8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):  February 21, 2006

EXPRESS SCRIPTS, INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	0-20199	43-1420563
(State or Other Jurisdiction of Incorporation or Organization	(Commission File Number)	(I.R.S. Employer Identification No.)

13900 Riverport Drive, Maryland Heights, MO (Address of Principal Executive Offices) 63043 (Zip Code)

Registrant’s telephone number including area code: 314-770-1666

No change since last report

(Former Name or Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On February 28, 2006, the Compensation and Development Committee (the “Compensation Committee”) of the Board of Directors of Express Scripts, Inc. (the “Company”) met and approved several compensation related items for the Company’s Named Executive Officers.  The Named Executive Officers were determined based on those identified in the Summary Compensation Table contained in the Company’s proxy statement dated April 22, 2005 (the “2005 Proxy Statement”) and expected to be named in the Company’s proxy statement to be filed in April, 2006.  A summary of the base salaries for the Named Executive Officers is attached as Exhibit 10.1 hereto and is incorporated by reference herein.

The Compensation Committee also approved target and potential annual bonus awards and equity awards for the Named Executive Officers.  A summary of the bonus and equity awards is also included in Exhibit 10.1 hereto and incorporated by reference herein.

Additionally, on February 21, 2006, the Compensation Committee determined that the performance targets for the following awards have been satisfied.  The awards were made pursuant to the Company’s amended and restated 2000 Long-Term Incentive Plan, as amended (the “2000 LTIP”).  The performance measures were financial targets based on the Company’s consolidated earnings per share, EBITDA (earnings before interest, taxes, depreciation and amortization) and/or free cash flow, as described below:

Name	Title	Number of Shares of Restricted Stock	Number of Shares Underlying Stock Options
George Paz	President & Chief Executive Officer	4,676(1)	N/A
David Lowenberg	Chief Operating Officer	5,344(1) 27,295(2)	35,108(2)
Edward J. Stiften	Senior Vice President & Chief Financial Officer	6,242(3) 8,571(4)	10,781(4)
Thomas M. Boudreau	Senior Vice President & General Counsel	4,676(1) 13,648(2)	19,310(2)
Patrick McNamee	Senior Vice President & Chief Information Officer	N/A	N/A

(1)   Represents the remaining one-third of a grant of shares of restricted stock awarded in 2003, which provided for accelerated vesting based on achievement of specified targets based on the Company’s consolidated earnings per share and either EBITDA or free cash flow in 2005.  The first two-thirds of the grant vested in March, 2005 based on the achievement of similar targets in 2004 and 2003.  Absent the accelerated vesting, one-half of the shares of restricted stock would have otherwise vested in full in May 2008 and the other half would have vested in full in May 2013.

(2)   Represents shares of restricted stock and options awarded in 2004 pursuant to the officer’s employment agreement and which provided for accelerated vesting based on achievement of specified consolidated earnings per share targets in 2004 and 2005, subject to continued employment through March 31, 2006.  The shares of restricted stock would have otherwise vested in full on August 31, 2011 for Mr. Lowenberg and October 29, 2011 for Mr. Boudreau, and the options would have otherwise vested in full on December 31, 2010 for both Messrs. Lowenberg and Boudreau.  Based on the targets achieved for 2004, vesting did not accelerate for a portion of the restricted stock grants (1,607 shares for Mr. Lowenberg, and 804 shares for Mr. Boudreau) and remain subject to the original vesting schedule.  The options had a split-adjusted exercise price of $31.60 per share. For additional information regarding the employment agreements, please see the 2005 Proxy Statement under the caption “Executive Compensation — Employment Agreements — Employment Agreements with Other Executive Officers” beginning on page 21.  The employment agreements are also listed as exhibits to this Current Report on Form 8-K and are hereby incorporated by reference herein.

(3)   Represents the remaining one-half of a grant of shares of restricted stock awarded in 2004, which provided for accelerated vesting based on achievement of specified targets based on the Company’s consolidated earnings per share and either EBITDA or free cash flow in 2005.  The first half of the grant vested in March, 2005 based on the achievement of similar targets in 2004.  Absent the accelerated vesting, one-half of the shares of restricted stock would have otherwise vested in full in April 2009 and the other half would have vested in full in April 2014.

