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EXHIBIT 1.1
$250,000,000
EXPRESS SCRIPTS, INC.
9 5/8 % Senior Notes due 2009
PURCHASE AGREEMENT
June 11, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
DEUTSCHE BANK SECURITIES INC.
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"), and the Guarantors (as defined) propose, subject to the terms and
conditions stated herein, to issue and sell to the several initial purchasers
named in Schedule A hereto (collectively, the "Purchasers") U.S. $250,000,000
principal amount of their 9 5/8% Senior Notes due 2009 (the "Notes") to be
issued under an indenture, dated as of June 11, 1999 (the "Indenture"), among
the Issuers (as defined) and Bankers Trust Company, as trustee (the "Trustee").
The Notes will be guaranteed (the "Guarantees") on a senior unsecured basis by
certain of the Company's domestic subsidiaries listed on the signature pages
hereof (collectively, the "Guarantors"). The Company and the Guarantors are
collectively referred to herein as the "Issuers." The Notes and the Guarantees
are collectively referred to herein as the "Offered Securities." The United
States Securities Act of 1933, as amended, is herein referred to as the "Act."
The Purchasers and the direct and indirect transferees of the Offered
Securities will be entitled to the benefits of a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit B (the "Registration Rights
Agreement"), pursuant to which the Issuers have agreed, among other things, to
file a registration statement with the Securities and Exchange Commission (the
"Commission") registering the Exchange Securities (as defined in the
Registration Rights Agreement) under the Act.
The Issuers hereby agree with the Purchasers as follows:
2. Representations and Warranties of the Issuers. The Issuers,
jointly and severally, represent and warrant to, and agree with, the Purchasers
that:
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(i) A preliminary offering circular and an offering circular relating
to the Offered Securities to be offered by the Purchasers have been prepared by
the Issuers. Such preliminary offering circular (the "Preliminary Offering
Circular") and offering circular (the "Offering Circular"), as supplemented as
of the date of this Agreement are hereinafter collectively referred to as the
"Offering Document." On the date of this Agreement and on the Closing Date (as
defined below), the Offering Document does not and will not include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Offering Document based upon written
information furnished to the Company by any Purchaser through Credit Suisse
First Boston Corporation ("CSFBC") specifically for use therein, it being
understood and agreed that the only such information is that described as such
in Section 7(b) hereof. Except as disclosed in the Offering Document, on the
date of their respective filings, the Company's Annual Report on Form 10-K most
recently filed with the Commission and all subsequent reports (collectively, the
"Exchange Act Reports") which have been filed with the Commission or sent to
stockholders pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), do not include any untrue statements of a material fact or omit
to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Such documents
when they were filed with the Commission, conformed in all material respects to
the requirements of the Exchange Act and the rules and regulations of the
Commission thereunder.
(ii) 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 Offering Document. 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 Offering Document. The subsidiaries listed on 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 B
hereto are owned by the Company or another Subsidiary free and clear of all
liens, encumbrances and equities and claims; and, other than as described in the
Offering Document or as disclosed in writing to the Purchasers, 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.
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(iii) The outstanding shares of common stock of the Company have been
duly authorized and validly issued, are fully paid and non-assessable; and no
preemptive rights of stockholders of the Company exist, other than as disclosed
in the Offering Document and waived in writing by the holders thereof. Except as
disclosed in the Offering Document, 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 Purchaser for a brokerage commission,
finder's fee or other like payment in connection with this offering.
(iv) The Indenture has been duly authorized by each of the Issuers;
and assuming the due authorization, execution and delivery of the Indenture by
the Trustee, the Indenture will constitute a valid and legally binding
obligation of each of the Issuers, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The Indenture meets the
requirements for qualification under the Trust Indenture Act of 1939, as amended
(the "TIA").
(v) The Notes have been duly authorized by the Company; and when the
Notes are issued and authenticated in accordance with the terms of the Indenture
and paid for by the Purchasers pursuant to this Agreement on the Closing Date
(as defined below), the Notes will have been duly executed, authenticated,
issued and delivered and will be in the form contemplated by, and entitled to
the benefits of, the Indenture and will constitute valid and binding obligations
of the Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles. The Guarantees have been duly authorized by
the Guarantors; and when issued by the Guarantors in accordance with the terms
of the Indenture and the Notes are delivered and paid for pursuant to this
Agreement on the Closing Date, the Guarantees will have been duly executed,
issued and delivered and will be in the form contemplated by, and entitled to
the benefits of, the Indenture and will constitute valid and legally binding
obligations of the Guarantors, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The Offered Securities and
the Indenture conform in all material respects to the description thereof
contained in the Offering Document.
