<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 1997
REGISTRATION NO. 333-36799
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
ORTHODONTIC CENTERS OF AMERICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 72-1278948
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
5000 SAWGRASS VILLAGE CIRCLE, SUITE 25
PONTE VEDRA BEACH, FLORIDA 32082
(904) 280-4500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
DR. GASPER LAZZARA, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ORTHODONTIC CENTERS OF AMERICA, INC.
5000 SAWGRASS VILLAGE CIRCLE, SUITE 25
PONTE VEDRA BEACH, FLORIDA 32082
(904) 280-4500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
J. CHASE COLE, ESQ. JEFFREY M. STEIN, ESQ.
WALLER LANSDEN DORTCH & DAVIS, PLLC KING & SPALDING
2100 NASHVILLE CITY CENTER 191 PEACHTREE, N.E.
NASHVILLE, TENNESSEE 37219-1760 ATLANTA, GEORGIA 30303-1763
(615) 244-6380 (404) 572-4600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses of this offering, which are to be paid by the Company, are
estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............. $ 34,771
National Association of Securities Dealers, Inc. Fee............ 11,975
State Qualification Expenses (including legal fees)............. 1,000
Printing Expenses............................................... 175,000
Legal Fees and Expenses......................................... 100,000
Auditors' Fees and Expenses..................................... 100,000
Transfer Agent and Registrar Fees............................... 5,000
Miscellaneous Expenses.......................................... 177,746
--------
Total......................................................... $600,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law grants corporations the
power to indemnify their directors, officers, employees and agents in
accordance with the provisions thereof. The Registrant's Restated Certificate
of Incorporation provides for indemnification of Registrant's directors,
officers, agents and employees to the full extent permissible under Section
145 of the Delaware General Corporation Law.
See Section 8 of the Underwriting Agreement.
Presently there is no pending litigation or proceeding involving a director
or officer of the Company as to which indemnification is being sought, nor is
the Company aware of any threatened litigation that may result in claims for
indemnification by any officer or director.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
1.1 --Underwriting Agreement*
3.1 --Restated Certificate of Incorporation of the Registrant**
3.2 --Bylaws of the Registrant(1)
4.1 --Specimen Stock Certificate(1)
5.1 --Opinion of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company**
21.1 --List of subsidiaries of the Registrant(2)
23.1 --Consent of Ernst & Young LLP**
23.2 --Consent of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company (included in Exhibit 5.1)**
24.1 --Power of Attorney**
</TABLE>
- --------
(1) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1, Registration Statement No. 33-85326.
(2) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996.
* Filed herewith.
** Previously filed.
II-1
<PAGE>
(b) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the Commission are not required under the related instructions
or are inapplicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purpose of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Ponte Vedra Beach,
State of Florida, on October 31, 1997.
ORTHODONTIC CENTERS OF AMERICA, INC.
/s/ Gasper Lazzara, Jr., D.D.S.
By:__________________________________
Gasper Lazzara, Jr., D.D.S.
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment to the Registration Statement has been signed by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Gasper Lazzara, Jr., D.D.S. Chairman of the Board, Chief October 31, 1997
____________________________________ Executive Officer and
Gasper Lazzara, Jr., D.D.S. Director (principal
executive officer)
* Chief Financial Officer, October 31, 1997
____________________________________ Senior Vice-President,
Bartholomew F. Palmisano, Sr. Treasurer, Secretary and
Director (principal
financial accounting
officer)
* President and Director October 31, 1997
____________________________________
Geoffrey L. Faux
* Chief Operating Officer and October 31, 1997
____________________________________ Director
Michael C. Johnsen
* Director October 31, 1997
____________________________________
Edward J. Walters, Jr.
* Director October 31, 1997
____________________________________
A Gordon Tunstall
* Director October 31, 1997
____________________________________
Ashton J. Ryan, Jr.
</TABLE>
/s/ Gasper Lazzara, Jr.,
D.D.S.
*By: __________________________
Gasper Lazzara, Jr., D.D.S.
Attorney-in-fact
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
1.1 --Underwriting Agreement*
3.1 --Restated Certificate of Incorporation of the Registrant**
3.2 --Bylaws of the Registrant(1)
4.1 --Specimen Stock Certificate(1)
5.1 --Opinion of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company**
21.1 --List of subsidiaries of the Registrant(2)
23.1 --Consent of Ernst & Young LLP**
23.2 --Consent of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company (included in Exhibit 5.1)**
24.1 --Power of Attorney**
</TABLE>
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(1) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1, Registration Statement No. 33-85326.
(2) Incorporated by reference to exhibits filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996.
* Filed herewith.
** Previously filed.
<PAGE>
EXHIBIT 1.1
5,200,000 Shares
ORTHODONTIC CENTERS OF AMERICA, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
_____________, 1997
<PAGE>
___________, 1997
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Morgan Stanley & Co. International Limited
Merrill Lynch International
Prudential-Bache Securities (U.K.) Inc.
Smith Barney Inc.
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs and Mesdames:
Orthodontic Centers of America, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters (identified
in Schedules I and II hereto) 2,600,000 shares of the Common Stock, par value
$.01 per share, of the Company, and the Selling Stockholders (identified in
Schedule III hereto) propose to sell to the several Underwriters 2,600,000
shares of the Common Stock, par value $.01 per share, of the Company
(collectively, the "Firm Shares").
It is understood that, subject to the conditions hereinafter stated,
4,160,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. and International Underwriters of even date herewith),
and 1,040,000 Firm Shares (the "International Shares") will be sold to the
several International Underwriters named in Schedule II hereto (the
"International Underwriters") in connection with the offering and sale of such
International Shares outside the Untied States and Canada to persons other than
United States and Canadian Persons. Morgan Stanley & Co. Incorporated, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Prudential Securities Incorporated
and Smith Barney Inc. shall act as representatives (the "U.S. Representatives")
of the several U.S. Underwriters, and Morgan Stanley & Co. International
Limited, Merrill Lynch International, Prudential-Bache Securities (U.K.) Inc.
and Smith Barney Inc. shall act as representatives (the "International
Representatives") of the several
<PAGE>
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the Underwriters.
The Selling Stockholders identified in Schedule III hereto as the Group 1
Selling Stockholders (the "Group 1 Selling Stockholders") severally propose to
sell to the several U.S. Underwriters the additional number of shares of the
Common Stock, par value $.01 per share, of the Company set forth in Schedule IV
hereto opposite the name of each Group 1 Selling Stockholder for a total of not
more than an additional 780,000 shares (the "Additional Shares") if and to the
extent that the U.S. Representatives shall have determined to exercise, on
behalf of the U.S. Underwriters, the right to purchase such shares of common
stock granted to the U.S. Underwriters in Section 4 hereof. The Firm Shares and
the Additional Shares are hereinafter collectively referred to as the "Shares."