(4)   Represents shares of restricted stock and options awarded in April 2004 pursuant to the officer’s employment agreement and which provided for accelerated vesting based on achievement of specified consolidated earnings per share and EBITDA targets in 2004, 2005 and 2006, subject to continued employment through March 31, 2007.  Vesting has not accelerated on a portion of the shares of restricted stock (an additional 17,143 shares) and options (representing an additional 21,563 shares) granted in April 2004, and such shares/options remain subject to the original vesting schedule; provided, however, that one-half of such remaining shares/options may accelerate in March 2007 based on achievement of specified consolidated earnings per share and EBITDA target in 2006.  Absent the accelerated vesting, the restricted stock would have otherwise vested in full in April, 2014 and the options would have otherwise vested in full in September, 2010.  The options had a split-adjusted exercise price of $39.075 per share. Mr. Stiften’s employment agreement is listed as an exhibit to this Current Report on Form 8-K and is hereby incorporated by reference herein.

ITEM 9.01    EXHIBITS

See exhibit index.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXPRESS SCRIPTS, INC.

(Registrant)

Date:  March 6, 2006By: /s/ Thomas M. Boudreau                           

    Name: Thomas M. Boudreau

    Title:Senior Vice President and General Counsel

Exhibit Index

Exhibit No.	Exhibit
10.1*	Summary Of Named Executive Officer 2006 Salaries, 2005 Bonus Awards, 2006 Bonus Potential, and 2006 Equity and Performance Awards
10.2*	Form of Performance Share Award Agreement under the Express Scripts, Inc. 2000 Long-Term Incentive Plan
10.3*	Form of Stock Appreciation Right Award Agreement under the Express Scripts, Inc. 2000 Long-Term Incentive Plan
10.4*	Form of Restricted Stock Agreement used with respect to grants of restricted stock by the Company, incorporated by reference to Exhibit No. 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2004.
10.5*	Amended and Restated Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit No. 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2001.
10.6*	Second Amendment to the Express Scripts, Inc. 2000 Long-Term Incentive Plan, incorporated by reference to Exhibit No. 10.27 to the Company's Annual Report on Form 10-K for the year ended December 31, 2001.
10.7*	Executive Employment Agreement, dated as of April 11, 2005, and effective as of April 1, 2005, between the Company and George Paz, incorporated by reference to Exhibit No. 10.1 to the Company’s Current Report on Form 8-K filed April 14, 2005.
10.8*	Executive Employment Agreement, dated as of April 1, 2004, between the Company and Edward J. Stiften, incorporated by reference to Exhibit No. 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2004.
10.9*	Executive Employment Agreement, dated as of August 31, 2004, between the Company and David Lowenberg, incorporated by reference to Exhibit No. 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2004.
10.10*	Executive Employment Agreement, dated as of October 29, 2004, between the Company and Thomas Boudreau, incorporated by reference to Exhibit No. 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2004.

* Denotes management contract or compensatory plan arrangements.

EX-10.1

Exhibit 10.1

Summary of Named Executive Officer 2006 Salaries, 2005 Bonus

Awards, 2006 Bonus Potential, and 2006 Equity and Performance Awards

Base Salary Adjustments.  The Compensation Committee approved adjustments to the annual base salaries (effective as of July 1, 2006) for four of the five Named Executive Officers after a review of performance and competitive market data.  The table below sets forth the annual base salary levels of the Company's Named Executive Officers for 2005 and 2006 (the salary for each year became, or will become, effective as of July 1 of such year).  The Named Executive Officers were determined based on those identified in the Summary Compensation Table contained in the Company’s proxy statement dated April 22, 2005 (the “2005 Proxy Statement”) and expected to be named in the Company’s proxy statement to be filed in April, 2006.

Annual Bonus Awards.  The Compensation Committee also authorized the payment of annual incentive (i.e., bonus) awards to each of the Company's executive officers in respect of the year ended December 31, 2005.  The annual bonus awards were made pursuant to the Company's annual bonus plan, with target percentages ranging from 40% to 100 % in 2005.  For each of the Named Executive Officers other than Mr. McNamee, the award and the target percentages were established pursuant to the individual’s employment agreement with the Company, which are listed as exhibits to the Company’s Current Report on Form 8-K to which this Exhibit 10.1 is attached and which are hereby incorporated by reference herein.  The Employment Agreements for Messrs. Paz, Lowenberg and Boudreau are also described in the 2005 Proxy Statement under the caption “Executive Compensation — Employment Agreements — Employment Agreements with Other Executive Officers” beginning on page 21.

