1
EXHIBIT 1.1
6,000,000 SHARES
EXPRESS SCRIPTS, INC.
CLASS A COMMON STOCK
($.01 PAR VALUE)
UNDERWRITING AGREEMENT
November [ ], 2000
CREDIT SUISSE FIRST BOSTON CORPORATION
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
BANC OF AMERICA SECURITIES LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
CIBC WORLD MARKETS CORP.,
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. NYLIFE LLC, a Delaware limited liability company (the
"Selling Stockholder"), proposes to sell to the Underwriters (as defined below)
an aggregate of 6,000,000 shares (the "Firm Securities") of the Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), of Express
Scripts, Inc., a Delaware corporation (the "Company"). Immediately prior to the
sale of the Firm Securities to the Underwriters, NYLIFE Healthcare Management,
Inc., a wholly owned subsidiary of the Selling Stockholder, will, through a
series of transactions, transfer all of its 15,020,000 shares of outstanding
Class B Common Stock, par value $.01 per share, of the Company (the "Class B
Common Stock", and together with the Class A Common Stock, the "Common Stock")
to the Company in consideration for the issuance by the Company of a like number
of shares of Class A Common Stock, which shares shall have the same rights and
preferences as all other outstanding shares of Class A Common Stock, and
distribute such shares of Class A Common Stock to the Selling Stockholder (the
"Reorganization"). The Selling Stockholder also proposes to sell to the
Underwriters, at the option of the Underwriters, an aggregate of not more than
900,000
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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 and the Selling
Stockholder hereby agree with each other and with the several Underwriters named
in Schedule A hereto (the "Underwriters") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholder.
(a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement on Form S-3 (No. 333-47572) 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 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 Commis-
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sion. 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 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
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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 Statements and the Prospectus.
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 Statements 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 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 Registration
Statements 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 (including
the Offered Securities) have been duly authorized and validly issued, are
fully paid and non-assessable. 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
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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 Statements. 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 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) PricewaterhouseCoopers 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
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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 Statements 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 Statements 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 material
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.
(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 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 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
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(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 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.
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(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, except as disclosed in the Prospectus and the
Registration Statements. Without limiting the foregoing, except as disclosed
in the Prospectus and the Registration Statements, (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
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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 categories of offenses as described
in 42 U.S.C. Section 1320a-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;
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(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.
(xxvi) As of the First Closing Date, there will be no shares of
Class B Common Stock outstanding.
(b) The Selling Stockholder represents and warrants to, and agrees
with, the several Underwriters that:
(i) the Selling Stockholder has been duly incorporated as a limited
liability company, is validly existing as a limited liability company
under the laws of the State of Delaware and has the limited liability
company power and authority to own and sell its property and conduct its
business.
(ii) The Selling Stockholder, on each Closing Date hereinafter
mentioned, will have valid and unencumbered title to the Offered
Securities to be sold by the Selling Stockholder on such Closing Date
and full right, power and authority to sell, assign, transfer and
deliver the Offered Securities to be delivered by the Selling
Stockholder on such Closing Date hereunder; and upon the delivery of and
payment for the Offered Securities on each Closing Date hereunder the
several Underwriters will acquire valid and unencumbered title to the
Offered Securities to be delivered by the Selling Stockholder on the
Closing Date.
(iii) The Selling Stockholder has full right, power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and the
consummation by the Selling Stockholder of the transactions herein
contemplated and the fulfillment by the Selling Stockholder of the terms
hereof will not require any consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other
governmental body (except
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as may be required under the Act, state securities laws or Blue Sky laws
and the rules and regulations of the NASD) and will not result in a
breach of any of the terms and provisions of, or constitute a default
under (x) the certificate of formation, operating agreement or any other
organizational documents of the Selling Stockholder, (y) any indenture,
mortgage, deed of trust or other document or instrument to which the
Selling Stockholder is a party or (z) any order, rule or regulation
applicable to the Selling Stockholder of any court or of any regulatory
body or administrative agency or other governmental body having
jurisdiction over the Selling Stockholder, other than in the case of
clauses (y) and (z), breaches or defaults which would not impair the
ability of the Selling Stockholder to perform its obligations under this
Agreement.
(iv) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement 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, (B)
on the Effective Date of the Additional Registration Statement (if any),
each Registration Statement 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 (C) on the date of this
Agreement, neither the Initial Registration Statement nor, if the
Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration
Statement, 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,
neither Registration Statements nor the Prospectus includes, or will
include, any untrue statement of a material fact or omits, or will 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, neither the Initial Registration Statement nor
the Prospectus 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. 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).
