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EXHIBIT 1.1
4,500,000 SHARES
EXPRESS SCRIPTS, INC.
CLASS A COMMON STOCK
($.01 PAR VALUE)
UNDERWRITING AGREEMENT
June [ ], 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
BT ALEX. XXXXX INCORPORATED
WARBURG DILLON READ LLC
XXXXXX XXXXXX & COMPANY, INC.
X.X. XXXXXXX & SONS, INC.
As Representatives of the Several Underwriters
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue
New York, N.Y. 10010-3629
Ladies and Gentlemen:
1. Introductory. Express Scripts, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the Underwriters (as defined below) an
aggregate of 4,500,000 shares (the "Firm Securities") of the Company's Class A
Common Stock, par value $.01 per share (the "Class A Common Stock" or "Common
Stock"). The Company also proposes to issue and sell to the Underwriters, at the
option of the Underwriters, an aggregate of not more than 675,000 additional
shares of Class A Common Stock (the "Optional Securities") as set forth below.
The Firm Securities and the Optional Securities are herein collectively called
the "Offered Securities". The Company hereby agrees with the several
Underwriters named in Schedule A hereto (the "Underwriters") as follows:
2. Representations and Warranties. The Company represents and warrants
to, and agrees with, the several Underwriters that:
(i) A registration statement on Form S-3 (No. 333-74613) relating to
the Offered Securities, including a form of prospectus, has been filed with
the Securities and Exchange Commission (the "Commission") and either (i)
has been declared effective under the Securities Act of 1933 (the "Act")
and is not proposed to be amended or (ii) is proposed to be amended by
amendment or post-effective amendment. The Company has complied with the
conditions for the use of Form S-3 under the Act. If such registration
statement (the "initial registration statement") has been declared
effective, either (i) an additional registration statement (the "additional
registration statement") relating to the Offered Securities may have been
filed with the Commission pursuant to Rule 462(b) ("Rule 462(b)") under the
Act and, if so filed, has become effective upon filing pursuant to such
Rule and the Offered Securities all have been duly registered under the Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (ii) such an additional registration
statement is proposed to be filed with the Commission pursuant to Rule
462(b) and will become effective upon filing pursuant to such Rule and upon
such filing the Offered Securities will all have been duly registered under
the Act pursuant to the initial registration statement and such
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additional registration statement. If the Company does not propose to amend
the initial registration statement or if an additional registration
statement has been filed and the Company does not propose to amend it, and
if any post-effective amendment to either such registration statement has
been filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (i) if the
Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (ii) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If
an additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect
to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the date
of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all material incorporated by
reference therein, and all information contained in the additional
registration statement (if any) and deemed to be a part of the initial
registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of Form S-3,
including all information (if any) deemed to be a part of the initial
registration statement as of its Effective Time pursuant to Rule 430A(b)
("Rule 430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as amended
at its Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all information
(if any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b), is hereinafter referred to as
the "Additional Registration Statement". The Initial Registration Statement
and the Additional Registration Statement are herein referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such
filing is required) as included in a Registration Statement, including all
material incorporated by reference in such prospectus, is hereinafter
referred to as the "Prospectus". No document has been or will be prepared
or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all respects to the requirements of the Act and the
rules and regulations of the Commission ("Rules
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and Regulations") and did not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not include,
or will not include, any untrue statement of a material fact and did not
omit, or will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
(iii) on the date of this Agreement, as of the First Closing Date and any
Optional Closing Date, and at the time of filing of the Prospectus pursuant
to Rule 424(b) or (if no such filing is required) at the Effective Date of
the Additional Registration Statement in which the Prospectus is included,
the Prospectus will conform in all respects to the requirements of the Act
and the Rules and Regulations, and will not include any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement: on the Effective Date of the
Initial Registration Statement, the Initial Registration Statement, and on
the Effective Date of the Initial Registration Statement and as of the
First Closing Date and any Optional Closing Date, the Prospectus, will
conform in all respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue statement of
a material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading
and no Additional Registration Statement has been or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that the only
such information is that described as such in Section 7(c) hereof. The
documents incorporated by reference in the Prospectus, at the time filed
with the Commission, conformed in all material respects to the requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
the Act, as applicable, and the rules and regulations of the Commission
thereunder. The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Offered
Securities nor instituted proceedings for that purpose.
(iii) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own or lease its properties and conduct
its business as described in the Registration Statement. Each of the
subsidiaries of the Company as listed in Exhibit A hereto (collectively,
the "Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement and the Prospectus. The subsidiaries listed in Exhibit B hereto
are the only subsidiaries, direct or indirect, of the Company. The Company
and each of the Subsidiaries are duly qualified to transact business in all
jurisdictions in which the conduct of their business requires such
qualification (except where the failure to so qualify would not have a
material adverse effect on the Company and the Subsidiaries taken as a
whole). The outstanding shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and
non-assessable and to the extent shown in Exhibit A hereto are owned by the
Company or another Subsidiary free and
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clear of all liens, encumbrances and equities and claims; and, other than
as described in the Registration Statement and the Prospectus or as
disclosed in writing to the Representatives, no options, warrants or other
rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into shares of capital stock or ownership
interests in the Company or any of the Subsidiaries are outstanding.