The shares of Common Stock, par value $.01 per share, of the Company to be
outstanding after giving effect to the sales contemplated hereby are hereinafter
referred to as the "Common Stock." The Company and the Selling Stockholders are
hereinafter sometimes collectively referred to as the "Sellers."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement contains two prospectuses to be used in
connection with the offering and sale of the Shares: the U.S. prospectus, to be
used in connection with the offering and sale of Shares in the United States and
Canada to United States and Canadian Persons, and the international prospectus,
to be used in connection with the offering and sale of Shares outside the United
States and Canada to persons other than United States and Canadian Persons. The
international prospectus is identical to the U.S. prospectus except for the
outside front cover page. The registration statement as amended at the time it
becomes effective, including the information (if any) incorporated by reference
therein or deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended
(the "Securities Act"), is hereinafter referred to as the "Registration
Statement"; the U.S. prospectus and the international prospectus in the
respective forms first used to confirm sales of Shares are hereinafter
collectively referred to as the "Prospectus." If the Company has filed an
abbreviated registration statement to register additional shares of Common Stock
pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND GROUP 1 SELLING
-----------------------------------------------------------------
STOCKHOLDERS. The Company and the Group 1 Selling Stockholders jointly and
- ------------
severally represent and warrant to and agree with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
2
<PAGE>
(b) (i) The Registration Statement, including all information
incorporated by reference therein, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement and the Prospectus,
including all information incorporated by reference therein, comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder and the Securities Exchange Act of 1934, as
amended, and the applicable rules and regulations of the Commission
thereunder (the "Exchange Act") and (iii) the Prospectus, including all
information incorporated by reference therein, does not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph 1(b) do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(c) The Company and each of its subsidiaries listed in Exhibit 21 to
the Registration Statement have been duly organized and are validly
existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation and are duly qualified to
transact business as foreign corporations and are in good standing under
the laws of all other jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses
requires such qualification, except where the failure to be so qualified
does not amount to a material liability or disability to the Company and
its subsidiaries, taken as a whole.
(d) The Company and each of its subsidiaries has full power (corporate
and other) to own or lease their respective properties and conduct their
respective businesses as described in the Registration Statement and the
Prospectus; and the Company has full power (corporate and other) to enter
into this Agreement and to carry out all the terms and provisions hereof to
be carried out by it.
(e) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and are owned beneficially by the Company free and clear
of any security interests, liens, encumbrances, equities or claims.
(f) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus. All of the issued shares of
capital stock of the Company, including but not limited to the Firm Shares
and the Additional Shares, have been duly authorized and validly issued and
are fully paid and nonassessable. No holders of outstanding shares of
capital stock of the Company are entitled as such to any preemptive or
other rights to
3
<PAGE>
subscribe for any of the Shares, and no holder of securities of the Company
has any right which has not been fully exercised or waived to require the
Company to register the offer or sale of any securities owned by such
holder under the Securities Act in the public offering contemplated by this
Agreement.
(g) The capital stock of the Company conforms to the description
thereof contained, or incorporated by reference, in the Prospectus.
(h) The consolidated financial statements and schedules of the Company
and its consolidated subsidiaries included in the Registration Statement
and the Prospectus fairly present the financial position of the Company and
its consolidated subsidiaries and the results of operations and changes in
financial condition as of the dates and periods therein specified. Such
financial statements and schedules have been prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved (except as otherwise noted therein). The selected
financial and operating data set forth under the caption "Selected
Financial and Operating Data" in the Prospectus and in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 and in the
quarterly reports on Form 10-Q for the quarters ended March 31, 1997 and
June 30, 1997 fairly present, on the basis stated in each of the Prospectus
and such Annual Report and quarterly reports, the information included
therein.
(i) Ernst & Young LLP, who have audited certain financial statements
of the Company and its consolidated subsidiaries and delivered their report
with respect to the audited consolidated financial statements and schedules
included and incorporated by reference in the Registration Statement, are
independent public accountants as required by the Securities Act and the
applicable rules and regulations thereunder.
(j) The execution and delivery of this Agreement have been duly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(k) No legal or governmental proceedings are pending to which the
Company, any of its subsidiaries or any of the orthodontic entities with
which the Company or any of its subsidiaries have service, management or
consulting agreements (collectively, the "Orthodontic Entities") is a party
or to which the property of the Company, any of its subsidiaries or any of
the Orthodontic Entities is subject that are required to be described in
the Registration Statement or the Prospectus, and no such proceedings have
been threatened against the Company, any of its subsidiaries or any of the
Orthodontic Entities or with respect to any of their respective properties;
no contract or other document is required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that is not described therein or filed as
required; after due inquiry, management of the Company does not know of any
legal or governmental proceedings
4
<PAGE>
pending against any orthodontist practicing in any Orthodontic Entity (an
"Affiliated Orthodontist"), which could reasonably be expected to result in
a material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company and
its subsidiaries.
(l) The compliance by the Company with the other provisions of this
Agreement and the consummation of the other transactions herein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as have been obtained, such as may be required under state securities
or blue sky laws and, if the registration statement filed with respect to
the Shares (as amended) is not effective under the Securities Act as of the
time of the execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Securities Act, or (B)
conflict with or result in a breach or violation of any terms and
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties are bound, or the
charter documents or by-laws of the Company of any of its subsidiaries, or
any statute or any judgment, decree, order, rule or regulation of any court
or other governmental authority or any arbitrator applicable to the Company
or any of its subsidiaries.
(m) The Company has not, directly or indirectly, (A) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale
of the Shares or (B) since the filing of the Registration Statement (I)
sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Shares or (II) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.
(n) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) the Company and
its subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (B) the Company has not purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock; and (C) there
has not been any material change in the capital stock, short-term debt or
long-term debt of the Company and its consolidated subsidiaries, except in
each case as described in or contemplated by the Prospectus.
(o) The Company and each of its subsidiaries have good and marketable
title in fee simple to all items of real property and marketable title to
all personal property owned by each of them, in each case free and clear of
any security interests, liens, encumbrances, equities, claims and other
defects, except such as do not materially and adversely affect the value of
such property and do not interfere with the use made or proposed to be made
of such
5
<PAGE>
property by the Company or such subsidiary, and any real property and
buildings held under lease by the Company or any such subsidiary are held
under valid, subsisting and enforceable leases, with such exceptions as are
not material and do not interfere with the use made or proposed to be made
of such property and buildings by the Company or such subsidiary, in each
case except as described in or contemplated by the Prospectus.
