EXHIBIT 1.1
Medco Health Solutions, Inc.
__% Notes due 2007
__% Notes due 2012
---------
Form of Underwriting Agreement
___________________, 2002
Xxxxxxx, Xxxxx & Co.,
X.X. Xxxxxx Securities Inc.,
Xxxxxxx Xxxxx Xxxxxx Inc.,
As representatives of the several Underwriters
named in Schedule I hereto,
c/x Xxxxxxx, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
Medco Health Solutions, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of $_________ principal amount of _____% Notes due 2007 ("Notes A") and
$_________ principal amount of _____% Notes due 2012 ("Notes B") (together, the
"Securities").
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-86404)
(the "Initial Registration Statement") in respect of the Securities has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you, and, excluding exhibits thereto, to you for each of the other
Underwriters, have been declared effective by the Commission in such
form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended
(the "Act"), which became effective upon filing, no other document with
respect to the Initial Registration Statement has heretofore been filed
with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any,
has been issued and no proceeding for that purpose has been initiated
or threatened by the Commission (any preliminary prospectus included in
the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Act, is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement, any post-effective
amendment thereto and the Rule 462(b) Registration Statement, if any,
including all exhibits thereto but excluding Form T-1 and including the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was
declared effective, each as amended at the time such part of the
Initial Registration Statement became effective or such part of the
Rule 462(b) Registration Statement, if any, became or hereafter becomes
effective, are hereinafter collectively called the "Registration
Statement"; such final prospectus, in the form first filed pursuant to
Rule 424(b) under the Act, is hereinafter called the "Prospectus");
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
rules and regulations of the Commission thereunder, and did 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, in the light of the circumstances under which they were made,
not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Xxxxxxx, Xxxxx & Co. expressly
for use therein;
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, 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; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through Xxxxxxx, Xxxxx & Co. expressly for use
therein;
(d) The consolidated financial statements, together with
related schedules and notes, included in the Registration Statement and
the Prospectus (and any amendment or supplement thereto), present
fairly in all material respects the combined financial position,
results of operations and changes in financial position of the Company
and its consolidated subsidiaries 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
2
involved, except as disclosed therein; and the other financial and
statistical information and data of the Company set forth in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto) present fairly, in all material respects, the
information stated therein and have been derived from the books and
records of the Company, and such other financial information and data
have been prepared on a basis consistent with such financial
statements;
(e) The unaudited pro forma condensed consolidated balance
sheet and condensed consolidated statement of income and the related
notes thereto set forth in the Registration Statement and the
Prospectus have been prepared in all material respects in accordance
with the applicable requirements of Rule 11-02 of Regulation S-X
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), have been compiled on the pro forma basis described
therein and, in the opinion of the Company, the assumptions used in the
preparation thereof were reasonable at the time made and the
adjustments used therein are based upon good faith estimates and
assumptions believed by the Company to be reasonable at the time made;
(f) No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries on the one hand, and the
directors, officers, stockholders, customers or suppliers of the
Company or any of its subsidiaries on the other hand, which is required
by the Securities Act to be described in the Registration Statement and
the Prospectus which is not so described;
(g) Neither the Company nor any of its significant
subsidiaries within the meaning of Rule 1-02(w) of Regulation S-X of
the Commission (each, a "Significant Subsidiary") has sustained since
the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(h) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed
to be made of such property by the Company and its subsidiaries; and
any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries;
3
(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, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each subsidiary of the Company
has been duly organized and is validly existing as a corporation or
limited liability company in good standing under the laws of its
jurisdiction of organization;
(j) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; and all of the issued shares of capital stock
of each subsidiary of the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and (except for
directors' qualifying shares and except as set forth in the Prospectus)
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims;
(k) This Agreement has been duly authorized, executed and
delivered by the Company and the Securities have been duly authorized
and, when issued and delivered pursuant to this Agreement, will have
been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the indenture dated as of
_____________, 2002 (the "Indenture") between the Company and U.S. Bank
Trust National Association, as Trustee (the "Trustee"), under which
they are to be issued, which is substantially in the form filed as an
exhibit to the Registration Statement; the Indenture has been duly
authorized and duly qualified under the Trust Indenture Act (assuming
due execution and delivery by the Trustee) and constitutes a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Securities
and the Indenture will conform to the descriptions thereof in the