(iv) The outstanding shares of Common Stock of the Company have been
duly authorized and validly issued, are fully paid and non-assessable; the
Offered Securities to be issued and sold by the Company have been duly
authorized and when issued and paid for as contemplated herein will be
validly issued, fully paid and non-assessable; and no preemptive rights of
stockholders of the Company exist with respect to any of the Offered
Securities or the issue and sale thereof other than pre-emptive rights
disclosed in the Registration Statement and Prospectus and waived in
writing by the holders thereof. Neither the filing of any Registration
Statement nor the offering or sale of the Offered Securities as
contemplated by this Agreement gives rise to any rights for or relating to
the registration of any shares of Common Stock. Except as disclosed in the
Prospectus, there are no contracts, agreements or understandings between
the Company and any person that would give rise to a valid claim against
the Company or any Underwriter for a brokerage commission, finder's fee or
other like payment in connection with this offering.
(v) The information set forth under the caption "Capitalization" in
the Prospectus is true and correct. All of the outstanding shares of Common
Stock and the Offered Securities conform, in all material respects, to the
description thereof contained in the Registration Statement. The form of
certificates for the Offered Securities conforms to the corporate law of
the jurisdiction of the Company's incorporation.
(vi) The consolidated financial statements of the Company and its
consolidated subsidiaries, together with related notes and schedules as set
forth or incorporated by reference in the Registration Statements and the
Prospectus, present fairly the financial position and the results of
operations and cash flows of the Company and its consolidated subsidiaries,
at the indicated dates and for the indicated periods. Such financial
statements and related schedules have been prepared in accordance with
generally accepted accounting principles, consistently applied throughout
the periods involved, except as disclosed therein, and all adjustments
necessary for a fair presentation of results for such periods have been
made. The consolidated financial statements of Diversified Pharmaceutical
Services, Inc. ("DPS") and its consolidated subsidiaries, together with
related notes and schedules set forth or incorporated by reference in the
Registration Statements and the Prospectus, present fairly the financial
position and the results of operations and cash flows of DPS and its
consolidated subsidiaries, at the indicated dates and for the indicated
periods. Such financial statements and related schedules have been prepared
in accordance with generally accepted accounting principles, consistently
applied throughout the periods involved, except as disclosed therein, and
all adjustments necessary for a fair presentation of results for such
periods have been made. The consolidated financial statements of Value
Health, Inc. and Managed Prescription Network, Inc. (collectively,
"ValueRx") and its consolidated subsidiaries, together with related notes
and schedules set forth or incorporated by reference in each Registration
Statement and the Prospectus, present fairly the financial position and the
results of operations and cash flows of ValueRx and its consolidated
subsidiaries, at the indicated dates and for
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the indicated periods. Such financial statements and related schedules have
been prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods involved, except as disclosed
therein, and all adjustments necessary for a fair presentation of results
for such periods have been made. The assumptions used in preparing the pro
forma financial statements included in the Registration Statement provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the related
pro forma adjustments give appropriate effect to those assumptions, and the
pro forma columns therein effect the proper application of those
adjustments to the corresponding historical financial statement amounts.
The summary financial and operating data included or incorporated by
reference in the Registration Statements and the Prospectus present fairly
the information shown therein and such data have been compiled on a basis
consistent with the financial statements presented therein and the books
and records of the Company.
(vii) Each of PricewaterhouseCoopers LLP and Ernst & Young LLP, who
have certified certain of the financial statements filed with the
Commission as part of, or incorporated by reference in, the Registration
Statements and the Prospectus, are independent public accountants as
required by the Act and the Rules and Regulations.
(viii) There is no action, suit, claim or governmental or third-party
payor audit (other than client audits in the ordinary course of business),
investigation or other proceeding ("Proceeding") pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency, domestic or
foreign, having jurisdiction over the Company or any Subsidiary or any of
their respective properties which if determined adversely to the Company or
any of the Subsidiaries might individually or in the aggregate have a
material adverse effect on the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects
of the Company and of the Subsidiaries taken as a whole or prevent the
consummation of the transactions contemplated hereby, except as set forth
in the Prospectus, including, without limitation, any such Proceeding
pursuant to federal or state laws or regulations (i) prohibiting the
payment or receipt of remuneration for patient referrals, (ii) prohibiting
the filing of false claims, (iii) prescribing conditions of participation
for certification by the Medicare and Medicaid programs and state fund
programs or standards for licensure or health planning approval or (iv)
providing for reimbursement under the Medicare and Medicaid and state fund
programs.
(ix) The Company and the Subsidiaries have good and marketable title
to all of the properties and assets reflected in the financial statements
(other than as described in the Registration Statement and Prospectus)
hereinabove described, except for such properties disposed of in the
ordinary course of business, subject to no lien, mortgage, pledge, charge
or encumbrance of any kind except those reflected in such financial
statements (or as described in the Registration Statement and Prospectus)
or which are not material in amount. The Company and the Subsidiaries
occupy their leased properties under valid and binding leases, with such
exceptions as are not material.
(x) The Company and the Subsidiaries have timely filed all federal,
state, local and foreign income tax returns which have been required to be
filed and have paid all taxes indicated by said returns and all assessments
received by them or any of them to the extent that such taxes have become
due and are not being contested in good faith
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in appropriate proceedings. All material tax liabilities have been
adequately provided for in the financial statements of the Company.
(xi) Since the date of the last audited financial statement included
in the Registration Statements and the Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or adversely affecting the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a
whole, whether or not occurring in the ordinary course of business, and
there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or any of
the Subsidiaries, other than transactions in the ordinary course of
business and changes and transactions described in the Prospectus. Except
as disclosed in or contemplated by the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by the Company
or any class of its capital stock. The Company and the Subsidiaries have no
material contingent obligations which are not disclosed in the Company's
financial statements which are included or incorporated by reference in the
Registration Statements and the Prospectus.
