effective on June 9, 1997.
This Current Report on Form 8-K shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any offer of the shares
in any state in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
state.
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Item 7(c) - Exhibits.
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1.1 Underwriting Agreement, dated June 11, 1997, by and among McKesson
Corporation, Morgan Stanley & Co. Incorporated and the Selling Stockholders
named in Schedule I thereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
McKESSON CORPORATION
(Registrant)
Date: June 13, 1997 By: /s/ Nancy A. Miller
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Name: Nancy A. Miller
Title: Vice President and
Corporate Secretary
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EXHIBIT INDEX
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Exhibit
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1.1 Underwriting Agreement, dated June 11, 1997,
by and among McKesson Corporation, Morgan
Stanley & Co. Incorporated and the Selling
Stockholders named in Schedule I thereto.
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EXHIBIT 1.1
June 11, 1997
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Certain shareholders of McKesson Corporation, a Delaware Corporation (the
"Company"), named in Schedule I hereto severally propose to sell to Morgan
Stanley & Co. Incorporated (the "Underwriter") an aggregate of 2,791,738 shares
of the Common Stock, par value $.01 per share, of the Company (the "Shares"),
each Selling Shareholder selling the amount set forth opposite such Selling
Shareholder's name in Schedule I hereto (the "Offering"). The shares of the
Common Stock, par value $.01 per share, of the Company outstanding on the date
hereof are hereinafter referred to as the "Common Stock."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
is hereinafter referred to as the "Registration Statement"; the prospectus in
the form first used to confirm sales of Shares is hereinafter referred to as the
"Prospectus." If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Securities Act") (the "Rule 462
Registration Statement"), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement. All
references herein to the Registration Statement and the Prospectus include the
documents incorporated therein by reference.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
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and warrants to, and agrees with, the Underwriter that:
(a) The Registration Statement has become effective under the
Securities Act; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose
are pending before or, to the knowledge of the Company, threatened by the
Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any 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, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder and (iii) the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any untrue
statement
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of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph 1(b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to
the Underwriter furnished to the Company in writing by the Underwriter
expressly for use therein.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents 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; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not 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.
(d) The accountants who have audited certain financial statements
included in the Registration Statement and the Prospectus are independent
public accountants as required by the Securities Act and the rules and
regulations thereunder.
(e) The financial statements (together with the related notes thereto)
included in the Registration Statement and the Prospectus present fairly
the financial position of the Company and its consolidated subsidiaries as
of and at the dates indicated and the results of their operations for the
periods specified, except as otherwise disclosed therein; and except as
otherwise stated therein or in the Registration Statement and the
Prospectus, said financial statements have been prepared in conformity with
generally accepted accounting principles in the United States applied on a
consistent basis; and the pro forma consolidated financial data of the
Company and its subsidiaries and the related notes thereto included in the
Registration Statement and Prospectus have been prepared in accordance with
the Commission's rules and regulations with respect to pro forma financial
data, have been and will be properly compiled on the bases described
therein and the assumptions used in the preparation thereof are and will be
reasonable and the adjustments used therein are and will be appropriate to
give effect to the transactions and circumstances referred to therein.
(f) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in the State of California; and the
Company is duly qualified to transact
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business and is in good standing in each other jurisdiction in which the
conduct of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(g) Each significant subsidiary of the Company, as defined by Rule 1-
02(w) of Regulation S-X of the Securities Act, has been duly incorporated,
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(h) This Agreement has been duly authorized, executed and delivered by
the Company.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement (A) do not and will
not contravene (1) any provision of the General Corporation Law of the
State of Delaware (the "DGCL") or any other provision of applicable law, or
(2) the charter or by-laws of the Company, or (3) any agreement, contract,
bond, indenture or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or (4) any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any subsidiary of
the Company, except with respect to clause (A)(3) and (A)(4), for a
contravention which would not have a material adverse effect on the
condition, financial or otherwise, or the earnings or business affairs of
the Company and its subsidiaries taken as a whole, (B) do not and will not
result in the imposition of any lien, charge or encumbrance upon any assets
of the Company or any of its subsidiaries pursuant to the terms of any
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which any of them or any of their respective properties is
bound, except for any liens, charges or encumbrances which would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings or business affairs of the Company and its subsidiaries taken as a
whole, and (C) do not require any consent, approval, authorization or order
of, or qualification with, any governmental body or agency, except such as
may be required by the securities or Blue Sky laws of the various states
and except as may be required under the Exchange Act in connection with the
offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
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(k) There are no legal or governmental proceedings pending or, to the
best of the Company's knowledge, threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject (i) which are required to be
described in the documents incorporated by reference in the Registration
Statement or Prospectus and are not so described or (ii) which could
reasonably be expected to result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, or in the
power or ability of the Company to perform its obligations under this
Underwriting Agreement or to consummate any of the transactions
contemplated by the Prospectus or this Underwriting Agreement. There are
no statutes, regulations, contracts or other documents that are required to
be described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(l) The Company is not an "investment company", as such term is
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(m) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(n) The shares of Common Stock (including the Shares outstanding) have
been duly authorized and are validly issued, fully paid and non-assessable.
