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EXHIBIT 1
ADVANCEPCS,
AS ISSUER
THE SUBSIDIARIES LISTED IN SCHEDULE B
AS GUARANTORS
$200,000,000
8 1/2% SENIOR NOTES DUE 2008
PURCHASE AGREEMENT
DATED MARCH 7, 2001
BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BANC ONE CAPITAL MARKETS, INC.
CHASE SECURITIES, INC.
CIBC WORLD MARKETS CORP.
SCOTIA CAPITAL "USA", INC.
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Table of Contents
Page
Section 1. Representations and Warranties....................................3
(a) No Registration Required...................................3
(b) No Integration of Offerings or General Solicitation........3
(c) Eligibility for Resale under Rule 144A.....................3
(d) The Offering Memorandum....................................3
(e) The Purchase Agreement.....................................4
(f) The Registration Rights Agreement and DTC Agreement........4
(g) Authorization of the Securities and the Exchange
Securities...............................................4
(h) Authorization of the Indenture.............................5
(i) Description of the Securities and the Indenture............5
(j) No Material Adverse Change in Business.....................5
(k) Independent Accountants....................................5
(l) Financial Statements of the Company........................5
(m) Financial Statements of PCS Holding Corporation............6
(n) Financial Statements of First Florida International
Holdings, Inc............................................6
(o) Good Standing of the Company...............................6
(p) Good Standing of Subsidiaries..............................6
(q) Capitalization and Other Capital Stock Matters.............7
(r) Stock Exchange Listing.....................................7
(s) Non-Contravention of Existing Instruments..................7
(t) No Further Authorizations or Approvals Required............8
(u) No Material Actions or Proceedings.........................8
(v) Intellectual Property Rights...............................8
(w) Possession of Licenses and Permits.........................8
(x) Title to Property..........................................9
(y) Absence of Labor Dispute...................................9
(z) Company Not an "Investment Company"........................9
(aa) No Price Stabilization or Manipulation.....................9
(bb) Compliance with Cuba Act...................................9
(cc) Environmental Laws.........................................9
(dd) Medicare Violations.......................................10
(ee) No Medicare Recoupment....................................10
(ff) Incorporated Documents....................................10
(gg) No Default in Senior Debt.................................10
(hh) Regulation S Compliance...................................10
Section 2. Purchase, Sale and Delivery of the Securities....................11
(b) The Closing Date..........................................11
(c) Delivery of the Securities................................11
(d) Delivery of Offering Memorandum to the Initial
Purchasers..............................................11
(e) Initial Purchasers as Qualified Institutional Buyers......11
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Section 3. Additional Covenants..............................................11
(a) Initial Purchasers' Review of Proposed Amendments and
Supplements..............................................12
(b) Amendments and Supplements to the Offering Memorandum and
Other Securities Act Matters.............................12
(c) Copies of the Offering Memorandum..........................12
(d) Blue Sky Compliance........................................12
(e) Use of Proceeds............................................13
(f) The Depositary.............................................13
(g) Additional Issuer Information..............................13
(h) Future Agreement Not to Offer or Sell Additional
Securities...............................................13
(i) Future Reports to the Initial Purchasers...................13
(j) No Integration.............................................14
(k) Legended Securities........................................14
(l) PORTAL.....................................................14
Section 4. Payment of Expenses...............................................14
Section 5. Conditions of the Obligations of the Initial Purchasers...........15
(a) Comfort Letter of Arthur Andersen LLP......................15
(b) Bring-Down Comfort Letter of Arthur Andersen LLP...........15
(c) Comfort Letter of Ernst & Young LLP........................15
(d) Bring-down Comfort Letter of Ernst & Young LLP.............15
(e) No Material Adverse Change or Ratings Agency Change........15
(f) Opinion of Counsel for the Company and the Guarantors......16
(g) Opinion of Streich Lang....................................16
(h) Opinion of General Counsel of the Company..................16
(i) Opinion of Laurie I. Johansen..............................16
(j) Opinion of Special Regulatory Counsel for Company..........16
(k) Opinion of Counsel for the Initial Purchaser...............16
(l) Officers' Certificate......................................16
(m) PORTAL Listing.............................................17
(n) Registration Rights Agreement..............................17
(o) Consent from Senior Lenders................................17
(p) Payment of Commission to Initial Purchasers................17
(q) Additional Documents.......................................17
Section 6. Reimbursement of Initial Purchasers' Expenses.....................17
Section 7. Offer, Sale and Resale Procedures.................................17
Section 8. Indemnification...................................................19
(b) Indemnification of Company, Directors and Officers.........20
(c) Actions Against Parties; Notification......................20
(d) Settlement Without Consent if Failure to Reimburse.........20
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Section 9. Contribution.....................................................20
Section 10. Termination of this Agreement....................................21
Section 11. Representations and Indemnities to Survive Delivery..............22
Section 12. Notices..........................................................22
Section 13. Successors.......................................................23
Section 14. Partial Unenforceability.........................................23
Section 15. Governing Law....................................................23
Section 16. Default of One or More of the Several Initial Purchasers.........23
Section 17. General Provisions...............................................24
SCHEDULE A - List of Initial Purchasers
SCHEDULE B - List of Guarantors
SCHEDULE C - List of Subsidiaries
EXHIBIT A
EXHIBIT B
EXHIBIT C
ANNEX 1
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PURCHASE AGREEMENT
March 7, 2001
BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BANC ONE CAPITAL MARKETS, INC.
CHASE SECURITIES, INC.
CIBC WORLD MARKETS CORP.
SCOTIA CAPITAL "USA", INC.
As Initial Purchasers
c/o Banc of America Securities LLC
100 North Tryon Street
Charlotte, NC 28255
Ladies and Gentlemen:
Introductory. AdvancePCS, a Delaware corporation (the
"Company), proposes to issue and sell to the several Initial Purchasers named in
Schedule A (the "Initial Purchasers"), acting severally and not jointly, the
respective amounts set forth in such Schedule A of a $200,000,000 aggregate
principal amount of the Company's 8 1/2% Senior Notes due 2008 (the
"Securities"). Banc of America Securities LLC, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Banc One Capital Markets, Inc., Chase Securities, Inc., CIBC
World Markets Corp. and Scotia Capital "USA", Inc., have agreed to act as
representatives of the several Initial Purchasers in connection with the
offering and sale of the Securities.
The Securities will be issued pursuant to an indenture, to be
dated as of the Closing Date (as defined in Section 2) (the "Indenture"), among
the Company, the Guarantors (as defined below) and U.S. Trust Company of Texas,
N.A. as trustee (the "Trustee"). Securities issued in book-entry form will be
issued in the name of The Depository Trust Company (the "Depositary") or its
nominee pursuant to a DTC Agreement, to be dated as of the Closing Date (the
"DTC Agreement"), among the Company, the Trustee and the Depositary.
The holders of the Securities will be entitled to the benefits
of a registration rights agreement, to be dated as of the Closing Date (the
"Registration Rights Agreement"), among the Company, the Guarantors party
thereto and the Initial Purchasers, substantially in the form of Exhibit A
attached hereto, pursuant to which the Company and the Guarantors will agree to
file, within 90 days of the Closing Date, a registration statement with the
Commission registering the Exchange Securities (as defined below) under the
Securities Act.