(p) No labor dispute with the employees of the Company, any of its
subsidiaries or any Orthodontic Entity exists or is threatened or imminent
that could result in a material adverse change in the condition (financial
or otherwise), business prospects, net worth or results of operations of
the Company and its subsidiaries taken as a whole, except as described in
or contemplated by the Prospectus.
(q) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent applications, trademarks,
service marks, trade names, licenses, copyrights and proprietary or other
confidential information currently employed by them in connection with
their respective businesses, and neither the Company nor any such
subsidiary or, to the knowledge of the management of the Company after due
inquiry, any Orthodontic Entity has received any notice of infringement of
or conflict with asserted rights of any third party with respect to any of
the foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material adverse
change in the condition (financial or otherwise), business prospects, net
worth or results of operations of the Company and its subsidiaries, except
as described in or contemplated by the Prospectus.
(r) The Company, each of its subsidiaries and each Orthodontic Entity
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 they are engaged; neither the Company nor any such
subsidiary or Orthodontic Entity has been refused any insurance coverage
sought or applied for; and neither the Company nor any such subsidiary or
Orthodontic Entity 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 cost that would not materially and adversely
affect the condition (financial or otherwise), business prospects, net
worth, or results of operations of the Company and its subsidiaries taken
as a whole, except as described in or contemplated by the Prospectus.
(s) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or
any other subsidiary of the Company, except as described in or contemplated
by the Prospectus.
6
<PAGE>
(t) The Company, its subsidiaries and the Orthodontic Entities possess
all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary or,
to the knowledge of the management of the Company after due inquiry,
Orthodontic Entity has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a material adverse change in
the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, except as
described in or contemplated by the Prospectus.
(u) The Company will conduct its operations in a manner that will not
subject it to registration as an investment company under the Investment
Company Act of 1940, as amended, and this transaction will not cause the
Company to become an investment company subject to registration under such
Act.
(v) The Company and its subsidiaries (and the Predecessor Entities, as
that term is defined in the Prospectus) have filed all foreign, federal,
state and local tax returns that are required to be filed or have requested
extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the Company and its
subsidiaries taken as a whole) and have paid all taxes required to be paid
by them and any other assessment, fine or penalty levied against them, to
the extent that any of the foregoing is due and payable, except for any
such assessment, fine or penalty that is currently being contested in good
faith or as described in or contemplated by the Prospectus.
(w) Neither the Company, nor any of its subsidiaries or, to the
knowledge of the management of the Company after due inquiry, any of the
Orthodontic Entities is in violation of any federal or state law or
regulation relating to occupational safety and health or to the storage,
handling or transportation of hazardous or toxic material, and the Company,
its subsidiaries and, to the knowledge of the management of the Company
after due inquiry, the Orthodontic Entities have received all permits,
licenses or other approvals required of them under applicable federal and
state occupational safety and health and environmental laws and regulations
to conduct their respective businesses, and the Company and each such
subsidiary 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, singly or in the aggregate,
result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries, except as described in or contemplated by the
Prospectus.
7
<PAGE>
(x) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
(y) Except for the shares of capital stock of each of the subsidiaries
owned by the Company and such subsidiaries, neither the Company nor any
such subsidiary owns any shares of stock or any other equity securities of
any corporation or has any equity interest in any firm, partnership,
association or other entity, except as described in or contemplated by the
Prospectus.
(z) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (A) transactions are executed in accordance with management's general
or specific authorizations; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (C)
access to assets is permitted only in accordance with management's general
or specific authorization and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(aa) No default exists, and no event has occurred which, with notice
or lapse or time or both, would constitute a default in the due performance
and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of their respective properties is bound
or may be affected in any material adverse respect with regard to property,
business or operations of the Company and its subsidiaries taken as a
whole.
(bb) The Company, its subsidiaries and, to the knowledge of the
management of the Company after due inquiry, each Orthodontic Entity and
their respective operations comply in all material respects with all
applicable laws and regulations, including, without limitation, those
relating to the practice of orthodontics (including the management or
operation of orthodontic offices), the splitting of professional fees with
non-orthodontists, the ownership or control of the assets of an orthodontic
practice, the employment of orthodontists 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 orthodontist to
other staff members, the business of insurance and reimbursement by
governmental agencies. The Company has not been made aware, or been
put on notice, that any Affiliated Orthodontist is not practicing in
material compliance with all such laws and regulations.
(cc) Except for the shares of Common Stock issued and sold in the
Company's initial public offering consummated in December 1994 and January
1995 and the subsequent
8
<PAGE>
public offerings consummated in June 1995 and March 1996 and shares of
Common Stock issued under the Company's Registration Statement on Form S-
8,"shelf" Registration Statement on Form S-3 and "shelf" Registration
Statement on Form S-4, each as on file with the Commission, all offers and
sales of the Company's capital stock prior to the date hereof, including
the offer and sale of 25,379,648 shares of Common Stock in connection with
the Combination Transaction (as such term is defined in the Prospectus),
were at all relevant times exempt from the registration requirements of the
Securities Act, and were the subject of an available exemption from the
registration requirements of all applicable state securities or blue sky
laws.
(dd) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida) to the extent such
provisions are applicable to the Company.