(o) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits
(collectively, "Permits") of and from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals, to
own, lease, license and use its properties and assets and to conduct its
business in the manner described in the Prospectus, except to the extent
that the failure to obtain or file could not reasonably be expected to have
a material adverse effect on the Company and its subsidiaries, taken as a
whole. Neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such Permits which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could reasonably be expected to
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(p) The Company and its subsidiaries (i) are in compliance with all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances, and regulated wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals and filed all notices required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of each such permit, license,
notice or approval, except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals or
failure to comply
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with the terms and conditions of such permits, licenses, approvals or
obligations or to file such notices would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken
as a whole, except as otherwise disclosed or incorporated by reference in
the Prospectus.
(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 potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole, except as
otherwise disclosed or incorporated by reference in the Prospectus.
(r) Except for the Registration Rights Agreement dated as of February
20, 1997 among the McKesson Financing Trust (the "Trust"), the Company and
Morgan Stanley & Co. Incorporated, the Registration Rights Agreement dated
as of March 11, 1997 among the Company, Morgan Stanley & Co. Incorporated,
BancAmerica Securities, Inc., Chase Securities Inc. and J.P. Morgan
Securities Inc. and the demand and incidental registration rights given in
connection with the shares of McKesson Common Stock issued in connection
with the acquisition of General Medical Inc. (the "GMI Shares"), there are
no contracts, agreements or understandings between the Company, on the one
hand, and any person, on the other hand, granting such person the right to
require the Company to file a registration statement under the Securities
Act with respect to any securities of the Company or to require the Company
to include such securities in any registration statement filed by the
Company under the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each of
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the Selling Shareholders represents and warrants to, and agree with, the
Underwriter that:
(a) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and the
performance by such Selling Shareholder of its obligations under, this
Agreement, the Custody Agreement (as defined below) signed by such Selling
Shareholder and First Chicago Trust Company of New York, as Custodian,
relating to the deposit of the Shares to be sold by such Selling
Shareholder (the "Custody Agreement") and the Power of Attorney appointing
certain individuals as such Selling Shareholder's attorneys-in-fact to the
extent set forth therein, relating to the transactions contemplated hereby
and by the Registration Statement (the "Power of Attorney") will not
contravene any provision of applicable law, or the certificate of
incorporation or by-laws of such Selling Shareholder (if such Selling
Shareholder is a corporation), or any agreement or other instrument binding
upon such Selling Shareholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such Selling
Shareholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
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performance by such Selling Shareholder of its obligations under this
Agreement or the Custody Agreement or Power of Attorney of such Selling
Shareholder, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Shares.
(c) Such Selling Shareholder has the legal right and power, and all
authorization and approval required by law, to enter into this Agreement,
the Custody Agreement and the Power of Attorney and to sell, transfer and
deliver the Shares to be sold by such Selling Shareholder.
(d) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by such Selling Shareholder and are
valid and binding agreements of such Selling Shareholder.
(e) Upon delivery of the Shares to be sold by such Selling Shareholder
and payment therefor pursuant to this Agreement good and valid title to the
Shares will pass free and clear of any security interests, claims, liens,
equities and other encumbrances (except as may be imposed by the Securities
Act or blue sky laws).
