EXHIBIT 1
CASTLE DENTAL CENTERS
2,500,000 SHARES COMMON STOCK
UNDERWRITING AGREEMENT
August __, 1997
X.X. XXXXXXXX & CO., L.L.C.
SOUTHCOAST CAPITAL CORPORATION
As Representatives of the Several Underwriters
c/o X.X. Xxxxxxxx & Co.
X.X. Xxxxxxxx Financial Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Castle Dental Centers, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the underwriters named in SCHEDULE I hereto (the
"Underwriters") for whom you are acting as the representatives (the
"Representatives") 2,500,000 shares (collectively, the "Firm Shares"), of Common
Stock, $0.001 par value per share (the "Common Stock"), of the Company. Such
shares of Common Stock are to be sold to the Underwriters, acting severally and
not jointly, in such amounts as are set forth in SCHEDULE I hereto opposite the
name of such Underwriter. The Company proposes to grant to the Underwriters an
option to purchase up to 375,000 additional shares of Common Stock as provided
for in SECTION 2 of this Agreement for the purpose of covering over-allotments
(the "Option Shares"). The Firm Shares and the Option Shares purchased pursuant
to this Agreement are herein called the "Shares."
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Securities Act"), a registration statement on Form S-1 (Registration
No. 333-11335), including the related preliminary prospectus relating to
the Shares. Copies of such registration statement and any amendments,
including any post-effective amendments, and all forms of the related
prospectuses contained therein and any supplements thereto, have been
delivered to you.
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Such registration statement, including the prospectus, Part II, all
financial schedules and exhibits thereto, all information deemed to be a
part of such registration statement pursuant to Rule 430A under the
Securities Act and any related registration statement filed pursuant to
Rule 462(b) under the Securities Act, at the time when they shall become
effective, are herein referred to as the "Registration Statement," and the
prospectus included as part of the Registration Statement on file with the
Commission that discloses all the information that was omitted from the
prospectus on the effective date pursuant to Rule 430A of the Rules and
Regulations (as defined below) and in the form filed pursuant to Rule
424(b) under the Securities Act is herein referred to as the "Final
Prospectus." The prospectus included as part of the Registration Statement
on the date when the Registration Statement became effective is referred
to herein as the "Effective Prospectus." Any prospectus included in the
Registration Statement and in any amendment thereto prior to the effective
date of the Registration Statement is referred to herein as a "Preliminary
Prospectus." For purposes of this Agreement, "Rules and Regulations" mean
the rules and regulations promulgated by the Commission under either the
Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as applicable.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus, at
the time of filing thereof, complied in all material respects with the
requirements of the Securities Act and the Rules and Regulations, and did
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; except that the foregoing does not apply to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company by any Underwriter
specifically for use therein (it being understood that the only
information so provided is the information included in the last paragraph
on the cover page and in the first and third paragraphs under the caption
"Underwriting" in the Preliminary, Effective and Final Prospectus). When
the Registration Statement becomes effective and at all times subsequent
thereto up to and including the First Closing Date (as hereinafter
defined), (i) the Registration Statement, the Effective Prospectus and
Final Prospectus and any amendments or supplements thereto will contain
all statements which are required to be stated therein in accordance with
the Securities Act and the Rules and Regulations and will comply in all
material respects with the requirements of the Securities Act and the
Rules and Regulations, and (ii) neither the Registration Statement, the
Effective Prospectus nor the Final Prospectus nor any amendment or
supplement thereto will include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in which
they were made, not misleading; except that the foregoing does not apply
to statements or omissions made in reliance upon and in conformity with
written information furnished to the Company by any Underwriter
specifically for use therein (it being understood that the only
information so provided is the information included in the last paragraph
on the cover
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page and in the first and third paragraphs under the caption
"Underwriting" in the Final Prospectus).
(c) The Company and each subsidiary of the Company (as used herein,
the term "subsidiary" includes any corporation, joint venture or
partnership in which the Company or any subsidiary of the Company has a
direct or indirect ownership interest, excluding the Affiliated Practices
(as hereinafter defined)) is duly incorporated and validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization with full power and authority to own its properties and
conduct its business as now conducted and is duly qualified or authorized
to do business and is in good standing in all jurisdictions wherein the
nature of its business or the character of property owned or leased may
require it to be authorized or qualified to do business. The Company and
each subsidiary holds all licenses, consents and approvals, and has
satisfied all eligibility and other similar requirements imposed by
federal and state regulatory bodies, administrative agencies or other
governmental bodies, agencies or officials, in each case as required for
the conduct of the business in which it is engaged and is contemplated to
be engaged in the Effective Prospectus and the Final Prospectus.
(d) The capitalization of the Company as of June 30, 1997 is as set
forth under the caption "Capitalization" in the Effective Prospectus and
the Final Prospectus, and the Company's capital stock conforms to the
description thereof contained under the caption "Description of Capital
Stock" in the Effective Prospectus and the Final Prospectus. All the
issued shares of capital stock of the Company have been duly authorized
and validly issued, are fully paid and nonassessable. None of the issued
shares of capital stock of the Company have been issued in violation of
any preemptive or similar rights. The Shares to be sold by the Company
hereunder have been duly and validly authorized and, upon issuance and
delivery and payment therefor in the manner herein described, will be
validly issued, fully paid and nonassessable. Except as set forth in the
Effective Prospectus and the Final Prospectus, (i) the Company does not
have outstanding any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of Common Stock and
(ii) there are no preemptive rights or other rights to subscribe for or to
purchase, or any restriction upon the transfer of, any shares of Common
Stock pursuant to the Company's certificate of incorporation, bylaws or
any agreement or other instrument to which the Company is a party or by
which it may be bound. Neither the filing of the Registration Statement
nor the offer or sale of the Shares as contemplated by this Agreement
gives rise to any rights, other than those which have been waived or
satisfied, for or relating to the registration of any shares of Common
Stock or any other securities of the Company. The Underwriters will
receive good and marketable title to the Shares to be issued and delivered
hereunder, free and clear of all liens, encumbrances, claims, security
interests, restrictions, shareholders' agreements and voting trusts
whatsoever.
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(e) The form of stock certificate to be used to evidence the Common
Stock will be in due and proper form and will comply with all applicable
legal requirements.