(vi) The Registration Rights Agreement has been duly authorized by each
of the Issuers, and, when duly executed and delivered by the Issuers on the
Closing Date, the Registration Rights Agreement will constitute a valid and
legally binding obligation of each of the Issuers, enforceable in accordance
with its terms, (a) except as rights of indemnity or contribution, or both, may
be limited by state and federal securities laws or contribution, or both, may be
limited by state and federal securities laws or public policy underlying such
laws and (b) subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or
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affecting creditors' rights and to general equity principles. The Registration
Rights Agreement conforms in all material respects to the description thereof
contained in the Offering Document.
(vii) The Exchange Securities and the guarantees to be endorsed thereon
have been duly authorized by the Company and the Guarantors, respectively; and
when the Exchange Securities are executed, and authenticated, issued in
accordance with the terms of the Indenture and delivered in exchange for the
Notes pursuant to the Registration Rights Agreement, the Exchange Securities
will have been duly executed, authenticated, issued and delivered and will be in
the form contemplated by, and entitled to the benefits of, the Indenture and
will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; and when the guarantees endorsed on the Exchange Securities are
issued in accordance with the terms of the Indenture and the Exchange Securities
are delivered in exchange for the Notes pursuant to the Registration Rights
Agreement, such guarantees will have been duly executed, issued and delivered
and will be in the form contemplated by, and entitled to the benefits of, the
Indenture and will constitute valid and binding obligations of each of the
Guarantors, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(viii) The information set forth under the caption "Capitalization" in
the Offering Document is true and correct. The outstanding shares of the
Company's common stock conform in all material respects to the description
thereof in the Offering Document.
(ix) 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 Offering Document, 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 Offering
Document, 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
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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 the Offering Document,
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 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 Offering Document 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 Offering Document 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.
(x) Each of PricewaterhouseCoopers LLP and Ernst & Young LLP, who have
certified certain of the financial statements included in, or incorporated by
reference in, the Offering Document are independent public accountants as
required by the Act.
(xi) 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 or materially and adversely affect the Issuers' ability to perform their
respective obligations under the Indenture, the Registration Rights Agreement or
this Agreement, except as set forth in the Offering Document, 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.
(xii) 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
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Offering Document) 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 Offering Document) 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.
(xiii) 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 in appropriate proceedings. All material tax
liabilities have been adequately provided for in the financial statements of the
Company.
(xiv) Since the date of the last audited financial statement included
in the Offering Document, 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 Offering
Document. Except as disclosed in or contemplated by the Offering Document, there
has been no dividend or distribution of any kind declared, paid or made by the
Company on 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
Offering Document.
(xv) 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 Issuers. The execution and delivery of this Agreement, the Registration
Rights Agreement and the Indenture and the issuance and sale of the Offered
Securities and the consummation of the transactions contemplated hereby and
thereby and the fulfillment of the terms hereof and thereof will not conflict
with or result in a breach of any of the terms or provisions of, or constitute a
default
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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 any of the
Issuers or any statute, rule regulation or order of any governmental agency or
body or of any decree or order by any court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their respective
properties.
(xvi) 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
Issuers of this Agreement, the Registration Rights Agreement and the Indenture
and the transactions contemplated hereby and thereby and the issue and sale of
the Offered Securities (except such additional steps as may be necessary to
qualify the Offered Securities for the offering contemplated hereby under state
securities or Blue Sky laws) has been obtained or made and is in full force and
effect.
(xvii) 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 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.
(xviii) 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.
(xix) 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.
(xx) 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.
(xxi) 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
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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.
(xxii) 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.
(xxiii) 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, except as disclosed in the Offering Document. Without
limiting the foregoing, except as disclosed in the Offering Document, (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.
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(xxiv) 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 Section1320a-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.
(xxv) (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
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.
(xxvi) To the best knowledge of the Company, except as disclosed in the
Offering Document, there is no Medicare, Medicaid or CHAMPUS recoupment or
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recoupments of any other third-party payor being sought, threatened, requested
or claimed against the Company or any Subsidiary.