Prospectus in all material respects;
(l) The Master Separation and Distribution Agreement between
Merck & Co., Inc. ("Merck") and the Company, dated ___________, (the
"Master Separation and Distribution Agreement") has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by Merck, constitutes a valid and
binding agreement of the Company; and each of the other agreements
described in the Prospectus under the heading "Relationship Between Our
Company and Merck & Co., Inc." that has been filed as an exhibit to the
Registration Statement, in each case between Merck and the Company
(collectively, together with the Master Separation and Distribution
Agreement, the "Separation and Transition Agreements"), has been duly
authorized and, when executed and delivered by the Company prior to the
Time of Delivery, will be duly executed and delivered by the Company,
and, assuming due authorization, execution and delivery by Merck, will
constitute a valid and binding agreement of the Company;
4
(m) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the
Indenture, the Separation and Transition Agreements and this Agreement
and the consummation of the transactions herein and therein
contemplated will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its
subsidiaries is subject, except for any such conflict, breach or
violation that would not, individually or in the aggregate, adversely
affect the validity of the Securities or have a material adverse effect
on the business or assets, or the current or future consolidated
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, taken as a whole (a "Material Adverse
Effect"); (ii) result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or (iii) except
for any such violation that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
result in any violation of any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties; and
no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by this
Agreement or the Indenture, except the registration under the Act of
the Securities, such as have been obtained under the Trust Indenture
Act and such consents, approvals, authorizations, orders, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities
by the Underwriters;
(n) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws; and neither
the Company nor any of its subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound except for
any such default that would not, individually or in the aggregate, have
a Material Adverse Effect;
(o) The statements set forth in the Prospectus under the
caption "Description of Notes", insofar as they purport to constitute a
summary of the terms of the Securities, under the caption "U.S. Federal
Tax Considerations", and under the caption "Underwriting", insofar as
they purport to describe the provisions of the laws and documents
referred to therein, fairly present in all material respects the
matters referred to therein;
(p) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate reasonably be expected to have a Material Adverse
Effect; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others;
5
(q) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company", as such term is defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(r) PricewaterhouseCoopers LLP and Xxxxxx Xxxxxxxx LLP, who
have certified certain financial statements of the Company and its
subsidiaries, are independent public accountants as required by the Act
and the rules and regulations of the Commission thereunder;
(s) The Company or one of its subsidiaries currently own or
possess adequate licenses or other rights to use the patents and patent
applications, copyrights, trademarks, service marks, trade names,
technology and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary rights) necessary in any material
respect to conduct the business of the Company and its subsidiaries,
taken as a whole as currently conducted in the manner described in the
Prospectus (collectively, the "Company Intellectual Property"); and
except as disclosed in the Prospectus, neither the Company nor any of
its subsidiaries has received any written notice of infringement of the
intellectual property rights of others with respect to the Company
Intellectual Property, which would reasonably be expected to have a
Material Adverse Effect;
(t) The Company and each of its subsidiaries has conducted its
business in compliance with all the laws, rules and regulations of the
jurisdictions in which each such entity is conducting business, except
as disclosed in the Prospectus or except for any such non-compliance
that would not, individually or in the aggregate, have a Material
Adverse Effect; without limiting the foregoing, except as disclosed in
the Prospectus, the Company and each of its subsidiaries, and each of
the pharmacists and physicians employed by the Company and each of its
subsidiaries, owns or possesses and is in compliance with the terms,
provisions and conditions of all permits, licenses, franchises,
operating certificates, orders, authorizations, registrations,
qualifications, consents or approvals (including certificates of need,
licenses, pharmacy licenses, Medicare provider numbers, accreditations
and other similar documentation or approvals of any local health
departments or any Authority (as hereinafter defined)) (collectively,
"Permits") of any court, arbitrator or arbitral body, or any federal,
state or local or foreign governmental agency or self-regulatory
authority, department or commission, or any other board, bureau, review
board, instrumentality or similar organization or any applicable
private accrediting organization (collectively, "Authorities")
necessary to own and use the properties and assets of the Company and
each of its subsidiaries, respectively, and to conduct their respective
businesses, except where the failure to so own, possess or comply,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect; as to the Company and each of its
subsidiaries, each such Permit of and from such Authorities is valid
and in full force and effect and there is no proceeding pending or, to
the best knowledge of the Company and its subsidiaries, threatened that
may cause any such Permit of or from any Authority to be revoked,
withdrawn, canceled, suspended or not renewed, except where the failure
to own or possess such Permit would not reasonably be expected to have
a Material Adverse Effect;
(u) None of the Company or any of its subsidiaries is in