(v) Neither the Selling Stockholder nor any of its affiliates (other
than the Company or its subsidiaries, as to which the Selling
Stockholder makes no representation) 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 Class A
Common Stock to facilitate the sale or resale of the Offered Securities.
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(vi) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Selling Stockholder 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 the offering of the Offered Securities.
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 Selling Stockholder agrees to
sell to the Underwriters, and the Underwriters agree, severally and not jointly,
to purchase from the Selling Stockholder, 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 Selling Stockholder 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 Selling Stockholder, at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at
[ ], New York City time, on [ ], 2000, or at such other time not later than
seven full business days thereafter as CSFBC and the Selling Stockholder
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 and
the Selling Stockholder 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 Class A Common
Stock to be paid for the Firm Securities. The Selling Stockholder agrees to sell
to the 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 on Schedule A 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 Selling
Stockholder.
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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 and no earlier than
two full business days after written notice of election to purchase Optional
Securities is given. The Selling Stockholder 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 Selling Stockholder, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. 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 and the Selling
Stockholder.
(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.
(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
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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 the 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 the Joint Lead Managers 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.
(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.
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(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) 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 the Common Stock or other capital stock of the
Company or securities convertible into or exchangeable or exercisable for
any shares of the Common Stock, or publicly disclose the intention to make
any such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC and ▇▇▇▇▇▇▇, Sachs & Co., except that such 90-day
restriction shall not prohibit (a) in the case of 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 by the Company of Common
Stock pursuant to the exercise of such options or the exercise of any other
employee stock options outstanding on the date hereof, (b) the Company from
issuing shares of Class A Common Stock in private placements pursuant to
Section 4(2) of the Act or in connection with any of the Company's existing
strategic alliances, (c) the Company from publicly announcing its intention
to issue, or actually issuing, shares of Class A Common Stock to
shareholders of another entity as consideration for the Company's
acquisition of, or merger with, such entity or (d) the Company from issuing
shares of Class A Common Stock in connection with the Reorganization.
(ix) 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 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 Underwriters),] for any
transfer taxes on the sale of the Offered Securities to the Underwriters and
for expenses incurred in printing and distributing preliminary prospectuses
and the Prospectus (including any amendments and supplements thereto) to the
Underwriters.
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(x) 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.
(xi) In connection with the offering of the Offered Securities, neither
the Company nor any of its subsidiaries will 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.
(xii) The Company will have obtained the approval of the Nasdaq National
Market for the listing of the Offered Securities.
(b) The Selling Stockholder agrees with the Company and the several
Underwriters that:
(i) The Selling Stockholder will pay all expenses incident to the
performance of its obligations under this Agreement.
(ii) The Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group on or prior to the First Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
(iii) For a period of 90 days after the date of the commencement of the
public offering of the Offered Securities, the Selling Stockholder will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, 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 the Common Stock, or publicly disclose the intention to
make any such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., except that such 90-day
restriction shall not prohibit (a) the Selling Stockholder from entering
into (x) that certain forward purchase contract relating to the delivery of
up to 3,450,000 shares of Class A Common Stock by the Selling Stockholder,
to be dated as of the First Closing Date, between the Selling Stockholder
and the Express Scripts Automatic Exchange Security Trust, and performing
its obligations thereunder, (y) that certain Collateral Agreement, to be
dated as of the First Closing Date, between the Selling Stockholder and The
Chase Manhattan Bank, as collateral agent, and performing its obligations
thereunder, and (z) any other agreements contemplated by the agreements
described in clauses (x) and (y), and performing its obligations thereunder,
(b) sales of shares of Class A Common Stock and other securities by the
Selling Stockholder in connection with the Selling Stockholder's ownership
and management (alone or together with others) of assets (x) held by it or
its affiliates in a fiduciary or custodial capacity or (y) of third parties,
(c) transfers of shares of Class A Common Stock by the Selling Stockholder
to one or more of its affiliates or among affiliates of the Selling
Stockholder and (d) transfers of Common Stock in connection with the
Reorganization.
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(iv) In connection with the offering of the Offered Securities, neither
the Selling Stockholder nor any of its affiliates (other than the Company
and its subsidiaries, as to which the Selling Stockholder makes no covenant)
will 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.