The payment of principal of, premium and Liquidated Damages
(as defined in the Indenture), if any, and interest on the Securities and the
Exchange Securities will be fully and unconditionally guaranteed on a senior and
unsecured basis, jointly and severally by (i) the Company's Subsidiaries listed
in Schedule B herein, (the "Subsidiaries"), and (ii) any subsidiary of the
Company
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formed or acquired after the Closing Date that executes an additional guarantee
in accordance with the terms of the Indenture, and the respective successors and
assigns of the subsidiaries of the Company referred to in (i) and (ii) above
(collectively, the "Guarantors"), pursuant to their guarantees (the
"Guarantees"). The Securities and the Guarantees attached thereto are herein
collectively referred to as the "Securities"; and the Exchange Securities and
the Guarantees attached thereto are herein collectively referred to as the
"Exchange Securities".
The Company understands that the Initial Purchasers propose to
make an offering of the Securities on the terms and in the manner set forth
herein and in the Offering Memorandum (as defined below) and agrees that the
Initial Purchasers may resell, subject to the conditions set forth herein, all
or a portion of the Securities to purchasers (the "Subsequent Purchasers") at
any time after the date of this Agreement. The Securities are to be offered and
sold to or through the Initial Purchasers without being registered with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933 (as amended, the "Securities Act," which term, as used herein, includes
the rules and regulations of the Commission promulgated thereunder), in reliance
upon exemptions therefrom. The terms of the Securities and the Indenture will
require that investors that acquire Securities expressly agree that Securities
may only be resold or otherwise transferred, after the date hereof, if such
Securities are registered for sale under the Securities Act or if an exemption
from the registration requirements of the Securities Act is available (including
the exemptions afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation
S") thereunder).
The Company has prepared and delivered to each Initial
Purchaser copies of a Preliminary Offering Memorandum, dated March 1, 2001 (the
"Preliminary Offering Memorandum"), and has prepared and will deliver to each
Initial Purchaser, copies of the Offering Memorandum, describing the terms of
the Securities, each for use by such Initial Purchaser in connection with its
solicitation of offers to purchase the Securities. As used herein, the "Offering
Memorandum" shall mean, with respect to any date or time referred to in this
Agreement, the Company's Offering Memorandum, dated March 7, 2001, including
amendments or supplements thereto, any exhibits thereto and the Incorporated
Documents (as defined by Section 1(gg) below), in the most recent form that has
been prepared and delivered by the Company to the Initial Purchasers in
connection with their solicitation of offers to purchase Securities. Further,
any reference to the Preliminary Offering Memorandum or the Offering Memorandum
shall be deemed to refer to and include any Additional Issuer Information (as
defined in Section 3(g)) furnished by the Company prior to the completion of the
distribution of the Securities.
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" in
the Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (as amended, the "Exchange Act," which term,
as used herein, includes the rules and regulations of the Commission promulgated
thereunder) which is incorporated or deemed to be incorporated by reference in
the Offering Memorandum.
Capitalized terms used herein not otherwise defined shall have
the meanings set forth in the Offering Memorandum.
The Company hereby confirms its agreements with the Initial
Purchasers as follows:
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Section 1. Representations and Warranties. The Company and
each of the Guarantors hereby jointly and severally represents and warrants to
and covenants with each Initial Purchaser as follows:
(a) No Registration Required. Subject to compliance by the
Initial Purchasers with the representations and warranties set forth in
Section 2(e) hereof and with the procedures set forth in Section 7
hereof, it is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers and to each
Subsequent Purchaser in the manner contemplated by this Agreement and
the Offering Memorandum to register the Securities under the Securities
Act or, until such time as the Exchange Securities are issued pursuant
to an effective registration statement, to qualify the Indenture under
the Trust Indenture Act of 1939 (the "Trust Indenture Act," which term,
as used herein, includes the rules and regulations of the Commission
promulgated thereunder).
(b) No Integration of Offerings or General Solicitation.
Neither the Company nor any Guarantor has, directly or indirectly,
solicited any offer to buy or offered to sell, and will not, directly
or indirectly, solicit any offer to buy or offer to sell, in the United
States or to any United States citizen or resident, any security which
is or would be integrated with the sale of the Securities in a manner
that would require the Securities to be registered under the Securities
Act. None of the Company, the Guarantors, their respective affiliates
(as such term is defined in Rule 501(b) under the Securities Act (each,
an "Affiliate"), or any person acting on their behalf (other than the
Initial Purchasers, as to whom neither the Company nor any Guarantor
makes any representation or warranty) has engaged or will engage, in
connection with the offering of the Securities, in any form of general
solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act. With respect to those Securities sold in
reliance upon Regulation S, (i) none of the Company, the Guarantors,
their Affiliates or any person acting on their behalf (other than the
Initial Purchasers, as to whom neither the Company nor any Guarantor
makes any representation or warranty) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S and (ii)
each of the Company, the Guarantors and their Affiliates and any person
acting on their behalf (other than the Initial Purchasers, as to whom
neither the Company nor any Guarantor makes any representation or
warranty) has complied and will comply with the offering restrictions
set forth in Regulation S.
(c) Eligibility for Resale under Rule 144A. The Securities are
eligible for resale pursuant to Rule 144A and will not be, at the
Closing Date, of the same class as securities listed on a national
securities exchange registered under Section 6 of the Exchange Act or
quoted in a U.S. automated interdealer quotation system.
(d) The Offering Memorandum. The Offering Memorandum does not,
and at the Closing Date will not, include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that this
representation, warranty and agreement shall not apply to statements in
or omissions from the Offering Memorandum made in reliance upon and in
conformity with information furnished to the Company in writing by any
Initial Purchaser through Banc of America Securities LLC expressly for
use in the Offering Memorandum. Each of the Preliminary Offering
Memorandum and the Offering Memorandum, as of its date, contains all
the information specified in, and meeting the requirements of Rule
144A(d)(4). Neither the Company nor any Guarantor has distributed and
will not distribute, prior to the later of the Closing Date and the
completion of the Initial Purchasers' distribution of the Securities,
any offering material in connection with the offering and sale of the
Securities other than a Preliminary Offering Memorandum or the Offering
Memorandum.
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(e) The Purchase Agreement. This Agreement has been duly
authorized, executed and delivered by the Company and each Guarantor.
(f) The Registration Rights Agreement and DTC Agreement. At
the Closing Date, each of the Registration Rights Agreement and the DTC
Agreement will have been duly authorized, executed and delivered by,
and will be a valid and binding agreement of, the Company and each
Guarantor, to the extent it is a party thereto, enforceable in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles (regardless of whether such is considered in a proceeding at
law or in equity) and except as rights to indemnification under the
Registration Rights Agreement may be limited by applicable law.
Pursuant to the Registration Rights Agreement, the Company and each
Guarantor will agree to file with the Commission, under the
circumstances set forth therein, (i) a registration statement under the
Securities Act relating to another series of debt securities of the
Company with terms substantially identical to the Securities (the
"Exchange Securities") to be offered in exchange for the Securities
(the "Exchange Offer") and (ii) to the extent required by the
Registration Rights Agreement, a shelf registration statement pursuant
to Rule 415 of the Securities Act relating to the resale by certain
holders of the Securities, and in each case, to use its reasonable best
efforts to cause such registration statements to be declared effective.