(f) All offers and sales by the Company of the Company's securities
prior to the date hereof were at all relevant times duly registered or the
subject of an available exemption from the registration requirements of
the Securities Act, and were duly registered or the subject of an
available exemption from the registration requirements of the applicable
state securities or Blue Sky laws, and any private placement memoranda
delivered in connection with offers and sales of the Company's securities
prior to the date hereof did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein not misleading.
(g) At the Closing Date, each of the agreements to which the Company
or its predecessor corporation, Family Dental Services of Texas, Inc.
("Family Dental"), are parties in connection with the acquisition of
certain assets or capital stock of four separate dental practices
(collectively, the "Affiliated Practices") or to which the Affiliated
Practices are parties, including management services agreements, asset
purchase agreements, employment agreements with the previous owners of the
Affiliated Practices and agreements and plans of reorganization, and the
agreement and plan of merger between the Company and Family Dental have or
will have been duly and validly authorized, executed and delivered by the
Company and are or will be valid and binding agreements of the Company
enforceable in accordance with their respective terms except, however,
that, at some later date, a court of competent jurisdiction may determine
that the scope, duration or geographic area of any covenant not to compete
set forth in any of these agreements may be overbroad or unenforceable. At
the Closing Date, the agreements pursuant to which certain persons have
agreed not to sell their Common Stock for a specified period of time (the
"Lockup Agreements") will have been duly and validly authorized, executed
and delivered by the parties thereto and will be valid and binding
agreements, enforceable in accordance with their terms. The management
services agreements, asset purchase agreements, agreements and plans of
reorganization, the agreement and plan of merger between the Company and
Family Dental and the Lockup Agreements are sometimes hereinafter called
the "Operative Documents." The execution, delivery and performance of the
Operative Documents and the consummation of the transactions contemplated
therein and compliance by the Company and the Affiliated Practices with
their obligations thereunder have been duly authorized by all necessary
action and do not or will not contravene any provision of applicable law
or the certificate of incorporation or bylaws of the Company or any
Affiliated Practice or any agreement or other instrument binding upon
them, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over them, and no consent, approval,
authorization or order of or qualification with any governmental body or
agency is required for the performance by them of their obligations under
the Operative Documents, except such as may be required by the federal
securities laws or the securities or Blue Sky laws of the various states
in connection with the offer and sale of the Shares.
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(h) The Company has full legal right, power and authority to enter
into this Agreement and to sell and deliver the Shares to be sold by it to
the several Underwriters as provided herein, and this Agreement has been
duly authorized, executed and delivered by the Company and constitutes a
valid and binding agreement of the Company enforceable against the Company
in accordance with its terms. No consent, approval, authorization or order
of any court or governmental agency or body or third party is required for
the performance of this Agreement by the Company, any subsidiary or any of
the Affiliated Practices or the consummation by the Company, any
subsidiary or any of the Affiliated Practices of the transactions
contemplated hereby, except such as have been obtained and such as may be
required by the National Association of Securities Dealers, Inc. ("NASD")
or under the Securities Act or state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the several
Underwriters. The issuance and sale of the Shares by the Company, the
Company's performance of this Agreement and the consummation of the
transactions contemplated hereby and the Operative Documents will not
result in a breach or violation of, or conflict with, any of the terms or
provisions of, or constitute a default by the Company, any subsidiary or
any of the Affiliated Practices under, any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which the
Company, any subsidiary or any of the Affiliated Practices is a party or
to which the Company, any subsidiary or any of the Affiliated Practices or
any of their respective properties is subject, the certificate of
incorporation, bylaws or other governing instrument of the Company, any
subsidiary or any of the Affiliated Practices or any statute or any
judgment, decree, order, rule or regulation of any court or governmental
agency or body applicable to the Company, any subsidiary or any of the
Affiliated Practices or any of their respective properties. Neither the
Company, any subsidiary, nor any of the Affiliated Practices is in
violation of its certificate of incorporation, bylaws or other governing
instrument or any law, administrative rule or regulation or arbitrators'
or administrative or court decree, judgment or order or in violation or
default (there being no existing state of facts which with notice or lapse
of time or both would constitute a default) in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, deed of trust, mortgage, loan
agreement, note, lease, agreement or other instrument or permit to which
it is a party or by which it or any of its properties is or may be bound.
(i) The historical and pro forma financial statements, together with
the related schedules and notes, of the Company and the Affiliated
Practices (together, the "Combined Companies"), included in the
Registration Statement, the Effective Prospectus and the Final Prospectus,
conform to the requirements of the Securities Act and the Rules and
Regulations. Such historical financial statements fairly present the
financial position of the Combined Companies at the respective dates
indicated in accordance with generally accepted accounting principles
applied on a consistent basis for the periods indicated. Such pro forma
financial statements have been prepared on a basis consistent with such
historical statements, except for the pro forma adjustments specified
therein, and give effect to assumptions made on a reasonable basis and
present fairly the transactions reflected
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thereby as indicated in the Prospectus. The financial and statistical data
set forth in the Effective Prospectus and the Final Prospectus fairly
present the information set forth therein on the basis stated in the
Effective Prospectus and the Final Prospectus. Coopers & Xxxxxxx L.L.P.,
whose reports are included in the Effective Prospectus and the Final
Prospectus, are independent accountants as required by the Securities Act
and the Rules and Regulations.
(j) Subsequent to June 30, 1997, the Company has not sustained any
material loss or interference with its business or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, which is not disclosed in the Effective Prospectus and
the Final Prospectus; and subsequent to the respective dates as of which
information is given in the Registration Statement, the Effective
Prospectus and the Final Prospectus, (i) neither the Company, any
subsidiary, nor any Affiliated Practice has incurred any material
liabilities or obligations, direct or contingent, or entered into any
transactions not in the ordinary course of business, and (ii) there has
not been any issuance of options, warrants or rights to purchase interests
or the capital stock of the Company, or any adverse change, or any
development involving a prospective adverse change, in the general
affairs, management, business, prospects, financial position, net worth or
results of operations of the Company or any Affiliated Practice, except in
each case as described in the Effective Prospectus and the Final
Prospectus.
(k) Except as described in the Effective Prospectus and the Final
Prospectus, there is not pending, or to the knowledge of the Company
threatened, any legal or governmental action, suit, proceeding, inquiry or
investigation, to which the Company, any of its subsidiaries, any
Affiliated Practice or any of their respective officers or directors is a
party, or to which their respective property is subject, before or brought
by any court or governmental agency or body, wherein an unfavorable
decision, ruling or finding could prevent or materially hinder the
consummation of this Agreement or the Operative Documents or result in a
material adverse change in the business condition (financial or other),
prospects, financial position, net worth or results of operations of the
Company or any of its subsidiaries.