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 and the Selling Stockholder 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 and the Selling
Stockholder of their 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 PricewaterhouseCoopers LLP 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 un-
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audited 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
June 30, 2000 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 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 June 30, 2000 consolidated balance sheet shown in the
Prospectus; or
(C) for the period from July 1, 2000 to September 30, 2000,
there were any decreases, as compared with the corresponding period
in the preceding year in the Company's net sales or in the total or
per share amounts in the Company's income before extraordinary items
or of the Company'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 the Company's net
sales,
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) 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, subject to the internal controls of the Company's
accounting system, 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
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proposed to be filed or as proposed to be amended by the 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 Selling Stockholder, 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 pro-
-19-
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ceed with completion of the public offering or the sale of and payment for
the Offered Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, substantially in the form of
Exhibit D hereto.
(e) The Representatives shall have received an opinion, dated such
Closing Date, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Senior Vice President, General
Counsel and Secretary of the Company, 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 Statements; 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 Registration Statements.
(ii) The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus.
(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 Statements, 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 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.
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(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 Statements
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.
(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, as of the date hereof 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).
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(f) The Representatives have received an opinion, dated such Closing
Date, of ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP, counsel for the
Selling Stockholder, substantially in the form of Exhibit E hereto.
(g) The Representatives shall have received from ▇▇▇▇▇▇▇▇▇, Will &
▇▇▇▇▇, special regulatory counsel to the Underwriters, an opinion dated the
First Closing Date in form and substance satisfactory to them.
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(h) The Representatives shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, 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.
(i) 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;
(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 Statements 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 Statements, 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 other-
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wise) or prospects of the Company and the Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business.
(j) The Company and the Selling Stockholder 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.
(k) The Firm Securities and the Optional Securities, if any, shall have
been approved for inclusion in the Nasdaq National Market subject to notice
of issuance.
(l) 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 Representatives, 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 and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., 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"), subject to the exceptions set forth therein.
(m) The Representatives shall have received a letter, dated such Closing
Date, of PricewaterhouseCoopers 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.
(n) The Reorganization shall have been consummated and there shall be no
shares of Class B Common Stock outstanding.
The Company and the Selling Stockholder will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. 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
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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 (c) 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) The Selling Stockholder 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, 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 the
Selling Stockholder specifically for use therein, 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 and will not be liable
to any Underwriter pursuant to this Section 7(b) 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
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statement or omission of a material fact contained in such preliminary
prospectus which was corrected in the Prospectus. The aggregate liability of the
Selling Stockholder pursuant to this Section 7(b) and Sections 7(e), (f), (g)
and (h) hereof shall in no event exceed in the aggregate the total proceeds to
the Selling Stockholder for the Offered Securities sold by the Selling
Stockholder as shown on the cover page of the Prospectus (the "Selling
Stockholder's Proceeds") pursuant to this Agreement. This indemnity agreement
will be in addition to any liability which the Selling Stockholder may otherwise
have.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, the Selling Stockholder and their respective directors and
officers and each person, if any, who controls the Company or the Selling
Stockholder within the meaning of Section 15 of the Act, against any losses,
claims, damages or liabilities to which the Company or the Selling Stockholder
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 and the Selling Stockholder 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 following information in the
Prospectus furnished on behalf of each Underwriter: the concession and
reallowance figures appearing in the fifth paragraph under the caption
"Underwriting" and the information contained in the twelfth and thirteenth
paragraphs under the caption "Underwriting".