(xii) Neither the Company nor any of the Subsidiaries is, or, with the
giving of notice or lapse of time or both, will be, in violation of or in
default under (i) its corporate charter or by-laws, (ii) any agreement,
lease, contract, indenture or other instrument or obligation to which it is
a party or by which it, or any of its properties, is bound or (iii) any
statute, rule, regulation or order of any governmental agency or body or
any court, domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of their respective properties, which default or
violation (in the case of (ii) and (iii) only) is of material significance
in respect of the condition, financial or otherwise, of the Company and the
Subsidiaries taken as a whole or the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise)
or prospects of the Company and the Subsidiaries taken as a whole. This
Agreement has been duly authorized, executed and delivered by the Company.
The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof
will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of a lien pursuant to any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any Subsidiary is a
party, or of the charter or by-laws of the Company or any statute, rule
regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any Subsidiary
or any of their respective properties.
(xiii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions
herein contemplated (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Offered Securities for
public offering by the Underwriters under state securities or Blue Sky
laws) has been obtained or made and is in full force and effect.
(xiv) The Company and the Subsidiaries own, possess or can acquire on
reasonable terms adequate patents, patent rights, trade names, trademarks
or copyrights and other intellectual property materially necessary to
conduct the business
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now operated by them, or presently employed by them. To the best knowledge
of the Company, neither the Company nor any of the Subsidiaries has
infringed any patents, patent rights, trade names, trademarks or
copyrights, which infringement is material to the business of the Company
and the Subsidiaries taken as a whole. The Company knows of no material
infringement by others of patents, patent rights, trade names, trademarks
or copyrights owned by or licensed to the Company or any Subsidiary.
(xv) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the best knowledge of the Company, is imminent
that could reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the Company and the Subsidiaries
taken as a whole.
(xvi) Neither the Company nor, to the Company's best knowledge, any of
its affiliates (as such term is defined in the Rules and Regulations) has
taken or may take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected
to constitute, the stabilization or manipulation of the price of the shares
of Common Stock to facilitate the sale or resale of the Offered Securities.
(xvii) Neither the Company nor any Subsidiary is, and after giving
effect to the offer and sale of the Offered Securities will be, an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations of the Commission thereunder.
(xviii) The Company and each of the Subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses as presently conducted and the
value of their respective properties and as is customary for companies
engaged in similar industries.
(xix) With respect to pension and welfare plans maintained by the
Company and the Subsidiaries, each of the Company and the Subsidiaries is
in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred with
respect to any "pension plan" (as defined in ERISA) for which the Company
or any of the Subsidiaries would have any liability; none of the Company
and the Subsidiaries has incurred or expects to incur liability under (i)
Title IV of ERISA with respect to termination of, or withdrawal from, any
"pension plan" or (ii) Section 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension plan" for which the Company and
the Subsidiaries would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(xx) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the completion of the
distribution of the Offered Securities it commences doing such business.
(xxi) To the best knowledge of the Company, the Company and each of
the Subsidiaries has conducted its business in material compliance with all
the laws, rules and regulations of the jurisdictions in which each such
entity is conducting business,
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except as disclosed in the Prospectus and the Registration Statement.
Without limiting the foregoing, except as disclosed in the Prospectus and
the Registration Statement, (i) the Company is in compliance with the
requirements of Section 13(b)(2) of the Exchange Act applicable to it and
(ii) the Company and each of the Subsidiaries, and each of the professional
employees of the Company and each Subsidiary, 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 of any Authority (as hereinafter defined)) of any
court, arbitrator or arbitral body, or any federal, state, local or foreign
governmental agency or self-regulatory authority, department or commission,
or any other board, bureau, review board, instrumentality or similar
organization, domestic or foreign, or any applicable private accrediting
organization (collectively, "Authority") (hereinafter collectively,
"Permits") necessary to own and use the properties and assets of the
Company and each of the Subsidiaries, respectively, and to conduct their
respective businesses, except where the failure to comply, individually or
in the aggregate, would not have a material adverse effect on the Company
and the Subsidiaries taken as a whole; as to the Company and each
Subsidiary, 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
Company's knowledge, threatened (or any reasonable basis therefor) which
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 have a material adverse effect on the
Company and the Subsidiaries taken as a whole.
(xxii) To the best knowledge of the Company, each of the Company and
the Subsidiaries and their respective officers and directors, and, to the
best knowledge of the Company, persons who provide professional services
under agreements with the Company and/or the Subsidiaries, have not engaged
in any activities which are prohibited, or are cause for civil penalties or
mandatory or permissive exclusion from Medicare or Medicaid, under Section
1320a-7, 1320a-7a, 1302a-7b or 1395nn of Title 42 of the United States
Code, the federal CHAMPUS statute or the regulations promulgated pursuant
to such statutes or related state or local statutes or regulations,
standards of accreditation applicable to the Company or the Subsidiaries or
rules of professional conduct, which activities might reasonably be
expected to result in sanctions (financial or otherwise) that would be
material to the Company and the Subsidiaries taken as a whole.
(xxiii) (A) To the best of the Company's knowledge, no person who
immediately following any Closing Date will have a direct or indirect
ownership interest (as those terms are defined in 42 C.F.R. Section
1001.1001) in the Company of 10% or more (a "Major Investor"), and (B) to
the best knowledge of the Company, no present subsidiary of such Major
Investor other than the Company: (1) has had a civil monetary penalty
assessed against it under 42 U.S.C. Section 1320a-7a; (2) has been excluded
from participation under the Medicare program or under a state health care
program as defined in 42 U.S.C. Section 1320a-7(h) (a "State Health Care
Program"); or (3)>has been convicted (as that term is defined in 42 C.F.R.
