SXC HEALTH SOLUTIONS
CORP.
J.P. Morgan
Securities Inc.
As Representative of the
several Underwriters listed
in Schedule 1 hereto
J.P. Morgan Securities Canada Inc.
Paradigm Capital Inc.
Versant Partners Inc.
c/o J.P. Morgan Securities Inc.
383 Madison Avenue
New York, New York 10179
SXC Health
Solutions Corp., a corporation continued under the Business
Corporations Act (Yukon) (the “ Company ”),
proposes to issue and sell to the several Underwriters listed in
Schedule 1 hereto (the “ Underwriters ”), for
whom J.P. Morgan Securities Inc. is acting as representative (the
“ Representative ”), an aggregate of 4,500,000
common shares, no par value per share, of the Company (the “
Underwritten Shares ”) and, at the option of the
Underwriters, up to an additional 675,000 common shares of the
Company (the “ Option Shares ”). The Company
understands that a portion of the Shares (as defined below) may be
offered and sold in the Provinces (as defined below) by (i) J.P.
Morgan Securities Canada Inc. (“ JPM Canada ”),
the Canadian broker-dealer affiliate of the Representative,
(ii) Paradigm Capital Inc. (“ Paradigm Canada
” and, together with JPM Canada, the “
Sub-Underwriters ”), the Canadian broker-dealer
affiliate of Paradigm Capital U.S. Inc. and (iii) Versant Partners
Inc. (the “ Canadian Underwriter ”), pursuant to
the Canadian Prospectus (as defined below). The Sub-Underwriters,
subject to the terms and conditions set forth herein, agree to use
reasonable best efforts to sell the Shares in the Provinces. Any
Shares sold by a Sub-Underwriter will be purchased by the
Sub-Underwriter from its respective U.S. broker-dealer affiliate at
the Closing Date (as defined below) at a price equal to the price
set forth in Section 2(a) below or such purchase price less an
amount to be mutually agreed upon by the Sub-Underwriter and its
respective U.S. broker-dealer affiliate, which amount shall not be
greater than the underwriting commission set forth on the cover of
the Prospectus (as defined below).
The Underwritten
Shares and the Option Shares are herein referred to as the “
Shares ”. The common shares of the Company to be
outstanding after giving effect to the sale of the Shares are
referred to herein as the “ Stock ”.
The Company and
the several Underwriters and the Sub-Underwriters hereby confirm
their agreement concerning the purchase and sale of the Shares, as
follows:
1.
Registration Statement . The Company has prepared and filed
with the Securities and Exchange Commission (the “
Commission ”) under the Securities Act of 1933, as
amended, and the rules
and regulations
of the Commission thereunder (collectively, the “
Securities Act ”), a registration statement on Form
S-3 (File No. 333-161237), including a prospectus (the “
Basic Prospectus ”), relating to the securities to be
issued from time to time by the Company. The Company has also
filed, or proposes to file, with the Commission pursuant to
Rule 424 under the Securities Act a prospectus supplement
specifically relating to the Shares (the “ Prospectus
Supplement ”). The registration statement, as amended at
the time it became effective, including the information, if any,
deemed pursuant to Rule 430A, 430B or 430C under the
Securities Act to be part of the registration statement at the time
of its effectiveness (“ Rule 430 Information
”), is referred to herein as the “ Registration
Statement ”; and as used herein, the term “
Prospectus ” means the Basic Prospectus as
supplemented by the prospectus supplement specifically relating to
the Shares in the form first used (or made available upon request
of purchasers pursuant to Rule 173 under the Securities Act)
in connection with confirmation of sales of the Shares, and the
term “ Preliminary Prospectus ” means the
preliminary prospectus supplement specifically relating to the
Shares together with the Basic Prospectus. If the Company has filed
an abbreviated registration statement pursuant to Rule 462(b) under
the Securities Act (the “ Rule 462 Registration
Statement ”), then any reference herein to the term
“ Registration Statement ” shall be deemed to
include such Rule 462 Registration Statement. Any reference in
this Agreement to the Registration Statement, the Basic Prospectus,
any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities
Act, as of the effective date of the Registration Statement or the
date of such Basic Prospectus, Preliminary Prospectus or the
Prospectus, as the case may be, and any reference to “
amend ”, “ amendment ” or “
supplement ” with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any documents filed by the Company
after such date under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the “ Exchange Act ”) that are
deemed to be incorporated by reference therein. Capitalized terms
used but not defined herein shall have the meanings given to such
terms in the Registration Statement and the Prospectus.