violation of any statute, or any rule, regulation, decision or order of
any governmental agency or body or any court
6
relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances
("Environmental Laws"), is to its knowledge liable for any off-site
disposal or contamination pursuant to any Environmental Laws or is the
subject of any claim relating to any Environmental Laws in any such
case the effect of which would reasonably be expected to have a
Material Adverse Effect; and
(v) Except as disclosed in the Prospectus, the Company has not
received written notice of any, and to the knowledge of any officer or
director of the Company there are no material Medicare, Medicaid, or
any other managed care recoupment or recoupments of any third-party
payor being sought, threatened, requested or claimed against the
Company or any of its subsidiaries.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
(a) at a purchase price of ___% of the principal amount thereof plus accrued
interest, if any, from _________, 2002 to the Time of Delivery hereunder, the
principal amount of Notes A set forth opposite the name of such Underwriter in
Schedule I hereto, and (b) at a purchase price of ___% of the principal amount
thereof plus accrued interest, if any, from _________, 2002 to the Time of
Delivery hereunder, the principal amount of Notes B set forth opposite the name
of such Underwriter in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities, the
several Underwriters propose to offer the Securities for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) The Securities to be purchased by each Underwriter hereunder
will be represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Company with The Depository
Trust Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Xxxxxxx, Xxxxx & Co., for the account of each Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer of Federal (same-day) funds to the account specified by the
Company to Xxxxxxx, Xxxxx & Co. at least forty-eight hours in advance, by
causing DTC to credit the Securities to the account of Xxxxxxx, Xxxxx & Co. at
DTC. The Company will cause the certificates representing the Securities to be
made available to Xxxxxxx, Xxxxx & Co. for checking at least twenty-four hours
prior to the Time of Delivery (as defined below) at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on ___________,
2002 or such other time and date as Xxxxxxx, Xxxxx & Co. and the Company may
agree upon in writing. Such time and date are herein called the "Time of
Delivery".
(b) The documents to be delivered at the Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof,
including the cross-receipt for the Securities and any additional
documents requested by the Underwriters pursuant to Section 7(j)
hereof, will be delivered at the offices of Xxxxxxxx & Xxxxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 (the "Closing Location"), and the
Securities will be delivered at the Designated Office, all at the Time
of Delivery. A meeting will be held at the Closing Location at _____
p.m., New York City time, on the New York Business Day next preceding
the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the
7
preceding sentence will be available for review by the parties hereto.
For the purposes of this Section 4, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
on which banking institutions in New York City are generally authorized
or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus which shall be disapproved by you
promptly after reasonable notice thereof; to advise you, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish you with copies thereof; to advise you, promptly after
it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending
or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you may request and
to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Securities, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction;
(c) Prior to 12:00 noon, New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with written and electronic copies
of the Prospectus in New York City in such quantities as you may
reasonably request, and, if the delivery of a prospectus is required at
any time prior to the expiration of nine months after the time of issue
of the Prospectus in connection with the offering or sale of the
Securities and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such same period to amend or supplement the
Prospectus in order to comply with the Act or the Trust Indenture Act,
to notify you and upon your request to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many
written and electronic copies as you may from time to time reasonably
request of an
8
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance; and in case any
Underwriter is required to deliver a prospectus in connection with
sales of any of the Securities at any time nine months or more after
the time of issue of the Prospectus, upon your request but at the
expense of such Underwriter, to prepare and deliver to such Underwriter
as many written and electronic copies as you may request of an amended
or supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c)), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and
the rules and regulations of the Commission thereunder (including, at
the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the later of the Time of Delivery and such
earlier time as you may notify the Company, not to offer, sell,
contract to sell, pledge, grant any option to purchase, make any short
sale or otherwise dispose of, except as provided hereunder any
securities of the Company that are substantially similar to the
Securities;
(f) To furnish to the holders of the Securities as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), to make available to its
stockholders consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which the Securities
or any class of securities of the Company is listed; and (ii) such
additional information concerning the business and financial condition
of the Company as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of
the Securities pursuant to this Agreement in the manner specified in
the Prospectus under the caption "Use of Proceeds";
(i) If the Company elects to rely upon Rule 462(b), to file a
Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either
9
pay to the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such fee