Section 1001.2) of any of the following
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categories of offenses as described in 42 U.S.C. Section 132a-7(a) or
(b)(1), (2), (3):
(a) criminal offenses relating to the delivery of an item or
service under Medicare or any State Health Care Program;
(b) criminal offenses under federal or state law relating to
patient neglect or abuse in connection with the delivery of a health
care item or service;
(c) criminal offenses under federal or state law relating to fraud,
theft, embezzlement, breach of fiduciary responsibility or other
financial misconduct in connection with the delivery of a health care
item or service or with respect to any act or omission in a program
operated by or financed in whole or in part by any federal, state or
local government agency;
(d) criminal offenses under federal or state laws relating to the
interference with or obstruction of any investigation into any criminal
offense described in (a) through (c) above; or
(e) criminal offenses under federal or state law relating to the
unlawful manufacture, distribution, prescription or dispensing of a
controlled substance.
(xxiv) To the best knowledge of the Company, except as disclosed in
the Prospectus, there is no Medicare, Medicaid or CHAMPUS recoupment or
recoupments of any other third-party payor being sought, threatened,
requested or claimed against the Company or any Subsidiary.
(xxv) The Offered Securities have been approved for listing on The
Nasdaq National Market, subject to notice of issuance.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $[ ] per share, the respective
numbers of shares of Firm Securities set forth opposite the names of the
Underwriters in Schedule A hereto.
The Company will deliver the Firm Securities to the Representatives for the
accounts of the Underwriters, against payment of the purchase price in federal
(same day) funds by official bank check or checks or wire transfer to an account
at a bank acceptable to Credit Suisse First Boston Corporation ("CSFBC") drawn
to the order of the Company, at the office of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M., New York City time, on June
[ ], 1999, or at such other time not later than seven full business days
thereafter as CSFBC and the Company determine, such time being herein referred
to as the "First Closing Date". For purposes of Rule 15c6-1 under the Exchange
Act, the First Closing Date (if later than the otherwise applicable settlement
date) shall be the settlement date for payment of funds and delivery of
securities for all the Firm Securities sold pursuant to the offering. The
certificates for the Firm Securities so to be delivered will be in such form, in
such denominations and registered in such names as CSFBC requests and will be
made available for checking and packaging at least 24 hours prior to the First
Closing Date.
In addition, upon written notice from CSFBC given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectus, the
Underwriters may purchase all or less than all of the Optional Securities at the
purchase price per share of Common Stock to be paid for the Firm Securities. The
Company agrees to sell to the
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Underwriters the number of shares of Optional Securities specified in such
notice and the Underwriters agree, severally and not jointly, to purchase such
Optional Securities. Such Optional Securities shall be purchased for the account
of each Underwriter in the same proportion as the number of shares of Firm
Securities set forth opposite such Underwriter's name bears to the total number
of shares of Firm Securities (subject to adjustment by CSFBC to eliminate
fractions) and may be purchased by the Underwriters only for the purpose of
covering over-allotments made in connection with the sale of the Firm
Securities. No Optional Securities shall be sold or delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered. The
right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters against payment of
the purchase price therefor in federal (same day) funds by official bank check
or checks or wire transfer to an account at a bank acceptable to CSFBC drawn to
the order of the Company, at the office of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. The certificates for the Optional Securities
being purchased on each Optional Closing Date will be in such form, in such
denominations and registered in such names as CSFBC requests upon reasonable
notice prior to such Optional Closing Date and will be made available for
checking and packaging at a reasonable time in advance of such Optional Closing
Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company. (a) The Company agrees with the
several Underwriters that:
(i) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
Rule 424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the fifteenth
business day after the Effective Date of the Initial Registration
Statement. The Company will advise CSFBC promptly of any such filing
pursuant to Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and an
additional registration statement is necessary to register a portion of the
Offered Securities under the Act but the Effective Time thereof has not
occurred as of such execution and delivery, the Company will file the
additional registration statement or, if filed, will file a post-effective
amendment thereto with the Commission pursuant to and in accordance with
Rule 462(b) on or prior to 10:00 P.M., New York City time, on the date of
this Agreement or, if earlier, on or prior to the time the Prospectus is
printed and distributed to any Underwriter, or will make such filing at
such later date as shall have been consented to by CSFBC.
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(ii) The Company will advise CSFBC promptly of any proposal to amend
or supplement the initial or any additional registration statement as filed
or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's prior consent; and
the Company will also advise CSFBC promptly of the effectiveness of each
Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of a
Registration Statement or the Prospectus and will use its reasonable best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(iii) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs 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
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company will promptly
notify CSFBC of such event and will promptly prepare and file with the
Commission (subject to Section 5(a)(ii)), at its own expense, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither CSFBC's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(iv) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(v) The Company will furnish to the Representatives copies of each
Registration Statement (five of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a
prospectus relating to the Offered Securities is required to be delivered
under the Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case in such quantities as CSFBC requests. The Prospectus shall be so
furnished on or prior to 3:00 P.M., New York City time, on the business day
following the later of the execution and delivery of this Agreement or the
Effective Time of the Initial Registration Statement. All other documents
shall be so furnished as soon as available. The Company will pay the
expenses of printing and distributing to the Underwriters all such
documents.
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(vi) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution.
(vii) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (a) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Exchange Act or mailed to stockholders, and (b)
from time to time, such other information concerning the Company as CSFBC
may reasonably request.