The Company has
(i) prepared and filed with the Ontario Securities Commission
(the “ OSC ”), as principal regulator, and the
other securities commissions or similar regulatory authorities in
each of the Provinces of British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia (together
with the OSC, the “ Canadian Commissions ”) in
accordance with National Instrument 44-101 — Short
Form Prospectus Distributions and National Instrument
44-102 — Shelf Distributions (together, the “
Shelf Procedures ”), a preliminary unallocated short
form base shelf prospectus dated August 10, 2009, relating to
the offering of debt securities, common shares, warrants,
convertible securities, share purchase contracts and share purchase
units of the Company (in the English and French languages, as
applicable, and together with the Canadian Draft Prospectus
Supplement, the “ Canadian Preliminary Prospectus
”) and obtained from the OSC a receipt for such preliminary
unallocated short form base shelf prospectus dated August 10,
2009 for and on behalf of itself and each of the other Canadian
Commissions pursuant to Multilateral Instrument 11-102 —
Passport System and National Policy 11-202 —
Process For Prospectus Reviews in Multiple Jurisdictions
(collectively, the “ Passport System ”),
(ii) prepared and filed with the OSC and the other Canadian
Commissions in accordance with the Shelf Procedures a final
unallocated short form base shelf prospectus dated
September 14, 2009, relating to the offering of up to
US$300,000,000 aggregate initial offering price of debt securities,
common shares, warrants, convertible securities, share purchase
contracts and share purchase units of the Company (in the English
and French languages, as applicable, the “ Canadian Final
Prospectus ”), and obtained from the OSC a receipt for
the Canadian Final Prospectus for and on behalf of itself and each
of the other Canadian Commissions pursuant to the Passport System;
and (iii) prepared and filed with the OSC and the other
Canadian Commissions a draft prospectus supplement to
the
2
Canadian Final
Prospectus, in both the English and French languages, relating to
the offering of the Shares (the “ Canadian Draft
Prospectus Supplement ”).
The Company will
prepare and will file with the OSC, as principal regulator, a
prospectus supplement to the Canadian Final Prospectus, in both the
English and French languages, relating to the offering of the
Shares to be dated no later than September 17, 2009 (the
“ Canadian Prospectus Supplement ”) and all
necessary related documents in order to qualify the Shares for
distribution in each of the Provinces of British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick and Nova
Scotia (the “ Provinces ”). The information
included in the Prospectus Supplement that is permitted under the
Shelf Procedures to be omitted from the Canadian Final Prospectus
for which receipts or other evidences of acceptance have been
obtained but that is deemed under the Shelf Procedures to be
incorporated by reference into the Canadian Final Prospectus as of
the date of and by virtue of the Canadian Prospectus Supplement is
referred to herein as the “ Shelf Information
”.
The Canadian Final
Prospectus for which a final receipt has been obtained from the
Canadian Commissions is herein referred to as the “
Canadian Prospectus ”, except that, when the Canadian
Prospectus Supplement is thereafter filed with the Canadian
Commissions, the term “ Canadian Prospectus ”
shall mean the Canadian Final Prospectus as supplemented by such
Canadian Prospectus Supplement, including the documents
incorporated by reference therein and any amendments or supplements
thereto and any French language translations thereof. Any amendment
to the Canadian Prospectus, and any amended or supplemented
prospectus or auxiliary materials that may be filed with any
Canadian Commission by or on behalf of the Company under any
applicable securities laws of each of the Provinces and the
respective regulations, rules, rulings, decisions and orders made
thereunder, together with the applicable policy statements and
prescribed forms issued by the Canadian Commissions (collectively,
the “ Canadian Securities Laws ”) relating to
the distribution of the Shares prior to the Applicable Time (as
defined below) or, where such document is deemed to be incorporated
by reference into the Canadian Prospectus, prior to the expiry of
the period of distribution of the Shares, is referred to herein
collectively as the “ Supplementary Material
”.
The Preliminary
Prospectus and the Canadian Preliminary Prospectus are hereinafter
collectively sometimes referred to as the “ Preliminary
Prospectuses ”. The Prospectus and the Canadian
Prospectus are hereinafter collectively sometimes referred to as
the “ Prospectuses ”.
At or prior to the
Applicable Time (as defined below), the Company had prepared the
following information (collectively with the pricing information
set forth on Annex B, the “ Pricing Disclosure Package
”): (i) with respect to the United States, a Preliminary
Prospectus dated September 14, 2009 and each
“free-writing prospectus” (as defined pursuant to
Rule 405 under the Securities Act) listed on Annex B hereto
and (ii) with respect to Canada, the Canadian Preliminary
Prospectus Supplement.
“
Applicable Time ” means 6:30 P.M., New York City time,
on September 17, 2009.
2. Purchase
of the Shares by the Underwriters.