(xxvii) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Act) as the Offered Securities are listed on any national
securities exchange registered under Section 6 of the Exchange Act or quoted in
a U.S. automated inter-dealer quotation system.
(xxviii) The offer and sale of the Offered Securities in the manner
contemplated by this Agreement will be exempt from the registration requirements
of the Act by reason of Section 4(2) thereof and Regulation S thereunder; and it
is not necessary to qualify an indenture in respect of the Offered Securities
under the TIA.
(xxix) None of the Issuers, nor any of their respective affiliates, nor
any person acting on their behalf (i) has, within the six-month period prior to
the date hereof, offered or sold in the United States or to any U.S. person (as
such terms are defined in Regulation S ("Regulation S") under the Act) the
Offered Securities or any security of the same class or series as the Offered
Securities or (ii) has offered or will offer or sell the Offered Securities (A)
in the United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Act or (B) with respect
to any such securities sold in reliance on Rule 903 of Regulation S, by means of
any directed selling efforts within the meaning of Rule 902(c) of Regulation S.
The Issuers, their respective affiliates and any person acting on their behalf
have complied and will comply with the offering restrictions requirement of
Regulation S. None of the Issuers has entered or will enter into any contractual
arrangement with respect to the distribution of the Offered Securities except
for this Agreement.
(xxx) No holder of securities of any Issuer (other than the holders of
the Offered Securities) will be entitled to have such securities registered
under the registration statements required to be filed by the Issuers pursuant
to the Registration Rights Agreement.
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 Issuers agree to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Issuers, at a purchase price of 97.401% of the principal amount
thereof, plus accrued interest, if any, from June 16, 1999 to the Closing Date,
the respective principal amounts of Offered Securities set forth opposite the
names of the Purchasers in Schedule A hereto.
The Issuers will deliver against payment of the purchase price therefor
the Offered Securities in the form of one or more permanent global Offered
Securities in definitive form (the "Global Securities") deposited with the
Trustee as custodian for The Depository Trust Company ("DTC") and registered in
the name of Cede & Co., as nominee for DTC. Interests in any permanent Global
Securities will be held only in book-entry form through DTC, except in the
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limited circumstances described in the Offering Document. Payment for the
Offered Securities shall be made by the Purchasers in federal (same day) funds
by official bank check or checks or wire transfer to an account at a bank
acceptable to CSFBC at the office of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 A.M. New York City time, on June 16, 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 "Closing Date,"
against delivery to the Trustee as custodian for DTC of the Global Securities
representing all of the Offered Securities. The Global Securities will be made
available for checking at the above office of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ at least 24 hours prior to the Closing Date.
4. Representations by Purchasers; Resale by Purchasers. Each Purchaser
severally represents and warrants to the Issuers that it is an "accredited
investor" within the meaning of Regulation D under the Act.
(b) Each Purchaser severally acknowledges that the Offered Securities
have not been registered under the Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S or pursuant to an exemption from the registration
requirements of the Act. Each Purchaser severally represents and agrees that it
has offered and sold the Offered Securities, and will offer and sell the Offered
Securities, (i) as part of its distribution at any time and (ii) otherwise until
40 days after the later of the commencement of the Offering and the Closing Date
only in accordance with Rule 903 or Rule 144A under the Act ("Rule 144A") and
pursuant to the offering and transfer procedures and restrictions set forth in
the Offering Document. Accordingly, none of the Purchasers nor any of their
affiliates, nor any persons acting on their behalf, have engaged or will engage
in any directed selling efforts with respect to the Offered Securities, and the
Purchasers, their respective affiliates and all persons acting on their behalf
have complied and will comply with the offering restrictions requirement of
Regulation S and Rule 144A. Each Purchaser severally agrees that, at or prior to
confirmation of sale of the Offered Securities, other than a sale pursuant to
Rule 144A, such Purchaser will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases the
Offered Securities from it a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of its
distribution at any time or (ii) otherwise until 40 days after
the later of the date of the commencement of the offering and
the closing date, except in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used
above have the meanings given to them by Regulation S."
Terms used in this subsection (b) have the meanings given to
them by Regulation S.