(viii) The Company will pay all expenses incident to the performance
of its obligations under this Agreement, for any filing fees and other
expenses (including fees and disbursements of counsel) incurred in
connection with qualification of the Offered Securities for sale under the
laws of such jurisdictions as CSFBC designates and the printing of
memoranda relating thereto, for the filing fee incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the NASD of the Offered Securities, for any
travel expenses of the Company's officers and in connection with attending
or hosting meetings with prospective purchasers of the Offered Securities
(it being understood that the cost of any chartered airplane will be split
evenly between the Company and the Underwriters) and for expenses incurred
in printing and distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the Underwriters.
(ix) For a period of 90 days after the date of the commencement of the
public offering of the Offered Securities, the Company will not offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under the
Act relating to, any additional shares of its Common Stock or other capital
stock of the Company or securities convertible into or exchangeable or
exercisable for any shares of its Common Stock, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of CSFBC, except (a) grants of employee
stock options or other issuances of Class A Common Stock pursuant to the
terms of a plan in effect on the date hereof, issuances of Common Stock
pursuant to the exercise of such options or the exercise of any other
employee stock options outstanding on the date hereof or (b) shares of
Class A Common Stock issued in private placements pursuant to Section 4(2)
of the Act or in connection with any of the Company's existing strategic
alliances.
(x) The Company shall apply the net proceeds of its sale of the
Offered Securities as set forth in the Prospectus.
(xi) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Class A Common Stock.
(xii) In connection with the offering of the Offered Securities, the
Company will not take, directly or indirectly, any action designed to cause
or result in, or that has constituted or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
securities of the Company.
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6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company herein set forth, to the accuracy of the
statements of the Company's officers made pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of each of
PricewaterhouseCoopers LLP (with respect to the Company and its
consolidated subsidiaries and DPS and its consolidated subsidiaries), and
Ernst & Young LLP (with respect to ValueRx and its consolidated
subsidiaries) confirming that they are independent public accountants
within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statements comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements included in the Registration Statements;
(iii) on the basis of a reading of the latest available interim
financial statements of the Company, inquiries of officials of the
Company, who have responsibility for financial and accounting matters
and other specified procedures up to a date no earlier than three
business days prior to the date of this Agreement, nothing came to their
attention that caused them to believe that:
(A) the unaudited financial statements included in the
Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published Rules and Regulations or any material modifications
should be made to such unaudited financial statements for them to
be in conformity with generally accepted accounting principles;
(B) at the date of the latest available balance sheet read by
such accountants there was any change in capital stock, increase in
long-term debt or any decreases in consolidated net current assets
(working capital) or stockholders' equity of the Company and its
consolidated subsidiaries as compared with the amounts shown on the
March 31, 1999 consolidated balance sheet included in the
Prospectus, and at the last day of the month preceding the date of
this Agreement, there was any change in the capital
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stock, increase in long-term debt or any decreases in stockholders'
equity of the Company and its consolidated subsidiaries as compared
with amounts shown on the March 31, 1999 consolidated balance sheet
shown in the Prospectus; or
(C) for the period from April 1, 1999 to April 30, 1999, there
were any decreases, as compared with the corresponding period in
the preceding year, (i) in the Company's net sales (excluding DPS)
or in the total or per share amounts in the Company's income before
extraordinary items (excluding DPS) or of the Company's net income
(excluding DPS) or (ii) in DPS's net sales or DPS's total income
before extraordinary items or DPS's net income; and, at the last
day of the month preceding this Agreement, as compared with the
corresponding period in the preceding year, there were any
decreases in (i) the Company's (excluding DPS) net sales, or (ii)
in DPS's net sales or DPS's total income before extraordinary items
or DPS's net income,
except in all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur;
(iv) with respect to the letter being provided by
PricewaterhouseCoopers LLP pertaining to the Company only, on the basis
of a reading of the unaudited pro forma financial statements of the
Company included or incorporated by reference in the Registration
Statement, inquiries of certain officials of the Company and DPS who
have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that such unaudited pro forma financial statements do not
comply as to form in all material respects with the accounting
requirements of Rule 11-02 of Regulation S-X under the Act or that the
pro forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(v) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and its
subsidiaries or DPS and its subsidiaries, as the case may be, subject to
the internal controls of the Company's or DPS's accounting system, as
the case may be, or are derived directly from such records by analysis
or computation) with the results obtained from inquiries, a reading of
such general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results, except as
otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii) if the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration is subsequent to such execution and delivery,
"Registration Statements" shall mean the Initial Registration Statement and
the additional registration statement as proposed to be filed or as
proposed to be amended by the
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post-effective amendment to be filed shortly prior to its Effective Time,
and (iii) "Prospectus" shall mean the prospectus included in the
Registration Statements. All financial statements and schedules included in
material incorporated by reference into the Prospectus shall be deemed
included in the Registration Statements for purposes of this subsection.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time
shall have occurred not later than 10:00 P.M., New York City time, on the
date of this Agreement or such later date as shall have been consented to
by CSFBC. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York City
time, on the date of this Agreement or, if earlier, the time the Prospectus
is printed and distributed to any Underwriter, or shall have occurred at
such later date as shall have been consented to by CSFBC. If the Effective
Time of the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section 5(a)(i)
of this Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of a Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or the Representatives, shall be contemplated by
the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the earnings, business, management,
properties, assets, rights, operating condition (financial or other), or
prospects of the Company and the Subsidiaries taken a whole which, in the
judgment of a majority in interest of the Underwriters including the
Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the sale
of and payment for the Offered Securities; (ii) any downgrading in the
rating of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any debt securities of the
Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any suspension or limitation of trading in securities
generally on the New York Stock Exchange or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (iv) any banking moratorium declared by U.S. federal or New York
authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or
any other substantial national or international calamity or emergency if,
in the judgment of a majority in interest of the Underwriters including the
Representatives, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the
Offered Securities.