(g) Authorization of the Securities and the Exchange
Securities. (i) The Securities to be purchased by the Initial
Purchasers from the Company are in the form contemplated by the
Indenture, have been duly authorized for issuance and sale pursuant to
this Agreement and the Indenture and, at the Closing Date, will have
been duly executed by the Company and, when authenticated in the manner
provided for in the Indenture and delivered against payment of the
purchase price therefor, will constitute valid and binding agreements
of the Company, enforceable in accordance with their terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by
general equitable principles (regardless of whether such is considered
in a proceeding at law or in equity) and will be entitled to the
benefits of the Indenture; (ii) the Exchange Securities have been duly
and validly authorized for issuance by the Company, and when issued and
authenticated in accordance with the terms of the Indenture, the
Registration Rights Agreement and the Exchange Offer, will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or similar laws relating to or
affecting enforcement of the rights and remedies of creditors or by
general principles of equity (regardless of whether such is considered
in a proceeding at law or in equity) and will be entitled to the
benefits of the Indenture; (iii) the Guarantees of the Securities are
in the form contemplated by the Indenture, have been duly authorized
for issuance and sale pursuant to this Agreement and the Indenture and,
at the Closing Date, will have been duly executed by each of the
Guarantors and, when the Guarantees have been authenticated in the
manner provided for in the Indenture and delivered against payment of
the purchase price of the Securities, will constitute valid and binding
agreements of the Guarantors, enforceable in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles (regardless of whether
such is considered in a proceeding at law or in equity) and will be
entitled to the benefits of the Indenture; and (iv) the Guarantees of
the Exchange Securities are in the form contemplated by the Indenture,
have been duly authorized for issuance and sale pursuant to this
Agreement and the Indenture and, at the
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Closing Date, will have been duly executed by each of the Guarantors
and, when the Guarantees have been authenticated in the manner provided
for in the Indenture and delivered against payment of the purchase
price of the Exchange Securities, will constitute valid and binding
agreements of the Guarantors, enforceable in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles (regardless of whether
such is considered in a proceeding at law or in equity) and will be
entitled to the benefits of the Indenture.
(h) Authorization of the Indenture. The Indenture has been
duly authorized by the Company and each Guarantor and, at the Closing
Date, will have been duly executed and delivered by the Company and
each Guarantor and, assuming the due execution and delivery by the
Trustee, will constitute a valid and binding agreement of the Company
and each Guarantor, enforceable against the Company and each Guarantor
in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles (regardless of whether such is considered in a proceeding at
law or in equity).
(i) Description of the Securities and the Indenture. The
Securities, the Guarantees of the Securities and the Indenture will
conform in all material respects to the respective statements relating
thereto contained in the Offering Memorandum. The Exchange Securities
and the Guarantees of such Exchange Securities will conform in all
material respects to the respective statements relating thereto
contained in the Offering Memorandum and the Registration Statement
registering the Exchange Securities at the time it becomes effective.
(j) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising
in the ordinary course of business (a "Material Adverse Effect"), (B)
there have been no transactions entered into by the Company or any of
its subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(k) Independent Accountants. The accountants who certified
financial statements and supporting schedules included or incorporated
by reference in the Offering Memorandum are independent public
accountants as required by the Securities Act and the Exchange Act.
(l) Financial Statements of the Company. The financial
statements of the Company and its consolidated subsidiaries included
and incorporated by reference in the Offering Memorandum, together with
the related schedules and notes, present fairly the financial position
of the Company and its consolidated subsidiaries at the dates indicated
and the statement of operations, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries for the periods
specified; the said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included or incorporated by reference in
the Offering Memorandum present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data
and the summary financial information included in the
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Offering Memorandum present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included or incorporated by reference in the
Offering Memorandum. The pro forma financial statements and the related
notes thereto included and incorporated by reference in the Offering
Memorandum present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.
(m) Financial Statements of PCS Holding Corporation. The
financial statements of PCS Holding Corporation, a Delaware corporation
("PCS"), and its consolidated subsidiaries included and incorporated by
reference in the Offering Memorandum, together with the related
schedules and notes, present fairly the financial position of PCS and
its consolidated subsidiaries at the dates indicated and the statement
of operations, stockholders' equity and cash flows of PCS and its
consolidated subsidiaries for the periods specified; the said financial
statements have been prepared in conformity with GAAP applied on a
consistent basis throughout the periods involved.
(n) Financial Statements of First Florida International
Holdings, Inc. The financial statements incorporated by reference in
the Offering Memorandum, together with the related schedules and notes,
present fairly the financial position of First Florida International
Holdings, Inc., a Florida corporation ("FFI") and its affiliated
companies and consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders' equity and cash flows of FFI and
its affiliated companies and consolidated subsidiaries for the periods
specified; said financial statements have been prepared in conformity
with GAAP applied on a consistent basis throughout the periods
involved.
(o) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and to enter into and
perform its obligations under this Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
(p) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation, limited liability company or limited partnership in good
standing under the laws of the jurisdiction of its organization, has
corporate, limited liability company or limited partnership power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and is duly qualified
as a foreign entity to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Offering Memorandum, all of the issued and
outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through Subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity except for such security interest, mortgages, pledges, liens,
encumbrances, claims or equities resulting pursuant to the terms of the
Credit Agreement
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dated as of October 2, 2000, among the Company, the guarantors parties
thereto, Bank of America, N.A., as administrative agent, the other
agents parties thereto, the lenders parties thereto and the arrangers
named therein, as amended by that certain First Amendment to Credit
Agreement dated as of November 3, 2000, among the Company, the
guarantors, Bank of America, N.A., as administrative agent, the other
agents parties thereto, the lenders parties thereto and the arrangers
named therein, and any related documents, including any amendments and
supplements thereto (the "Credit Facility"); none of the outstanding
shares of capital stock of any Subsidiary was issued in violation of
the preemptive or similar rights of any securityholder of such
subsidiary. The only subsidiaries of the Company are the subsidiaries
listed on Schedule C hereto.
(q) Capitalization and Other Capital Stock Matters. The
authorized, issued and outstanding capital stock of the Company is as
set forth in the Offering Memorandum in the column entitled "Actual"
under the caption "Capitalization" (except for subsequent issuances, if
any, pursuant to the U.S. Purchase Agreement and the International
Purchase Agreement to be entered into among the Company, Rite Aid
Corporation ("Rite Aid") and the underwriters named therein relating to
the offering of the Company's common stock by Rite Aid, pursuant to
reservations, agreements or employee benefit plans referred to in the
Offering Memorandum or pursuant to the exercise of convertible
securities, warrants or options referred to in the Offering
Memorandum). The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of
the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
(r) Stock Exchange Listing. The Company's Class A common stock
is registered pursuant to Section 12(g) of the Exchange Act and is
listed on the Nasdaq National Market, and the Company has taken no
action designed to, or likely to have the effect of, terminating the
registration of its Class A common stock under the Exchange Act or
delisting its Class A common stock from the Nasdaq National Market, nor
has the Company received any notification that the Commission or the
National Association of Securities Dealers, Inc. (the "NASD") is
contemplating terminating such registration or listing.
(s) Non-Contravention of Existing Instruments. None of the
Company or any of its subsidiaries is in violation of its charter or
by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments")
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated in this Agreement
and in the Offering Memorandum and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the
giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action
result in any violation of the provisions of the charter or by-laws of
the Company or any subsidiary, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over
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the Company or any subsidiary or any of their assets, properties or
operations, except for such violations of applicable law, statute,
rule, regulation, judgment, order or decree that would not result in a
Material Adverse Effect. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any subsidiary.