(a) On the
basis of the representations, warranties and agreements set forth
herein and subject to the conditions set forth herein, the Company
agrees to issue and sell the Underwritten Shares to the several
Underwriters as provided in this Agreement, and each Underwriter,
agrees, severally and not jointly, to purchase from the Company the
respective number of Underwritten Shares set forth opposite such
Underwriter’s name in Schedule 1 hereto (or such number
of Underwritten Shares increased pursuant to Section 10
hereof) at a price per share (the “ Purchase Price
”) of $39.477. The Company will
3
not be
obligated to deliver any of the Shares except upon payment for all
Shares to be purchased as provided herein.
In addition, the
Company agrees to issue and sell the Option Shares to the several
Underwriters as provided in this Agreement, and the Underwriters,
on the basis of the representations, warranties and agreements set
forth herein and subject to the conditions set forth herein, shall
have the option to purchase, severally and not jointly, from the
Company the Option Shares at the Purchase Price less an amount per
share equal to any dividends or distributions declared by the
Company and payable on the Underwritten Shares but not payable on
the Option Shares.
If any Option
Shares are to be purchased, the number of Option Shares to be
purchased by each Underwriter shall be the number of Option Shares
which bears the same ratio to the aggregate number of Option Shares
being purchased as the number of Underwritten Shares set forth
opposite the name of such Underwriter in Schedule 1 hereto (or
such number of Option Shares increased pursuant to Section 10
hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject,
however, to such adjustments to eliminate any fractional Shares as
the Representative in its sole discretion shall make.
The Underwriters
may exercise the option to purchase Option Shares at any time in
whole, or from time to time in part, on or before the thirtieth day
following the date of the Prospectus, by written notice from the
Representative to the Company; provided, however, that such option
may not be exercised more than twice. Such notice shall set forth
the aggregate number of Option Shares as to which the option is
being exercised and the date and time when the Option Shares are to
be delivered and paid for, which may be the same date and time as
the Closing Date (as hereinafter defined) but shall not be earlier
than the Closing Date or later than the tenth full business day (as
hereinafter defined) after the date of such notice (unless such
time and date are postponed in accordance with the provisions of
Section 10 hereof). Any such notice shall be given at least
two business days prior to the date and time of delivery specified
therein.
(b) The
Company understands that the Underwriters intend to make a public
offering of the Shares as soon after the effectiveness of this
Agreement as in the judgment of the Representative is advisable,
and initially to offer the Shares on the terms set forth in the
Prospectus. The Company acknowledges and agrees that the
Underwriters may offer and sell Shares to or through any affiliate
of an Underwriter.
(c) Payment
for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the
Representative in the case of the Underwritten Shares, at the
offices of Davis Polk & Wardwell LLP, 450 Lexington Avenue, New
York, New York 10017, at 10:00 A.M., New York City time, on
September 23, 2009, or at such other time or place on the same
or such other date, not later than the fifth business day
thereafter, as the Representative and the Company may agree upon in
writing or, in the case of the Option Shares, on the date and at
the time and place specified by the Representative in the written
notice of the Underwriters’ election to purchase such Option
Shares. The time and date of such payment for the Underwritten
Shares is referred to herein as the “ Closing Date
”, and the time and date for such payment for the Option
Shares, if other than the Closing Date, is herein referred to as
the “ Additional Closing Date ”.
Payment for the
Shares to be purchased on the Closing Date or the Additional
Closing Date, as the case may be, shall be made against delivery to
the Representative for the respective accounts of the several
Underwriters and Sub-Underwriters of the Shares to be purchased on
such date or the Additional
4
Closing Date,
as the case may be, with any transfer taxes payable in connection
with the sale of such Shares duly paid by the Company. Delivery of
the Shares shall be made through the facilities of The Depository
Trust Company (“ DTC ”) for further credit to
CDS Clearing and Depository Services Inc. for the respective
accounts of the Underwriters and Sub-Underwriters, unless the
Representative shall otherwise instruct. The certificates for the
Shares will be made available for inspection and packaging by the
Representative at the office of DTC or its designated custodian not
later than 1:00 P.M., New York City time, on the business day prior
to the Closing Date or the Additional Closing Date, as the case may
be.
(d) The
Company acknowledges and agrees that the Underwriters and
Sub-Underwriters are acting solely in the capacity of an
arm’s length contractual counterparty to the Company with
respect to the offering of Shares contemplated hereby (including in
connection with determining the terms of the offering) and not as a
financial advisor or a fiduciary to, or an agent of, the Company or
any other person. Additionally, neither the Representative nor any
other Underwriter or Sub-Underwriter is advising the Company or any
other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company shall consult
with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and
appraisal of the transactions contemplated hereby, and the
Underwriters and Sub-Underwriters shall have no responsibility or
liability to the Company with respect thereto. Any review by the
Underwriters or the Sub-Underwriters of the Company, the
transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of the
Underwriters and the Sub-Underwriters and shall not be on behalf of
the Company.