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(c) Each Purchaser severally agrees that it and each of its affiliates
has not entered and will not enter into any contractual arrangement with respect
to the distribution of the Offered Securities except for any such arrangements
with any other Purchaser or affiliates of any other Purchaser or with the prior
written consent of the Issuers.
(d) Each Purchaser severally agrees that it and each of its affiliates
will not offer or sell the Offered Securities in the United States by means of
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Act, including, but not limited to (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising. Each Purchaser severally agrees, with respect to resales made in
reliance on Rule 144A of any of the Offered Securities, to deliver either with
the confirmation of such resale or otherwise prior to settlement of such resale
a notice to the effect that the resale of such Offered Securities has been made
in reliance upon the exemption from the registration requirements of the Act
provided by Rule 144A.
(e) Each Purchaser severally represents and agrees that (i) it has not
offered or sold, and prior to the date six months after the date of issue of the
Offered Securities will not offer or sell, any Offered Securities to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services ▇▇▇ ▇▇▇▇ with respect to anything done by it in relation to the Offered
Securities in, from or otherwise involving the United Kingdom; and (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue of the Offered
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services ▇▇▇ ▇▇▇▇ (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
5. Certain Agreements of the Issuers. The Issuers agree with the
several Purchasers that:
(a) The Issuers will advise CSFBC promptly of any proposal to amend or
supplement the Offering Document and will not effect such amendment or
supplementation without CSFBC's prior consent. If, at any time prior to the
completion of the resale of the Offered Securities by the Purchasers, any
event occurs as a result of which the Offering Document as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Issuers promptly will notify CSFBC of such event and
promptly will prepare, at their own expense, an amendment or supplement
which will correct such statement or omission. Neither CSFBC's consent to,
nor the Purchasers' delivery to
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offerees or investors of, any such amendment or supplement shall constitute
a waiver of any of the conditions set forth in Section 6.
(b) The Issuers will furnish to CSFBC copies of the Preliminary
Offering Circular, the Offering Circular and all amendments and supplements
to such documents, in each case in such quantities as CSFBC requests. At
any time when the Issuers are not subject to Section 13 or 15(d) of the
Exchange Act, the Issuers will promptly furnish or cause to be furnished to
CSFBC (and, upon request, to each of the other Purchasers) and, upon
request of holders and prospective purchasers of the Offered Securities, to
such holders and purchasers, copies of the information required to be
delivered to holders and prospective purchasers of the Offered Securities
pursuant to Rule 144A(d)(4) under the Act (or any successor provision
thereto) in order to permit compliance with Rule 144A in connection with
resales by such holders of the Offered Securities. The Issuers will pay the
expenses of printing and distributing to the Purchasers all such documents.
(c) The Issuers will arrange for the qualification of the Offered
Securities for sale under the laws of such U.S. jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the resale of the Offered Securities by the Purchasers.
(d) During the period of ten years hereafter, the Company will furnish
to CSFBC and, upon request, to each of the other Purchasers, 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 CSFBC and,
upon request, to each of the other Purchasers 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.
(e) During the period of two years after the Closing Date, the Issuers
will, upon request, furnish to CSFBC and any holder of Offered Securities a
copy of the restrictions on transfer applicable to the Offered Securities.
(f) During the period of two years after the Closing Date, the Issuers
will not, and will not permit any of their affiliates (as defined in Rule
144 under the Act) to, resell any of the Offered Securities that have been
reacquired by any of them.
(g) During the period of two years after the Closing Date, the Company
will not be or become, an open end investment company, unit investment
trust or face amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act.
(h) The Issuers will pay all expenses incident to the performance of
their obligations under this Agreement, the Indenture and the Registration
Rights Agreement, including (i) any 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, (ii)
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any commercial travel and lodging expenses of the Company's officers and
employees 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
Purchasers), (iii) expenses incurred in printing and distributing any
preliminary offering circulars and the Offering Document (including any
amendments and supplements thereto), (iv) the fees and expenses of the
Trustee and its professional advisers, (v) the cost of qualifying the
Offered Securities for trading in The Portal(SM) Market ("PORTAL") and any
expenses incident thereto and (vi) any fees charged by investment rating
agencies for the rating of the Offered Securities.