(t) No Further Authorizations or Approvals Required. No filing
with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by
each of the Company and the Guarantors of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities under
this Agreement or the consummation of the transactions contemplated by
this Agreement, except for such as have been already obtained or as may
be required under the Securities Act or the Exchange Act or state
securities laws.
(u) No Material Actions or Proceedings. Except as disclosed in
the Offering Memorandum, there is no action, suit, proceeding, inquiry
or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Offering
Memorandum (other than as disclosed therein), or which might reasonably
be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by any of the Company
or the Guarantors of its obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which the
Company or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not described in
the Offering Memorandum, including ordinary routine litigation
incidental to the business of the Company or any such subsidiary, could
not reasonably be expected to result in a Material Adverse Effect.
(v) Intellectual Property Rights. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(w) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses"), 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, issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
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Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except where the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not, singly or in the aggregate, have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(x) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and
its subsidiaries and, to the best knowledge of the Company, good title
to all other properties owned by them, in each case, free and clear of
all mortgages, pledges, liens, security interests, claims, restrictions
or encumbrances of any kind except such as (a) are described in the
Offering Memorandum or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries; and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Offering Memorandum, are
in full force and effect, and neither the Company nor any subsidiary
has any notice of any material claim of any sort that has been asserted
by anyone adverse to the rights of the Company or any subsidiary under
any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the
continued possession of the leased or subleased premises under any such
lease or sublease which, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(y) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(z) Company Not an "Investment Company". The Company has been
advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company is not,
and after receipt of payment for the Securities will not be, an
"investment company" within the meaning of the Investment Company Act
and will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(aa) No Price Stabilization or Manipulation. Neither the
Company nor any Guarantor has taken and will take, directly or
indirectly, any action designed to or that might be reasonably expected
to cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(bb) Compliance with Cuba Act. The Company has complied with,
and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(cc) Environmental Laws. Except as disclosed in the Offering
Memorandum and except as would not, singly or in the aggregate, result
in a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, or any judicial or
administrative interpretation thereof,
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including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or, to the best knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental
Law against the Company.
(dd) Medicare Violations. To the best knowledge of the Company
and its subsidiaries, 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, singly or in the aggregate, have a
Material Adverse Effect.
(ee) No Medicare Recoupment. To the best knowledge of the
Company, except as disclosed in the Offering Memorandum, 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.
(ff) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Offering Memorandum (the
"Incorporated Documents"), when they became effective or at the time
they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and, when read together with
the other information in the Offering Memorandum, at the time the
Offering Memorandum was issued and on the Closing Date, did not and
will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(gg) No Default in Senior Debt. No event of default exists
under any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument constituting Senior Debt (as defined in
the Indenture).
(hh) Regulation S Compliance. The Company, the Guarantors and
their respective affiliates and all authorized persons acting on their
behalf (other than the Initial Purchasers, as to whom the Company and
the Guarantors make no representation) have complied with and will
comply with the offering restrictions requirements of Regulation S in
connection with the offering of the Securities outside the United
States and, in connection therewith, the Offering Memorandum will
contain the disclosure required by Rule 902(h).
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Any certificate signed by an officer of the Company or of any
Guarantor and delivered to the Initial Purchasers or to counsel for the Initial
Purchasers pursuant to the terms of this Agreement shall be deemed to be a
representation and warranty by the Company or such Guarantor to each Initial
Purchaser as to the matters set forth therein.
Section 2. Purchase, Sale and Delivery of the Securities. (a)
The Securities. The Company agrees to issue and sell to the several Initial
Purchasers, severally and not jointly, all of the Securities on the basis of the
representations, warranties and agreements, and upon the terms herein set forth.
On the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Initial
Purchasers agree, severally and not jointly, to purchase from the Company the
aggregate principal amount of Securities set forth opposite their names on
Schedule A, at a purchase price of 100% of the principal amount thereof payable
on the Closing Date. On the Closing Date, the Company shall pay the Initial
Purchasers an initial purchase commission equal to 2.43% of the principal amount
of the Securities.
(b) The Closing Date. Delivery of certificates for the
Securities in definitive form to be purchased by the Initial Purchasers and
payment therefor shall be made at the offices of Shearman & Sterling, 599
Lexington Avenue, New York, NY 10022-6069 (or such other place as may be agreed
to by the Company and the Initial Purchasers) at 9:00 a.m. New York City time,
on March 13, 2001, or such other time and date as the Initial Purchasers shall
designate by notice to the Company (the time and date of such closing are called
the "Closing Date"). The Company hereby acknowledges that circumstances under
which the Initial Purchasers may provide notice to postpone the Closing Date as
originally scheduled include, but are in no way limited to, any determination by
the Company or the Initial Purchasers to recirculate to investors copies of an
amended or supplemented Offering Memorandum or a delay as contemplated by the
provisions of Section 16.
(c) Delivery of the Securities. The Company shall deliver, or
cause to be delivered, to Banc of America Securities LLC for the accounts of the
several Initial Purchasers certificates for the Securities at the Closing Date
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The certificates for the
Securities shall be in such denominations and registered in the name of the
Depositary or its nominee, pursuant to the DTC Agreement, and shall be made
available for inspection on the business day preceding the Closing Date at a
location in New York City, as the Initial Purchasers may designate. Time shall
be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Initial Purchasers.
(d) Delivery of Offering Memorandum to the Initial Purchasers.
Not later than 12:00 p.m. on the second business day following the date of this
Agreement, the Company shall delivery or cause to be delivered copies of the
Offering Memorandum in such quantities and at such places as the Initial
Purchasers shall reasonably request.
(e) Initial Purchasers as Qualified Institutional Buyers. Each
Initial Purchaser severally and not jointly represents and warrants to, and
agrees with, the Company that (i) it is a "qualified institutional buyer" within
the meaning of Rule 144A (a "Qualified Institutional Buyer"), and (ii) with
respect to those Securities sold in reliance on Regulation S, (A) has not
engaged and will not engage in any direct selling efforts within the meaning of
Regulation S and (B) has complied and will comply with the offering restrictions
requirement of Regulations S.
Section 3. Additional Covenants. The Company and each of the
Guarantors further jointly and severally covenants and agrees with each Initial
Purchaser as follows:
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(a) Initial Purchasers' Review of Proposed Amendments and
Supplements. Prior to amending or supplementing the Offering Memorandum
(including any amendment or supplement through incorporation by
reference of any report filed under the Exchange Act), the Company
shall furnish to the Initial Purchasers for review a copy of each such
proposed amendment or supplement, and the Company shall not use any
such proposed amendment or supplement to which the Initial Purchasers
reasonably object.
(b) Amendments and Supplements to the Offering Memorandum and
Other Securities Act Matters. If, prior to the completion of the
placement of the Securities by the Initial Purchasers with the
Subsequent Purchasers, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances when the Offering Memorandum is delivered to a purchaser,
not misleading, or if in the opinion of the Initial Purchasers or
counsel for the Initial Purchasers it is otherwise necessary to amend
or supplement the Offering Memorandum to comply with law, the Company
agrees to promptly prepare (subject to Section 3(a) hereof), and
furnish at its own expense to the Initial Purchasers, amendments or
supplements to the Offering Memorandum so that the statements in the
Offering Memorandum as so amended or supplemented will not, in the
light of the circumstances when the Offering Memorandum is delivered to
a purchaser, be misleading or so that the Offering Memorandum, as
amended or supplemented, will comply with law.