(d) The Representatives shall have received on the First Closing Date
or the Optional Closing Date, as the case may be, the opinion of Xxxxxxx
Xxxxxxx &
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Xxxxxxxx, counsel for the Company, dated the First Closing Date or the
Optional Closing Date, as the case may be, addressed to the Underwriters 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, with corporate power and authority to conduct its business as
described in the Registration Statement.
(ii) The outstanding shares of the Company's Common Stock have been
duly authorized and validly issued and are fully paid and
non-assessable; all of the Offered Securities and other Common Stock of
the Company conform in all material respects to the description thereof
contained in the Registration Statements and the Prospectus; the
certificates for the Offered Securities, assuming they are in the form
filed with the Commission, are in due and proper form; the Offered
Securities, including the Optional Securities, if any, to be sold by the
Company pursuant to this Agreement have been duly authorized and will be
validly issued, fully paid and non-assessable upon delivery and payment
therefor as contemplated by this Agreement; and no preemptive rights of
stockholders of the Company with respect to any of the Offered
Securities or the issue and sale thereof are set forth in the charter.
(iii) Each Registration Statement has become effective under the
Act and, to the best knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Act. The Prospectus has been filed with the
Commission pursuant to Rule 424(b).
(iv) Each Registration Statement, the Prospectus and each amendment
or supplement thereto and each document filed pursuant to the Exchange
Act and incorporated by reference therein comply as to form in all
material respects with the requirements of the Act or the Exchange Act,
as applicable, and the applicable rules and regulations thereunder
(except that such counsel need express no opinion as to the financial
statements and related schedules included or incorporated by reference
therein). The conditions for the use of Form S-3, set forth in the
General Instructions thereto, have been satisfied.
(v) The statements under the caption "Description of Capital Stock"
in the Registration Statement and the Prospectus, insofar as such
statements constitute a summary of the terms of the Common Stock
(including the Offered Securities), accurately summarize in all material
respects the terms of such Common Stock.
(vi) Such counsel does not know of any contracts or documents
required to be filed as exhibits to or incorporated by reference in the
Registration Statements or described in the Registration Statements or
the Prospectus which are not so filed, incorporated by reference or
described as required.
(vii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the
Subsidiaries of a character required to be disclosed in the Prospectus
pursuant to the Act and the Rules and Regulations, except as set forth
in the Prospectus.
(viii) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
(i) violate the charter or by-laws of the Company or (ii) breach or
constitute a default under or result
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in the creation or imposition of a lien pursuant to any contract or
agreement filed as an exhibit to the Registration Statement or the
Exchange Act filings incorporated by reference therein or any statute,
rule, regulation or order of any federal or New York State governmental
agency or body having jurisdiction over the Company or any Subsidiary or
any of their respective properties, except (in the case of (ii) only)
where such violation, breach or default would not have a material
adverse effect on the Company or any of the Subsidiaries or the offer,
sale, delivery or trading of the Offered Securities.
(ix) This Agreement has been duly authorized, executed and
delivered by the Company.
(x) No approval, consent, order, authorization, registration or
qualification of or with any federal or New York State court or
governmental agency or body or any Delaware court or governmental agency
or body acting pursuant to the Delaware General Corporation Law is
required for the issue and sale of the Offered Securities by the Company
or the consummation by the Company of the transactions contemplated by
this Agreement, except for the registration under the Act and the
Exchange Act of the Offered Securities, and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Offered Securities by the Underwriters.
(xi) The Company is not an "investment company" within the meaning
of and subject to regulation under the 1940 Act.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of
such counsel which leads them to believe that (i) each Registration
Statement, or any amendment thereto, at the time it became effective under
the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act), 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
(ii) the Prospectus, or any supplement thereto, on June [ ], 1999 or as of
the First Closing Date or the Optional Closing Date, as the case may be,
contained or contains any untrue statement of a material fact or omitted 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 (except that such counsel need express no view as to financial
statements and related schedules included or incorporated by reference
therein).
(e) The Representatives shall have received on the First Closing Date
or the Optional Closing Date, as the case may be, the opinion of Xxxxxx X.
Xxxxxxxx, Esq., Senior Vice President of Administration and General Counsel
of the Company, dated the First Closing Date or the Optional Closing Date,
as the case may be, addressed to the Underwriters, to the effect that:
(i) Each of the Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority to
conduct its business as described in the Registration Statement; each of
the Company and the Subsidiaries is duly qualified to transact business
in all jurisdictions deemed material to its operations and listed on a
schedule to such opinion; the
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outstanding shares of capital stock of each of the Subsidiaries have
been duly authorized and validly issued and are fully paid and
non-assessable and are owned of record by the Company or a Subsidiary
except as described in Exhibit A hereto; and, to the best of such
counsel's knowledge, the outstanding shares of capital stock of each of
the Subsidiaries are owned free and clear of all liens, encumbrances,
equities and claims, and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligations into any shares of capital stock or ownership
interests in the Subsidiaries are outstanding, except as otherwise
described in the Registration Statement.
(ii) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Prospectus and no
preemptive contractual rights exist with respect to any of the Offered
Securities or the issue or sale thereof, except as disclosed in the
Registration Statement and Prospectus and waived in writing by the
holders thereof.