(d) The Company will indemnify and hold harmless the Selling
Stockholder, its managers, directors and officers and each person, if any, who
controls the Selling Stockholder within the meaning of Section 15 of the Act
against all losses, claims, damages or liabilities (or any actions or
proceedings in respect thereof) to which the Selling Stockholder or any such
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or any actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in light of the circumstances under which they were
made; and will reimburse the Selling Stockholder and each such controlling
person upon demand for all legal or other expenses reasonably incurred by the
Selling Stockholder or such controlling person in connection with investigating
or defending any such loss, claim, damage or liability (or any actions or
proceedings in respect thereof) or in responding to a subpoena or governmental
inquiry related to the offering of the Offered Securities, whether or not the
Selling Stockholder or such
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controlling person is a party to any such action or proceeding. However, the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability (or any actions or proceedings in respect thereof)
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendment or supplement thereto
naming the Selling Stockholder or any affiliate thereof or describing the
Selling Stockholder's relationship with the Company, including the summary of
the Stockholder and Registration Rights Agreement (as defined in the Prospectus)
and the Asset Acquisition Agreement (as defined in the Prospectus) and the
descriptions of the offering of the Trust Securities (as defined in the
Prospectus) by the Selling Stockholder. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(e) The Selling Stockholder will indemnify and hold harmless the
Company, each of the directors of the Company and each of the officers of the
Company who shall have signed the Registration Statements against all losses,
claims, damages or liabilities (or any actions or proceedings in respect
thereof) to which the Company or any such director or officer may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or any actions or proceedings in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
light of the circumstances under which they were made ; and will reimburse the
Company and each director or officer upon demand for all legal or other expenses
reasonably incurred by the Company or such director or officer in connection
with investigating or defending any such loss, claim, damage or liability (or
any actions or proceedings in respect thereof) or in responding to a subpoena or
governmental inquiry relating to the offering of the Offered Securities, whether
or not the Company or such director or officer is a party to any such action or
proceeding. However, the Selling Stockholder will be liable in each case to the
extent, but only to the extent, that any such loss, claim, damage or liability
(or any actions or proceedings in respect thereof) arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statements, any preliminary prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by the Selling
Stockholder specifically for use therein. Further, the aggregate liability of
the Selling Stockholder pursuant to this Section 7(e) and Sections 7(b), (f),
(g) and (h) hereof shall in no event exceed the amount of the Selling
Stockholder's Proceeds. This indemnity agreement will be in addition to any
liability which the Selling Stockholder may otherwise have.
(f) Promptly after receipt by an indemnified party under this Section 7
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) through (e) 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 subsections (a) through (e) above. In case any such action
is brought against any indemnified party and it notifies the indemnifying party
of the com-
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mencement 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 reasonably
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 7 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.
(g) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under subsection (a)
through (e) above (other than as expressly provided therein and subject to the
limitations and exceptions set forth therein), 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) through (e) above (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholder 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 and the Selling Stockholder 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
and the Selling Stockholder 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 Selling Stockholder, 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, the Selling Stockholder 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 (g) 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 (g). Notwithstanding the
provisions of this subsection (g), (i) 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, and (ii) the Selling Stockholder
shall not be required to contribute any amount in
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respect of any losses, claims or liabilities or amount paid in settlement
greater than the excess of the Selling Stockholder's Proceeds over the amount
paid by the Selling Stockholder under Sections 7(b) and (e) hereof or to
contribute any amount in respect of losses, claims, damages or liabilities or
amounts paid in settlement that the Selling Stockholder would not be obligated
to indemnify under Sections 7(b) and (e) hereof. 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 (g) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(h) Subject to the following provisions of this Section 7(h), the
Selling Stockholder hereby guarantees, irrevocably, absolutely and
unconditionally, the full and prompt payment of any and all amounts as may be
due from time to time from the Company pursuant to Section 7(a) and Section
7(g), provided, however, that (A) the Selling Stockholder shall have no
obligation to make any payment pursuant to this Section 7(h) in respect of the
reimbursement of any indemnified party for any expenses incurred unless such
indemnified party shall first have demanded from the Company reimbursement of
expenses to which such indemnified party is entitled and the Company shall have
failed to make such payment within 30 days of such demand, and (B) the Selling
Stockholder shall have no obligation to make any other payment to any
indemnified party pursuant to this Section 7(h) unless such indemnified party
shall first have demanded from the Company the full amount of the payment then
due from the Company and the Company shall have failed to pay such amount owed
to such indemnified party pursuant to Section 7(a) or Section 7(g) within 30
days after the earlier to occur of (i) a demand by the indemnified party for
payment by the Company of such amount, which amount the Selling Stockholder
agrees, whether by settlement or otherwise, is owed, or (ii) entry of a final
judgment by a court of competent jurisdiction, from which the time period for
filing an appeal has expired, against such indemnified party has remained
unsatisfied by the Company; further provided, however, that after any Insolvency
Event (as hereinafter defined), the Selling Stockholder shall be liable in
accordance with this Section 7(h) without regard to the provisions set forth in
the first proviso of this sentence. For purposes of this Section 7(h), an
"Insolvency Event" shall have occurred when (i) the Company shall generally not
pay its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment (or its
equivalent) for the benefit of creditors; (ii) any proceeding shall be
instituted against the Company seeking to adjudicate it a bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debt under any law relating to
bankruptcy, insolvency, reorganization, relief of debtors, moratorium,
suspension of payments or similar laws relating to or affecting creditors'
rights, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property, and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 90 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of any order for relief
against, or the appointment of a receiver, trustee, custodian or similar
official for, it or for any substantial part of its property) shall occur, or
(iii) the Company shall take any corporate action to authorize any of the
actions set forth in clauses (i) or (ii) of this sentence. Fur-
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thermore, the Selling Stockholder's payment obligations pursuant to this Section
7(h) shall in no event exceed the amount of the Selling Stockholder's Proceeds,
less any amount paid by the Selling Stockholder under Sections 7(b), (e), (g) or
(j) in respect of any losses, claims, damages or liabilities or amounts paid in
settlement that the Selling Stockholder would not be obligated to indemnify
under Sections 7(b) and (e) hereof.