(i) In connection with the offering, until CSFBC shall have notified
the Company and the other Purchasers of the completion of the resale of the
Offered Securities, neither the Issuers nor any of their affiliates has or
will, either alone or with one or more other persons, bid for or purchase
for any account in which it or any of its affiliates has a beneficial
interest any Offered Securities or attempt to induce any person to purchase
any Offered Securities; and neither it nor any of its affiliates will make
bids or purchases for the purpose of creating actual, or apparent, active
trading in, or of raising the price of, the Offered Securities.
(j) For a period of 90 days after the Closing Date, the Issuers will
not offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any U.S. dollar-denominated debt securities issued or
guaranteed by any of them and having a maturity of more than one year from
the date of issue, or publicly disclose the intention to make any such
offer, sale, pledge or disposition, without the prior written consent of
CSFBC. The Issuers will not at any time offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any securities
under circumstances where such offer, sale, pledge, contract or disposition
would cause the exemption afforded by Section 4(2) of the Act or the safe
harbor of Regulation S thereunder to cease to be applicable to the offer
and sale of the Offered Securities.
(k) The Company shall apply the net proceeds of the sale of the Offered
Securities as set forth in the Offering Document.
6. Conditions of the Obligations of the Purchasers. The obligations of
the several Purchasers to purchase and pay for the Offered Securities on the
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Issuers herein set forth, to the accuracy of the
statements of the Issuers' officers made pursuant to the provisions hereof, to
the performance by the Issuers of their obligations hereunder and to the
following additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the date of this
Agreement, 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
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published rules and regulations thereunder (the "Rules and Regulations")
and to effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Offering Document 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 Offering Document;
(iii) on the basis of the review referred to in clause (ii)
above, 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
Offering Document 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 Offering Document, and at the last day of the
month preceding the date of this Agreement, there was any change
in the capital 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 Offering Document; 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)
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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 Offering Document 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 Offering
Document, 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 Offering Document (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.
(b) The offering of 4,500,000 shares of the Company's Class A Common
Stock, par value $.01 per share, pursuant to the Company's registration
statement (No. 333-74613) on Form S-3 and the use of the proceeds thereof as
described in the Offering Document shall have been consummated or shall be
consummated simultaneously with the sale to the Purchasers of the Offered
Securities.
(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
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other), or prospects of the Company and the Subsidiaries taken a whole which, in
the judgment of the Purchasers, is material and adverse and makes it impractical
or inadvisable to proceed with completion of the offering or the sale of and
payment for the Offered Securities; (ii) any downgrading in the rating of any
debt securities of any Issuer (including, without limitation, the Notes) 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 any Issuer, including, without limitation, the Notes (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 State 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 the Purchasers, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the offering or the sale of and
payment for the Offered Securities.
(d) The Purchasers shall have received on the Closing Date the opinion
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Issuers, dated the Closing Date
and addressed to the Purchasers, to the effect that:
(i) The Company has been duly incorporated and is an existing
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 Offering Document.
(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 outstanding shares of common stock of the
Company conform in all material respects to the description thereof
contained in the Offering Document; and no preemptive rights of
stockholders of the Company are set forth in the charter.
(iii) The Indenture is in such form that would not preclude
qualification under the TIA and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder.
The Indenture has been duly authorized, executed and delivered by each
of the Issuers and, assuming the due authorization, execution and
delivery by the Trustee, is a valid and binding agreement of each of
the Issuers, enforceable against each of the Issuers in accordance
with its terms, except to the extent that enforcement thereof may be
limited by (x) bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights
generally and (y) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
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(iv) The issuance and sale of the Notes has been duly authorized
by the Company, and the Notes, when executed and authenticated in
accordance with the terms of the Indenture and delivered to and paid
for by the Purchasers in accordance with the terms of this Agreement,
will be valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that enforcement
thereof may be limited by (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (y) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).
(v) The issuance of the Guarantees has been duly authorized by
each of the Guarantors, and the Guarantees, when the Notes are
executed and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Purchasers in
accordance with the terms of this Agreement, will be valid and binding
obligations of each of the Guarantors entitled to the benefits of the
Indenture and enforceable against each of the Guarantors in accordance
with their terms, except to the extent that enforcement thereof may be
limited by (x) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (y) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity).
(vi) This Agreement has been duly authorized, executed and
delivered by each of the Issuers.