pursuant to Rule 111(b) under the Act;
(j) To file with the Commission such information on Form 10-Q
or Form 10-K as may be required by Rule 463 under the Act; and
(k) Upon request of any Underwriter, to furnish, or cause to
be furnished, to such Underwriter an electronic version of the
Company's trademarks, servicemarks and corporate logo for use on the
website, if any, operated by such Underwriter for the purpose of
facilitating the on-line offering of the Securities (the "License");
provided, however, that the License shall be used solely for the
purpose described above, shall be removed from the Underwriter's
website as promptly as practicable at the request of the Company
following the Time of Delivery, is granted without any fee, and may not
be sublicensed, assigned or transferred.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of Merck's and the Company's counsel and accountants
in connection with the registration of the Securities under the Act and all
other expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Indenture, the Blue Sky
and Legal Investment Memoranda, closing documents (including any compilations
thereof) and any other documents in connection with the offering, purchase, sale
and delivery of the Securities; (iii) all expenses in connection with the
qualification of the Securities for offering and sale under state securities
laws as provided in Section 5(b) hereof, including the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) the filing fees incident to, and the reasonable fees and disbursements of
counsel for the Underwriters in connection with, any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (vi) the cost of preparing the Securities; (vii) the fees and
expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Company herein are, at and as of the Time of Delivery,
true and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and
10
regulations under the Act and in accordance with Section 5(a) hereof;
if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests
for additional information on the part of the Commission shall have
been complied with to your reasonable satisfaction;
(b) Xxxxxxxx & Xxxxxxxx, counsel for the Underwriters, shall
have furnished to you such written opinion or opinions (a draft of each
such opinion is attached as Xxxxx XXX(a) hereto), dated the Time of
Delivery, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon
such matters;
(c) Xxxxx, Xxxxx, Xxxxxx, Xxxxxxx & Xxxxxxxx, counsel for the
Company, shall have furnished to you their written opinion (a draft of
such opinion is attached as Xxxxx XXX(b) hereto), dated the Time of
Delivery, in form and substance satisfactory to you;
(d) Xxxxx Xxxxxxxxxx, General Counsel for the Company, shall
have furnished to you his written opinion (a draft of such opinion is
attached as Xxxxx XXX(c) hereto), dated the Time of Delivery, in form
and substance satisfactory to you:
(e) (i) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
the Time of Delivery, PricewaterhouseCoopers LLP shall have furnished
to you letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to you, to the effect set forth in Annex I
hereto (the executed copy of the letters delivered prior to the
execution of this Agreement are attached as Annex I(a) hereto and a
draft of the form of letter to be delivered by PricewaterhouseCoopers
LLP on the effective date of any post-effective amendment to the
Registration Statement and as of the Time of Delivery is attached as
Annex I(b) hereto), and (ii) Xxxxxx Xxxxxxxx LLP shall not have
withdrawn its letter addressed to you and to the Company, dated May 22,
2002, and attached as Xxxxx XX hereto, notified you that such letter no
longer represents the views of Xxxxxx Xxxxxxxx LLP or notified you of
any fact or opinion inconsistent with any of the facts or opinions
contained in such letter;
(f) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any change, or any development involving
a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of you as the
representatives so material and adverse as to make it
11
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated
in the Prospectus;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;
(h) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or on
the NASDAQ National Market System; (ii) a suspension or material
limitation in trading in the Company's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking activities
declared by either Federal or New York State authorities or a material
disruption in commercial banking or securities settlement or clearance
services in the United States;(iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the
United States of a national emergency or war or (v) the occurrence of
any other calamity or crisis or any change in financial, political or
economic conditions in the United States or elsewhere, if the effect of
any such event specified in clause (iv) or (v) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities on the terms and
in the manner contemplated in the Prospectus;
(i) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses;
(j) The Company shall have furnished or caused to be furnished
to you at the Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of the Time of Delivery, as
to the performance by the Company of all of its obligations hereunder
to be performed at or prior to the Time of Delivery, as to the matters
set forth in subsections (a) and (f) of this Section and as to such
other matters as you may reasonably request;
(k) Each transaction required to have occurred pursuant to the
Master Separation and Distribution Agreement, prior to the initial
public offering of the Company's common stock, $.01 par value (the
"Common Stock"), including but not limited to the consummation of the
Realignment Transactions and the execution and delivery by Merck and
the Company of the Ancillary Agreements, each as defined in the Master
Separation and Distribution Agreement, shall have occurred; and
(l) The sale of the shares of Common Stock by Xxxxxxx, Xxxxx &
Co. and X.X. Xxxxxx Securities Inc. to the Underwriters, as defined in
the Underwriting Agreement, dated [_____], 2002, among the Company,
Merck, Goldman, Sachs & Co., X.X. Xxxxxx Securities Inc. and [_____],
the qualified independent underwriter, (the "Equity Underwriting
Agreement") shall have occurred in accordance with the Equity
Underwriting Agreement.