Pursuant to the bonus plan, in order for any bonus amount to be paid the Company must meet an annual financial goal which is based on budgeted EBITDA (earnings before interest, taxes, depreciation and amortization) and earnings per share.  If the corporate financial target is not met, then the corporate bonus pool is reduced to the extent necessary to enable the Company to meet its target.  If the Company has met its annual financial goal, then actual bonus awards for executive officers are determined based on the executive officers’ respective bonus targets and an evaluation by the Committee (and in the case of senior executives also by the CEO) of the extent to which work plan goals were achieved.  In addition, if the Company meets certain “stretch” financial and work plan targets, bonus targets may be increased by as much as 100%.  The Committee reviews and approves the annual financial targets and the stretch work plan goals.  In determining the extent of the achievement of work plan goals, the Committee and the CEO evaluate the executive’s individual contribution to the corporate work plan.  For 2005, the Company achieved its “stretch” financial and work plan goals, and, accordingly, bonuses awarded to the Named Executive Officers were enhanced by up to 100%.

The Compensation Committee also authorized the award of annual incentive (i.e., bonus) awards to each of the Company’s executive officers in respect of the year ending December 31, 2006.  The terms and conditions of the awards are substantially the same as those for 2005.

The following table sets forth the 2005 and 2006 base salary levels, along with the annual bonus awards for 2005 and the target annual bonus percentages for 2006, for each of the Named Executive Officers:

			Annual Base Salary			Annual Bonus Award		Base Bonus Target Percentage
Name	Title		2005		2006		2005	2006
George Paz	President & Chief Executive Officer	$	650,000	$	780,000	$	1,200,500	100	%
David Lowenberg	Chief Operating Officer	$	464,000	$	482,000	$	649,600	70	%
Edward J. Stiften	Senior Vice President & Chief Financial Officer	$	341,000	$	409,000	$	456,940	67	%
Thomas M. Boudreau	Senior Vice President & General Counsel	$	411,000	$	411,000	$	526,080	64	%
Patrick McNamee	Senior Vice President & Chief Information Officer	$	325,000	$	339,000	$	403,000	62	%

Annual Long Term Incentive Awards

On February 28, 2006, the Compensation Committee approved awards of certain long term incentive compensation to each of the Named Executive Officers.  The long term incentive compensation awards are comprised of a mix of performance shares, stock appreciation rights and restricted stock, all of which were granted under the Company’s amended and restated 2000 Long Term Incentive Plan, as amended (the “2000 LTIP”), as follows:

Name	Title	Performance Shares	Stock Appreciation Rights	Shares of Restricted Stock
George Paz	President & Chief Executive Officer	13,647	68,924	13,647
David Lowenberg	Chief Operating Officer	5,715	28,863	5,715
Edward J. Stiften	Senior Vice President & Chief Financial Officer	5,480	27,677	5,480
Thomas M. Boudreau	Senior Vice President & General Counsel	3,481	17,578	3,481
Patrick McNamee	Senior Vice President & Chief Information Officer	1,862	9,404	1,862

Performance Shares.  The performance shares are settled in shares of the Company’s common stock (the “Stock”) on a share-for-share basis.  The number of shares of Stock to be delivered upon settlement of the performance shares is determined based upon the Company’s performance over a set period versus a peer group of companies selected by the Compensation Committee.  The awards are subject to certain amendments to the 2000 LTIP to reflect the performance measures by stockholders at the Company’s 2006 annual meeting; provided, that if not so approved, the award will be void and of no force and effect.

Specifically, the number of shares issued in settlement of the performance share awards will depend on where the Company’s performance for the period from January 1, 2006 through January 1, 2009 ranks in relation to the designated peer group in three equally-rated metrics:

·   compound annual shareholder return (price appreciation plus reinvestment of monthly dividends and the compounding effect of dividends paid on reinvested dividends),

·   compound annual growth in earnings per share (basic earnings per share before extraordinary items and discontinued operations), and

·   average return on invested capital (income before extraordinary items (available for common stock) divided by total invested capital, which is the sum of total long-term debt, preferred stock, minority interest and total common equity).