(i) If the Selling Stockholder shall pay any amount due from the Company
pursuant to Section 7(a) in accordance with the provisions of Section 7(h), the
Selling Stockholder shall thereafter have full subrogation rights, for the
entire amount of each amount so paid, against the Company. However, the Company
will not be liable to the Selling Stockholder in any such case to the extent
that any such loss, claim, damage or liability (or any actions or proceedings in
respect thereof) arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statements, any preliminary prospectus, the Prospectus or any amendment or
supplement thereto naming the Selling Stockholder or any affiliate thereof or
describing the Selling Stockholder's relationship with the Company, including
the summary of the Stockholder and Registration Rights Agreement and the Asset
Acquisition Agreement and the descriptions of the offering of the Trust
Securities by the Selling Stockholder.
(j) If both the Company and the Selling Stockholder are at fault, or if
the Selling Stockholder is solely at fault, insofar as any losses, claims,
damages or liabilities (or any actions or proceedings in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statements, any preliminary
prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
light of the circumstances under which they were made, then notwithstanding
anything to the contrary contained in this Section 7, as between the Company and
the Selling Stockholder, the Selling Stockholder shall contribute to any
indemnification required pursuant to Section 7(a) and the Selling Stockholder
shall contribute to any amount payable by the Company pursuant to Section 7(g),
in either case, in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the Selling Stockholder on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or any actions or proceedings in respect
thereof). If the indemnification provided for in this Section 7 is unavailable
to or insufficient to hold harmless an indemnified party under Section 7(d) or
7(e) in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein or any amount paid in
settlement thereof, then the indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) or
settlement in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and the Selling Stockholder on the other hand.
However, the aggregate liability of the Selling Stockholder pursuant to this
Section 7(j) and Sections 7(b), (e) and (g) hereof shall in no event exceed the
Selling Stockholder's Proceeds, less any amounts paid by the Selling Stockholder
under Sections 7(b), (e), (g) or (j) hereof in respect of losses, claims,
liabilities or amounts paid in settlement that the Selling Stockholder would not
be obligated to indemnify under Sections 7(b) or (e) hereof. Relative fault
shall be determined by
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reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or to information
included in reliance upon and in conformity with written information furnished
to the Company specifically for use in the Registration Statements, any
preliminary prospectus or the Prospectuses on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. This Section 7(j) is solely for the benefit
of the Company and the Selling Stockholder and, to the extent expressed, any
other persons entitled to claim indemnification pursuant to Section 7(d) or
7(e), and no other person shall acquire or have any right pursuant to or by
virtue of this Section 7(j). This Section 7(j) shall not be construed as
limiting or affecting in any manner the rights of the Underwriters under
Sections 7(a), 7(g) or 7(h).
(k) The obligations of the Company and the Selling Stockholder under
this Section 7 shall be in addition to any liability which the Company and the
Selling Stockholder 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 7
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 Selling Stockholder 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 Selling Stockholder 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 8. Nothing herein will relieve a defaulting Underwriter 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
Selling Stockholder, 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 Selling Stockholder, 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 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, the Selling Stockholder 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;
provided, however, that if the purchase of the Offered Securities by the
Underwriters is not consummated as a result of any action by the Selling
Stockholder, the Selling Stockholder 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
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, 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.,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief
Financial Officer, or if sent to the Selling Stockholder, will be mailed,
delivered or telegraphed and confirmed to it at NYLIFE LLC., ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel; 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.
-32-
33
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 collectively 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.