(f) (i) The information pertaining to such Selling Shareholder in the
Prospectus under the caption "Selling Stockholders" at the time the
Registration Statement became effective did not contain any 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 and (ii) the information pertaining to such Selling Shareholder
in the Prospectus under the captions "Selling Stockholders" does not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. AGREEMENTS TO SELL AND PURCHASE. Each Selling Shareholder, severally
-------------------------------
and not jointly, hereby agrees to sell to the Underwriter, and the Underwriter,
upon the basis of the representations and warranties herein contained, but
subject to the conditions hereinafter stated, agrees to purchase from such
Selling Shareholder at $74.73 a share (the "Purchase Price") the number of
Shares set forth in Schedule I hereto opposite the name of such Selling
Shareholder.
The Company hereby agrees that, without the prior written consent of the
Underwriter, it will not, during the period ending 30 days after the date of
this Agreement, and each Selling Shareholder hereby agrees that, without the
prior written consent of the Underwriter, it will not, during the period ending
90 days after the date of this Agreement, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock (whether such
shares or any such securities are now owned by such Selling Shareholder or are
hereafter acquired prior to or in connection with the Offering) or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock,
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whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the Shares to be sold
hereunder, (b) shares of Common Stock of the Company held by a Selling
Shareholder which are transferred or sold to an affiliate of such Selling
Shareholder so long as such affiliate agrees to be bound by the provisions of
this Section 3, (c) the issuance by the Company of shares of Common Stock upon
the conversion of the 5% Trust Convertible Preferred Securities (the "Preferred
Securities") and the related 5% Convertible Junior Subordinated Debentures due
2027 or any filings with the Commission, or resales or transfers of securities
in connection with the offering of the Preferred Securities or (d) the issuance
by the Company of shares of Common Stock options to purchase Common Stock
pursuant to employee benefit plans incorporated by reference in the Prospectus.
In addition, each Selling Shareholder, agrees that, without the prior written
consent of the Underwriter, it will not, during the period ending 90 days after
the date of the Prospectus, make any demand for, or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
4. PAYMENT AND DELIVERY. Payment for the Shares to be sold by each
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Selling Shareholder shall be made to such Selling Shareholder in Federal or
other funds immediately available in New York City against delivery of such
Shares for the account of the Underwriter at 10:00 A.M., New York City time, on
June 16, 1997, or at such other time on the same or such other date, not later
than June 26, 1997, as shall be designated in writing by the Underwriter. The
time and date of such payment are hereinafter referred to as the "Closing Date."
Certificates for the Shares shall be in definitive form and registered in
such names and in such denominations as the Underwriter shall request in writing
not later than one full business day prior to the Closing Date. The
certificates evidencing the Shares shall be delivered to the Underwriter on the
Closing Date, with any transfer taxes payable in connection with the transfer of
the Shares to the Underwriter duly paid, against payment of the Purchase Price
therefor.