3.
Representations and Warranties of the Company . The Company
represents and warrants to each Underwriter and Sub-Underwriter
that:
(a)
Preliminary Prospectus. No order preventing or suspending
the use of any of the Preliminary Prospectuses has been issued by
the Commission or the Canadian Commissions, and the Preliminary
Prospectus included in the Pricing Disclosure Package, at the time
of filing thereof, complied in all material respects with the
Securities Act, and none of the Preliminary Prospectuses, at the
time of filing thereof, contained any untrue statement of a
material fact or omitted to state a material fact that is required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no
representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of any
Underwriter through the Representative expressly for use in any of
the Preliminary Prospectuses, it being understood and agreed that
the only such information furnished by or on behalf of any
Underwriter consists of the information described as such in
Section 7(b) hereof.
(b)
Pricing Disclosure Package . The Pricing Disclosure Package
as of the Applicable Time did not, and as of the Closing Date and
as of the Additional Closing Date, as the case may be, will not,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that
the Company makes no representation and warranty with respect to
any statements or omissions made in reliance upon and in conformity
with information furnished to the Company in writing by or on
behalf of any Underwriter through the Representative expressly for
use in such Pricing Disclosure Package, it being understood and
agreed that the only such information furnished by or on behalf of
any Underwriter consists of the information described as such in
Section 7(b) hereof.
5
(c)
Issuer Free Writing Prospectus. Other than the Registration
Statement, the Preliminary Prospectuses and the Prospectuses, the
Company (including its agents and representatives, other than the
Underwriters in their capacity as such) has not prepared, used,
authorized, approved or referred to and will not prepare, use,
authorize, approve or refer to any “written
communication” (as defined in Rule 405 under the
Securities Act) that constitutes an offer to sell or solicitation
of an offer to buy the Shares (each such communication by the
Company or its agents and representatives (other than a
communication referred to in clause (i) below) an “
Issuer Free Writing Prospectus ”) other than
(i) any document not constituting a prospectus pursuant to
Section 2(a)(10)(a) of the Securities Act or Rule 134 under
the Securities Act, (ii) the documents listed on Annex B
hereto, (iii) each electronic road show and (iv) any
other written communications approved in writing in advance by the
Representative, which approval shall not be unreasonably withheld
or delayed. Each such Issuer Free Writing Prospectus complied in
all material respects with the Securities Act, has been or will be
(within the time period specified in Rule 433) filed in
accordance with the Securities Act (to the extent required thereby)
and, when taken together with the Preliminary Prospectus filed
prior to the first use of such Issuer Free Writing Prospectus, did
not, and as of the Closing Date and as of the Additional Closing
Date, as the case may be, will not, contain any 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
the Company makes no representation and warranty with respect to
any statements or omissions made in each such Issuer Free Writing
Prospectus or Preliminary Prospectus in reliance upon and in
conformity with information furnished to the Company in writing by
or on behalf of any Underwriter through the Representative
expressly for use in such Issuer Free Writing Prospectus or
Preliminary Prospectus, it being understood and agreed that the
only such information furnished by or on behalf of any Underwriter
consists of the information described as such in Section 7(b)
hereof.
(d)
Registration Statement and Prospectus. The Registration
Statement is an “automatic shelf registration
statement” as defined under Rule 405 of the Securities
Act that has been filed with the Commission not earlier than three
years prior to the date hereof; and no notice of objection of the
Commission to the use of such registration statement or any
post-effective amendment thereto pursuant to Rule 401(g)(2)
under the Securities Act has been received by the Company. No order
suspending the effectiveness of the Registration Statement has been
issued by the Commission, and no proceeding for that purpose or
pursuant to Section 8A of the Securities Act against the
Company or related to the offering of the Shares has been initiated
or, to the knowledge of the Company, threatened by the Commission;
as of each “new effective date” (within the meaning of
Rule 430B(f)(2) under the Securities Act) of the Registration
Statement and as of the effective date of any post-effective
amendment thereto, the Registration Statement and any such
post-effective amendment complied and will comply in all material
respects with the Securities Act, and did not and will not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein not misleading; and as of the date of the
Prospectus and any amendment or supplement thereto and as of the
Closing Date and as of the Additional Closing Date, as the case may
be, the Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no
representation or warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
furnished to the Company in writing by or on behalf of any
Underwriter through the Representative expressly for use in the
Registration Statement and the Prospectus and any amendment or
supplement thereto, it being understood and agreed that the only
such information furnished by or on behalf of any Underwriter
consists of the information described as such in Section 7(b)
hereof.