(l) __________ shares of Common Stock, including the Shares, have
been approved for listing on the Nasdaq Stock Market's National Market
("Nasdaq"), subject to official notice of issuance.
(m) Neither the Company nor any of its directors, officers or
controlling persons, has taken or will take, directly or indirectly, any
action resulting in a violation of Regulation M under the Exchange Act, or
designed to cause or result under the Exchange Act or otherwise in, or
which has constituted or which reasonably might be expected to constitute,
the stabilization or manipulation of the price of any securities of the
Company or facilitation of the sale or resale of the Shares.
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(n) Except as described in the Effective Prospectus and the Final
Prospectus, the Company, each of its subsidiaries and each Affiliated
Practice has good and marketable title to all real and material personal
property owned by it, free and clear of all liens, charges, encumbrances
or defects, except those reflected in the financial statements hereinabove
described. The real and personal property and buildings referred to in the
Effective Prospectus and the Final Prospectus which are leased from others
by the Company, its subsidiaries or any Affiliated Practice are held under
valid, subsisting enforceable leases. The Company, its subsidiaries or any
Affiliated Practice owns or leases all such properties as are necessary to
their respective operations as now conducted.
(o) The Company's system of internal accounting controls is
sufficient to meet the broad objectives of internal accounting controls
insofar as those objectives pertain to the prevention or detection of
errors or irregularities in amounts that would be material in relation to
the Company's financial statements.
(p) The Company, each of its subsidiaries and each Affiliated
Practice has filed all foreign, federal, state and local income and
franchise tax returns required to be filed through the date hereof and has
paid all taxes shown as due therefrom to the extent such taxes have become
due and are not being contested in good faith; and there is no tax
deficiency that has been, nor does the Company have knowledge of any tax
deficiency which is likely to be, asserted against the Company, any of its
subsidiaries or any Affiliated Practice, which if determined adversely
could materially and adversely affect the earnings, assets, affairs,
business prospects or condition (financial or other) of the Company, any
of its subsidiaries or any Affiliated Practice.
(q) The Company, each of its subsidiaries, and each Affiliated
Practice operates its business in conformity, in all material respects,
with all applicable statutes, common laws, ordinances, decrees, orders,
rules and regulations of governmental bodies including, without
limitation, those relating to the practice of dentistry (including the
management or operation of dental offices), the splitting of professional
fees with non-dentists, the ownership or control of the assets of a dental
practice, the employment of dentists, orthodontists, other dental
specialists or other personnel, the content of advertising, the making of
payments in consideration for referrals of patients, limitations on tasks
that may be delegated by a dentist to other staff members, the business of
insurance and reimbursement by governmental agencies. The Company, each of
its subsidiaries and each Affiliated Practice has all licenses, approvals,
consents or permits to operate its businesses in all locations in which
such businesses are currently being operated, and, except as described in
the Prospectus, such permits contain no restrictions that are materially
burdensome. The Company is not aware of any existing or imminent matter
which may materially adversely impact its, any of its subsidiaries' or any
of the Affiliated Practices' operations or business prospects other than
as specifically disclosed in the Effective Prospectus and the Final
Prospectus. Each of the (i) dentists, orthodontists, other dental
specialists and (ii) other professionals involved in providing dental care
to patients (each,
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a "Professional") who is employed by or affiliated with an Affiliated
Practice has such permits under laws and related governmental regulations
(including, as applicable, state and local licenses to practice dentistry
and federal Drug Enforcement Agency Controlled Substances Registration
Certificates) as are necessary to provide dental, orthodontic and other
specialty dental care in such jurisdictions as are contemplated by the
management services agreement between the Affiliated Practice and the
Company, the failure of which to have would have a material adverse effect
on the Affiliated Practice; each of such Professionals has fulfilled and
performed all of his or her material obligations with respect to such
permits, and no event has occurred which allows, or after notice or lapse
of time (or both) would allow, revocation or termination thereof or would
result in any other material impairment of the rights of the holder of
such permit; and, except as described in the Effective Prospectus, no such
permit contains any restrictions that are materially burdensome to the
holder thereof or the Affiliated Practice with which that holder is
affiliated or employed. The Company's and the Affiliated Practice's
business practices do not violate any foreign, federal or state laws
regarding dentist ownership of (or financial relationship with), and
referral to, entities providing dentistry-related goods or services, or
laws respecting financial interests held by dentists in entities to which
they may refer patients for the provision of dentistry-related goods or
services.
(r) Neither the Company, any of its subsidiaries, nor any of the
Affiliated Practices is in material violation of any federal, state, local
or foreign law or regulation relating to occupational safety and health or
to the storage, handling or transportation of hazardous or toxic
materials, and the Company, each of its subsidiaries and each Affiliated
Practice has received all permits, licenses or other approvals required of
it under applicable federal, state and foreign occupational safety and
health and environmental laws and regulations to conduct its respective
businesses, and the Company and each of its subsidiaries is in compliance
with all terms and conditions of any such permit, license or approval,
except any such violation of law or regulation, failure to receive
required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals which
would not result in a material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or prospects of the
Company or any of its subsidiaries.
(s) Neither the Company, any of its subsidiaries, nor any Affiliated
Practice has failed to file with the applicable regulatory authorities any
statements, reports, information or forms required by all applicable laws,
regulations or orders; all such filings or submissions were in compliance
with applicable laws when filed, and no deficiencies have been asserted by
any regulatory commission, agency or authority with respect to such
filings or submissions. Neither the Company, any of its subsidiaries, nor
any Affiliated Practice has failed to maintain in full force and effect
any licenses, registrations or permits necessary or proper for the conduct
of its business, or received any notification that any revocation or
limitation thereof is threatened or pending, and there is not to the
knowledge of the Company pending any change under any law, regulation,
license or permit which
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could materially adversely affect the business, operations, property or
business prospects of the Company. Neither the Company, any of its
subsidiaries, nor any Affiliated Practice has received any notice of
violation of or been threatened with a charge of violating or is under
investigation with respect to a possible violation of any provision of any
law, regulation or order.