In order for any shares to be issued under the performance share awards, the Company’s composite performance must rank in at least the 40th percentile in relation to its peer group.  Assuming the Company’s composite performance for the performance period is at the 40th percentile, the actual shares of Stock issued will equal 35% of the award targeted for the Named Executive Officer; at the 50th percentile, the actual shares of Stock issued will equal 100% of the award targeted for the Named Executive Officer; and at the 80th percentile, the actual shares of Stock issued will equal 250% of the award targeted for the Named Executive Officer, which is the maximum number of shares that can be awarded.  If the Company’s composite performance falls between these percentile rankings, the actual shares of Stock issued will be determined by interpolation.

Realization of the performance share awards and their actual value, if any, will depend on the applicable targets being met and the market value of the Stock on the date the performance share awards are settled.

The awards provide for certain rights in the event of termination of employment as a result of death, disability or retirement, but terminate in the event of termination of employment for any other reason prior to the last day of the performance period.  Notwithstanding the foregoing, the awards provide that upon a change of control (as defined) prior to the last day of the performance period, participants who remain employed on the date of a change in control or who terminated earlier on account of death, disability or retirement will receive cash equal to the value of the Stock represented by the performance shares on the last trading day before the change in control.

The performance shares are subject to the terms of the 2000 LTIP and a Performance Share Agreement entered into with each participant.  The 2000 LTIP is listed as Exhibit 10.5 and 10.6, and the form of award agreement is filed as Exhibit 10.2, to the Current Report on Form 8-K to which this Exhibit 10.1 is attached and are hereby incorporated herein by this reference.

Stock Appreciation Rights.  The stock appreciation rights (“SARs”) were granted with a specified exercise price of $87.27 per share, which was equal to the fair market value of the Stock on the date of grant, and will be settled in Stock to the extent there has been appreciation in the market value of the Stock from the date of grant to the date such SARs are exercised.  The SARs vest and become exercisable in equal amounts annually over a period of three years on the anniversary date of the grant, and expire on the seventh anniversary of their grant.  The actual value, if any, of the SARs will depend on the market value of the Stock on the date the SARs are exercised.

The SARs are subject to the terms and conditions of the 2000 LTIP as well as a Stock Appreciation Right Award Agreement entered into with each participant.  The 2000 LTIP is listed as Exhibit 10.5 and 10.6, and the form of award agreement is filed as Exhibit 10.3, to the Current Report on Form 8-K to which this Exhibit 10.1 is attached and are hereby incorporated herein by this reference.

Restricted Stock.  The shares of restricted stock awarded to the Named Executive Officers are initially subject to restrictions which prohibit the sale or transfer of the restricted stock.  The restrictions on the restricted stock lapse as to one-third of each award annually over a period of three years on the anniversary date of the grant.  Holders are entitled to the same rights to dividends on and to vote shares of restricted stock as other shareholders.

The restricted stock awards are subject to the terms and conditions of the 2000 LTIP as well as a Restricted Stock Agreement entered into with each participant.  The 2000 LTIP is listed as Exhibit 10.5 and 10.6, and the form of award agreement is listed as Exhibit 10.4, to the Current Report on Form 8-K to which this Exhibit 10.1 is attached and each are hereby incorporated herein by this reference.

EX-10.2

Exhibit 10.2

PERFORMANCE SHARE AWARD AGREEMENT

UNDER THE

EXPRESS SCRIPTS, INC.

2000 LONG-TERM INCENTIVE PLAN

THIS AWARD AGREEMENT is made and entered into February 28, 2006 (the "Date of Grant"), by and between Express Scripts, Inc. (the "Company"), and «Name» ("Employee").

BACKGROUND

A. The Board of Directors of the Company (the "Board of Directors") has adopted, and the Company's shareholders have approved, the Express Scripts, Inc. 2000 Long-Term Incentive Plan (the "Plan"), pursuant to which performance share incentive awards may be granted to employees of the Company and its subsidiaries and certain other individuals.  

B. The Board of Directors intends to amend the Plan, subject to approval of the shareholders of the Company, to revise the performance measures thereunder.  