Each of the Company and the Selling Stockholder 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]
-33-
34
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 among the
Selling Stockholder, the Company and the several Underwriters in accordance with
its terms.
Very truly yours,
NYLIFE LLC
By:
--------------------------------------
Name:
Title:
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
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
BANC OF AMERICA SECURITIES LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
CIBC WORLD MARKETS CORP.
Acting on behalf of themselves and as the
Representatives of the several Underwriters
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:
---------------------------------
Name:
Title:
-34-
35
SCHEDULE A
NUMBER OF
UNDERWRITER FIRM SECURITIES
----------- ---------------
Credit Suisse First Boston Corporation................... [ ]
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co...................................... [ ]
Banc of America Securities LLC........................... [ ]
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc................................. [ ]
CIBC World Markets Corp.................................. [ ]
[Names of other Underwriting Syndicate Members].......... [ ]
Total.................................................... 6,000,000
36
EXHIBIT A
1. Diversified Pharmaceutical Services, Inc. (Minnesota)
2. Express Scripts Sales Development Co. (Delaware)
3. Express Scripts Vision Corporation (Delaware)
4. IVTx, Inc. (Delaware)
5. Value Health, Inc. (Delaware)
6. ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. (Delaware)
7. ESI Mail Pharmacy Service, Inc. (Delaware)
37
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) Inc. Puerto Rico None
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 Express Scripts Infusion Services
Express Scripts Sales Development Co. Delaware None
Great Plains Reinsurance Company Arizona None
Practice Patterns Science, Inc. Delaware None
Value Health, Inc. Delaware None
ValueRx of Michigan, Inc. Michigan None
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. Delaware None
ESI Mail Pharmacy Service, Inc. Delaware None
Express Scripts Specialty Distribution Services, Inc. Delaware None
ESI Utilization Management Co. Delaware None
ESI Claims, Inc. Delaware None
607486 Alberta Ltd. Alberta None
38
EXHIBIT C
Officers:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
Directors:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
39
EXHIBIT D
November -, 2000
Credit Suisse First Boston Corporation
▇▇▇▇▇▇▇, Sachs & Co.
Banc of America Securities LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
CIBC World Markets Corp.
c/o Credit Suisse First Boston Corporation
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Express Scripts, Inc., a Delaware
corporation (the "Company") in connection with the purchase by you of an
aggregate of 6,000,000 shares of Class A Common Stock, par value $0.01 per share
(the "Shares"), of the Company from NYLIFE LLC (the "Selling Stockholder")
pursuant to the Underwriting Agreement dated November -, 2000 between you,
the Selling Stockholder and the Company (the "Underwriting Agreement").
We have examined the Registration Statement on Form S-3 (File No.
333-47572) filed by the Company under the Securities Act of 1933, as amended
(the "Act"), as it became effective under the Act (the "Registration
Statement"); and the Company's prospectus dated October -, 2000 (the
"Prospectus"), filed by the Company pursuant to Rule 424(b) of the rules and
regulations of the Securities and Exchange Commission (the "Commission") under
the Act, which pursuant to Form S-3 incorporates by reference the Annual Report
on Form 10-K of the Company for the fiscal year ended December 31, 1999,
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2000, and
June 30, 2000, Current Reports on Form 8-K dated February 10, 2000, March 3,
2000, April 24, 2000, June 23, 2000, July 21, 2000, October 17, 2000, October
18, 2000, and October 31, 2000 and the Description of Common Stock contained in
the Registration Statement on Form 8-A dated May 12, 1992 (the "Exchange Act
Documents"), each as filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). We also have examined the
40
Underwriting Agreement and a specimen certificate representing the
Class A Common Stock of the Company. In addition, we have examined, and have
relied as to matters of fact upon, the documents delivered to you at the
closing, and upon originals or copies, certified or otherwise identified to our
satisfaction, of such corporate records, agreements, documents and other
instruments and such certificates or comparable documents or oral statements of
public officials and of officers and representatives of the Company, and have
made such other and further investigations, as we have deemed relevant and
necessary as a basis for the opinions hereinafter set forth. Our opinion that
the Registration Statement has become effective under the Act is based on oral
advice from the staff of the Commission to the effect that the Registration
Statement has been declared effective.
In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing and
in good standing as a corporation under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as
described in the Registration Statement and Prospectus.