(vii) The Registration Rights Agreement has been duly authorized,
executed and delivered by each of the Issuers and, assuming the due
authorization, execution and delivery by the Purchasers, is a valid
and binding agreement of each of the Issuers, enforceable against each
of the Issuers in accordance with its terms, except to the extent that
enforcement thereof may be limited by (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (y) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity), and except that any
rights of indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy considerations.
(viii) The Exchange Securities and the guarantees to be endorsed
on the Exchange Securities have been duly authorized by the Issuers;
and when the Exchange Securities and such guarantees are executed and
issued in accordance with the terms of the Indenture and the Exchange
Securities are delivered in exchange for the Notes pursuant to the
Registration Rights Agreement, the Exchange Securities and such
guarantees will have been duly executed, issued and delivered and the
Exchange Notes and such guarantee will constitute valid and
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binding obligations of the Company and the Guarantors, respectively,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to an affecting
creditors' rights and to general equity principles.
(ix) The Company is not an "investment company" within the
meaning of and subject to regulation under the 1940 Act.
(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
Issuers or the execution and delivery or the consummation by the
Issuers of the transactions contemplated by this Agreement, the
Registration Rights Agreement or the Indenture, except for 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 Purchasers.
(xi) The Indenture, the Notes, the Guarantees and the
Registration Rights Agreement conform in all material respects to the
descriptions thereof in the Offering Document.
(xii) Such counsel does not know of any contracts or documents
required to be described in a prospectus pursuant to the Act and the
Rules and Regulations if the Offered Securities were registered
thereunder which are not so described in the Offering Document.
(xiii) Such counsel does not know of any material legal or
governmental proceedings pending or threatened against the Company or
any of the Subsidiaries of a character required to be described in a
prospectus pursuant to the Act and the Rules and Regulations if the
Offered Securities where registered thereunder except as set forth in
the Offering Document.
(xiv) The execution and delivery of this Agreement, the Indenture
and the Registration Rights Agreement, the consummation of the
transactions contemplated hereby and thereby and the issuance and sale
of the Offered Securities and compliance with the terms and provisions
thereof do not and will not (i) violate the charter or by-laws of any
of the Issuers or (ii) result in a breach or constitute a default
under or result in the creation or imposition of a lien pursuant to
any contract or agreement filed as an exhibit to the Exchange Act
Reports, 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
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on the Company and the Subsidiaries taken as a whole or the offer,
sale, delivery or trading of the Offered Securities.
(xv) It is not necessary in connection with the (i) offer, sale
and delivery of the Offered Securities by the Issuers to the
Purchasers pursuant to this Agreement or (ii) the resales of the
Offered Securities by the Purchasers in the manner contemplated by
this Agreement, to register the Offered Securities under the Act or to
qualify the Indenture under the Trust Indenture 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 the Offering Document, or any amendment
or supplement thereto, as of the date hereof or as of the Closing Date,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in 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 Purchasers shall have received on the Closing Date the opinion
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Senior Vice President of Administration and General
Counsel of the Company, dated the Closing Date and addressed to the Purchasers,
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 Offering
Document; 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 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 B 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 Offering Document.
(ii) The Company has authorized and outstanding capital stock as
set forth under the caption "Capitalization" in the Offering Document.
(iii) Except as described in or contemplated by the Offering
Document or as otherwise disclosed to the Purchasers, 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
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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.
(iv) Such counsel does not know of any contracts or documents
required to be described in a prospectus pursuant to the Act and the
Rules and Regulations if the Offered Securities were registered
thereunder which are not so described in the Offering Documents; the
descriptions in the Offering Document of any material contract or
other material documents are accurate in all material respects and
fairly present the information shown therein.
(v) Such counsel does not know of any material legal or
governmental proceedings pending or threatened against the Company or
any of the Subsidiaries of a character required to be described in a
prospectus pursuant to the Act and the Rules and Regulations if the
Offered Securities where registered thereunder except as set forth in
the Offering Document.
(vi) The execution and delivery of this Agreement, the Indenture
and the Registration Rights Agreement and the consummation of the
transactions contemplated hereby and thereby and the issuance and sale
of the Offered Securities and the compliance with the terms and
provisions thereof, 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 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 or any decree or order known
to such counsel by any court, domestic or foreign, having jurisdiction
over the Company or any Subsidiaries or any of their respective
properties, 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 the Offering Document, or any amendment
or supplement thereto, as of the date hereof or as of the Closing Date,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in 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).