C. The Company desires to grant to Employee a performance share award under the terms of the Plan.  

D. Pursuant to the Plan, the Company and Employee agree as follows:

AGREEMENT

1. Grant of Award.  Pursuant to action of the Committee (as defined herein) which was taken on the Date of Grant, the Company grants to Employee «Shares» performance shares ("Performance Shares"), subject to the terms, conditions, and adjustments set forth in this Award Agreement and Exhibit A hereto. The Performance Shares granted under this Section 1 are referred to in this Award Agreement as the "Target Grant."  

2. Award Subject to Plan.  This award is granted under, and is expressly subject to, the terms and provisions of the Plan, as amended from time to time, which terms are incorporated herein by reference, and this Award Agreement.  The Committee described in Section 3 of the Plan (the "Committee") has been appointed by the Board of Directors, and designated by it, as the Committee to make awards.  This award is subject to the Company’s stockholders approving an amendment to the Plan to reflect the performance measures used hereunder before any compensation is paid pursuant to this award.  In the event that the stockholders of the Company do not so approve an amendment to the Plan, this award shall be void and of no force and effect.  

3. Performance Period.  The performance period for this award shall be as set forth on Exhibit A hereto (the "Performance Period").  

4. Payment.  Subject to early termination of this Award Agreement pursuant to Section 6 below, following the end of the Performance Period and during the calendar year in which such Performance Period ends, the Company will deliver to Employee one share of the Company's Stock for each then-outstanding Performance Share under this Award Agreement; except that, fractional Shares shall be rounded down to the nearest whole Share and that a portion of the payment shall be withheld to satisfy the payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes as provided in Section 7.  

5. Performance Criteria and Adjustments.  The Target Grant shall be adjusted pursuant to the Company’s performance against certain criteria (the “Performance Criteria”) as further set out on Exhibit A hereto.  

6. Termination of Award.  This Award Agreement will terminate and be of no further force or effect on the date that Employee is no longer actively employed by the Company or any of its Affiliates, whether due to voluntary or involuntary termination, other than on account of death, Disability or Retirement, prior to the date on which the Performance Period ends.  Employee will, however, be entitled to receive any Stock payable under Section 4 of this Award Agreement if Employee's employment terminates after the Performance Period but before Employee's receipt of such Stock.  If Employee’s employment terminates before the end of the Performance Period on account of death, Disability or Retirement, any portion of this award which has not yet vested shall vest at such time, but only to the extent the Performance Criteria are achieved and any payment under Section 4 hereof shall be prorated for the portion of the Performance Period during which Employee was employed by the Company or any Affiliate.  Without limiting the foregoing, in the event Employee’s employment terminates before the end of the Performance Period on account of death, Disability or Retirement, any portion of the award which vests in accordance with the foregoing sentence shall be payable at the time and in the manner set forth in Section 4 after the end of the Performance Period.  Notwithstanding the foregoing or any provision of the Plan to the contrary, upon a Change in Control prior to the date on which the Performance Period ends, and provided that Employee continues to be actively employed on the date of such Change in Control or terminated on account of death, Disability or Retirement prior to such Change in Control, Employee shall receive in cash the value of one share of Company Stock on the last trading day before the Change in Control multiplied by the number of Performance Shares awarded pursuant to this Agreement.  The amount payable in the preceding sentence shall be subject to applicable withholding taxes.  Notwithstanding anything herein to the contrary, any payment upon a Change in Control shall not be prorated, including with respect to any payment made upon a Change in Control after termination on account of death, Disability or Retirement.  This Award shall terminate immediately following payment upon a Change in Control, and no further payment shall be made hereunder.  

7. Tax Withholding.  Employee must pay, or make arrangements acceptable to the Company for the payment of, any and all federal, state, and local income and payroll tax withholding that in the opinion of the Company is required by law.  Unless Employee satisfies any such tax withholding obligation by paying the amount in cash or by check, the Company will withhold cash and/or shares of Stock having a Fair Market Value on the date of withholding sufficient to cover the withholding obligation.  

8. Non-Transferability.  Neither this award nor any rights under this Award Agreement may be assigned, transferred, or in any manner encumbered except by will or the laws of descent and distribution, and any attempted assignment, transfer, mortgage, pledge or encumbrance except as herein authorized, will be void and of no effect.  