2. All outstanding shares of the Company's Common Stock, including the
Shares, have been duly authorized, and all outstanding shares of the
Company's Common Stock have been and, upon payment and delivery in
accordance with the Underwriting Agreement, the Shares will be validly
issued, fully paid and nonassessable.
3. The statements made in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute
summaries of the terms of the Company's Common Stock (including the
Shares), constitute accurate summaries of the terms of such Common Stock in
all material respects.
41
4. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
5. The issue and sale of the Shares by the Company and the compliance
by the Company with all of the provisions of the Underwriting Agreement
will not breach or result in a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument filed or
incorporated by reference as an exhibit to the Registration Statement, nor
will such action violate the Certificate of Incorporation or By-laws of the
Company or any federal or New York statute or the Delaware General
Corporation Law or any rule or regulation that has been issued pursuant to
any federal or New York statute or the Delaware General Corporation Law or
any order known to us issued pursuant to any federal or New York statute or
the Delaware General Corporation Law by any court or governmental agency or
body or court having jurisdiction over the Company or any of its
subsidiaries or any of their properties.
6. No consent, approval, authorization, order, registration or
qualification of or with any federal or New York governmental agency or
body or any Delaware governmental agency or body acting pursuant to the
Delaware General Corporation Law or, to our knowledge, any federal or New
York court or any Delaware court acting pursuant to the Delaware General
Corporation Law is required for the issue and sale of the Shares by the
Company and the compliance by the Company with all of the provisions of the
Underwriting Agreement, except for the registration under the Act and the
Exchange Act of the Shares, 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
Shares by the Underwriters.
7. The Registration Statement has become effective under the Act and
the Prospectus was filed on October -, 2000 pursuant to Rule 424(b)___ of
the rules and regulations of the Commission under the Act and, to our
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued or proceeding for that purpose has been
instituted or threatened by the Commission.
42
8. There are no preemptive rights under federal or New York law or
under the Delaware General Corporation Law to subscribe for or purchase
shares of Company capital stock. There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the voting or
transfer of, any shares of the Company's capital stock pursuant to the
Company's Certificate of Incorporation or By-laws or any agreement or other
instrument filed or incorporated by reference as an exhibit to the
Registration Statement.
9. The Company is not an "investment company" within the meaning of
and subject to regulation under the Investment Company Act of 1940, as
amended.
We have not independently verified the accuracy, completeness or
fairness of the statements made or included in the Registration Statement, the
Prospectus or the Exchange Act Documents and take no responsibility therefor,
except as and to the extent set forth in paragraph 3 above. In the course of the
preparation by the Company of the Registration Statement and the Prospectus
(excluding the Exchange Act Documents), we participated in conferences with
certain officers and employees of the Company, with representatives of
PricewaterhouseCoopers LLP and with counsel to the Company. We did not prepare
the Exchange Act Documents; however, we discussed the Exchange Act Documents
with the Company and with counsel to the Company prior to their filing with the
Commission. Based upon our examination of the Registration Statement, the
Prospectus and the Exchange Act Documents, our investigations made in connection
with the preparation of the Registration Statement and the Prospectus (excluding
the Exchange Act Documents) and our participation in the conferences referred to
above, (i) we are of the opinion that the Registration Statement, as of its
effective date, and the Prospectus, as of October -, 2000, complied as to
form in all material respects with the requirements of the Act and the
applicable rules and regulations of the Commission thereunder and that the
Exchange Act Documents complied as to form when filed in all material respects
with the requirements of the Exchange Act and the applicable rules and
regulations of the Commission thereunder, except that in each case we express no
opinion with respect to the financial statements or other financial or
statistical data contained or incorporated by reference in the Registration
Statement, the Prospectus or the Exchange Act Documents, and (ii) we have no
reason to believe that the Registration Statement, as of its effective date
(including the Exchange Act Documents on file with the Commission on such
effective date), contained any untrue
43
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading or that the Prospectus (including the Exchange Act Documents) as of
its date or as of the date hereof contains any untrue statement of a material
fact or omits 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, except that in each case we express no belief with respect
to the financial statements or other financial or statistical data contained or
incorporated by reference in the Registration Statement, the Prospectus or the
Exchange Act Documents.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State of
New York, the federal law of the United States and the Delaware General
Corporation Law.
This opinion letter is rendered to you in connection with the above
described transactions. This opinion letter may not be relied upon by you for
any other purpose, or relied upon by, or furnished to, any other person, firm or
corporation without our prior written consent.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