(ee) Except as disclosed in the Prospectus, there are no outstanding
(A) securities or obligations of the Company or any of its subsidiaries
convertible into or exchangeable for any capital stock of the Company or
any such subsidiary, (B) warrants, rights or options to subscribe for or
purchase from the Company or any such subsidiary any such capital stock or
any such convertible or exchangeable securities or obligations, or (C)
obligations of the Company or any such subsidiary to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(ff) The Company has not distributed and, prior to the later of (A)
the Closing Date and (B) the completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering
and sale of the Shares other than the Registration Statement or any
amendment thereto, the Prospectus or any supplement or amendment thereto,
or any materials, if any permitted by the Securities Act.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
----------------------------------------------------------
Selling Stockholder (and, where applicable, each Affiliated Person (as
hereinafter defined) affiliated with such Selling Stockholder severally and not
jointly (except that each Affiliated Person represents and warrants to, and
agrees with, jointly with the Selling Stockholder(s) with which he is
affiliated) represents and warrants to, and agrees with, each of the several
Underwriters that:
(a) Each Selling Stockholder and each Affiliated Person have full
power (partnership, trust or other) to enter into this Agreement and to
sell, assign, transfer and deliver to the Underwriters the Shares to be
sold by such Selling Stockholder hereunder in
9
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accordance with the terms of this Agreement; the execution and delivery of
this Agreement have been duly authorized by all necessary action
(partnership, trust or other) of each Selling Stockholder and each
Affiliated Person; this Agreement has been executed and delivered by each
Selling Stockholder and each Affiliated Person; this Agreement is the
legal, valid, binding and enforceable instruments of each Selling
Stockholder and each Affiliated Person, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
(b) Such Selling Stockholder and such Affiliated Person have
authorized and duly executed and delivered a power of attorney and custody
agreement (with respect to such Selling Stockholder and such Affiliated
Person, the "Power of Attorney" and the "Custody Agreement," respectively),
each in the form heretofore delivered to the Representatives, appointing
Geoffrey L. Faux as such Selling Stockholder's attorney-in-fact (the
"Attorney-in-Fact") with authority to execute, deliver and perform this
Agreement on behalf of such Selling Stockholder and such Affiliated Person
and appointing Waller Lansden Dortch & Davis, A Professional Limited
Liability Company, as custodian thereunder (the "Custodian"). Certificates
in negotiable form, endorsed in blank or accompanied by blank stock powers
duly executed, with signatures appropriately guaranteed, representing the
Shares to be sold by such Selling Stockholder hereunder have been deposited
with the Custodian pursuant to the Custody Agreement for the purpose of
delivery pursuant to this Agreement. Such Selling Stockholder and such
Affiliated Person have full power (partnership, trust or other, as
applicable) to enter into the Custody Agreement and the Power of Attorney
and to perform his obligations under the Custody Agreement. The Custody
Agreement and the Power of Attorney have been duly executed and delivered
by such Selling Stockholder and such Affiliated Person and, assuming due
authorization, execution and delivery by the Custodian, are the legal,
valid, binding and enforceable instruments of such Selling Stockholder and
such Affiliated Person. Such Selling Stockholder and such Affiliated Person
agree that each of the Shares represented by the certificates on deposit
with the Custodian is subject to the interests of the Underwriters
hereunder, that the arrangements made for such custody, the appointment of
the Attorney-in-Fact and the right, power and authority of the Attorney-in-
Fact to execute and deliver this Agreement, to agree on the price at which
the Securities (including such Selling Stockholder's Shares) are to be sold
to the Underwriters, and to carry out the terms of this Agreement, are to
that extent irrevocable and that the obligations of such Selling
Stockholder and such Affiliated Person hereunder shall not be terminated,
except as provided in this Agreement or the Custody Agreement, by any act
of such Selling Stockholder or such Affiliated Person, by operation of law
or otherwise, whether in the case of any individual Selling Stockholder by
the death or incapacity of such Selling Stockholder, in the case of a trust
or estate by the death of the trustee or trustees or the executor or
executors or the termination of such trust or estate, or in the case of a
partnership Selling Stockholder or Affiliated Person by its liquidation or
dissolution or by the occurrence of any other event. If any individual
Selling Stockholder, trustee or executor should die or become incapacitated
or any such trust should be terminated, or if any corporate or partnership
10
<PAGE>
Selling Stockholder or Affiliated Person shall liquidate or dissolve, or if
any other event should occur, before the delivery of such Securities
hereunder, the certificates for such Shares deposited with the Custodian
shall be delivered by the Custodian in accordance with the respective terms
and conditions of this Agreement as if such death, incapacity, termination,
liquidation or dissolution or other event had not occurred, regardless of
whether or not the Custodian or the Attorney-in-Fact shall have received
notice thereof.
(c) Such Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder hereunder and upon sale and delivery of,
and payment for, such Securities, as provided herein, such Selling
Stockholder will convey good and marketable title to such Shares, free and
clear of any security interests, liens, encumbrances, equities, claims or
other defects.
(d) Such Selling Stockholder and such Affiliated Person have not,
directly or indirectly, (A) taken any action designed to cause or result
in, or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares or (B) since
the filing of the Registration Statement (I) sold, bid for, purchased, or
paid anyone any compensation for soliciting purchases of, the Shares or
(II) paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company (except for the
sale of Shares by the Selling Stockholders under this Agreement).
(e) Each of such Selling Stockholder and such Affiliated Person has
reviewed the Prospectus and the Registration Statement, and the information
regarding such Selling Stockholder and such Affiliated Person set forth
therein under the captions "Management" and "Principal and Selling
Stockholders" is complete and accurate.
(f) Each of such Selling Stockholder and such Affiliated Person has
not distributed and, prior to the later of (A) the Closing Date and (B) the
completion of the distribution of the Shares, will not distribute any
offering material in connection with the offering and sale of the Shares
other than the Registration Statement or any amendment thereto, the
Prospectus or any supplement or amendment thereto, or any materials, if any
permitted by the Securities Act.
(g) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986,
as amended, with respect to the transactions herein contemplated, such
Selling Stockholder agrees to deliver to the Representatives prior to or on
the Closing Date a properly completed and executed United States Treasury
Department Form W-8 or W-9 (or other applicable form or statement specified
by the Treasury Department regulations in lieu thereof).
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<PAGE>
(h) The sale by such Selling Stockholder of Shares pursuant hereto is
not prompted by any adverse information concerning the Company that is not
set forth in the Registration Statement or the Prospectus.
(i) The sale of the Shares to the Underwriters by such Selling
Stockholder pursuant to this Agreement, the compliance by such Selling
Stockholder and such Affiliated Person with the other provisions of this
Agreement and the Custody Agreement and the consummation of the other
transactions herein contemplated do not (A) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as has been obtained, such as the registration under
state securities or blue sky laws and, if the registration statement filed
with respect to the Shares (as amended) is not effective under the
Securities Act as of the time of execution hereof, such as may be required
(and shall be obtained as provided in this Agreement) under the Securities
Act and the Exchange Act, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which such Selling Stockholder or such Affiliated Person is a
party or by which such Selling Stockholder or such Affiliated Person or any
of such Selling Stockholder's or such Affiliated Person's properties are
bound, or any statute or any judgment, decree, order, rule or regulation of
any court or other governmental authority or any arbitrator applicable to
such Selling Stockholder or such Affiliated Person.
(j) The Shares to be sold by such Selling Stockholder pursuant to this
Agreement have been duly authorized and are validly issued, fully paid and
non-assessable.
For purposes of this Agreement, "Affiliated Person" shall mean (i) Gasper
Lazzara, Jr. who is affiliated with OCA Two Limited Partnership and OCA Three
Limited Partnership; (ii) Bartholomew F. Palmisano, Sr. who is affiliated with
the Palmisano (1996) Investment Limited Partnership, (iii) Joseph A. Asercion
who is affiliated with Joseph A. and Sandra H. Asercion Charitable Remainder
Trust, (iv) Delbert E. Hale II who is affiliated with the DEH (1996) Charitable
Remainder Annuity Trust and (v) Robert L. Lamb who is affiliated with the R.