(t) No labor dispute exists or is imminent with any of the employees
of the Company, any of its subsidiaries, nor any Affiliated Practice or
otherwise which could materially adversely affect the Company or any of
its subsidiaries. The Company is not aware of any existing or imminent
labor disturbance by employees of the Company, any of its subsidiaries or
any Affiliated Practice which could be expected to materially adversely
affect the condition (financial or otherwise), results of operations,
properties, affairs, management, business affairs or business prospects of
the Company or its subsidiaries.
(u) The Company, each of its subsidiaries and each Affiliated
Practice owns all licenses, copyrights, trademarks, service marks and
trade names presently employed by it in connection with the businesses
proposed to be operated by it, and neither the Company, any of its
subsidiaries nor any of the Affiliated Practices has received any notice
of infringement of or conflict with asserted rights of others with respect
to any of the foregoing which, alone or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, could result in any
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company or any
of its subsidiaries.
(v) The Company, each of its subsidiaries and each Affiliated
Practice is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and
customary in the businesses in which it is engaged and in which it
proposes to engage; and neither the Company, any of its subsidiaries, nor
any Affiliated Practice has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a comparable cost.
(w) Neither the Company, any of its subsidiaries, any Affiliated
Practice, nor to the knowledge of the Company, any director, officer,
agent, employee or other person acting on behalf of the Company has (i)
used, or authorized the use of, any corporate or other funds for unlawful
payments, contributions, gifts or entertainment, (ii) made unlawful
expenditures relating to political activity to government officials or
others, or (iii) established or maintained any unlawful or unrecorded
funds in violation of any federal, state, local or foreign law or
regulation, including Section 30A of the Exchange Act. Neither the Company
nor, to the knowledge of the Company, any director, officer, agent,
employee or other person acting on behalf of the Company has accepted or
received any unlawful contributions, payments, gifts or expenditures.
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(x) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become, an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940.
(y) Except as disclosed in the Registration Statement and the
Effective Prospectus, there are no business relationships or related party
transactions required to be disclosed therein by Item 404 of Regulation
S-K of the Commission.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to sell to the several Underwriters the Firm
Shares, and each of the Underwriters, severally and not jointly, agrees to
purchase at a purchase price of $______ per share, the number of Firm
Shares set forth opposite such Underwriter's name in SCHEDULE I hereto.
(b) The Company hereby grants to the Underwriters an option to
purchase, solely for the purpose of covering over-allotments in the sale
of Firm Shares, all or any portion of the Option Shares at the purchase
price per share set forth above. The option granted hereby may be
exercised as to all or any part of the Option Shares at any time within 30
days after the date of the Final Prospectus. The Underwriters shall not be
under any obligation to purchase any Option Shares prior to the exercise
of such option. The option granted hereby may be exercised by the
Underwriters by the Representatives giving written notice to the Company
setting forth the number of Option Shares to be purchased and the date and
time for delivery of and payment for such Option Shares and stating that
the Option Shares referred to therein are to be used for the purpose of
covering over-allotments in connection with the distribution and sale of
the Firm Shares. If such notice is given prior to the First Closing Date
(as defined herein), the date set forth therein for such delivery and
payment shall not be earlier than two full business days thereafter or the
First Closing Date, whichever occurs later. If such notice is given on or
after the First Closing Date, the date set forth therein for such delivery
and payment shall not be earlier than three full business days thereafter.
In either event, the date so set forth shall not be more than four full
business days after the date of such notice. The date and time set forth
in such notice is herein called the "Option Closing Date." Upon exercise
of the option, the Company shall become obligated to sell to the
Underwriters, and, subject to the terms and conditions herein set forth,
the Underwriters shall become obligated to purchase, for the account of
each Underwriter, from the Company, severally and not jointly, the number
of Option Shares specified in such notice. Option Shares shall be
purchased for the accounts of the Underwriters in proportion to the number
of Firm Shares set forth opposite such Underwriter's name in SCHEDULE I
hereto, except that the respective purchase obligations of each
Underwriter shall be adjusted so that no Underwriter shall be obligated to
purchase fractional Option Shares.
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(c) Certificates in definitive form for the Firm Shares which each
Underwriter has agreed to purchase hereunder shall be delivered by or on
behalf of the Company to the Underwriters for the account of such
Underwriter against payment by such Underwriter or on its behalf of the
purchase price therefor by wire transfer of immediately available funds to
the order of the Company, at the offices of X.X. Xxxxxxxx & Co., L.L.C.,
000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or at such other place as
may be agreed upon by the Representatives, at 10:00 A.M., Nashville time,
on the third full business day after this Agreement becomes effective, or,
at the election of the Representatives, on the fourth full business day
after this Agreement becomes effective, if it becomes effective after 4:30
P.M. Eastern time, or at such other time not later than the seventh full
business day thereafter as the Representatives and the Company may
determine, such time of delivery against payment being herein referred to
as the "First Closing Date." The First Closing Date and the Option Closing
Date are herein individually referred to as the "Closing Date" and
collectively referred to as the "Closing Dates." Certificates in
definitive form for the Option Shares which each Underwriter shall have
agreed to purchase hereunder shall be similarly delivered by or on behalf
of the Company on the Option Closing Date. The certificates in definitive
form for the Shares to be delivered will be in good delivery form and in
such denominations and registered in such names as the Representatives may
request not less than 48 hours prior to the First Closing Date or the
Option Closing Date, as the case may be. Such certificates will be made
available for checking and packaging at a location in New York, New York
as may be designated by you, at least 24 hours prior to the First Closing
Date or the Option Closing Date, as the case may be. It is understood that
the Representatives may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for the Shares to be purchased
by such Underwriter or Underwriters. No such payment shall relieve such
Underwriter or Underwriters from any of its or their obligations
hereunder.