Following the consummation of the Exchange Offer or the
effectiveness of an applicable shelf registration statement and for so
long as the Securities are outstanding if, in the reasonable judgment
of the Initial Purchasers, the Initial Purchasers or any of their
affiliates (as such term is defined in the rules and regulations under
the Securities Act) are required to deliver a prospectus in connection
with sales of, or market-making activities with respect to, such
securities, the Company will (A) periodically amend the applicable
registration statement so that the information contained therein
complies with the requirements of Section 10(a) of the Securities Act,
(B) amend the applicable registration statement or supplement the
related prospectus or the documents incorporated therein when necessary
to reflect any material changes in the information provided therein so
that the registration statement and the prospectus will not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances existing as of the date the prospectus is so delivered,
not misleading and (C) provide the Initial Purchasers with copies of
each amendment or supplement filed and such other documents as the
Initial Purchasers may reasonably request.
The Company hereby expressly acknowledges that the
indemnification and contribution provisions of Sections 8 and 9 hereof
are specifically applicable and relate to each offering memorandum,
registration statement, prospectus, amendment or supplement referred to
in this Section 3(b).
(c) Copies of the Offering Memorandum. The Company agrees to
furnish the Initial Purchasers, without charge, as many copies of the
Offering Memorandum and any amendments and supplements thereto as they
shall have reasonably requested.
(d) Blue Sky Compliance. The Company shall cooperate with the
Initial Purchasers and counsel for the Initial Purchasers to qualify or
register the Securities for sale under (or obtain exemptions from the
application of) the Blue Sky or state securities laws of those
jurisdictions designated by the Initial Purchasers, shall comply with
such laws and shall continue such qualifications, registrations and
exemptions in effect so long as required for the distribution of the
Securities. The Company shall not be required to qualify as a foreign
corporation or to take any
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action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise
the Initial Purchasers promptly of the suspension of the qualification
or registration of (or any such exemption relating to) the Securities
for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or
exemption, the Company shall use its reasonable best efforts to obtain
the withdrawal thereof at the earliest possible moment.
(e) Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Securities sold by it in the manner described
under the caption "Use of Proceeds" in the Offering Memorandum.
(f) The Depositary. The Company will cooperate with the
Initial Purchasers and use its reasonable best efforts to permit the
Securities to be eligible for clearance and settlement through the
facilities of the Depositary.
(g) Additional Issuer Information. Prior to the completion of
the placement of the Securities by the Initial Purchasers with the
Subsequent Purchasers, the Company shall file, on a timely basis, with
the Commission and the Nasdaq National Market all reports and documents
required to be filed under Section 13 or 15(d) of the Exchange Act.
Additionally, at any time when the Company is not subject to Section 13
or 15(d) of the Exchange Act, for the benefit of holders and beneficial
owners from time to time of Securities, the Company shall furnish, at
its expense, upon request, to holders and beneficial owners of
Securities and prospective purchasers of Securities (i) all quarterly
and annual financial information that would be required to be contained
in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including a "Management Discussion
and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report on the annual
financial statements by the Company's certified independent accounts;
and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Company were required to file such
reports. In addition, whether or not required by the Commission, the
Company will file a copy of all of the information and reports referred
to in clauses (i) and (ii) above with the Commission for public
availability within the time periods specified in the Commission's
rules and regulations (unless the Commission will not accept such a
filing) and make such information available to securities analysts and
prospective purchasers of Securities upon request if not obtainable
from the Commission.
(h) Future Agreement Not to Offer or Sell Additional
Securities. During the period of 180 days following the date of the
Offering Memorandum, the Company will not, without the prior written
consent of Banc of America Securities LLC (which consent may be
withheld at the sole discretion of Banc of America Securities LLC),
directly or indirectly, issue, sell, offer to sell, grant any option
for the sale of, or otherwise dispose of, any securities similar to the
Securities, or any securities convertible or exchangeable for the
Securities or any such similar securities or file any registration
statement with respect to any of the foregoing (other than as
contemplated by this Agreement and to register the Exchange
Securities).
(i) Future Reports to the Initial Purchasers. For so long as
any Securities or Exchange Securities remain outstanding, (i) the
Company and the Guarantors will furnish holders and beneficial owners
of Securities and to securities analysts and prospective purchasers of
Securities, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless
the Company furnishes information to the Commission pursuant to
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Section 13 or 15(d) of the Exchange Act; and (ii) as soon as available,
copies of any report or communication of the Company mailed generally
to holders of its capital stock or debt securities (including the
holders of the Securities).
(j) No Integration. The Company agrees that it will not and
will cause its Affiliates not to make any offer or sale of securities
of the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the Securities Act, such
offer or sale would render invalid (for the purpose of (i) the sale of
the Securities by the Company to the Initial Purchasers, (ii) the
resale of the Securities by the Initial Purchasers to Subsequent
Purchasers or (iii) the resale of the Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements
of the Securities Act provided by Section 4(2) thereof or by Rule 144A
or by Regulation S thereunder or otherwise.
(k) Legended Securities. Each certificate for a Note will bear
the legend contained in "Notice to Investors" in the Offering
Memorandum for the time period and upon the other terms stated in the
Offering Memorandum.
(l) PORTAL. The Company will use its reasonable best efforts
to cause such Securities when issued to be eligible for the National
Association of Securities Dealers, Inc. PORTAL market (the "PORTAL
market").
Banc of America Securities LLC, on behalf of the several
Initial Purchasers, may, in its sole discretion, waive in writing the
performance by the Company of any one or more of the foregoing covenants or
extend the time for their performance.
Section 4. Payment of Expenses. The Company and each of the
Guarantors jointly and severally agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the
Securities (including all printing and engraving costs), (ii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Securities to the Initial Purchasers, (iii) all fees and expenses of the
Company's and the Guarantors' counsel, independent public or certified public
accountants and other advisors, (iv) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution of
each Preliminary Offering Memorandum and the Offering Memorandum (including
financial statements and exhibits), and all amendments and supplements thereto,
this Agreement, the Registration Rights Agreement, the Indenture, the DTC
Agreement, and the Securities and the Guarantees, (v) all filing fees,
reasonable attorneys' fees and expenses incurred by the Company, the Guarantors
or the Initial Purchasers in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Securities for offer and sale under the Blue Sky laws and, if requested
by the Initial Purchasers, preparing and printing a "Blue Sky Survey" or
memorandum, and any supplements thereto, advising the Initial Purchasers of such
qualifications, registrations and exemptions, not to exceed $20,000, (vi) the
fees and expenses of the Trustee, including the fees and disbursements of
counsel for the Trustee in connection with the Indenture, the Securities and the
Exchange Securities, (vii) any fees payable in connection with the rating of the
Securities or the Exchange Securities with the ratings agencies and the initial
listing of the Securities with the PORTAL market, (viii) all fees and expenses
(including reasonable fees and expenses of counsel) of the Company and the
Guarantors in connection with approval of the Securities by DTC for "book-entry"
transfer and (ix) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Securities, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
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expenses of any representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show. Except as provided in this Section 4, Section 6, Section 8 and Section 9
hereof, the Initial Purchasers shall pay their own expenses, including the fees
and disbursements of their counsel.