Lamb (1996) Charitable Remainder Annuity Trust.
3. REPRESENTATIONS AND WARRANTIES OF THE GROUP 2 SELLING STOCKHOLDERS.
------------------------------------------------------------------
Each of the Selling Stockholders identified in Schedule III hereto as a Group 2
Selling Stockholder (collectively, "Group 2 Selling Stockholders"), severally
and not jointly, represents and warrants to and agrees with each of the
Underwriters that:
(a) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations of
the Commission
12
<PAGE>
thereunder and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; but only, in each such case, with reference to
information relating to such Group 2 Selling Stockholder furnished in
writing by such Group 2 Selling Stockholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
4. AGREEMENTS TO SELL AND PURCHASE. The Sellers hereby agree to sell to
--------------------------------
the several Underwriters, severally and not jointly, and each Underwriter, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from the Sellers the respective numbers of Firm Shares set forth in
Schedules I and II hereto opposite its name at U.S. $_______ a share (the
"Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Group 1 Selling
Stockholders agree to sell to the U.S. Underwriters the Additional Shares, and
the U.S. Underwriters shall have a one-time right to purchase, severally and not
jointly, up to 780,000 Additional Shares at the Purchase Price. If the U.S.
Representatives, on behalf of the U.S. Underwriters, elect to exercise such
option, the U.S. Representatives shall so notify the Group 1 Selling
Stockholders in writing not later than 30 days after the date of this Agreement,
which notice shall specify the number of Additional Shares to be purchased by
the U.S. Underwriters and the date on which such shares are to be purchased.
Such date may be the same as the Closing Date (as defined below) but not earlier
than the Closing Date nor later than ten business days after the date of such
notice. Additional Shares may be purchased as provided in Section 6 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. If any Additional Shares are to be purchased, each
U.S. Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
the U.S. Representatives may determine) that bears the same proportion to the
total number of Additional Shares to be purchased as the number of U.S. Firm
Shares set forth in Schedule I hereto opposite the name of such U.S. Underwriter
bears to the total number of U.S. Firm Shares.
Each Seller hereby agrees that, without the prior written consent of Morgan
Stanley & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, lend
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply (A) to the Shares to
be sold hereunder, (B) to the issuance by the Company of shares of Common Stock
upon the exercise of an option or warrant or the conversion
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<PAGE>
of a security outstanding on the date hereof of which the Underwriters have been
advised in writing, (C) to any options granted or shares of Common Stock issued
pursuant to existing benefit plans of the Company existing on the date hereof
and described in the Prospectus or of which the Underwriters have been advised
in writing, (D) with respect to any Selling Stockholder, to any sale of shares
of Common Stock which are subject to an existing pledge or other security
arrangement on the date hereof of which the Underwriters have been advised in
writing, in good faith pursuant to the terms of such pledge or arrangement, (E)
transactions by any person other than the Company of shares of Common Stock or
other securities acquired in open market transactions after completion of the
offering of the Shares, (F) bona fide gifts (so long as the recipient has agreed
in writing to be bound by similar restrictions) or (G) to the issuance by the
Company of up to 150,000 shares of Common Stock in connection with acquisitions
if the recipients of such shares agree to be bound by the provisions of this
Section. In addition, each Selling Stockholder agrees that, without the prior
written consent of Morgan Stanley & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending 90 days after the date of
the Prospectus, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
5. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that the
-------------------------
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
U.S. $____________ a share (the "Public Offering Price") and to certain dealers
selected by you at a price that represents a concession not in excess of U.S.
$______ a share under the Public Offering Price, and that any Underwriter may
allow, and such dealers may reallow, a concession, not in excess of U.S. $_____
a share, to any Underwriter or to certain other dealers.
6. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by the
---------------------
Company shall be made to the Company in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 A.M., New York City
time, on ____________, 1997 , or at such other time on the same or such other
date, not later than ________, 1997, as shall be designated in writing by you.
The time and date of such payment are hereinafter referred to as the "Closing
Date."
Payment for any Additional Shares shall be made to the Group 1 Selling
Stockholders in Federal or other funds immediately available in New York City
against delivery of such Additional Shares for the respective accounts of the
several Underwriters at 10:00 A.M., New York City time, on the date specified in
the notice described in Section 4 or at such other time on the same or on such
other date, in any event not later than ______, 1997, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to
as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The
14
<PAGE>
certificates evidencing the Firm Shares and Additional Shares shall be delivered
to you on the Closing Date or the Option Closing Date, as the case may be, for
the respective accounts of the several Underwriters, with any transfer taxes
payable in connection with the transfer of the Shares to the Underwriters duly
paid, against payment of the Purchase Price therefor.
7. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of the
-------------------------------------------
Company to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 5:30 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date,
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in clause (a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Waller Lansden Dortch & Davis, A Professional Limited Liability
Company, counsel for the Company, dated the Closing Date, to the effect
that:
15
<PAGE>
(i) the Company and each of its subsidiaries listed in Exhibit 21
to the Registration Statement (the "Subsidiaries") have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation and
are duly qualified to transact business as foreign corporations and
are in good standing under the laws of all other jurisdictions where
the ownership or leasing of their respective properties or the conduct
of their respective businesses requires such qualification, except
where the failure to be so qualified does not amount to a material
liability or disability to the Company and the Subsidiaries, taken as
a whole;
(ii) the Company and each of the Subsidiaries have corporate power
to own or lease their respective properties and conduct their
respective businesses as described in the Registration Statement and
the Prospectus, and the Company has corporate power to enter into this
Agreement and to carry out all the terms and provisions hereof to be
carried out by it;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned beneficially by the Company free
and clear of any perfected security interests or, to the best
knowledge of such counsel, any other security interests, liens,
encumbrances, equities or claims;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable and were not
issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities; no holders of
outstanding shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for any of the
Shares; and no holders of securities of the Company are entitled to
have such securities registered under the Registration Statement;
(v) the description of the Common Stock set forth in the
Prospectus under the heading "Description of Capital Stock," insofar
as such statements purport to summarize certain provisions of the
capital stock of the Company, provide a fair summary of such
provisions, and the statements set forth under the headings "Business-
Agreements with Affiliated Orthodontists" and "Business-Government
Regulation" in the Prospectus, insofar as such statements constitute a
summary of the agreements and matters referred to therein, provide a
fair summary of such agreements and matters;
(vi) the Shares to be sold by the Company have been fully
authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be
16
<PAGE>
validly issued, fully paid and non-assessable, and the issuance of
such Shares will not be subject to any preemptive or similar rights;
(vii) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Company and this
Agreement has been duly executed and delivered by the Company;
(viii) (A) to the best knowledge of such counsel, no legal or
governmental proceedings are pending to which the Company, any of the
Subsidiaries or any of the Orthodontic Entities is a party or to which
the property of the Company, any of the Subsidiaries or any of the
Orthodontic Entities is subject that are required to be described in
the Registration Statement or the Prospectus and are not described
therein, and, to the best knowledge of such counsel, no such
proceedings have been threatened against the Company, any of the
Subsidiaries or any of the Orthodontic Entities or with respect to any
of their respective properties and (B) no contract or other document
is required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that is not described therein or filed as required;
(ix) the issuance, offering and sale of the Shares to the
Underwriters by the Company pursuant to this Agreement, the compliance
by the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (A)
require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as
have been obtained and such as may be required under state securities
or blue sky laws, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, lease or other
agreement or instrument known to such counsel to which the Company or
any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their respective properties are bound, or
the charter documents or by-laws of the Company or any of the
Subsidiaries, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any
arbitrator known to such counsel and applicable to the Company or any
of the Subsidiaries;
(x) the Registration Statement is effective under the Securities
Act; any required filing of the Prospectus pursuant to Rules 434 and
424(b) has been made in the manner and within the time period required
by Rules 434 and 424(b); and no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto and no order directed at any document incorporated
by reference in the Registration Statement or the Prospectus or any
amendment or supplement thereto has been issued, and no proceedings
for that purpose have been instituted or threatened or, to the best
knowledge of such counsel, are contemplated by the Commission;
17
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(xi) the registration statement originally filed with respect to
the Securities and each amendment thereto, any Rule 462(b)
Registration Statement and the Prospectus (in each case, including the
documents incorporated by reference therein but not including the
financial statements and other financial information contained
therein, as to which such counsel need express no opinion) comply as
to form in all material respects with the applicable requirements of
the Securities Act, the Exchange Act and the respective rules and
regulations of the Commission thereunder;
(xii) to the best knowledge of such counsel, the Company and the
Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses, and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of
operations of the Company and the Subsidiaries, except as described in
or contemplated by the Prospectus;
(xiii) the Company is not an "investment company" under the
Investment Company Act of 1940, as amended, and consummation of the
transactions herein contemplated will not cause the Company to become
an investment company subject to registration under such Act;
(xiv) except for the shares of capital stock of each of the
subsidiaries owned by the Company and such subsidiaries, neither the
Company nor any such subsidiary owns any shares of stock or any other
equity securities of any corporation or has any equity interest in any
firm, partnership, association or other entity, except as described in
or contemplated by the Prospectus;
(xv) except for the shares of Common Stock issued and sold in the
Company's initial public offering consummated in December 1994 and
January 1995 and the subsequent public offerings consummated in June
1995 and March 1996 and shares of Common Stock issued under the
Company's Registration Statement on Form S-8, "shelf" Registration
Statement on Form S-3 and "shelf" Registration Statement on Form S-4,
each as on file with the Commission, all offers and sales of the
Company's capital stock prior to the date hereof, including the offer
and sale of 6,344,912 shares of Common Stock in connection with the
Combination Transaction (as such term is defined in the Prospectus),
were at all relevant times exempt from the registration requirements
of the Securities Act, and were the subject of an available exemption
from the registration requirements of all applicable state securities
or blue sky laws;
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(xvi) except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital stock of
the Company or any such subsidiary, (B) warrants, rights or options to
subscribe for or purchase from the Company or any such subsidiary any
such capital stock or any such convertible or exchangeable securities
or obligations, or (C) obligations of the Company or any such
subsidiary to issue any shares of capital stock, any such convertible
or exchangeable securities or obligations, or any such warrants,
rights or options; and
(xvii) such counsel is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data included therein as
to which such counsel need not express any opinion) comply as to form
in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
Such counsel shall also state that no facts have come to such counsel's
attention that cause such counsel to believe that (except for financial
statements and schedules and other financial and statistical data as to which
such counsel need not express any belief) the Registration Statement and the
prospectus included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that (except for financial statements and
schedules and other financial and statistical data as to which such counsel need
not express any belief) the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Such counsel shall also state that no facts have come to such counsel's
attention that cause such counsel to believe that the Company, the Subsidiaries
and the Orthodontic Entities are not conducting their respective business in
material compliance with the laws, rules and regulations applicable thereto,
including, without limitation, those relating to the practice of orthodontics
(including the management or operation of orthodontic offices), the splitting of
professional fees with non-orthodontists, the ownership or control of the assets
of an orthodontic practice, the employment of orthodontists or other personnel,
the content of advertising, limitations on tasks that may be delegated by any
orthodontist to other staff members, the business of insurance and reimbursement
by governmental agencies; and nothing has come to such counsel's attention that
causes such counsel to believe that the provisions of the service, consulting
and management agreements and other business arrangements entered into by the
Company or any Subsidiary described in the Prospectus, or the operations of the
Company and the Subsidiaries in accordance with the terms thereof, are not in
material compliance with applicable laws and governmental regulations (such
statement as to jurisdictions other than the State of Tennessee and the Federal
law of the United States to be based solely on such counsel's reading of
published statutes and regulations and the case annotations published
therewith).
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(d) The Underwriters shall have received on the Closing Date an
opinion of Waller, Lansden Dortch & Davis, A Professional Limited Liability
Company, counsel for the Selling Stockholders, dated the Closing Date, to
the effect that:
(i) each Selling Stockholder and each Affiliated Person have full
legal right and power (partnership, trust or other), and all
authorization and approval required by law, to enter into this
Agreement, the Custody Agreement and the Power of Attorney and to
sell, assign, transfer and deliver to the Underwriters the Shares to
be sold by such Selling Stockholder hereunder in accordance with the
terms of this Agreement, and to perform his, her or its obligations
under the Custody Agreement; the execution and delivery of this
Agreement, the Custody Agreement and the Power of Attorney have been
duly authorized by all necessary action (partnership, trust or other)
of each Selling Stockholder and each Affiliated Person; this
Agreement, the Custody Agreement and the Power of Attorney have been
executed and delivered by each Selling Stockholder and each Affiliated
Person; this Agreement and, assuming due authorization, execution and
delivery by the Custodian, the Custody Agreement and the Power of
Attorney, are the legal, valid, binding and enforceable instruments of
each Selling Stockholder and each Affiliated Person, subject to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law);
(ii) the delivery by each Selling Stockholder to the Underwriters
of certificates for the Shares being sold hereunder by such Selling
Stockholder against payment therefor as provided herein, will convey
good and marketable title to such Shares to the several Underwriters,
free and clear of any security interests, liens, encumbrances,
equities, claims or other defects;
(iii) the sale of the Shares to the Underwriters by each Selling
Stockholder pursuant to this Agreement, the compliance by each Selling
Stockholder and each Affiliated Person with the other provisions of
this Agreement and the Custody Agreement and the consummation of the
other transactions herein contemplated do not (A) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as has been obtained, and except
such as may be required for registration under state securities or
blue sky laws and, if the Registration Statement filed with respect to
the Shares (as amended) is not effective under the Securities Act as
of the time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Securities Act and
the Exchange Act, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under any indenture, mortgage, deed of trust, lease or other
agreement or instrument to which any Selling Stockholder or any
Affiliated Person is a party or by which any Selling Stockholder or
any Affiliated Person or any of any Selling Stockholder's or any
Affiliated Person's
20
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properties are bound, or any statute or any judgment, decree, order,
rule or regulation known to such counsel of any court or other
governmental authority or any arbitrator applicable to any Selling
Stockholder or any Affiliated Person.