5. CONDITIONS TO THE UNDERWRITER'S OBLIGATIONS. The obligations of the
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Underwriter are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in
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the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement) that, in the Underwriter's judgment, is so
material and adverse and that makes it, in the Underwriter's judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriter shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in clause (a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriter shall have received on the Closing Date an opinion
of Ivan D. Meyerson, Vice President and General Counsel of the Company,
dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the state of
Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in the State of
California; and the Company is duly qualified to transact business and
is in good standing in each other jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or to be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(ii) each significant subsidiary of the Company, as defined by
Rule 1-02(w) of Regulation S-X of the Securities Act (other than GM
Holdings, Inc, General Medical Inc. and General Medical Corporation),
has been duly incorporated, is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole;
(iii) the shares of outstanding Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable and
are not
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subject to any preemptive or similar rights arising under the DGCL,
the charter or by-laws of the Company or, to the best of such
counsel's knowledge, any agreement or instrument to which the Company
or any of its subsidiaries is a party;
(iv) the statements in the Company's 1996 Annual Report on Form
10-K under the caption "Legal Proceedings" and the statements
regarding legal proceedings in the Company's Current Reports on Form
8-K, as amended, and Quarterly Reports on Form 10-Q, as amended,
incorporated by reference in the Prospectus, in each case insofar as
such statements constitute summaries of legal matters or legal
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(v) each document filed pursuant to the Exchange Act and
incorporated by reference in the Prospectus (except for financial
statements, exhibits and schedules included therein as to which
counsel need not express any opinion) complied when so filed or, if
amended, when so amended, as to form in all material respects with the
requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
(A) do not and will not contravene (1) any provision of applicable law
or the charter or by-laws of the Company, or (2) to the best of such
counsel's knowledge, any agreement, contract, bond, indenture or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or (3)
to the best of such counsel's knowledge, any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary of the Company, except, with respect to
clause (A)(2) and (A)(3), for a contravention which would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings or business affairs of the Company and its subsidiaries
taken as a whole, (B) to the best of such counsel's knowledge, do not
and will not result in the imposition of any lien, charge or
encumbrance upon any assets of the Company or any of its subsidiaries
pursuant to the terms of any agreement or instrument to which the
Company or any of its subsidiaries is a party or by which any of them
or any of their respective properties is bound except for any liens,
charges or encumbrances which would not have a material adverse effect
on the condition, financial or otherwise, or the earnings or business
affairs of the Company and its subsidiaries taken as a whole, and (C)
do not require any consent, approval, authorization or order of, or
qualification with, any governmental body or agency, except such as
may be required by the securities or Blue Sky laws of the various
states and except as may be required under the Securities Act and the
Exchange Act in connection with the performance of the obligations
under this Underwriting Agreement. Such opinion may state that the
term "applicable law" as used in such opinion
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means those laws, rules and regulations of the State of California,
the DGCL and the federal laws of the United States of America that, in
such counsel's experience, are normally applicable to transactions of
the type contemplated by this Agreement (other than federal and state
securities laws and the rules and regulations of the National
Association of Securities Dealers, Inc.), but without such counsel
having made any special investigation concerning the applicability of
any other laws, rules or regulations;
(vii) to the best of such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject (i)
which are required to be described in the Registration Statement or
the Prospectus and are not so described or (ii) which could reasonably
be expected to result in a material adverse change in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, or in the power or
ability of the Company to perform its obligations under the
Underwriting Agreement or to consummate any of the transactions
contemplated by the Underwriting Agreement. To the best of such
counsel's knowledge, there are no contracts or other documents that
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
In addition, such counsel shall state that such counsel or his
representatives has participated in discussions with officers and other
representatives of the Company and representatives of the independent public
accountants for the Company, at which the contents of the Registration
Statement, the Prospectus and related matters were discussed and, although such
counsel has not independently verified, is not passing upon and does not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus and has made no
independent check or verification thereof (except as otherwise indicated above),
on the basis of the foregoing, such counsel shall state that no facts have come
to such counsel's attention that have led such counsel to believe that (except
for financial statements and schedules and other financial and statistical data
included or incorporated by reference therein, as to which such counsel need not
express any belief) the Registration Statement and the prospectus included
therein at the time the Registration Statement became effective contained any
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, as of its date or on the Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
The foregoing opinion shall be rendered to the Underwriter at the request
of the Company and shall so state therein. In addition, in rendering such
opinion, such counsel shall state that such opinion is limited to matters
arising under the laws of the State of California, the DGCL and the federal laws
of the United States.
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(d) The Underwriter shall have received on the Closing Date an
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Delaware;
(ii) the statements (A) in the Prospectus under the caption
"Description of Capital Stock" and (B) in the Registration Statement
in Item 15, insofar as such statements constitute summaries of legal
matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting
Agreement (A) do not and will not contravene any provision of
applicable law, the charter or by-laws of the Company, and (B) do not
require any consent, approval, authorization or order of, or
qualification with, any governmental body or agency, except such as
may be required by the securities or Blue Sky laws of the various
states. Such opinion may state that the term "applicable law" as used
in such opinion means those laws, rules and regulations of the state
of New York, the state of California, the DGCL and the federal laws of
the United States of America that, in such counsel's experience, are
normally applicable to transactions of the type contemplated by this
Agreement (other than federal and state securities laws and the rules
and regulations of the National Association of Securities Dealers,
Inc.), but without such counsel having made any special investigation
concerning the applicability of any other laws, rules or regulations;
(v) the Company is not an "investment company", as such term is
defined in the Investment Company Act;
(vi) each of the Registration Statement, as of its effective
date, and the Prospectus, as of its date, appeared on its face to be
appropriately responsive in all material respects to the requirements
of the Securities Act and the applicable rules and regulations of the
Commission, except that in each case we express no opinion as to (a)
the documents and information incorporated or deemed to be
incorporated by reference therein (the "Incorporated Documents") or
(b) the financial statements, schedules and other financial and
statistical data included or incorporated by reference therein or
excluded therefrom or the exhibits to the Registration Statement, and
we do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the
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Registration Statement, the Prospectus or any of the documents
incorporated therein by reference.