3. OFFERING BY THE UNDERWRITERS. After the Registration Statement becomes
effective, the several Underwriters propose to offer for sale to the public the
Firm Shares and any Option Shares which may be sold at the price and upon the
terms set forth in the Final Prospectus.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with each of
the Underwriters that:
(a) The Company shall comply with the provisions of and make all
requisite filings with the Commission pursuant to Rules 424 and 430A of
the Rules and Regulations and shall notify the Representatives promptly
(in writing, if requested) of all such filings. The Company shall notify
the Representatives promptly of any request by the Commission for any
amendment of or supplement to the Registration Statement, the Effective
Prospectus or the Final Prospectus or for additional information; the
Company shall prepare and file with the Commission, promptly upon the
Representatives' request, any amendments of or supplements to the
Registration Statement, the Effective Prospectus or the Final Prospectus
which, in the Representatives' opinion, may be necessary or advisable
11
in connection with the distribution of the Shares; and the Company shall
not file any amendment of or supplement to the Registration Statement, the
Effective Prospectus or the Final Prospectus which is not approved by the
Representatives after reasonable notice thereof. The Company shall advise
the Representatives promptly of the issuance by the Commission or any
jurisdiction or other regulatory body of any stop order or other order
suspending the effectiveness of the Registration Statement, suspending or
preventing the use of any Preliminary Prospectus, the Effective Prospectus
or the Final Prospectus or suspending the qualification of the Shares for
offering or sale in any jurisdiction, or of the institution of any
proceedings for any such purpose; and the Company shall use its best
efforts to prevent the issuance of any stop order or other such order and,
should a stop order or other such order be issued, to obtain as soon as
possible the lifting thereof.
(b) The Company will take or cause to be taken all necessary action
and furnish to whomever the Representatives direct such information as may
be reasonably required in qualifying the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Underwriters
may designate and will continue such qualifications in effect for as long
as may be reasonably necessary to complete the distribution of the Shares.
(c) Within the time during which a Final Prospectus relating to the
Shares is required to be delivered under the Securities Act, the Company
shall comply with all requirements imposed upon it by the Securities Act,
as now and hereafter amended, and by the Rules and Regulations, as from
time to time in force, so far as is necessary to permit the continuance of
sales of or dealings in the Shares as contemplated by the provisions
hereof and the Final Prospectus. If during such period any event occurs as
a result of which the Final Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances then existing, not misleading, or if during such period it
is necessary to amend the Registration Statement or supplement the Final
Prospectus to comply with the Securities Act, the Company shall promptly
notify the Representatives and shall amend the Registration Statement or
supplement the Final Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(d) The Company will furnish without charge to the Representatives
and make available to the Underwriters copies of the Registration
Statement (four of which shall be signed and shall be accompanied by all
exhibits), each Preliminary Prospectus, the Effective Prospectus and the
Final Prospectus, and all amendments and supplements thereto, including
any prospectus or supplement prepared after the effective date of the
Registration Statement, in each case as soon as available and in such
quantities as the Underwriters may reasonably request.
12
(e) The Company will (A) deliver to the Representatives at such
office or offices as the Representatives may designate as many copies of
the Preliminary Prospectus and Final Prospectus as the Representatives may
reasonably request, (B) for a period of not more than nine months after
the Registration Statement becomes effective, send to the Underwriters as
many additional copies of the Final Prospectus and any supplement thereto
as the Representatives may reasonably request, and (C) following nine
months after the Registration Statement becomes effective, send to the
Underwriters at their expense as many additional copies of the Final
Prospectus and any supplement thereto as the representatives may
reasonably request.
(f) The Company shall make generally available to its security
holders, in the manner contemplated by Rule 158(b) under the Securities
Act as promptly as practicable and in any event no later than 45 days
after the end of its fiscal quarter in which the first anniversary of the
effective date of the Registration Statement occurs, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act covering
a period of at least 12 consecutive months beginning after the effective
date of the Registration Statement.
(g) The Company will apply the net proceeds from the sale of the
Shares to be sold by it as set forth under the caption "Use of Proceeds"
in the Final Prospectus and will timely file reports on Form SR with the
Commission in accordance with Rule 463 of the Securities Act or any
successor provision.
(h) During a period of five years from the effective date of the
Registration Statement or such longer period as the Representatives may
reasonably request, the Company will furnish to the Representatives copies
of all reports and other communications (financial or other) furnished by
the Company to its shareholders and, as soon as available, copies of any
reports or financial statements furnished or filed by the Company to or
with the Commission or any national securities exchange on which any class
of securities of the Company may be listed.
(i) The Company will, from time to time, after the effective date of
the Registration Statement file with the Commission such reports as are
required by the Securities Act, the Exchange Act and the Rules and
Regulations, and shall also file with foreign, state and other
governmental securities commissions in jurisdictions where the Shares have
been sold by the Underwriters (as the Representatives shall have advised
the Company in writing) such reports as are required to be filed by the
securities acts and the regulations of those states.
(j) Except pursuant to this Agreement or with the Representatives'
written consent, for a period of 180 days from the effective date of the
Registration Statement, the Company will not, and the Company has provided
agreements executed by each of its executive officers, directors and all
of its stockholders providing that for a period of 180
13
days from the effective date of the Registration Statement, such person
will not, offer to sell (other than the issuance by the Company of shares
of Common Stock pursuant to the exercise of options granted pursuant to
existing employee benefit plans and agreements), grant any options (other
than pursuant to existing employee benefit plans and agreements), rights
or warrants with respect to any shares of Common Stock, securities
convertible into shares of Common Stock or any other capital stock of the
Company, or otherwise dispose of, directly or indirectly, any shares of
Common Stock or such other securities or capital stock, except in the case
of the Company, shares of Common Stock issued in connection with
acquisitions to parties that agree to be bound by the same restrictions on
offers and sales.
(k) Neither the Company nor any of its officers, directors or
affiliates will take, directly or indirectly, any action designed to cause
or result in, or which might constitute or be expected to constitute,
stabilization or manipulation of the price of the Common Stock.
(l) The Company will either conduct its business and operations as
described in the Final Prospectus or, if the Company makes any material
change to its business or operations as so conducted, promptly disclose
such change generally to the Company's securityholders.
(m) If at any time during the 25-day period after the Registration
Statement is declared effective, any rumor, publication or event relating
to or affecting the Company shall occur as a result of which, in the
Representatives' opinion, the market price for the Shares has been or is
likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Final Prospectus), the Company will, after written notice from the
Representatives advising it as to the effect set forth above, prepare,
consult with the Representatives concerning the substance of and, subject
to the Rules and Regulations, disseminate a press release or other public
statement, reasonably satisfactory to the Representatives, responding to
or commenting on such rumor, publication or event.
(n) The Company will use its best efforts to effect the listing of
the Common Stock, subject to notice of issuance, on Nasdaq on or before
the effective date of the Registration Statement.
(o) Subject to the terms thereof, the Company will do and perform
its obligations under each of the Operative Documents to which it is a
party, to the extent required to consummate the transactions set forth
therein, and all things required to be done or performed prior to the
Closing Date pursuant to this Agreement.