9. Definitions: Copy of Plan and Plan Prospectus.  To the extent not specifically defined in this Award Agreement, all capitalized terms used in this Award Agreement will have the same meanings ascribed to them in the Plan.  By signing this Award Agreement, Employee acknowledges receipt of a copy of the Plan and the related Plan Prospectus.  

10. Choice of Law.  To the extent that federal laws do not otherwise control, this Award Agreement and all determinations made and actions taken hereunder shall be governed by the laws of the State of Delaware, without giving effect to principles of conflicts of laws, and construed accordingly.

An authorized representative of the Company has signed this Award Agreement, and Employee has signed this Award Agreement to evidence Employee's acceptance of the award on the terms specified in this Award Agreement, all as of the Date of Grant.

EXPRESS SCRIPTS, INC.

By:  ___________________________________ 

Its:

      __________________________________

Employee

EX-10.3

Exhibit 10.3

EXPRESS SCRIPTS, INC.

2000 LONG-TERM INCENTIVE PLAN

STOCK APPRECIATION RIGHT GRANT NOTICE

Notice is hereby given of the following stock appreciation right (the “SAR”) granted by Express Scripts, Inc. (the “Company”) pursuant to the following terms and conditions:

·	Grantee:	_____________________________
·	Grant Date:	_____________________________
·	Vesting Commencement Date:	_____________________________
·	Exercise Price Per SAR Share:	_____________________________
·	Number of SAR Shares:	_____________________________
·	Term/Expiration Date of SAR:	_____________________________
·	Vesting Schedule: The Stock Units granted pursuant to the SAR shall be vested and exercisable in accordance with the following vesting schedule, subject to Grantee’s continued service with the Company and other conditions, to the extent provided in the SAR Agreement and the Plan: - One-third (1/3) vests and becomes exercisable on _______________________ - An additional one-third (1/3) vests and becomes exercisable on __________________ - The final one-third (1/3) vests and becomes exercisable on ______________________
·	Other Provisions: The SAR is granted subject to, and in accordance with, the terms of the Stock Appreciation Right Award Agreement (the “SAR Agreement”) attached hereto as Exhibit A and the Express Scripts, Inc. 2000 Long-Term Incentive Plan (the “Plan”) attached hereto as Exhibit B.
	This SAR is granted under, and governed by, the terms and conditions of this Grant Notice, the Plan and the SAR Agreement.
	DATED ________________________

EXPRESS SCRIPTS, INC.

By:_____________________________

Attachments:

Exhibit A— SAR Agreement

Exhibit B—Express Scripts, Inc. 2000 Long-Term Incentive Plan

EXHIBIT A

EXPRESS SCRIPTS, INC.

2000 LONG-TERM INCENTIVE PLAN

STOCK APPRECIATION RIGHT AWARD AGREEMENT

Express Scripts, Inc., a Delaware corporation ( “Company”), has granted you (“Grantee”) a stock appreciation right (“SAR”) pursuant to the terms and conditions set forth in your Stock Appreciation Right Grant Notice (“Grant Notice”) and this Stock Appreciation Right Award Agreement (“SAR Agreement”).

The SAR is granted pursuant to the Express Scripts, Inc. 2000 Long-Term Incentive Plan (the “Plan”), pursuant to which SARs, and other awards, may be granted to key personnel of the Company or an Affiliate. Terms not defined in this SAR Agreement shall have the meanings ascribed to them in the plan.

The details of your SAR are as follows:

1. Grant of SAR. The committee appointed by the Board of Directors of the Company to administer the Plan (the “Committee”) has approved your SAR. The number of SAR Shares subject to your SAR and the Exercise Price Per Share are set forth in the Grant Notice. The SAR shall be subject to the terms and conditions of the Plan, which is incorporated herein by reference.

2. Term of SAR. This SAR may be exercised only within the Term set forth in the Grant Notice, and may be exercised during such Term only in accordance with the Plan and the terms of this SAR Agreement.

3. Exercise of SAR.

   (a) Right to Exercise. This SAR is exercisable during its Term in accordance with the Vesting Schedule set forth in the Grant Notice and the applicable provisions of the Plan and this SAR Agreement. In the event of a Change in Control (as defined in the Plan) or Grantee’s death, Disability (as defined in the Plan) or other termination of Grantee as an employee, Non-Employee Director (as defined in the Plan) or consultant, the exercisability of the SAR is governed by the applicable provisions of the Plan.