(e) The Underwriters shall have received on the Closing Date an
opinion of King & Spalding, counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (vi), (vii) and
(xvii) of paragraph (c) above and to the effect that the statements set
forth under the heading "Underwriters" in the Prospectus, insofar as such
statements constitute a summary of the agreements and matters referred to
therein, provide a fair summary of such agreements and matters.
With respect to subparagraph (xvii) of paragraph (c) above, Waller
Lansden Dortch & Davis, A Professional Limited Liability Company, and King
& Spalding may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified. With respect to paragraph (d) above,
Waller Lansden Dortch & Davis, A Professional Limited Liability Company,
may rely upon an opinion or opinions of counsel for any Selling
Stockholders and, with respect to factual matters and to the extent such
counsel deems appropriate, upon the representations of each Selling
Stockholder contained herein and in the Custody Agreement and Power of
Attorney of such Selling Stockholder and in other documents and
instruments; provided that (A) each such counsel for the Selling
--------
Stockholders is satisfactory to your counsel, (B) a copy of each opinion so
relied upon is delivered to you and is in form and substance satisfactory
to your counsel, (C) copies of such Custody Agreements and Powers of
Attorney and of any such other documents and instruments shall be delivered
to you and shall be in form and substance satisfactory to your counsel and
(D) Waller Lansden Dortch & Davis, A Professional Limited Liability
Company, shall state in their opinion that they are justified in relying on
each such other opinion.
The opinions of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company, described in paragraphs (c) and (d) above (and any
opinions of counsel for any Selling Stockholder referred to in the
immediately preceding paragraph) shall be rendered to the Underwriters at
the request of the Company or one or more of the Selling Stockholders, as
the case may be, and shall so state therein.
(f) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Ernst & Young LLP independent public accountants, 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 contained in the Registration Statement
and the Prospectus;
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provided that the letter delivered on the Closing Date shall use a "cut-off
--------
date" not earlier than the date hereof.
(g) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain stockholders, officers and
directors of the Company listed on Schedule V hereto relating to sales and
certain other dispositions of shares of Common Stock or certain other
securities, delivered to you on or before the date hereof, shall be in full
force and effect on the Closing Date.
The several obligations of the U.S. Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional Shares.
8. COVENANTS OF THE COMPANY. In further consideration of the agreements
------------------------
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, eight (8) signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 A.M. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
paragraph (c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by
an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus
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<PAGE>
is delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or blue sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-
month period ending June 30, 1998 that satisfies the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder
(f) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company agrees to pay or
cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including: (i) the fees, disbursements
and expenses of the Company's counsel, the Company's accountants and
counsel for the Selling Stockholders in connection with the registration
and delivery of the Shares under the Securities Act and all other fees or
expenses in connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments and
supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, in the quantities hereinabove specified, (ii)
all costs and expenses related to the transfer and delivery of the Shares
to the Underwriters, including any transfer or other taxes payable thereon,
(iii) the cost of printing or producing any Blue Sky or Legal Investment
memorandum in connection with the offer and sale of the Shares under state
securities laws and all expenses in connection with the qualification of
the Shares for offer and sale under state securities laws as provided in
Section 8(d) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification of
the offering of the Shares by the National Association of Securities
Dealers, Inc. or the New York Stock Exchange, as the case may be, (v) all
fees and expenses in connection with the preparation and filing of the
registration statement on Form 8-A relating to the Common Stock and all
costs and expenses incident to listing the Shares on the Nasdaq National
Market or the New York Stock Exchange, as the case may be, (vi) the cost of
printing certificates representing the Shares, (vii) the costs and charges
of any transfer agent, registrar or depositary, (viii) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
Shares, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision
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is not otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 9 entitled "Indemnity and
Contribution," and the last paragraph of Section 11 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements
of their counsel, stock transfer taxes payable on resale of any of the
Shares by them, any advertising expenses connected with any offers they may
make and all expenses in connection with any offer and sale of the Shares
outside of the United States, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with offers
and sales outside of the United States.
The provisions of this Section 8(f) shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. INDEMNITY AND CONTRIBUTION.
---------------------------
(a) The Company and each Group 1 Selling Stockholder, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use therein; provided, however, that the foregoing
-----------------
indemnity agreement with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or
liabilities, unless such failure is the result of noncompliance by the
Company with Section 7(a) hereof.
(b) Each Group 2 Selling Stockholder agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either
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Section 15 of the Securities Act or Section 20 of the Exchange Act, and
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act, from and against any and all losses, claims, damages
and liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only with reference to
information relating to such Group 2 Selling Stockholder furnished in
writing by or on behalf of such Group 2 Selling Stockholder expressly for
use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Stockholders, the directors of
the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company or any Selling
Stockholder within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal
or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but
only with reference to information relating to such Underwriter furnished
to the Company in writing by such Underwriter through you expressly for use
in the Registration Statement, any preliminary prospectus, the Prospectus
or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to paragraph (a), (b) or (c) of this Section 9, such
person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and
the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both
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the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for (i) the fees and expenses of more
than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (ii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, its directors, its officers
who sign the Registration Statement and each person, if any, who controls
the Company within the meaning of either such Section and (iii) the fees
and expenses of more than one separate firm (in addition to any local
counsel) for all Selling Stockholders and all persons, if any, who control
any Selling Stockholder within the meaning of either such Section, and that
all such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Underwriters and such control
persons of any Underwriters, such firm shall be designated in writing by
Morgan Stanley & Co. Incorporated. In the case of any such separate firm
for the Company, and such directors, officers and control persons of the
Company, such firm shall be designated in writing by the Company. In the
case of any such separate firm for the Selling Stockholders and such
control persons of any Selling Stockholders, such firm shall be designated
in writing by the persons named as attorneys-in-fact for the Selling
Stockholders under the Powers of Attorney. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in paragraph (a),
(b) or (c) of this Section 9 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the
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indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative benefits received
by the Sellers on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses) received by each Seller and the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus, bear to
the aggregate Public Offering Price of the Shares. The relative fault of
the Sellers on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Sellers or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 9 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
--------
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (e) of
this Section 9. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The remedies provided for in this
Section 9 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in
equity.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling Stockholders contained in this Agreement shall
remain operative and in full force and effect regardless of
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(i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any
Underwriter, any Selling Stockholder or any person controlling any
Selling Stockholder, or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for
any of the Shares.