6
(e)
Canadian Prospectus . The Company is eligible to use the
Shelf Procedures. The Canadian Prospectus, together with the
Supplementary Material, will comply, as of its date, the Closing
Date and the Additional Closing Date, if any, and at all times
during which a prospectus is required by the Canadian Securities
Laws to be delivered in connection with any sale of the Shares,
with the requirements of the Canadian Securities Laws pursuant to
which it has been filed and does and will provide full, true and
plain disclosure of all material facts and does not and will not
contain a misrepresentation (each within the meaning of the
Canadian Securities Laws) relating to the Company and to the
Shares. However, the Company makes no representation and warranty
with respect to any statements or omissions made in reliance upon
and in conformity with information furnished to the Company in
writing by or on behalf of any Underwriter or Sub-Underwriter
through the Representative expressly for use in the Canadian
Prospectus, the Supplementary Material, and any amendment or
supplement thereto, it being understood and agreed that the only
such information furnished by or on behalf of any Underwriter or
Sub-Underwriter consists of the information described as such in
Section 7(b) hereof.
(f)
Incorporated Documents. The documents incorporated by
reference in the Registration Statement, the Prospectuses and the
Pricing Disclosure Package, when they were filed with the
Commission and the Canadian Commissions, as applicable, conformed
in all material respects to the applicable requirements of the
Exchange Act and the Canadian Securities Laws, as applicable, and
none of such documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
and any further documents so filed and incorporated by reference in
the Registration Statement, the Prospectuses or the Pricing
Disclosure Package, when such documents are filed with the
Commission and the Canadian Commissions, will conform in all
material respects to the applicable requirements of the Exchange
Act and the Canadian Securities Laws, as applicable, and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading. All documents incorporated by
reference in the Canadian Preliminary Prospectus, Canadian Draft
Prospectus Supplement and Canadian Prospectus have been filed with
the Canadian Commissions in the French language version in
accordance with applicable laws and decisions of the Authorite des
marches financiers dated August 10, 2009 and
September 14, 2009.
(g)
Financial Statements. The financial statements (including
the related notes thereto but excluding any pro forma
financial information) of the Company and its consolidated
subsidiaries included or incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the
Prospectuses comply in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the
Canadian Securities Laws, as applicable, and present fairly, in all
material respects, the financial position of the Company and its
consolidated subsidiaries as of the dates indicated and the results
of their operations and the changes in their cash flows for the
periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles in the
United States applied on a consistent basis throughout the periods
covered thereby, except as described in the notes to such financial
statements, and any supporting schedules included or incorporated
by reference in the Registration Statement present fairly, in all
material respects, the information required to be stated therein;
the other financial information included or incorporated by
reference in the Registration Statement, the Pricing Disclosure
Package and the Prospectuses has been derived from the accounting
records of the Company and its consolidated subsidiaries and
presents fairly, in all material respects, the information shown
thereby; and the pro forma financial information and
the related notes thereto included or incorporated by reference in
the Registration Statement, the Pricing Disclosure Package and the
Prospectuses have been prepared in accordance with the applicable
requirements of the Securities Act, the Exchange Act and the
Canadian Securities Laws, as applicable, and the assumptions
underlying such pro
7
forma financial information are reasonable and are set
forth in the Registration Statement, the Pricing Disclosure Package
and the Prospectuses.
(h) No
Material Adverse Change. Since the date of the most recent
financial statements of the Company included or incorporated by
reference in the Registration Statement, the Pricing Disclosure
Package and the Prospectuses, (i) there has not been any
material change in the capital stock (other than the issuance of
common shares upon exercise of stock options and warrants described
as outstanding in, and the vesting of restricted stock or
restricted stock units and the grant of options and awards under
existing equity incentive plans described in, the Registration
Statement, the Pricing Disclosure Package and the Prospectuses),
short-term debt or long-term debt of the Company or any of its
subsidiaries, or any dividend or distribution of any kind declared,
set aside for payment, paid or made by the Company on any class of
capital stock, or any material adverse change, or any development
involving a prospective material adverse change, in or affecting
the business, properties, management, financial position,
stockholders’ equity or results of operations of the Company
and its subsidiaries taken as a whole; (ii) neither the
Company nor any of its subsidiaries has entered into any
transaction or agreement that is material to the Company and its
subsidiaries taken as a whole or incurred any liability or
obligation, direct or contingent, that is material to the Company
and its subsidiaries taken as a whole; and (iii) neither the
Company nor any of its subsidiaries has sustained any loss or
interference with its business that is material to the Company and
its subsidiaries taken as a whole and that is either from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action,
order or decree of any court or arbitrator or governmental or
regulatory authority, except in each case as otherwise disclosed in
the Registration Statement, the Pricing Disclosure Package and the
Prospectuses.