5. EXPENSES. The Company agrees with the Underwriters that (a) whether or
not the transactions contemplated by this Agreement are consummated or this
Agreement becomes
14
effective or is terminated, the Company will pay all fees and expenses incident
to the performance of the obligations of the Company hereunder, including, but
not limited to, (i) the Commission's registration fee, (ii) the expenses of
printing (or reproduction) and distributing the Registration Statement
(including the financial statements therein and all amendments and exhibits
thereto), each Preliminary Prospectus, the Effective Prospectus, the Final
Prospectus, any amendments or supplements thereto, any Marketing Materials (as
defined herein) and this Agreement and other underwriting documents, including
Underwriter's Questionnaires, Underwriter's Powers of Attorney, Blue Sky
Memoranda, Agreements Among Underwriters and Selected Dealer Agreements, (iii)
fees and expenses of accountants and counsel for the Company, (iv) expenses of
registration or qualification of the Shares under state Blue Sky and securities
laws, including the fees and disbursements of counsel to the Underwriters in
connection therewith, (v) filing fees paid or incurred by the Underwriters in
connection with filings with the NASD, (vi) expenses of listing the outstanding
Common Stock on Nasdaq, (vii) all travel, lodging and reasonable living expenses
incurred by the Company in connection with marketing, dealer and other meetings
attended by the Company and the Underwriters in marketing the Shares, (viii) the
costs and charges of the Company's transfer agent and registrar and the cost of
preparing the certificates for the Shares and (ix) all other costs and expenses
incident to the performance of its obligations hereunder not otherwise provided
for in this Section; and (b) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, incurred by the Underwriters in connection with
investigating, preparing to market and marketing the Shares and proposing to
purchase and purchasing the Shares under this Agreement, will be borne and paid
by the Company if the sale of the Shares provided for herein is not consummated
(i) by reason of the termination of this Agreement by the Company pursuant to
SECTION 12(A)(I) or (ii) by reason of the termination of this Agreement by the
Representatives pursuant to SECTION 12(B)(II) OR (IV) of this Agreement.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The respective obligations
of the Underwriters to purchase and pay for the Firm Shares shall be subject to
the accuracy of the representations and warranties of the Company herein as of
the date hereof and as of the Closing Date as if made on and as of the Closing
Date, to the accuracy of the statements of the Company's officers made pursuant
to the provisions hereof, to the performance by the Company of all of their
respective covenants and agreements hereunder and to the following additional
conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 5:30 P.M., Washington,
D.C. time, on the day following the date of this Agreement, or such later
time and date as shall have been consented to by the Representatives, and
all filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or,
to the knowledge of the Company or the Underwriters, shall be contemplated
by the Commission; any request of the Commission for additional
information (to be included in the Registration Statement or the Final
Prospectus or otherwise) shall have been complied with to the
Representatives' satisfaction; and the NASD, upon review of the terms of
the public offering of the Shares,
15
shall not have objected to such offering, such terms or the Underwriters'
participation in the same.
(b) No Representative shall have advised the Company that the
Registration Statement, Preliminary Prospectus, the Effective Prospectus
or Final Prospectus, or any amendment or any supplement thereto, contains
an untrue statement of fact which, in the Representatives' reasonable
judgment, is material, or omits to state a fact which, in the
Representatives' reasonable judgment, is material and is required to be
stated therein or necessary to make the statements therein not misleading
and the Company shall not have cured such untrue statement of fact or
stated a statement of fact required to be stated therein.
(c) The Representatives shall have received an opinion, dated the
Closing Date, from Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel for the Company,
in substantially the form of Exhibit 6(c) attached hereto.
The opinion to be rendered pursuant to this paragraph (c) may be limited
to federal law, and as to foreign and state law matters, to the laws of the
states or jurisdictions in which such counsel is admitted to practice and the
law of the State of Delaware. Such counsel may rely upon opinions of other
counsel in rendering such opinions provided that such counsel shall state that
they believe that both the Representatives and they are justified in relying
upon such opinions and that such counsel is reasonably satisfactory to you.
(d) The Underwriters shall have received an opinion or opinions,
dated the Closing Date, of Bass, Xxxxx & Xxxx PLC, counsel for the
Underwriters, with respect to the Registration Statement and the Final
Prospectus, and such other related matters as the Underwriters may
require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them
to pass upon such matters.
(e) The Representatives shall have received from Coopers & Xxxxxxx
L.L.P., a letter dated the date hereof and, at the Closing Date, a second
letter dated the Closing Date, in form and substance satisfactory to the
Representatives, stating that they are independent public accountants with
respect to the Company within the meaning of the Securities Act and the
applicable Rules and Regulations, and containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information of the Company contained in the Registration
Statement and the Prospectus.
In the event that the letters to be delivered referred to above set forth
any such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that the Underwriters shall have determined,
after discussions with officers of the Company responsible for financial and
accounting matters and with Coopers & Xxxxxxx L.L.P., that such
16
changes, decreases or increases as are set forth in such letters do not reflect
a material adverse change in the total assets, stockholders' equity or long-term
debt of the Company as compared with the amounts shown in the latest balance
sheets of the Company included in the Final Prospectus, or a material adverse
change in revenues or net income of the Company, in each case as compared with
the corresponding period of the prior year.
(f) There shall have been furnished to the Representatives a
certificate, dated the Closing Date and addressed to you, signed by the
Chief Executive Officer and Chief Financial Officer of the Company, to the
effect that:
(i) the representations and warranties of the Company in
SECTION 1 of this Agreement are true and correct, as if made at and
as of the Closing Date, and the Company has 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;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been initiated or are pending, or to their knowledge,
threatened under the Securities Act;
(iii) all filings required by Rule 424 and Rule 430A of the
Rules and Regulations have been made;
(iv) they have carefully examined the Registration Statement,
the Effective Prospectus and the Final Prospectus, and any
amendments or supplements thereto, and such documents do not include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
under which they were made; and
(v) since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amendment
or supplement to the Registration Statement, the Effective
Prospectus or the Final Prospectus which has not been so set forth.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Final Prospectus, and except
as stated therein, the Company has not sustained any material loss or
interference with its business or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any court or governmental action, order or decree, or
become a party to or the subject of any litigation which is material to
the Company, nor shall there have been any material adverse change, or any
development involving a prospective material adverse change, in the
business, properties, key personnel, capitalization, prospects, net worth,
results of operations or condition (financial or other) of the Company,
which loss,
17
interference, litigation or change, in the Representatives' reasonable
judgment shall render it unadvisable to commence or continue the offering
of the Shares at the offering price to the public set forth on the cover
page of the Prospectus or to proceed with the delivery of the Shares.