(f) The Purchasers shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel for the Purchasers, an opinion, dated the Closing Date, with respect to
the validity of the Offered Securities, the Offering Document, the exemption
from registration for the offer and sale of the Offered Securities by the
Company to the several Purchasers and the resales by the several
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Purchasers as contemplated hereby and other related matters as the Purchasers
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 Purchasers shall have received on the Closing Date a
certificate or certificates of the Chief Executive Officer and the Chief
Financial Officer of each of the Issuers, dated as of the Closing Date, to the
effect that each of them severally represents in his capacity as an officer of
such Issuer as follows:
(i) The representations and warranties of the Issuers contained
in Section 2 hereof are true and correct in all material respects as
of the Closing Date and the Issuers have complied with all agreements
and satisfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date;
(ii) He has carefully examined the Offering Document and, in his
opinion, as of the date thereof and as of the Closing Date, the
statements contained in the Offering Document were true and correct in
all material respects, and the Offering Document 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 date of the
Offering Document, no event has occurred which should have been set
forth in a supplement to or an amendment of the Offering Document
which has not been so set forth in such supplement or amendment; and
(iii) Since the date of the most recent financial statements of
the Company included in the Offering Document, 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 Purchasers such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the Purchasers
may reasonably have requested.
(i) The Offered Securities shall have been designated for trading on
the PORTAL market.
(j) The Purchasers shall have received a letter, dated the Closing
Date, 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 the Closing Date for the purposes of this subsection.
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(k) Each of the Issuers and the Trustee shall have executed and
delivered the Indenture in form and substance satisfactory to the Purchasers and
the Indenture shall be in full force and effect.
(l) Each of the Issuers shall have executed and delivered the
Registration Rights Agreement in form and substance satisfactory to the
Purchasers and the Registration Rights Agreement shall be in full force and
effect.
The Company will furnish the Purchasers with such conformed copies of such
opinions, certificates, letters and documents as the Purchasers reasonably
request. CSFBC may in its sole discretion waive on behalf of the Purchasers
compliance with any conditions to the obligations of the Purchasers hereunder.
7. Indemnification and Contribution. Each of the Issuers will, jointly
and severally, indemnify and hold harmless each Purchaser, its partners,
directors and officers and each person, if any, who controls such Purchaser
within the meaning of Section 15 of the Act, against any losses, claims, damages
or liabilities, joint or several, to which such Purchaser 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
the Offering Document, or any amendment or supplement thereto, or any related
preliminary offering circular, 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 Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Issuers 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 Purchaser through CSFBC specifically
for use therein, it being understood and agreed that the only such information
furnished by any Purchaser consists of the information described as such in
subsection (b) of this Section 7 or (y) to any Purchaser pursuant to this
Section 7(a) with respect to any preliminary offering circular to the extent
that any such loss, claim, damage or liability (or any actions or proceedings in
respect thereof) results from such Purchaser'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 Offering
Document in any case where such delivery is required by the Act if the Issuers
have previously furnished copies thereof to such Purchaser and the loss, claim,
damage or liability of such Purchaser results from an untrue statement or
omission of a material fact contained in such preliminary offering circular
which was corrected in the Offering Document.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Issuers, their respective 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 Issuers may
become subject, under the Act or otherwise, insofar as such
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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 the Offering Document, or any amendment or supplement
thereto, or any related preliminary offering circular, 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 Purchaser through CSFBC specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Issuers 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 Purchaser consists of the
following information in the Offering Document furnished on behalf of each
Purchaser: the information contained in paragraph nine under the caption "Plan
of Distribution."
(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 Issuers on the
one hand and the Purchasers 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 Issuers on the one hand and the Purchasers on the other in
connection with
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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 Issuers on the one hand and the Purchasers 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
discounts and commissions received by the Purchasers. 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 Issuers or the Purchasers
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 the
provisions of this subsection (d), no Purchaser shall be required to contribute
any amount in excess of the amount by which the total price at which the Offered
Securities purchased by it were resold exceeds the amount of any damages which
such Purchaser 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 Purchasers' obligations in this subsection (d)
to contribute are several in proportion to their respective purchasing
obligations and not joint.
(e) The obligations of the Issuers under this Section shall be in
addition to any liability which the Issuers may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Act; and the obligations of the Purchasers
under this Section shall be in addition to any liability which the respective
Purchasers may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls the Company within the meaning
of the Act.