(i)
Organization and Good Standing. The Company and each of its
“significant subsidiaries” (as defined below) have been
duly organized and are validly existing and in good standing under
the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires
such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to
be so qualified or in good standing or have such power or authority
would not, individually or in the aggregate, have a material
adverse effect on the business, properties, management, financial
position, stockholders’ equity or results of operations of
the Company and its subsidiaries taken as a whole or on the
performance by the Company of its obligations under this Agreement
(a “ Material Adverse Effect ”). Except for SXC
Health Solutions TPA, LLC, the Company does not own or control,
directly or indirectly, any corporation, association or other
entity other than the subsidiaries listed in Exhibit 21 to the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2008. SXC Health Solutions, Inc., a Texas
corporation, Health Business Systems, Inc., a Pennsylvania
corporation, informedRx, Inc. (f/k/a National Medical Health Card
Systems, Inc.), a Delaware corporation, NMHCRX Mail Order, Inc.
(d/b/a informedMAIL), a Delaware corporation, and Portland
Professional Pharmacy Associates (d/b/a Ascend SpecialtyRx), a
Maine corporation, are the only subsidiaries of the Company that
are “significant subsidiaries” within the meaning of
Rule 1-02 of Regulation S-X promulgated by the Commission
and shall be referred to collectively herein as the “
significant subsidiaries ” of the Company.
(j)
Capitalization. All the outstanding common shares of the
Company have been duly and validly authorized and issued and are
fully paid and non-assessable and are not subject to any
pre-emptive or similar rights; except as described in or expressly
contemplated by the Pricing Disclosure Package and the
Prospectuses, there are no outstanding rights (including, without
limitation, pre-emptive rights),
8
warrants or
options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or other equity interest in the
Company or any of its subsidiaries, or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the
issuance of any capital stock of the Company or any such
subsidiary, any such convertible or exchangeable securities or any
such rights, warrants or options; the authorized capital of the
Company conforms in all material respects to the description
thereof contained in the Registration Statement, the Pricing
Disclosure Package and the Prospectuses; and all the outstanding
common shares or other equity interests of each subsidiary owned,
directly or indirectly, by the Company have been duly and validly
authorized and issued, are fully paid and non-assessable (except,
in the case of any foreign subsidiary, for directors’
qualifying shares) and are owned directly or indirectly by the
Company, free and clear of any material lien, charge, encumbrance,
security interest, restriction on voting or transfer or any other
claim of any third party, except as otherwise described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectuses.
(k) Stock
Options. With respect to the stock options (the “
Stock Options ”) granted pursuant to the stock-based
compensation plans of the Company and its subsidiaries (the “
Company Stock Plans ”), (i) each Stock Option
intended to qualify as an “incentive stock option”
under Section 422 of the Internal Revenue Code of 1986, as
amended (the “ Code ”) so qualifies,
(ii) each grant of a Stock Option was duly authorized no later
than the date on which the grant of such Stock Option was by its
terms to be effective (the “ Grant Date ”) by
all necessary corporate action, including, as applicable, approval
by the board of directors of the Company (or a duly constituted and
authorized committee thereof) and any required stockholder approval
by the necessary number of votes or written consents, and the award
agreement governing such grant (if any) was duly executed and
delivered by each party thereto, (iii) each such grant was
made in accordance with the terms of the Company Stock Plans, the
Exchange Act and all other applicable laws and regulatory rules or
requirements, including the rules of the NASDAQ Global Select
Market (the “ NASDAQ Market ”) and, except as
would not reasonably be expected to have a Material Adverse Effect,
the Toronto Stock Exchange (the “ Exchange ”),
and (iv) each such grant was properly accounted for in
accordance with United States generally accepted accounting
principles in all material respects in the financial statements
(including the related notes) of the Company and disclosed in the
Company’s filings with the Commission and the Canadian
Securities Commissions in accordance with the Exchange Act, the
Canadian Securities Laws and all other applicable laws. The Company
has not knowingly granted, and there is no and has been no policy
or practice of the Company of granting, Stock Options prior to, or
otherwise coordinating the grant of Stock Options with, the release
or other public announcement of material information regarding the
Company or its subsidiaries or their results of
operations.
(l) Due
Authorization. The Company has full right, power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder; and all action required to be taken for the
due and proper authorization, execution and delivery by it of this
Agreement and the consummation by it of the transactions
contemplated hereby has been duly and validly taken.