 (b) Method of Exercise. This SAR is exercisable by delivering a Notice of SAR Exercise available from the Company or otherwise via procedures provided by the Company from time to time, including through a third-party incentive plan record keeper. If exercise is made via a Notice of SAR Exercise, the Notice of SAR Exercise shall be signed by the Grantee and shall be delivered in person or by certified mail to the Secretary of the Company.

 (c) Terms of Exercise. Upon proper exercise of any vested portion of the SAR, Grantee shall be entitled to receive the excess of (i) the Fair Market Value of the specified number of SAR Shares (which shall be equal, on a per share basis to the Fair Market Value of Stock (as defined in the Plan)) as of the date of exercise over (ii) the Exercise Price Per Share of the specified number of SAR Shares. Such excess, if any, shall be paid in whole shares of the Stock with a value per share equal to the Fair Market Value of the Stock as of the date of exercise, provided that fractional shares of the Stock shall be rounded down to the nearest whole share.

4. Non-Transferability of SAR. This SAR may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Grantee only by Grantee. The terms of the Plan and this SAR Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of Grantee.

5. Stockholder Rights. Grantee shall not have any stockholder rights with respect to the SAR Shares granted pursuant to this SAR or any shares of the Stock which could be received pursuant to any exercise of the SAR, unless and until Grantee shall have exercised the SAR in accordance with Section 3 hereof and received shares of Stock.

6. Adjustments Upon Changes in Capitalization or Corporate Acquisitions. Should any change be made to the Stock by reason of any Fundamental Change (as defined in the Plan), reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, stock combination, rights offering, spin-off or other relevant change, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this SAR, and (b) the Exercise Price Per Share set forth in the Grant Notice in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

7. Compliance with Laws and Regulations. Notwithstanding anything herein to the contrary, no shares of Stock shall be issued pursuant to the exercise of this SAR unless such issuance and exercise complies with all relevant provisions of law and the requirements of any stock exchange or quotation service upon which the shares of Stock are then listed.

8. Committee Discretion. The Committee shall have plenary authority to (a) interpret any provision of this SAR Agreement, (b) make any determinations necessary or advisable for the administration of this SAR Agreement, and (c) modify or amend any provision hereof in any manner which does not materially and adversely affect any right granted to Grantee by the express terms hereof, unless required as a matter of law.

9. Withholding Obligations. At the time Grantee exercises his or her SAR, in whole or in part, or at any time thereafter requested by the Company, Grantee must authorize withholding from payroll, and any other amounts payable to Grantee, and must otherwise make adequate provision for any sums required to satisfy the federal, state and local tax withholding obligations of the Company or an Affiliate, if any, which arise in connection with the SAR. Upon Grantee’s request, as indicated on the Notice of SAR Exercise or via other procedures authorized by the Company, Grantee may elect to have any such withholding obligations satisfied by: (i) delivering cash; (ii) delivering part or all of the withholding payment in previously owned shares (which have been held by Grantee for at least six months) of Stock (whether or not acquired through the prior exercise of an SAR; and/or (iii) irrevocably directing the Company to withhold from the shares of Stock that would otherwise be issued to Grantee upon the exercise of the SAR that number of whole shares of Stock having a fair market value, determined by the Company, in its sole discretion, equal to the amount of tax required to be withheld, but not to exceed the Company’s required minimum statutory withholding.

10. Governing Law. To the extent federal law does not otherwise control, this Agreement shall be governed by the laws of the State of Delaware, without giving effect to principles of conflicts of laws.

11. SAR Not A Service/Employment Contract. Neither the Grant Notice nor this SAR Agreement creates a service or employment contract and in no way obligates Grantee to remain in the employ of the Company or an Affiliate, or in no way obligates the Company or an Affiliate to continue Grantee’s employment. In addition, neither the Grant Notice nor this SAR Agreement obligates the Company or an Affiliate, or their respective stockholders, boards of directors, officers or employees to continue any relationship that Grantee might have as a Non-Employee Director or consultant for the Company or an Affiliate.