8. Default of Purchasers. If any Purchaser or Purchasers default in
their obligations to purchase Offered Securities hereunder and the aggregate
principal amount of Offered Securities that such defaulting Purchaser or
Purchasers agreed but failed to purchase does not exceed 10% of the total
principal amount of Offered Securities, CSFBC may make arrangements satisfactory
to the Company for the purchase of such Offered Securities by other persons,
including any of the Purchasers, but if no such arrangements are made by the
Closing Date, the non-defaulting Purchasers shall be obligated, severally, in
proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Purchasers agreed but failed to purchase. If any
Purchaser or Purchasers so default and the aggregate principal amount of Offered
Securities with respect to which such default or defaults occur exceeds 10% of
the total principal amount of Offered Securities 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 Purchaser or the
Company, except as provided in Section 9. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this Section.
Nothing herein will relieve a defaulting Purchaser from liability for its
default.
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9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuers or their respective officers and of the several Purchasers 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 Purchaser, the Issuers 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 Purchasers is not consummated, the Issuers shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Issuers and the Purchasers
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 Purchasers 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 Issuers will, jointly and severally, reimburse the Purchasers for all
out-of-pocket expenses (including fees and disbursements of counsel to the
Purchasers) 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 Purchasers, will be mailed, delivered or telegraphed and confirmed
to the Purchasers c/o Credit Suisse First Boston Corporation, Eleven ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Investment Banking
Department--Transactions Advisory Group, or, if sent to any of the Issuers, will
be mailed, delivered or telegraphed and confirmed to it at Express Scripts,
Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief
Financial Officer; provided, however, that any notice to a Purchaser pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to such
Purchaser.
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, except that holders of
Offered Securities shall be entitled to enforce the agreements for their benefit
contained in the second and third sentences of Section 5(b) hereof against the
Issuers as if such holders were parties thereto.
12. Representation of Purchasers. CSFBC will act for the several
Purchasers in connection with this financing, and any action under this
Agreement taken by it will be binding upon all the Purchasers.
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.
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The Issuers hereby submit 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 Issuers one of the
counterparts hereof, whereupon it will become a binding agreement between the
Issuers and the several Purchasers in accordance with its terms.
Very truly yours,
EXPRESS SCRIPTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
________________________________
Name: ▇▇▇▇▇▇ ▇▇▇
Title: Senior Vice President and
Chief Financial Officer
DIVERSIFIED PHARMACEUTICAL SERVICES, INC.,
ESI/VRx SALES DEVELOPMENT CO., EXPRESS
SCRIPTS VISION CORPORATION, IVTx, INC.,
MANAGED PRESCRIPTION NETWORK, INC., MHI,
INC., VALUE HEALTH, INC., VALUERx, INC.,
VALUERx PHARMACY PROGRAM, INC.,
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC., HEALTH CARE
SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇
________________________________
Name: ▇▇▇▇▇▇ ▇▇▇
Title: Senior Vice President and
Chief Financial Officer
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The foregoing Purchase Agreement is
hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
DEUTSCHE BANK SECURITIES INC.
Acting on behalf of themselves and the
several Purchasers
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
___________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Director
30
SCHEDULE A
PRINCIPAL AMOUNT
PURCHASER OF NOTES
--------- --------
Credit Suisse First Boston Corporation 162,500,000
Deutsche Bank Securities Inc. 87,500,000
------------
Total $250,000,000
============
31
EXHIBIT A
SUBSIDIARIES
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. MHI, Inc. (Nevada)
7. Value Health, Inc. (Delaware)
8. ValueRx, Inc. (Delaware)
9. Health Care Services, Inc. (Pennsylvania)
10. ValueRx Pharmacy Program, Inc. (Michigan)
11. Your ▇▇▇▇▇▇▇▇.▇▇▇, Inc. (Delaware)
32
EXHIBIT B
SUBSIDIARY STATE OF INCORPORATION D/B/A
---------- ---------------------- -----
Diversified Pharmaceutical Services, Inc. Minnesota None
Diversified NY IPA, Inc. New York None
Diversified Pharmaceutical Services (Puerto Rico) Puerto Rico None
Inc.
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. Delaware None
(80% owned by ESI; 20% owned by management)
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
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. Delaware None