(m)
Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(n) The
Shares. The Shares to be issued and sold by the Company
hereunder have been duly authorized by the Company and, when issued
and delivered and paid for as provided herein, will be duly and
validly issued, will be fully paid and nonassessable and will
conform to the descriptions thereof in the Registration Statement,
the Pricing Disclosure Package and the Prospectuses; and the
issuance of the Shares is not subject to any preemptive or similar
rights.
9
(o)
Exchange Listing . The Company has filed a “Listing of
Additional Shares” notification form with the NASDAQ Market
with respect to the Shares, and the Shares have been conditionally
approved for listing, subject to delivery of customary post-closing
filings, on the Exchange, and the Exchange has conditionally
accepted for filing notice of the offering of the Shares; subject
to the foregoing, all acts have been taken and all required
documents have been filed under the Canadian Securities Laws and
Exchange and NASDAQ Market rules (except routine post-closing
matters) to enable the Shares to trade on the Exchange and NASDAQ
Market.
(p) No
Violation or Default. (i) Neither the Company nor any of
its significant subsidiaries is in violation of its charter or
by-laws or similar organizational documents; (ii) neither the
Company nor any of its subsidiaries is in default, and no event has
occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of
its subsidiaries is subject; and (iii) neither the Company nor
any of its subsidiaries is in violation of any law or statute or
any judgment, order, rule or regulation of any court or arbitrator
or governmental or regulatory authority, except, in the case of
clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(q) No
Conflicts. The execution, delivery and performance by the
Company of this Agreement, the issuance and sale of the Shares and
the consummation by the Company of the transactions contemplated by
this Agreement will not (i) conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, (ii) result
in any violation of the provisions of the charter or by-laws or
similar organizational documents of the Company or any of its
significant subsidiaries or (iii) result in the violation of
any law or statute or any judgment, order, rule or regulation of
any court or arbitrator or governmental or regulatory authority
having jurisdiction over the Company or any of its subsidiaries,
except, in the case of clauses (i) and (iii) above, for
any such conflict, breach, violation or default that would not,
individually or in the aggregate, have a Material Adverse
Effect.
(r) No
Consents Required. No consent, approval, authorization, order,
license, registration or qualification of or with any court or
arbitrator or governmental or regulatory authority having
jurisdiction over the Company or any of its subsidiaries is
required for the execution, delivery and performance by the Company
of this Agreement, the issuance and sale of the Shares and the
consummation by the Company of the transactions contemplated by
this Agreement, except for the registration of the Shares under the
Securities Act, the filing of the Canadian Prospectus Supplement,
the final acceptance of the Exchange and such consents, approvals,
authorizations, orders and registrations or qualifications as may
have been obtained or made prior to the Closing Date or as may be
required by the Financial Industry Regulatory Authority, Inc.
(“ FINRA ”) and under applicable state
securities laws in connection with the purchase and distribution of
the Shares by the Underwriters.
(s) Legal
Proceedings. Except as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectuses, there are no
legal, governmental or regulatory investigations, actions, suits or
proceedings pending to which the Company or any of its subsidiaries
is a party or to
10
which any
property of the Company or any of its subsidiaries is the subject
that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect; to the knowledge of the
Company, no such investigations, actions, suits or proceedings are
threatened or contemplated by any governmental or regulatory
authority or threatened by others; and there are no statutes,
regulations or contracts or other documents that are required under
the Securities Act to be filed as exhibits to the Registration
Statement or described in the Registration Statement, the Pricing
Disclosure Package or the Prospectuses that are not so filed as
exhibits to the Registration Statement or described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectuses.
(t)
Independent Accountants . KPMG LLP (United States) and KPMG
LLP (Canada), who have audited certain financial statements of the
Company and its consolidated subsidiaries and delivered their
reports with respect thereto, are independent registered public
accounting firms with respect to the Company and its consolidated
subsidiaries within the applicable rules and regulations adopted by
the Commission and the Public Company Accounting Oversight Board
(United States) and as required by the Securities Act and are
independent within the meaning of Canadian Securities
Laws.
(u) Title
to Intellectual Property . The Company and its subsidiaries
own, possess, license or have adequate rights to use all material
patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service mark registrations,
copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) reasonably necessary for the
conduct of their respective businesses as currently conducted, and,
to the knowledge of the Company, the conduct of their respective
businesses does not conflict in any material respect with any such
valid rights of others. The Company and its subsidiaries have not
received any notice of any claim of infringement, misappropriation
or conflict with any such rights of others in connection with its
patents, patent rights, licenses, inventions, trademarks, service
marks, trade names, copyrights and know-how, except for such
notices the content of which, if accurate, would not, individually
or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(v)
Investment Company Act . The Company is not and, after
giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectuses, will not be required to register as an
“investment company” or an entity
“controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the “ Investment Company Act
”).