(iii) Except as described in or contemplated by the Prospectus or
as otherwise disclosed to the Representatives, to the knowledge of such
counsel there are no outstanding securities of the Company convertible
or exchangeable into or evidencing the right to purchase or subscribe
for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such stock; and, except as
described in the Registration Statement, to the knowledge of such
counsel, no holder of any securities of the Company or any other person
has the right, contractual or otherwise, which has not been satisfied or
effectively waived, to cause the Company to sell or otherwise issue to
them, or to permit them to underwrite the sale of, any of the Offered
Securities or the right to have any shares of Common Stock or other
securities of the Company included in the Registration Statements or the
right, as a result of the filing of the Registration Statements, to
require registration under the Act of any shares of Common Stock or
other securities of the Company.
(iv) Such counsel does not know of any contracts or documents
required to be filed as exhibits to or incorporated by reference in the
Registration Statements or described in the Registration Statements or
the Prospectus which are not so filed, incorporated by reference or
described as required; the descriptions in the Registration Statement
and the Prospectus of such contracts or other documents are accurate in
all material respects and fairly present the information shown therein.
(v) The descriptions in the Registration Statements and the
Prospectus of legal and governmental proceedings are accurate in all
material respects and fairly present the information shown therein.
(vi) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the
Subsidiaries of a character required to be disclosed in the Prospectus
pursuant to the Act and the Rules and Regulations, except as set forth
in the Prospectus.
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(vii) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any agreement or instrument known to
such counsel or of any decree or order known to such counsel by any
court, domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of their respective properties to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries may be bound, except where such conflict or breach would
not have a material adverse effect on the Company or any of the
Subsidiaries, taken as a whole, or the offer, sale, delivery or trading
of the Offered Securities.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of
such counsel which leads him to believe that (i) each Registration
Statement, or any amendment thereto, at the time it became effective under
the Act (but after giving effect to any modifications incorporated therein
pursuant to Rule 430A under the Act), 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
(ii) the Prospectus, or any supplement thereto, on June [ ], 1999 and as
of the First Closing Date or the Optional Closing Date, as the case may be,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements and related schedules included or incorporated by reference
therein).
(f) The Representatives shall have received from Xxxxxx Xxxxxx &
Xxxxxxx, counsel for the Underwriters, an opinion, dated the First Closing
Date or the Optional Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Offered Securities
delivered on such Closing Date, the Registration Statements, the Prospectus
and other related matters as the Representatives may require, and the
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(g) The Representatives shall have received on the First Closing Date
or the Optional Closing Date, as the case may be, a certificate or
certificates of the Chief Executive Officer and the Chief Financial Officer
of the Company, dated as of the First Closing Date or the Optional Closing
Date, as the case may be, to the effect that each of them severally
represents in his capacity as an officer of the Company as follows:
(i) Each Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of any Registrations
Statement has been issued and no proceedings for such purpose have been
taken or are, to his best knowledge, contemplated by the Commission;
(ii) The representations and warranties of the Company contained in
Section 2 hereof are true and correct in all material respects as of
such Closing Date and the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date;
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(iii) All filings required to have been made pursuant to Rules 424
or 430A under the Act have been made;
(iv) He has carefully examined each Registration Statement and the
Prospectus and, in his opinion, as of the effective date of each
Registration Statement, the statements contained in each Registration
Statement and, as of the date of the Prospectus and as of such Closing
Date, the statements contained in the Prospectus were true and correct
in all material respects, and each Registration Statement and Prospectus
did not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and
since the effective date of each Registration Statement, no event has
occurred which should have been set forth in a supplement to or an
amendment of the Registration Statement or Prospectus which has not been
so set forth in such supplement or amendment; and
(v) Since the date of the most recent financial statements of the
Company included in the Prospectus and Registration Statement, there has
been no material adverse change, nor any development involving a
prospective material adverse change, in or affecting the condition,
financial or otherwise, of the Company and the Subsidiaries taken as a
whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company and the Subsidiaries taken as a whole, whether or not arising in
the ordinary course of business.
(h) The Company shall have furnished to the Representatives such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters
as the Representatives may reasonably have requested.
(i) The Firm Securities and Optional Securities, if any, shall have
been approved for inclusion in The Nasdaq Stock Market subject to notice of
issuance.
(j) The Company has caused each executive officer and director listed
on Exhibit C hereto to furnish to the Representatives, on or prior to the
date of this Agreement, a letter or letters, in form and substance
satisfactory to the Representative, pursuant to which each such person
shall agree not to offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any shares of Common Stock of the
Company or other capital stock of the Company or securities convertible
into or exchangeable or exercisable for any shares of Common Stock owned by
such person or publicly disclose the intention to make any such offer,
sale, pledge or disposition, without the prior written consent of CSFBC,
for a period of 90 days after the date of the commencement of the public
offering of the Offered Securities, except as may be provided otherwise in
such letters ("Lockup Agreements").
(k) The Representatives shall have received a letter, dated the First
Closing Date or the Optional Closing Date, as the case may be, of each of
PricewaterhouseCoopers LLP and Ernst & Young LLP which meets the
requirements of subsection (a) of this Section, except that the specified
date referred to in such subsection will be a date not more than three
business days prior to such Closing Date for the purposes of this
subsection as compared with amounts shown on the March 31, 1999
consolidated balance sheet included in the Prospectus.
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request.