(h) The Shares shall be listed on Nasdaq.
(i) The Representatives shall have received the Lockup Agreements.
(j) The Company shall have consummated the acquisition of a
multi-location dental practice in Austin, Texas (the "Austin
Acquisition"), as such acquisition is referred to and described in the
Registration Statement.
(k) The Company shall have received appropriate waivers under its
bank credit facility or entered into an amended or replacement credit
facility permitting the Company to apply the proceeds of the offering as
stated in "Use of Proceeds" in the Registration Statement.
(l) The Series A convertible preferred stock and the Series C
convertible preferred stock of the Company shall be converted into an
aggregate of 948,243 shares of Common Stock upon consummation of the
Offering, as contemplated in the Registration Statement.
All such opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory to the Representatives and their counsel. The Company
shall furnish to the Representatives such conformed copies of such opinions,
certificates, letters and documents in such quantities as the Representatives
shall reasonably request.
The respective obligations of the Underwriters to purchase and pay for the
Option Shares shall be subject, in their discretion, to the conditions of this
SECTION 6, except that all references to the "Closing Date" shall be deemed to
refer to the Option Closing Date, if it shall be a date other than the Closing
Date.
7. CONDITION OF THE COMPANY'S OBLIGATIONS. The obligations hereunder of
the Company are subject to the condition set forth in SECTION 6(A) hereof.
18
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, and each person, if any, who controls any Underwriter within
the meaning of the Securities Act, against any losses, claims, damages or
liabilities to which such Underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based in whole or in part upon: (i) any inaccuracy in the
representations and warranties of the Company contained herein; (ii) any
failure of the Company to perform its obligations hereunder or under law;
(iii) any untrue statement or alleged untrue statement of any material
fact contained in (A) the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or Final Prospectus, or any amendment
or supplement thereto, (B) any audio or visual materials supplied by the
Company expressly for use in connection with the marketing of the Shares,
including without limitation, slides, videos, films and tape recordings
(the "Marketing Materials"), or (C) in any Blue Sky application or other
written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Shares under the
securities laws thereof (a "Blue Sky Application"); (iv) the omission or
alleged omission to state in the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or Final Prospectus or any amendment
or supplement thereto, any Marketing Materials or Blue Sky Application a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or (v) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby,
and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters covered
by clause (i), (ii), (iii) or (iv) above (PROVIDED, that the Company shall
not be liable under this clause (v) to the extent that it is determined in
a final judgment by a court of competent jurisdiction that such loss,
claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter
through its gross negligence or willful misconduct); and will reimburse
each Underwriter and each such controlling person for any legal or other
expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, the Preliminary
Prospectus, the Effective Prospectus or Final Prospectus, or any amendment
or supplement thereto, or any Marketing Materials or Blue Sky Application
in reliance upon and in conformity with written information furnished to
the Company by any Underwriter specifically for use therein (it being
understood that the only information so provided is the information
included in the last paragraph on the cover page and in the first and
third paragraphs under the caption "Underwriting" in any Preliminary
Prospectus and in the Final Prospectus and the Effective Prospectus).
19
(b) Each Underwriter will indemnify and hold harmless the Company,
each of its directors, each of the Company's officers who signed the
Registration Statement and each person, if any, who controls the Company
within the meaning of the Securities Act against any losses, claims,
damages or liabilities to which the Company or any such director, officer
or controlling person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Effective
Prospectus or Final Prospectus, or any amendment or supplement thereto,
any Marketing Materials or any Blue Sky Application, or arise out of or
are based upon the omission or the alleged omission to state in the
Registration Statement, any Preliminary Prospectus, the Effective
Prospectus or Final Prospectus, or any amendment or supplement thereto,
any Marketing Materials or any Blue Sky Application a material fact
required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically for
use therein (it being understood that the only information so provided is
the information included in the last paragraph on the cover page and in
the first and third paragraphs under the caption "Underwriting" in any
Preliminary Prospectus and in the Final Prospectus and the Effective
Prospectus).
(c) Promptly after receipt by an indemnified party under this
SECTION 8 of notice of the commencement of any action, including
governmental proceedings, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this
SECTION 8, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party hereunder unless
the indemnifying party has been materially prejudiced thereby and in any
event shall not relieve it from liability otherwise than under this
SECTION 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein, and to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this SECTION 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, except that
the indemnified party shall have the right to employ separate counsel if,
in the indemnified party's reasonable judgment, it is advisable for the
indemnified party to be represented by separate counsel, and in that event
the fees and expenses of separate counsel shall be paid by the
indemnifying party.
20
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the
preceding part of this SECTION 8 is for any reason held to be unavailable
to the Underwriters or the Company or is insufficient to hold harmless an
indemnified party, then the Company shall contribute to the damages paid
by the Underwriters, and the Underwriters shall contribute to the damages
paid by the Company; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The amount of such
contribution shall (i) be in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and
the Underwriters on the other from the offering of the Shares or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, be in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other
with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Underwriters on the other with respect
to such offering shall be deemed to be in the same proportion as the total
net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company, in the case
of the Company, and the total underwriting discount received by the
Underwriters with respect to the Shares purchased under this Agreement, in
the case of the Underwriters, bear to the total gross proceeds from the
offering of the Shares under this Agreement, in each case as set forth in
the Prospectus. The relative fault shall be determined by reference to
whether the 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 the Underwriters, the intent of the
parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation
(even if the Underwriters were treated as one entity for such purpose).
Notwithstanding the foregoing, no Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in the
aggregate exceeds the underwriting discount applicable to the Shares
purchased by such Underwriter under this Agreement, less the aggregate
amount of any damages which such Underwriter and its controlling persons
have otherwise been required to pay in respect of the same or any similar
claim. The Underwriters' obligations to contribute hereunder are several
in proportion to their respective obligations and not joint. For purposes
of this Section, each person, if any, who controls an Underwriter within
the meaning of Section 15 of the Securities Act shall have the same rights
to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, shall have the same rights to
contribution as the Company.