(w)
Taxes. Except as described in the Registration Statement,
the Pricing Disclosure Package or the Prospectuses, the Company and
its subsidiaries have paid all federal, state, local and foreign
taxes (other than those which are being contested in good faith and
for which appropriate reserves have been established or which, if
not paid, would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect) and filed all
material tax returns required to be paid or filed through the date
hereof; and there is no tax deficiency in excess of the
Company’s reserves for uncertain tax positions that has been,
or would reasonably be expected to be, asserted against the Company
or any of its subsidiaries or any of their respective properties or
assets, except for such tax deficiencies which would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(x)
Licenses and Permits. The Company and its subsidiaries
possess all licenses, certificates, permits and other
authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign
governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of
their respective businesses as described
11
in the
Registration Statement, the Pricing Disclosure Package and the
Prospectuses, except where the failure to possess or make the same
would not, individually or in the aggregate, have a Material
Adverse Effect; and except as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectuses,
neither the Company nor any of its subsidiaries has received notice
of any revocation or modification of any such license, certificate,
permit or authorization, or has any reason to believe that any such
license, certificate, permit or authorization will not be renewed
in the ordinary course, except such revocations or modifications
which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(y) No
Labor Disputes. No labor disturbance by or dispute with
employees of the Company or any of its subsidiaries exists or, to
the knowledge of the Company, is contemplated or threatened, except
as would not have a Material Adverse Effect.
(z)
Compliance with and Liability under Environmental Laws.
(i) The Company and its subsidiaries (A) are, and, to the
knowledge of the Company, at all prior times were, in compliance
with any and all applicable federal, state, local and foreign laws,
rules, regulations, requirements, decisions, judgments, decrees,
orders and the common law relating to pollution or the protection
of the environment, natural resources or human health or safety,
including those relating to the generation, storage, treatment,
use, handling, transportation, Release or threat of Release of
Hazardous Materials (collectively, “ Environmental
Laws ”), (B) have received and are in compliance
with all permits, licenses, certificates or other authorizations or
approvals required of them under applicable Environmental Laws to
conduct their respective businesses, (C) have not received
notice of any actual or potential liability under or relating to
any Environmental Laws, including for the investigation or
remediation of any Release or threat of Release of Hazardous
Materials, and have no knowledge of any event or condition that
would reasonably be expected to result in any such notice,
(D) are not conducting or paying for, in whole or in part, any
investigation, remediation or other corrective action pursuant to
any Environmental Law at any location, and (E) are not a party
to any order, decree or agreement that imposes any obligation or
liability under any Environmental Law, and (ii) there are no
costs or liabilities associated with Environmental Laws of or
relating to the Company or its subsidiaries, except in the case of
each of (i) and (ii) above, for any such matter, as would
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and (iii) except as described
in the Registration Statement, the Pricing Disclosure Package and
the Prospectuses, (A) there are no proceedings that are pending, or
that are known to be contemplated, against the Company or any of
its subsidiaries under any Environmental Laws in which a
governmental entity is also a party, other than such proceedings
regarding which the Company reasonably believes no monetary
sanctions of $100,000 or more will be imposed, (B) the Company
and its subsidiaries are not aware of any facts or issues regarding
compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws, including the Release or
threat of Release of Hazardous Materials, that would reasonably be
expected to have a material effect on the capital expenditures,
earnings or competitive position of the Company and its
subsidiaries, and (C) none of the Company and its subsidiaries
anticipates material capital expenditures relating to any
Environmental Laws. “ Hazardous Materials ”
means any material, chemical, substance ,waste, pollutant,
contaminant, compound, mixture, or constituent thereof, in any form
or amount, including petroleum (including crude oil or any fraction
thereof) and petroleum products, natural gas liquids, asbestos and
asbestos containing materials, naturally occurring radioactive
materials, brine, and drilling mud, regulated or which can give
rise to liability under any Environmental Law. “
Release ” means any spilling, leaking, seepage,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, disposing, depositing, dispersing, or
migrating in, into or through the environment, or in, into from or
through any building or structure.
12
(aa)
Compliance with ERISA. (i) Each employee benefit plan,
within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ ERISA
”), for which the Company or any member of its “
Controlled Group ” (defined as any organization which
is a member of a controlled group of corporations within the
meaning of Section 414 of the Code) would have any liability
(each, a “ Plan ”) has been maintained in
compliance with its terms and the requirements of any applicable
statutes, orders, rules
|