The foregoing opinion shall be rendered to the Underwriter at the request
of the Company and shall so state therein. In addition, in rendering such
opinion, such counsel shall state that such opinion is limited to matters
arising under the laws of the states of New York and California, the DGCL and
the federal laws of the United States.
(e) The Underwriter shall have received on the Closing Date an
opinion of McGuire, Woods, Battle & Boothe, llp counsel for the Selling
Shareholders other than Princes Gate Investors, L.P., Acorn Partnership I,
L.P., PGI Investments Limited, PGI Sweden AB, Gregor Von Opel and Chase
Equity Associates, L.P., dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Shareholders;
(ii) the execution and delivery by each Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, this Agreement and the Custody Agreement and Power of Attorney
of such Selling Shareholder will not contravene any provision of
applicable law, or the certificate of incorporation or by-laws of such
Selling Shareholder (if such Selling Shareholder is a corporation),
or, to the best of such counsel's knowledge, any agreement or other
instrument binding upon such Selling Shareholder or, to the best of
such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the performance by such Selling Shareholder of its obligations
under this Agreement or the Custody Agreement or Power of Attorney of
such Selling Shareholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
offer and sale of the Shares;
(iii) each of the Selling Shareholders has valid title to the
Shares to be sold by such Selling Shareholder and the legal right and
power, and all authorization and approval required by law, to enter
into this Agreement and the Custody Agreement and Power of Attorney of
such Selling Shareholder and to sell, transfer and deliver the Shares
to be sold by such Selling Shareholder;
(iv) the Custody Agreement and the Power of Attorney of each
Selling Shareholder have been duly authorized, executed and delivered
by such Selling Shareholder and are valid and binding agreements of
such Selling Shareholder;
(v) delivery of the Shares to be sold by each Selling Shareholder
pursuant to this Agreement will pass title to such Shares free and
clear of any security interests, claims, liens, equities and other
encumbrances;
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(vi) such counsel (A) is of the opinion that the information in
the Prospectus under the captions "Selling Stockholders" complies as
to form in all material respects with the 1933 Act and the Rules and
Regulations, (B) has no reason to believe that the information in the
Prospectus under the caption "Selling Stockholders" at the time the
Registration Statement became effective contained any 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 and (C) has no reason to believe that the information in
the Prospectus under the captions "Selling Stockholders" contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(vii) each of General Medical, Inc., a Delaware corporation
("GMI"), GM Holdings Inc., a Delaware corporation ("Holdings"), and
General Medical Corporation, a Virginia corporation ("General
Medical"), is a corporation duly incorporated, validly existing and in
good standing under the laws of the state of its incorporation with
the corporate power and authority under such laws to own, lease and
operate its properties and conduct its business as described in the
Prospectus; and
(viii) each of GMI, Holdings and General Medical is duly
qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make
such qualification necessary, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
The Underwriter shall have received the opinions of Davis Polk &
Wardwell and O'Sullivan Graev & Karabell, LLP, counsel for the Princes Gate
Investors, L.P. and Chase Equity Associates, L.P., respectively, in the
form previously submitted to and approved by you.
The opinion of McGuire, Woods, Battle & Boothe, LLP described in
paragraph (e) above shall be rendered to the Underwriter at the request of
the Selling Shareholders and shall so state therein.