10. TERMINATION. This Agreement shall be subject to termination by notice
------------
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a) (i) through (iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
11. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall become
---------------------------------------
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I or Schedule II bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided that in no event shall the
--------
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 11 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased and arrangements satisfactory to
you and the Company for the purchase of such Firm Shares are not made within 36
hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Selling
Stockholders. In any such case either you or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If,
on the Option Closing Date, any Underwriter or Underwriters shall
28
<PAGE>
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than one-
tenth of the aggregate number of Additional Shares to be purchased, the non-
defaulting Underwriters shall have the option to (i) terminate their obligation
hereunder to purchase Additional Shares or (ii) purchase not less than the
number of Additional Shares that such non-defaulting Underwriters would have
been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. COUNTERPARTS. This Agreement may be signed in two or more
-------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. This Agreement shall be governed by and construed in
--------------
accordance with the internal laws of the State of New York.
14. HEADINGS. The headings of the sections of this Agreement have been
---------
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
ORTHODONTIC CENTERS OF AMERICA, INC.
By:
----------------------------------------------
Geoffrey L. Faux
President
SELLING STOCKHOLDERS
By:
----------------------------------------------
Geoffrey L. Faux, Attorney-in-fact for the
Selling Stockholders listed on Schedule III
attached hereto
AFFILIATED PERSONS
By:
----------------------------------------------
Geoffrey L. Faux, as attorney-in-fact for the
Affiliated Persons listed in Section 2 hereof
29
<PAGE>
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule I hereto.
By: Morgan Stanley & Co.
Incorporated
By:
-------------------------------------
Name:
Title:
Morgan Stanley & Co. International Limited
Merrill Lynch International
Prudential-Bache Securities (U.K.) Inc.
Smith Barney Inc.
Acting severally on behalf of themselves and
the several International Underwriters named
in Schedule II hereto.
By: Morgan Stanley & Co. International Limited
By:
--------------------------------------
Name:
Title:
30
<PAGE>
SCHEDULE I
U.S. Underwriters
-----------------
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith......
Incorporated
Prudential Securities Incorporated.........
Smith Barney Inc...........................
[NAMES OF OTHER U.S. UNDERWRITERS]
______________
Total U.S. Firm Shares......... 4,160,000
==============
31
<PAGE>
SCHEDULE II
International Underwriters
--------------------------
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Morgan Stanley & Co. International Incorporated...
Merrill Lynch International.......................
Prudential-Bache Securities (U.K.) Inc............
Smith Barney Inc..................................
[NAMES OF OTHER INTERNATIONAL UNDERWRITERS]
--------------
Total International Firm Shares.............. 1,040,000
==============
32
<PAGE>
SCHEDULE III
Number of
Shares To
Selling Stockholder Be Sold
- ------------------- ---------
Group 1:
- -------
Dr. Gasper Lazzara, Jr.......... 968,025
Bartholomew F. Palmisano, Sr.,.. 968,025
Group 2:
- -------
Dr. Joseph A. Asercion.......... 53,648
Caren Buchman................... 54,798
Dr. Charles E. Cauble........... 108,000
Dr. John S. Clark............... 17,982
Dr. Delbert E. Hale II.......... 64,159
Dr. Michael R. Hebert........... 40,499
Dr. J. Jeff Kincaid............. 46,000
Dr. Robert L. Lamb.............. 26,148
Dr. Richard H. Maness........... 14,953
Dr. Michael F. McCarthy......... 49,944
Dr. Jean-Pierre Pontier......... 24,289
Dr. Alan Shoopak................ 76,906
Dr. Terry Tippin................ 45,782
Dr. David L. Wyatt.............. 35,842
Total....... 2,600,000
=========
33
<PAGE>
SCHEDULE IV
Number of
Additional
Shares To
Selling Stockholder Be Sold
------------------- ------------
Dr. Gasper Lazzara, Jr......................
Bartholomew F. Palmisano, Sr................
Total................... 780,000
========
34
<PAGE>
SCHEDULE V
Lock-up Agreements
- ------------------
Dr. Gasper Lazzara, Jr.
Bartholomew F. Palmisano, Sr.
Geoffrey L. Faux
Michael C. Johnsen
Edward J. Walters, Jr.
A Gordon Tunstall
Ashton J. Ryan, Jr.
Dr. Joseph A. Asercion
Caren Buchman
Dr. Charles E. Cauble
Dr. John S. Clark
Dr. Delbert E. Hale II
Dr. Michael R. Hebert
Dr. J. Jeff Kincaid
Dr. Robert L. Lamb
Dr. Richard H. Maness
Dr. Michael F. McCarthy
Dr. Jean-Pierre Pontier
Dr. Alan Shoopak
Dr. Terry Tippin
Dr. David L. Wyatt
35
<PAGE>
EXHIBIT A
LOCK-UP LETTER
_____, 1997
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce Fenner & Smith
Incorporated
Prudential Securities Incorporated
Smith Barney Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Orthodontic Centers of America, Inc., a Delaware
corporation (the "COMPANY"), providing for the public offering (the "PUBLIC
OFFERING") by the several Underwriters, including Morgan Stanley (the
"UNDERWRITERS"), of 5,200,000 shares (the "SHARES") of the Common Stock, $.01
par value, of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 90 days after the date of the final prospectus
relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Shares to the Underwriters pursuant to the Underwriting Agreement, (b)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Public Offering or (c) bona
fide gifts (so long as the recipient has agreed in writing to be bound by
similar restrictions). In addition, the undersigned agrees that, without the
prior written consent of Morgan Stanley on behalf of the Underwriters, it will
not, during the period commencing on the date hereof and ending 90 days after
the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
----------------------------------
(Name)
----------------------------------
(Address)
36