Section 5. Conditions of the Obligations of the Initial
Purchasers. The obligations of the several Initial Purchasers to purchase and
pay for the Securities as provided herein on the Closing Date shall be subject
to the accuracy of the representations and warranties on the part of the Company
and the Guarantors set forth in Section 1 hereof as of the date hereof and as of
the Closing Date as though then made and to the timely performance by the
Company or any Guarantor of its covenants and other obligations hereunder, and
to each of the following additional conditions:
(a) Comfort Letter of Arthur Andersen LLP. At the time of the
execution of this Agreement, the Initial Purchasers shall have received
from Arthur Andersen a letter dated such date, in form and substance
satisfactory to the Initial Purchasers, together with signed or
reproduced copies of such letter for each of the Initial Purchasers
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements of the Company and certain financial information
included or incorporated by reference in the Offering Memorandum.
(b) Bring-Down Comfort Letter of Arthur Andersen LLP. On the
Closing Date, the Initial Purchasers shall have received from Arthur
Andersen LLP a letter, dated as of the Closing Date, to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (a) of this Section, except that the specified date referred
to shall be a date not more than three business days prior to the
Closing Date.
(c) Comfort Letter of Ernst & Young LLP. At the time of the
execution of this Agreement, the Initial Purchasers shall have received
from Ernst & Young LLP a letter dated such date, in form and substance
satisfactory to the Initial Purchasers together with signed or
reproduced copies of such letter for the Initial Purchasers, containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements of PCS and certain financial information included
or incorporated by reference in the Offering Memorandum.
(d) Bring-down Comfort Letter of Ernst & Young LLP. On the
Closing Date, the Initial Purchasers shall have received from Ernst &
Young LLP a letter, dated as of the Closing Date, to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (c) of this Section, except that the specified date referred
to shall be a date not more than three business days prior to the
Closing Date.
(e) No Material Adverse Change or Ratings Agency Change. For
the period from and after the date of this Agreement and prior to the
Closing Date:
(i) there shall not have been, since the date hereof
or since the respective date as of which information is given
in the Offering Memorandum, any material adverse change in the
condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business;
(ii) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible
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change that does not indicate the direction of the possible
change, in the rating accorded any securities of the Company
or any of its Subsidiaries by any "nationally recognized
statistical rating organization" as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act.
(f) Opinion of Counsel for the Company and the Guarantors. On
the Closing Date, the Initial Purchasers shall have received a
favorable opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel
for the Company and the Guarantors, dated as of the Closing Date, the
form of which is attached as Exhibit B.
(g) Opinion of Streich Lang. On the Closing Date, the Initial
Purchasers shall have received the favorable opinion of Streich Lang,
counsel for PCS Mail Services, Inc. and PCS Mail Services of
Scottsdale, Inc. in form and substance satisfactory to counsel for the
Initial Purchasers.
(h) Opinion of General Counsel of the Company. On the Closing
Date, the Initial Purchasers shall have received the favorable opinion
of the General Counsel of the Company in form and substance
satisfactory to counsel for the Initial Purchasers.
(i) Opinion of Laurie I. Johansen. On the Closing Date, the
Initial Purchasers shall have received the favorable opinion of Laurie
I. Johansen, Senior Vice President, Corporate Affairs and Secretary of
the Company in form and substance satisfactory to counsel for the
Initial Purchasers.
(j) Opinion of Special Regulatory Counsel for Company. On the
Closing Date, the Initial Purchasers shall have received the favorable
opinion, dated as of the Closing Date, of Reed Smith Shaw & McClay,
special regulatory counsel for the Company, in form and substance
satisfactory to counsel for the Initial Purchasers, together with
signed or reproduced copies of such letter for the Initial Purchasers
to the effect set forth in Exhibit C hereto and to such further effect
as counsel to the Initial Purchasers may reasonably request.
(k) Opinion of Counsel for the Initial Purchaser. On the
Closing Date, the Initial Purchasers shall have received the favorable
opinion of Shearman & Sterling, counsel for the Initial Purchasers,
dated as of such Closing Date, with respect to such matters as may be
reasonably requested by the Initial Purchasers.
(l) Officers' Certificate. On the Closing Date, the Initial
Purchasers shall have received a written certificate executed by the
Chairman of the Board, Chief Executive Officer, or President or a Vice
President of the Company and each of the Guarantors and the Chief
Financial Officer or Chief Accounting Officer of the Company and each
of the Guarantors, dated as of the Closing Date, to the effect set
forth in subsection (e)(ii) of this Section 5, and further to the
effect that:
(i) for the period from and after the date of this
Agreement and prior to the Closing Date there has not occurred
any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course
of business;
(ii) the representations, warranties and covenants of
the Company and such Guarantors set forth in Section 1 of this
Agreement are true and correct with the same force and effect
as though expressly made on and as of the Closing Date; and
16
21
(iii) the Company and the Guarantors have complied
with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the
Closing Date.
(m) PORTAL Listing. At the Closing Date the Securities shall
have been designated for trading on the PORTAL market.
(n) Registration Rights Agreement. The Company and each of the
Guarantors shall have entered into the Registration Rights Agreement
and the Initial Purchasers shall have received executed counterparts
thereof.
(o) Consent from Senior Lenders. The Company and each of the
Guarantors shall have obtained the consent to enter into this Agreement
and to perform the Company's and the Guarantors' obligations
contemplated herein from all parties required to give such consent
under the Credit Facility.
(p) Payment of Commission to Initial Purchasers. The Company
shall have paid an initial purchase commission equal to 2.43% of the
principal amount of the Securities to the Initial Purchasers.
(q) Additional Documents. On or before the Closing Date, the
Initial Purchasers and counsel for the Initial Purchasers shall have
received such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Securities as contemplated herein, or in order
to evidence the accuracy of any of the representations and warranties,
or the satisfaction of any of the conditions or agreements, herein
contained.
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Initial Purchasers by notice to the Company at any time on or prior to the
Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 4, Section 6, Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
Section 6. Reimbursement of Initial Purchasers' Expenses. If
this Agreement is terminated by the Initial Purchasers pursuant to Section 5, or
if the sale to the Initial Purchasers of the Securities on the Closing Date is
not consummated because of any refusal, inability or failure on the part of the
Company or any Guarantor to perform any agreement herein or to comply with any
provision hereof, the Company and the Guarantors jointly and severally agree to
reimburse the Initial Purchasers (or such Initial Purchasers as have terminated
this Agreement with respect to themselves), severally, upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the Initial
Purchasers in connection with the proposed purchase and the offering and sale of
the Securities, including but not limited to fees and disbursements of counsel,
travel expenses, postage, facsimile and telephone charges.
Section 7. Offer, Sale and Resale Procedures. Each of the
Initial Purchasers, on the one hand, and the Company and each of the Guarantors,
on the other hand, hereby establish and agree to observe the following
procedures in connection with the offer and sale of the Securities:
(i) Offers and Sales only to Qualified Institutional Buyers.
Offers and sales of the Securities will be made only by the Initial
Purchasers or Affiliates thereof qualified to do so in the
jurisdictions in which such offers or sales are made. Each such offer
or sale shall only be made (A) to persons whom the offeror or seller
reasonably believes to be qualified institutional buyers
17
22
(as defined in Rule 144A under the Securities Act) or (B) non-U.S.
persons outside the United States to whom the offeror or seller
reasonably believes offers and sales of the Securities may be made in
reliance upon Regulation S under the Securities Act, upon the terms and
conditions set forth in Annex I hereto, which Annex I is hereby
expressly made a part hereof.
(ii) No General Solicitation. The Securities will be offered
by approaching prospective Subsequent Purchasers on an individual
basis. No general solicitation or general advertising (within the
meaning of Rule 502(c) under the Securities Act) will be used in the
United States in connection with the offering of the Securities.