(f) The Underwriter shall have received on the Closing Date an opinion
of Brown & Wood LLP, counsel for the Underwriter, dated the Closing Date,
in form and substance satisfactory to the Underwriter, with respect to this
Agreement, the Registration Statement, the Prospectus and other related
matters as the Underwriter may require.
(g) The Underwriter shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriter,
from Deloitte & Touche LLP, independent auditors, containing statements and
information of the type ordinarily
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included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained or
incorporated by reference in the Registration Statement and the Prospectus
(including, without limitation, all pro forma financial statements and the
financial statements and financial information relating to the Company,
General Medical Inc. and FoxMeyer Corporation); provided that the letter
--------
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(h) Any certificate signed by any officer of the Company and delivered
to the Underwriter or the Underwriter's counsel shall be deemed a
representation and warranty by the Company to the Underwriter as to the
matters covered thereby.
(i) Each Selling Shareholder shall have furnished or caused to be
furnished to the Underwriter a certificate dated the Closing Date signed on
behalf of each Selling Shareholder as to the accuracy of the
representations and warranties of such Selling Shareholder herein at and as
of the Closing Date, as to the performance by such Selling Shareholder of
all of its obligations hereunder to be performed at or prior to the Closing
Date and as to such other matters as the Underwriter may reasonably
request.
6. COVENANTS OF THE COMPANY. In further consideration of the agreements
------------------------
of the Underwriter herein contained, the Company covenants with the Underwriter
as follows:
(a) To furnish to the Underwriter, without charge, two signed
copies of the Registration Statement (including exhibits thereto) and
a conformed copy of the Registration Statement (without exhibits
thereto) and to furnish to the Underwriter in New York City, without
charge, prior to 5:00 P.M. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned
in paragraph (c) below, as many copies of the Prospectus and any
supplements and amendments thereto or to the Registration Statement as
the Underwriter may reasonably request.
(b) Before amending or supplementing the Registration Statement
or the Prospectus, to furnish to the Underwriter a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which the Underwriter reasonably objects,
and to file with the Commission within the applicable period specified
in Rule 424(b) under the Securities Act any prospectus required to be
filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the Underwriter's opinion the Prospectus
is required by law to be delivered in connection with sales by the
Underwriter or a dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus
in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare, file
with the Commission and
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furnish, at its own expense, to the Underwriter and to the dealers
(whose names and addresses the Underwriter will furnish to the
Company) to which Shares may have been sold by the Underwriter and to
any other dealers upon request, either amendments or supplements to
the Prospectus so that the statements in the Prospectus as so amended
or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with applicable
law.
(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the
Underwriter shall reasonably request, to comply with such laws as to
permit the continuance of sales and dealings in such jurisdictions
until the earlier of (i) one year after the date of this Agreement and
(ii) as long as may be necessary to complete the distribution of
Shares; provided, however, that the Company will not be required to
qualify as a foreign corporation, to file a general consent to service
of process in any such jurisdiction or to take any other action that
would subject the Company to service of process in any suits other
than those arising out of the offering of the Shares or to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise subject.
(e) To make generally available to the Company's security holders
and to the Underwriter as soon as practicable an earning statement
covering the twelve-month period ending June 30, 1998 that satisfies
the provisions of Section 11(a) of the Securities Act and the rules
and regulations of the Commission thereunder.
7. EXPENSES. Whether or not the transactions contemplated in this
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Agreement are consummated or this Agreement is terminated, the Company and the
Selling Shareholders agree to pay or cause to be paid all expenses incident to
the performance of their obligations under this Agreement, including: (i) the
fees, disbursements and expenses of the Company's counsel, the Company's
accountants and counsel for the Selling Shareholders in connection with the
registration and delivery of the Shares under the Securities Act and all other
fees or expenses in connection with the preparation and filing of the
Registration Statement, the Prospectus and amendments and supplements to any of
the foregoing, including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriter and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriter, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 6(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriter in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) the cost of printing certificates representing the Shares, (v)
the costs and charges of any transfer agent, registrar or depositary and (vi)
all other costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in
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<PAGE>
this Section. It is understood, however, that except as provided in this
Section, Section 8 entitled "Indemnity and Contribution" and Section 10 entitled
"Miscellaneous", the Underwriter will pay all of their costs and expenses,
including fees and disbursements of its counsel, stock transfer taxes payable on
resale of any of the Shares by it and any advertising expenses connected with
any offers it may make. It is also understood that nothing in this Agreement
shall change or set aside any existing arrangement or agreement between the
Company and the Selling Shareholders or the Company and the Underwriter with
respect to fees or expenses incurred or to be incurred in connection with the
transactions contemplated by this Agreement.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Selling Shareholder and the Company may otherwise have for
the allocation of such expenses between themselves.
8. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to indemnify and
--------------------------
hold harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state in the Registration Statement a material fact
necessary in order to make the statements therein not misleading, or caused by
any omission or alleged omission to state in the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to the Underwriter furnished to the Company in writing
by the Underwriter expressly for use therein.
(b) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless the Underwriter, the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Underwriter or the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof or the Prospectus (as amended or supplemented
if the Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state in the Registration
Statement a material fact necessary in order to make the statements therein not
misleading, or caused by any omission or alleged omission to state in the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, but only with
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reference 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 Prospectus or any amendments or supplements thereto.
Notwithstanding the foregoing provisions of this subsection (b), with respect to
all claims pursuant to this subsection (b) and/or arising as a result of a
breach of subsection 2(f) of this Agreement, the liability of each Selling
Shareholder shall in no event exceed the amount of total net proceeds, before
deducting expenses but after deducting underwriting discounts and commissions
("Net Proceeds"), received by such Selling Shareholder from the sale of the
Shares pursuant to this Agreement.
(c) The Underwriter agrees to indemnify and hold harmless the Company, the
Selling Shareholders, the directors of the Company, the officers of the Company
who sign the Registration Statement and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state in the
Registration Statement a material fact necessary in order to make the statements
therein not misleading, or caused by any omission or alleged omission to state
in the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but only with reference to information
relating to the Underwriter furnished to the Company in writing by the
Underwriter expressly for use in the Registration Statement, the Prospectus or
any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to paragraph (a), (b) or (c) of this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for (i) the fees and expenses of more than one
separate firm (in addition to any local counsel) for the Underwriter and all
persons, if any,
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<PAGE>
who control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, (ii) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Company,
its directors, its officers who sign the Registration Statement and each person,
if any, who controls the Company within the meaning of either such Section of
the Exchange Act and (iii) the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Selling Shareholders and all persons,
if any, who control any Selling Shareholder within the meaning of either such
Section of the Exchange Act, and that all such reasonable fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Underwriter and such control persons of the Underwriter, such firm shall
be designated in writing by the Underwriter. In the case of any such separate
firm for the Company, and such directors, officers and control persons of the
Company, such firm shall be designated in writing by the Company. In the case
of any such separate firm for the Selling Shareholders and such control persons
of any Selling Shareholder, such firm shall be designated in writing by the
persons named as attorneys-in-fact for the Selling Shareholders under the Powers
of Attorney. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for the reasonable fees
and expenses of counsel as contemplated by the second and third sentences of
this paragraph, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened 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 proceeding.
(e) To the extent the indemnification provided for in paragraph (a), (b) or
(c) of this Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties 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 indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, 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 Underwriter on the
other hand in connection with the offering of the Shares shall be deemed
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<PAGE>
to be in the same proportion as the Net Proceeds from the offering of the Shares
received by the Selling Shareholders bear to the total underwriting discounts
and commissions received by the Underwriter. The relative fault of the Selling
Shareholders, the Company and the Underwriter 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 Selling Shareholders, by the Company or
by the Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(f) The Selling Shareholders, the Company and the Underwriter agree that it
would not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (e) of
this Section 8. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities referred to in paragraph (e) of
this Section 8 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 or defending any such action or claim.