21
(e) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified
party is a party or is (or would be, if a claim were to be made against
such indemnified party) entitled to indemnity hereunder, unless such
settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such action,
suit or proceeding.
9. DEFAULT OF UNDERWRITERS. If any Underwriter defaults in its obligation
to purchase Shares hereunder, and if the total number of Shares which such
defaulting Underwriter agreed but failed to purchase is ten percent or less of
the total number of Shares to be sold hereunder, the non-defaulting Underwriters
shall be obligated severally to purchase (in the respective proportions which
the number of Shares set forth opposite the name of each non-defaulting
Underwriter in SCHEDULE I hereto bears to the total number of Shares set forth
opposite the names of all the non-defaulting Underwriters), the Shares which
such defaulting Underwriter or Underwriters agreed but failed to purchase. If
any Underwriter so defaults and the total number of Shares with respect to which
such default or defaults occur is more than ten percent of the total number of
Shares to be sold hereunder, and arrangements satisfactory to the other
Underwriters and the Company for the purchase of such Shares by other persons
(who may include the non-defaulting Underwriters) are not made within 36 hours
after such default, this Agreement, insofar as it relates to the sale of the
Shares, will terminate without liability on the part of the non-defaulting
Underwriters or the Company except for (i) the provisions of SECTION 8 hereof,
and (ii) the expenses to be paid or reimbursed by the Company pursuant to
SECTION 5. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this SECTION 9. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.
10. SURVIVAL CLAUSE. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company or its
officers and the Underwriters set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (a) any investigation made by or on behalf of
the Company, any of its officers or its directors, any Underwriter or any
controlling person, (b) any termination of this Agreement or (c) delivery of and
payment for the Shares.
11. EFFECTIVE DATE. This Agreement shall become effective at whichever of
the following times shall first occur: (i) at 11:30 A.M., Washington, D.C. time,
on the next full business day following the date on which the Registration
Statement becomes effective or (ii) at such time after the Registration
Statement has become effective as the Representatives shall release the Firm
Shares for sale to the public; provided, however, that the provisions of
SECTIONS 5, 8, 10 AND 11 hereof shall at all times be effective. For purposes of
this SECTION 11, the Firm Shares shall be deemed to have been so released upon
the release by the Representatives for publication, at any time after the
Registration Statement has become effective, of any newspaper advertisement
relating to the Firm Shares or upon the release by the Representatives of
telegrams offering the Firm Shares for sale to securities dealers, whichever may
occur first.
22
12. TERMINATION.
(a) The Company's obligations under this Agreement may be terminated
by the Company by notice to the Representatives (i) at any time before it
becomes effective in accordance with SECTION 11 hereof, or (ii) in the
event that the condition set forth in SECTION 7 shall not have been
satisfied at or prior to the First Closing Date.
(b) This Agreement may be terminated by the Representatives by
notice to the Company (i) at any time before it becomes effective in
accordance with SECTION 11 hereof; (ii) in the event that at or prior to
the First Closing Date the Company shall have failed, refused or been
unable to perform any agreement on the part of the Company to be performed
hereunder or any other condition to the obligations of the Underwriters
hereunder is not fulfilled; (iii) if at or prior to the Closing Date
trading in securities on Nasdaq, the American Stock Exchange or the
over-the-counter market shall have been suspended or materially limited or
minimum or maximum prices shall have been established on either of such
exchanges or such market or a banking moratorium shall have been declared
by Federal or state authorities; (iv) if at or prior to the Closing Date
trading in securities of the Company shall have been suspended; or (v) if
there shall have been such a material adverse change in general economic,
political or financial conditions or if the effect of international
conditions on the financial markets in the United States shall be such as,
in your reasonable judgment, makes it inadvisable to commence or continue
the offering of the Shares at the offering price to the public set forth
on the cover page of the Prospectus or to proceed with the delivery of the
Shares.
(c) Termination of this Agreement pursuant to this SECTION 12 shall
be without liability of any party to any other party other than as
provided in SECTIONS 5 AND 8 hereof.
13. NOTICES. All communications hereunder shall be in writing and, if sent
to any of the Underwriters, shall be mailed or delivered or telegraphed and
confirmed in writing to the Representatives in care of X. X. Xxxxxxxx &
Co.,L.L.C., X. X. Xxxxxxxx Financial Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx 00000, Attention: Xxxxxxxxx Xxxxxxx-Xxxxx, or if sent to the Company
shall be mailed, delivered or telegraphed and confirmed in writing to the
Company at 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000-0000,
Attention: Xxxx X. Xxxxxx, Xx.
14. MISCELLANEOUS. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company and its successors and legal
representatives. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any other person any legal or equitable right, remedy
or claim under or in respect of this Agreement. This Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the Company and the several Underwriters and for the benefit of no
other person except that (a) the representations and warranties and indemnities
of the Company contained in this Agreement shall also be for the benefit of any
person or persons who control any Underwriter
23
within the meaning of Section 15 of the Securities Act, and (b) the indemnities
by the Underwriters shall also be for the benefit of the directors of the
Company, officers of the Company who have signed the Registration Statement and
any person or persons who control the Company within the meaning of Section 15
of the Securities Act. No purchaser of Shares from any Underwriter will be
deemed a successor because of such purchase. The validity and interpretation of
this Agreement shall be governed by the laws of the State of Tennessee. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. The Representatives hereby represent and warrant to the Company that
they have authority to act hereunder on behalf of the several Underwriters, and
any action hereunder taken by the Representatives will be binding upon all the
Underwriters.
If the foregoing is in accordance with your understanding of our
agreement, please indicate your acceptance thereof in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among the Company and each of the several Underwriters.
Very truly yours,
CASTLE DENTAL CENTERS, INC.
By:
Title: President and Chief Executive Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
X. X. XXXXXXXX & CO., L.L.C.
SOUTHCOAST CAPITAL CORPORATION
By: X.X. XXXXXXXX & CO., L.L.C.
For themselves and as
Representatives of the Several
Underwriters
By:
Title: Partner
533917.3
24
SCHEDULE I
UNDERWRITERS
NUMBER OF
FIRM SHARES TO
NAME OF UNDERWRITER BE PURCHASED
------------------- --------------
X.X. Xxxxxxxx & Co..................................
Southcoast Capital Corporation......................
--------------
Total............................................... 2,500,000
==============
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