(iii) Restrictions on Transfer. Upon original issuance by the
Company, and until such time as the same is no longer required under
the applicable requirements of the Securities Act, the Securities (and
all securities issued in exchange therefor or in substitution thereof,
other than the Exchange Securities) shall bear the following legend:
"THIS NOTE AND THE GUARANTEES ENDORSED HEREON HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE OR THE GUARANTEES ENDORSED
HEREON NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS NOTE AND THE
GUARANTEES ENDORSED HEREON BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE AND THE GUARANTEES
ENDORSED HEREON (OR ANY PREDECESSOR OF THIS NOTE AND THE GUARANTEES ENDORSED
HEREON (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY OR
ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES AND THE GUARANTEES
ENDORSED THEREON ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (i) PURSUANT TO CLAUSE (D) PRIOR TO THE END OF THE 40-DAY
DISTRIBUTION COMPLIANCE PERIOD WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR PURSUANT TO CLAUSE (E) PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE."
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23
(iv) Each Initial Purchaser will, as required by the
Securities Act, deliver to each purchaser of the Securities from such
Initial Purchaser, in connection with its original distribution of the
Securities, a copy of the Offering Memorandum, as amended and
supplemented at the date of such delivery.
Following the sale of the Securities by the Initial Purchasers
to Subsequent Purchasers pursuant to the terms hereof, except as otherwise
expressly provided herein, the Initial Purchasers shall not be liable or
responsible to the Company or any Guarantor for any losses, damages or
liabilities suffered or incurred by the Company or such Guarantor, including any
losses, damages or liabilities under the Securities Act, arising from or
relating to any resale or transfer of any Security.
Section 8. Indemnification. (a) Indemnification of the Initial
Purchasers. The Company agrees to indemnify and hold harmless each Initial
Purchaser and each person, if any, who controls any Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 8(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Banc of
America Securities LLC), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission to the
extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Banc of America Securities LLC expressly for use in
the Offering Memorandum (or any amendment thereto). The foregoing indemnity with
respect to any untrue statement contained in or omission from a Preliminary
Offering Memorandum shall not inure to the benefit of any Initial Purchaser from
whom the person asserting any such loss, liability, claim, damage or expense
purchased any of the Securities which are the subject thereof if the Company
shall sustain the burden of proving that such person was not sent or given a
copy of the Offering Memorandum (or the Offering Memorandum as amended or
supplemented) at or prior to the written confirmation of the sale of such
Securities to such person and the untrue statement contained in or omission from
such Preliminary Offering Memorandum was corrected in the Offering Memorandum
(or Offering Memorandum as amended or supplemented).
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24
(b) Indemnification of Company, Directors and Officers. Each
Initial Purchaser severally agrees to indemnify and hold harmless the Company
and each person, if any, who controls the Company within Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Offering Memorandum in reliance upon and in conformity with written information
furnished to the Company by such Initial Purchaser through Banc of Securities
LLC expressly for use in the Offering Memorandum.
(c) Actions Against Parties; Notification. Each indemnified
party shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 8(a) above, counsel to the indemnified parties shall be selected by
Banc of Securities LLC, and, in the case of parties indemnified pursuant to
Section 8(b) above, counsel to the indemnified parties shall be selected by the
Company. An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 8 or Section 9 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 8(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement other than reimbursement for fees and expenses that
the indemnifying party is contesting in good faith.
Section 9. Contribution. If the indemnification provided for
in Section 8 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to
20
25
in clause (i) above but also the relative fault of the Company on the one hand
and of the Initial Purchasers on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand
and the Initial Purchasers on the other hand in connection with the offering of
the Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial public offering price of the
Securities.
The relative fault of the Company on the one hand and the
Initial Purchasers on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Initial Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
9. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 9 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 9, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities resold by it in the initial
placement of such Securities were offered to investors exceeds the amount of any
damages which such Initial Purchaser has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 9, each person, if any, who
controls an Initial Purchaser within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such Initial Purchaser, and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company. The
Initial Purchasers' respective obligations to contribute pursuant to this
Section 9 are several in proportion to the amount of Securities set forth
opposite their respective names in Schedule A hereto and not joint.
Section 10. Termination of this Agreement. Prior to the
Closing Date, this Agreement may be terminated by the Initial Purchasers by
written notice given to the Company if at any time (i) trading or quotation in
any of the Company's securities shall have been suspended or limited by the
Commission or by the Nasdaq Stock Market, or trading in securities generally on
either the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or the
21
26
NASD; (ii) a general banking moratorium shall have been declared by any of
federal, New York, or Texas authorities; (iii) there shall have occurred any
outbreak or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective change in
United States' or international political, financial or economic conditions, as
in the judgment of the Initial Purchasers is material and adverse and makes it
impracticable to market the Securities or to enforce contracts for the sale of
securities; or (iv) there shall have occurred any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business. Any
termination pursuant to this Section 10 shall be without liability on the part
of (a) the Company or any Guarantor to any Initial Purchaser, except that the
Company and the Guarantors shall be obligated to reimburse the expenses of the
Initial Purchasers pursuant to Sections 4 and 6 hereof, (b) any Initial
Purchaser to the Company or any Guarantor, or (c) of any party hereto to any
other party except that the provisions of Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
Section 11. Representations and Indemnities to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the Guarantors and their respective
officers and of the several Initial Purchasers set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser, the Company or any
Guarantor or any of its or their partners, officers or directors or any
controlling person, as the case may be, and will survive delivery of and payment
for the Securities sold hereunder and any termination of this Agreement.
Section 12. Notices. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:
If to the Initial Purchasers:
Banc of America Securities LLC
100 North Tryon Street
Charlotte, NC 28255
Facsimile: (704) 388-9941
Attention: Gary R. Wolfe
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Facsimile: (212) 848-7179
Attention: Rohan S. Weerasinghe, Esq.
James B. Bucher, Esq.
If to the Company or the Guarantors:
AdvancePCS
5215 North O'Conner Boulevard, Suite 1600
Irving, Texas 75039
Facsimile: (469) 420-6196
Attention: Legal Department
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27
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, LLP
1700 Pacific Avenue, Suite #4100
Dallas, Texas 75201
Facsimile: (214) 969-4343
Attention: Alan Utay, Esq.
Any party hereto may change the address for receipt of
communications by giving written notice to the others.
Section 13. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto, including any substitute
Initial Purchasers pursuant to Section 16 hereof, and to the benefit of the
employees, officers and directors and controlling persons referred to in Section
8 and Section 9, and in each case their respective successors, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Securities as such from any of the Initial
Purchasers by reason of such purchase.
Section 14. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
Section 15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
Section 16. Default of One or More of the Several Initial
Purchasers. If any one or more of the several Initial Purchasers shall fail or
refuse to purchase Securities that it or they have agreed to purchase hereunder
on the Closing Date, and the aggregate number of Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase does not exceed 10% of the aggregate number of the Securities to be
purchased on such date, the other Initial Purchasers shall be obligated,
severally, in the proportions that the number of Securities set forth opposite
their respective names on Schedule A bears to the aggregate number of Securities
set forth opposite the names of all such non-defaulting Initial Purchasers, or
in such other proportions as may be specified by the Initial Purchasers with the
consent of the non-defaulting Initial Purchasers, to purchase the Securities
which such defaulting Initial Purchaser or Initial Purchasers agreed but failed
or refused to purchase on such date. If any one or more of the Initial
Purchasers shall fail or refuse to purchase Securities and the aggregate number
of Securities with respect to which such default occurs exceeds 10% of the
aggregate number of Securities to be purchased on the Closing Date, and
arrangements satisfactory to the Initial Purchasers and the Company for the
purchase of such Securities are not made within 24 hours after such default,
this Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 4, Section 8 and Section 9 shall at all
times be effective and shall survive such termination, but only as to such
non-defaulting Initial Purchasers. In any such case either the Initial
Purchasers or the Company shall have the right to postpone the Closing Date, as
the case may be, but in no event for longer than seven days in order that any
changes to the Offering Memorandum or any other documents or arrangements deemed
necessary or desirable may be effected.