Notwithstanding the provisions of this Section 8, (i) the Underwriter shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that the Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission and (ii) no Selling Shareholder shall
be required to contribute any amount in excess of the amount of total Net
Proceeds received by such Selling Shareholder from the sale of the Shares
pursuant to this Agreement. The Selling Shareholder's respective obligations in
this subsection (f) to contribute are several in proportion to the total Net
Proceeds they have received from the sale of the Shares pursuant to this
Agreement and are not joint. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company and the
Selling Shareholders contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of the Underwriter or any person
controlling the Underwriter, any Selling Shareholder or any person controlling
any Selling Shareholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
9. TERMINATION. This Agreement shall be subject to termination by notice
-----------
given by the Underwriter to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange or the National Association
of Securities Dealers, Inc., (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York
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shall have been declared by either Federal or New York State authorities or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the Underwriter's
judgment, is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv) such event, singly or together with any
other such event, makes it, in the Underwriter's judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
10. MISCELLANEOUS. If this Agreement shall be terminated by the
-------------
Underwriter because (A) of any failure or refusal on the part of (i) any Selling
Shareholder or (ii) the Company to comply with the terms or to fulfill any of
the conditions of this Agreement, or (B) if for any reason (i) any Selling
Shareholder or (ii) the Company shall be unable to perform its obligations under
this Agreement, then, in the case of clauses (A)(i) and (B)(i) above, the
Selling Shareholders will, and in the case of clauses (A)(ii) and (B)(ii) above,
the Company will, reimburse the Underwriter, for all out-of-pocket expenses
(including the fees and disbursements of its counsel) reasonably incurred by the
Underwriter in connection with this Agreement or the offering contemplated
hereunder.
11. EFFECTIVENESS. This Agreement shall become effective upon the
-------------
execution and delivery hereof by the parties hereto.
12. COUNTERPARTS. This Agreement may be signed in two or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. This Agreement shall be governed by and construed in
--------------
accordance with the internal laws of the State of New York.
14. HEADINGS. The headings of the sections of this Agreement have been
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inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
15. NOTICES. Except as otherwise provided in this Agreement, all notices,
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requests and other communications to any person provided for hereunder shall be
in writing and shall be given to such person (a) in the case of any Selling
Shareholder, addressed to such party care of Kelso & Company, 320 Park Avenue,
24th Floor, New York, New York 10022 to the attention of James J. Connors, III,
Esquire or at such other address as such party shall have furnished to the
Company and the Underwriter in writing, (b) in the case of the Underwriter at
Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036 to
the attention of Syndicate Department or at such other address as the
Underwriter shall have furnished to the Company and to the Selling Shareholders
in writing or (c) in the case of the Company, at McKesson Corporation, One Post
Street, San Francisco, California 94104, to the attention of its General
Counsel, or at such other address, or to the attention of such other officer, as
the Company shall have furnished to the Underwriter and the Selling Shareholders
in writing. Each such notice, request or other communication shall be effective
(i) if given by mail, 72 hours after such communication is deposited in the mail
with first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means (including without limitation, by air courier), when delivered at
the address specified above.
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Very truly yours,
McKESSON CORPORATION
By: /s/ Ivan D. Meyerson
-----------------------
Name: Ivan D. Meyerson
Title: Vice President and
General Counsel
The Selling Shareholders named in
Schedule I hereto
By: /s/ David I. Wahrhaftig
--------------------------
Name: David I. Wahrhaftig
Title: Attorney-in-Fact
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
By: /s/ William H. Wright II
---------------------------
Name: William H. Wright II
Title: Principal
21
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of Shares
Selling Shareholder To Be Sold
- ------------------- -----------------
<S> <C>
Kelso Investment Associates IV, L.P............... 1,774,034
Kelso Equity Partners II, L.P..................... 39,910
Chase Equity Associates, L.P...................... 294,557
John Rutledge Partners, L.P....................... 251,930
Princes Gate Investors, L.P....................... 174,404
Acorn Partnership I, L.P.......................... 20,748
PGI Investments Limited........................... 20,541
PGI Sweden AB..................................... 20,541
Gregor Von Opel................................... 10,272
The Louis and Patricia Kelso Trust................ 3,612
William A. Marquard............................... 2,890
The Frank T. Nickell IRA.......................... 14,450
David M. Roderick................................. 4,335
George L. Shinn................................... 1,445
Steven B. Nielsen................................. 60,885
F. DeWight Titus.................................. 85,293
Donald B. Garber.................................. 11,891
---------
Total.............................. 2,791,738
=========
</TABLE>