12
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Xxxxxxx, Xxxxx & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the
Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any such amendment or supplement in reliance upon and
in conformity with written information furnished to the Company, in the
case of each Underwriter, by such Underwriter through Xxxxxxx, Xxxxx &
Co. expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or
any other expenses,
13
in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such
action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from
the offering of the Securities. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law
or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the
Prospectus. The relative fault 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 on the one hand or
the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount
of any damages which such 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
14
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 Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls any Underwriter within the meaning of the Act and
each broker-dealer affiliate of any Underwriter; and the obligations of
the Underwriters under this Section 8 shall be in addition to any
liability which the respective Underwriters may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Company (including any person who, with his or her
consent, is named in the Registration Statement as about to become a
director of the Company) and to each person, if any, who controls the
Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to purchase such
Securities on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such
Securities, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Securities on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Securities, or the Company notifies you that it has so
arranged for the purchase of such Securities, you shall have the right to
postpone the Time of Delivery for a period of not more than seven days, in order
to effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters
by you and the Company as provided in subsection (a) above, the
aggregate principal amount of such Securities which remains unpurchased
does not exceed one-eleventh of the aggregate principal amount of all
the Securities, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the principal amount of
Securities which such Underwriter agreed to purchase hereunder and, in
addition, to require each non-defaulting Underwriter to purchase its
pro rata share (based on the principal amount of Securities which such
Underwriter agreed to purchase hereunder) of the Securities of such
defaulting Underwriter or Underwriters for which such arrangements have
not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters
by you and the Company as provided in subsection (a) above, the
aggregate principal amount of Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of all the
Securities, or if the
15
Company shall not exercise the right described in subsection (b) above
to require non-defaulting Underwriters to purchase Securities of a
defaulting Underwriter or Underwriters, then this Agreement shall
thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to
be borne by the Company and the Underwriters as provided in Section 6
hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Xxxxxxx, Xxxxx &
Co., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Underwriter shall be deemed a successor or assign
by reason merely of such purchase.
16
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17. The Company is authorized, subject to applicable law, to disclose
any and all aspects of this potential transaction that are necessary to support
any U.S. federal income tax consequences expected to be realized with respect to
such transaction, without the Underwriters imposing any limitation of any kind.
17
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Medco Health Solutions, Inc.
By: ___________________________
Name:
Title:
Accepted as of the date hereof at New York, New York:
Xxxxxxx, Xxxxx & Co.
X.X. Xxxxxx Securities Inc.
Xxxxxxx Xxxxx Xxxxxx Inc.
By: ______________________________
(Xxxxxxx, Xxxxx & Co.)
On behalf of each of the Underwriters
18
SCHEDULE I
Principal Principal
Amount of Amount of
__% Notes due 2007 __% Notes due 2012
to be to be
Underwriter Purchased Purchased
----------- --------- ---------
Xxxxxxx, Xxxxx & Co. ................ $ $
X.X. Xxxxxx Securities Inc. .........
Xxxxxxx Xxxxx Xxxxxx Inc.............
------------------ ----------------
Total........................ $ $
================== ================
[List of Annexes to the Underwriting Agreement]
Xxxxx X(a): Executed copies of the letters of PricewaterhouseCoopers LLP
delivered prior to the execution of this Agreement
Xxxxx X(b): Draft form of letter to be delivered by PricewaterhouseCoopers
LLP on the effective date of any post-effective amendment and as
of each Time of Delivery
Xxxxx XX: Letter from Xxxxxx Xxxxxxxx LLP dated May 22, 2002
Xxxxx XXX(a): Draft opinion of Xxxxxxxx & Xxxxxxxx and form of registration
statement letter of Xxxxxxxx & Xxxxxxxx
Xxxxx XXX(b): Draft opinion of Xxxxx, Xxxxx, Xxxxxx, Xxxxxxx & Xxxxxxxx,
counsel for the Company
Xxxxx XXX(c): Draft opinion of Xxxxx Xxxxxxxxxx, General Counsel for the
Company