As used in this Agreement, the term "Initial Purchaser" shall
be deemed to include any person substituted for a defaulting Initial Purchaser
under this Section 16. Any action taken under this
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28
Section 16 shall not relieve any defaulting Initial Purchaser from liability in
respect of any default of such Initial Purchaser under this Agreement.
Section 17. General Provisions. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be
executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and except as otherwise expressly provided herein no
condition herein (express or implied) may be waived unless waived in writing by
each party whom the condition is meant to benefit. The Table of Contents and the
section headings herein are for the convenience of the parties only and shall
not affect the construction or interpretation of this Agreement.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
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Very truly yours,
ADVANCEPCS
By:
------------------------------------
Name:
Title:
ADVANCEPCS, L.P.
By ADVANCEPCS, its General Partner
By:
------------------------------------
Name:
Title:
ADVANCEPCS RESEARCH, L.L.C.
By:
------------------------------------
Name:
Title:
ADVANCERX.COM, L.P.
By ADVANCEPCS, its General Partner,
By:
------------------------------------
Name:
Title:
ADVP CONSOLIDATION, L.L.C.
By:
------------------------------------
Name:
Title:
30
ADVP MANAGEMENT, L.P,
By ADVANCEPCS, its General Partner,
By:
------------------------------------
Name:
Title:
AMBULATORY CARE REVIEW SERVICES, INC.
By:
------------------------------------
Name:
Title:
BAUMEL-EISNER NEUROMEDICAL INSTITUTE,
INC.
By:
------------------------------------
Name:
Title:
CLINICAL PHARMACEUTICALS, INC.
By:
------------------------------------
Name:
Title:
FFI RX MANAGED CARE, INC.
By:
------------------------------------
Name:
Title:
31
FIRST FLORIDA INTERNATIONAL HOLDINGS,
INC.
By:
------------------------------------
Name:
Title:
FIRST FLORIDA MANAGED CARE, INC.
By:
------------------------------------
Name:
Title:
FOUNDATION HEALTH PHARMACEUTICAL
SERVICES INC.
By:
------------------------------------
Name:
Title:
HMN HEALTH SERVICES, INC.
By:
------------------------------------
Name:
Title:
INNOVATIVE MEDICAL RESEARCH, INC.
By:
------------------------------------
Name:
Title:
INNOVATIVE PHARMACEUTICAL STRATEGIES,
INC.
By:
------------------------------------
Name:
Title:
32
MATURE RX PLUS OF NEVADA, INC.
By:
------------------------------------
Name:
Title:
PCS HEALTH SYSTEMS, INC.
By:
------------------------------------
Name:
Title:
PCS HOLDING CORPORATION
By:
------------------------------------
Name:
Title:
PCS MAIL SERVICES, INC.
By:
------------------------------------
Name:
Title:
PCS MAIL SERVICES OF BIRMINGHAM, INC.
By:
------------------------------------
Name:
Title:
33
PCS MAIL SERVICES OF FT. WORTH, INC.
By:
------------------------------------
Name:
Title:
PCS MAIL SERVICES OF SCOTTSDALE, INC.
By:
------------------------------------
Name:
Title:
PCS SERVICES, INC.
By:
------------------------------------
Name:
Title:
PHOENIX COMMUNICATIONS INTERNATIONAL,
INC.
By:
------------------------------------
Name:
Title:
34
The foregoing Purchase Agreement is hereby confirmed and accepted by the Initial
Purchasers as of the date first above written.
BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BANC ONE CAPITAL MARKETS, INC.
CHASE SECURITIES, INC.
CIBC WORLD MARKETS CORP.
SCOTIA CAPITAL "USA", INC.
By: Banc of America Securities LLC
By:
--------------------------------------------
Name:
Title:
35
SCHEDULE A
Initial Purchasers Aggregate Principal
Amount of Securities
to be Purchased
---------------------
Banc of America Securities LLC............................... $ 80,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated........... $ 80,000,000
Banc One Capital Markets, Inc. .............................. $ 9,000,000
Chase Securities, Inc. ...................................... $ 13,000,000
CIBC World Markets Corp. .................................... $ 9,000,000
Scotia Capital "USA", Inc. .................................. $ 9,000,000
------------
Total $200,000,000
36
SCHEDULE B
GUARANTORS
AdvancePCS, L.P.
AdvancePCS Research, L.L.C.
AdvanceRx.com, L.P.
ADVP Consolidation, L.L.C.
ADVP Management, L.P.
Ambulatory Care Review Services, Inc.
Baumel-Eisner Neuromedical Institute, Inc.
Clinical Pharmaceuticals, Inc.
FFI Rx Managed Care, Inc.
First Florida International Holdings, Inc.
First Florida Managed Care, Inc.
Foundation Health Pharmaceutical Services, Inc.
HMN Health Services, Inc.
Innovative Medical Research, Inc.
Innovative Pharmaceutical Strategies, Inc.
Mature Rx Plus of Nevada, Inc.
PCS Health Systems, Inc.
PCS Holding Corporation
PCS Mail Services, Inc.
PCS Mail Services of Birmingham, Inc.
PCS Mail Services of Ft. Worth, Inc.
PCS Mail Services of Scottsdale, Inc.
PCS Services, Inc.
Phoenix Communications International, Inc.
37
EXHIBIT A
[See Attached]
38
EXHIBIT B
Opinion of counsel for the Company and the Guarantors to be
delivered pursuant to Section 5(c) of the Purchase Agreement.
[See attached]
39
EXHIBIT C
[See attached]
40
ANNEX I
Resale Pursuant to Regulation S or Rule 144A. Each Initial Purchaser understands
that:
(a) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Securities in the United States or to, or
for the benefit or account of, a U.S. Person (other than a distributor), in each
case, as defined in Rule 902 under the Securities Act (i) as part of its
distribution at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering of the Securities pursuant hereto and the Closing
Date, other than in accordance with Regulation S of the Securities Act or
another exemption from the registration requirements of the Securities Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it will not
cause any advertisement with respect to the Securities (including any
"tombstone" advertisement) to be published in any newspaper or periodical or
posted in any public place and will not issue any circular relating to the
Securities, except such advertisements as permitted by and include the
statements required by Regulation S.
(b) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Securities by it to any distributor, dealer or person
receiving a selling concession, fee or other remuneration during the 40-day
restricted period referred to in Rule 903(b)(3) under the Securities Act, it
will send to such distributor, dealer or person receiving a selling concession,
fee or other remuneration a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of your distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are exempt from
the registration requirements of the Securities Act), and in connection
with any subsequent sale by you of the Securities covered hereby in
reliance on Regulation S during the period referred to above to any
distributor, dealer or person receiving a selling concession, fee or
other remuneration, you must deliver a notice to substantially the
foregoing effect. Terms used above have the meanings assigned to them
in Regulation S."