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CSFBC may in its sole discretion waive on behalf of the Underwriters compliance
with any conditions to the obligations of the Underwriters hereunder, whether in
respect of an Optional Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, 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 any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, 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 loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company will not be liable (x) 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 in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) of this Section 7 or (y) to any
Underwriter pursuant to this Section 7(a) with respect to any preliminary
prospectus to the extent that any such loss, claim, damage or liability (or any
actions or proceedings in respect thereof) results from such Underwriter's sale
of Offered Securities to a person as to whom it shall be established that there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the Prospectus in any case where such delivery is required by the Act if
the Company has previously furnished copies thereof to such Underwriter and the
loss, claim, damage or liability of such Underwriter results from an untrue
statement or omission of a material fact contained in such preliminary
prospectus which was corrected in the Prospectus.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, 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 any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the 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 reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the
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following information in the Prospectus furnished on behalf of each Underwriter:
the concession and reallowance figures appearing in the fourth paragraph under
the caption "Underwriting" and the information contained in the ninth paragraph
under the caption "Underwriting."
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) and (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may 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 will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action 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 any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) 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 Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company 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 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. 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 or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of 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 action or claim which is
the subject of this subsection (d). Notwithstanding
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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 Offered 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
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 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 the obligations of the Underwriters under
this Section 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 director of the Company, to each officer of the Company who
has signed a Registration Statement and to each person, if any, who controls the
Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date, the non-defaulting Underwriters
shall be obligated, severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of shares of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
number of shares of Offered Securities that the Underwriters are obligated to
purchase on such Closing Date and arrangements satisfactory to CSFBC and the
Company for the purchase of such Offered Securities by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company, except
as provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
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Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriters pursuant to Section 7 shall
remain in effect, and if any Offered Securities have been purchased hereunder
the representations and warranties in Section 2 and all obligations under
Section 5 shall also remain in effect. If the purchase of the Offered Securities
by the Underwriters is not consummated for any reason other than solely because
of the termination of this Agreement pursuant to Section 8 or the occurrence of
any event specified in clause (iii), (iv) or (v) of Section 6(c), the Company
will reimburse the Underwriters for all out-of-pocket expenses (including fees
and disbursements of counsel to the Underwriters) reasonably incurred by them in
connection with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives c/o Credit Suisse First Boston Corporation, Eleven Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Investment Banking
Department -- Transactions Advisory Group, or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at Express Scripts, Inc.,
00000 Xxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention: Chief
Financial Officer; provided, however, that any notice to an Underwriter pursuant
to Section 7 will be mailed, delivered or telegraphed and confirmed to such
Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. Representation of Underwriters. The Representatives will act for the
several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representatives jointly or by CSFBC will be binding
upon all the Underwriters.
13. Counterparts. This Agreement may be executed 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 Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company hereby submits to the non-exclusive jurisdiction of the federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
[SIGNATURE PAGE FOLLOWS]
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If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
EXPRESS SCRIPTS, INC.
By:
------------------------------------
Name:
Title:
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
BT ALEX. XXXXX INCORPORATED
WARBURG DILLON READ LLC
XXXXXX XXXXXX & COMPANY, INC.
X.X. XXXXXXX & SONS, INC.
Acting on behalf of themselves and as the
Representatives of the several Underwriters
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:
-------------------------------------------
Name:
Title:
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SCHEDULE A
NUMBER OF
UNDERWRITER FIRM SECURITIES
----------- ---------------
Credit Suisse First Boston Corporation......................
BT Alex. Xxxxx Incorporated.................................
Warburg Dillon Read LLC.....................................
Xxxxxx Xxxxxx & Company, Inc................................
X.X. Xxxxxxx & Sons, Inc....................................
Total.............................................
27
EXHIBIT A
1. Diversified Pharmaceutical Services, Inc. (Minnesota)
2. ESI/VRx Sales Development Co. (Delaware)
3. Express Scripts Vision Corp. (Delaware)
4. IVTx, Inc. (Delaware)
5. Managed Prescription Network, Inc. (Delaware)
6. Practice Patterns Science, Inc. (Delaware)
7. Value Health, Inc. (Delaware)
8. ValueRx, Inc. (Delaware)
9. ValueRx of Michigan, Inc. (Michigan)
10. ValueRx Pharmacy Program, Inc. (Michigan)
11. XxxxXxxxxxxx.xxx, Inc. (Delaware)
28
EXHIBIT B
SUBSIDIARY STATE OF INCORPORATION D/B/A
---------- ---------------------- -----
ESI Canada, Inc............ New Brunswick, Canada None
ESI Canada Holdings,
Inc...................... New Brunswick, Canada None
Express Scripts Vision
Corporation.............. Delaware ESI Vision Care
IVTx, Inc.................. Delaware None
ESI/VRx Sales Development
Co....................... Delaware None
Great Plains Reinsurance
Company.................. Arizona None
Practice Patterns Science,
Inc.
(80% owned by ESI; 20%
owned by management)..... Delaware None
Managed Prescription
Network, Inc............. Delaware Columbia Pharmacy Solutions
Value Health, Inc.......... Delaware None
Health Care Services,
Inc...................... Pennsylvania None
MHI, Inc................... Nevada None
ValueRx, Inc............... Delaware None
ValueRx of Michigan,
Inc...................... Michigan None
ValueRx Pharmacy Program,
Inc...................... Michigan None
XxxxXxxxxxxx.xxx, Inc...... Delaware None
29
EXHIBIT C
Officers:
Xxxxxxx X. Xxxx
Xxxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Xxxx Xxxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxx Xxx
Xxxxxx Xxxxxxx
Directors:
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxx, Xx.
Xxxxxxx X. Xxxxxxx
Xxxxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxxxxx
Xxxxxxx A. Xxxx
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx
