<PAGE> 1
As filed with the Securities and Exchange Commission on August 14, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
---------------------------
ORTHALLIANCE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4632134
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23848 HAWTHORNE BOULEVARD,
SUITE 200
TORRANCE, CALIFORNIA 90505
(Address, including zip code, of registrant's principal executive offices)
ORTHALLIANCE, INC.
1997 ORTHODONTIST STOCK OPTION PLAN
(Full title of plan)
SAM WESTOVER
CHIEF EXECUTIVE OFFICER
23848 HAWTHORNE BOULEVARD
SUITE 200
TORRANCE, CALIFORNIA 90505
(310) 791-5656
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
COPY TO:
PAUL A. QUIROS, ESQ.
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303-1763
(404) 572-4600
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Amount to Offering Price Per Aggregate Offering Amount of
Title of Securities to be Registered be Registered Share(1) Price(1) Registration Fee
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<S> <C> <C> <C> <C>
Class A Common Stock, par value $.001 per
share.......................................... 100,000 $12.79 $1,278,583 $377.18
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(h) on the basis of the average price of the total
of (i) options previously granted for 5,210; 11,145; 637; 791; 13,108;
12,011; 5,000; 2,428; 2,786; 2,672; and 1,781 shares of Class A Common
Stock (the "Stock") pursuant to the OrthAlliance 1997 Orthodontist Stock
Option Plan (the "Plan") at exercise prices per share of $12.00,
$13.025, $12.6875, $14.30, $14.675, $15.80, $15.525, $15.9125, $14.65,
$13.1875, and $11.75 respectively, and (ii) the average of the high and
low prices of the Registrant's Stock on August 11, 1998 as reported by
the Nasdaq National Market for 42,431 shares of Stock under the Plan for
which options have not been granted.
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<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I of Form
S-8 will be sent or given to participating officers and employees as specified
by Rule 428(b)(1) of the Securities Act of 1933, as amended (the "Securities
Act"). These documents and the documents incorporated by reference in this
registration statement (the "Registration Statement") pursuant to Item 3 of
Part II below, taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents have been previously filed by the Registrant with
the Securities and Exchange Commission (the "Commission") and are incorporated
by reference in this Registration Statement:
(a) The Registrant's Prospectus dated August 21, 1997;
(b) The Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997 filed with the Commission on March 31, 1998;
(c) The Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 filed with the Commission on May 15, 1998;
and
(d) The description of the Registrant's Class A Common Stock, par
value $.001 per share ("Common Stock"), contained in the Registration
Statement on Form 8-A, dated August 12, 1997, filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including any
amendment filed for the purpose of updating such description.
In addition, all documents filed by the Registrant subsequent to the date
of this Registration Statement pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Exchange Act, and prior to the filing of a post-effective amendment to
this Registration Statement that indicate that all securities offered hereunder
have been sold or that deregister all securities then remaining unsold shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part of this Registration Statement from the date of filing of such
documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interest of Named Experts and Counsel.
Not applicable.
<PAGE> 3
Item 6. Indemnification of Directors and Officers.
Registrant's Amended and Restated Certificate of Incorporation
("Certificate") provides that no director of the Registrant shall be liable for
breach of fiduciary duty as a director except for (i) any breach of the
director's duty of loyalty to the Registrant or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (iii) willful or negligent violations of certain
provisions of the Delaware General Corporation Law ("DGCL") imposing certain
requirements with respect to stock repurchases, redemptions and dividends; or
(iv) any transaction from which the director derived an improper personal
benefit.
Pursuant to the Registrant's Certificate and Amended and Restated Bylaws,
the Registrant is obligated to indemnify each of its directors and officers to
the fullest extent permitted by the DGCL. Under Section 145 of the DGCL, the
Registrant may indemnify any of its directors and officers against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with a
threatened, pending or completed action, suit or proceeding brought against him
by reason of the fact that he is or was a director or officer (i) if any such
person acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the Registrant and (ii) in connection with any
criminal action or proceeding if such person had no reasonable cause to believe
such conduct was unlawful.
In actions brought by or in the right of the Registrant, Section 145 of
the DGCL provides that no indemnification for expenses may be made in respect
of any claim, issue or matter as to which any director or officer of the
Registrant shall have been adjudged to be liable for negligence or misconduct
in the performance of such person's duty to the Registrant unless, and only to
the extent that, the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in review of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Pursuant to the Registrant's Bylaws, the Registrant may purchase and
maintain insurance on behalf of any director or officer of the Registrant
against any liability asserted against and incurred by such director or
officer, whether or not the Registrant would have the power to indemnify such
officer or director against such liability under the Bylaws or DGCL.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit Description
4.1 Amended and Restated Certificate of Incorporation of
Registrant (incorporated by reference to Exhibit 3.1 of
Registrant's Registration Statement on Form S-1,
Registration No. 333-27143).
4.2 Amended and Restated Bylaws of Registrant (incorporated by
reference to Exhibit 3.2 of Registrant's Registration
Statement on Form S-1, Registration No. 333-27143).
4.3 OrthAlliance, Inc. 1997 Orthodontist Stock Option Plan.
4.4 Form of Stock Option Agreement pursuant to OrthAlliance,
Inc. 1997 Orthodontist Stock Option Plan.
-2-
<PAGE> 4
5.1 Opinion of King & Spalding regarding legality of shares
being registered.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of King & Spalding (included in Exhibit 5.1).
24.1 Power of Attorney (included on signature page).
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
this Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
this Registration Statement or any material change
to such information in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in this 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.
(c) 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 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.
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<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Torrance, State of California, on the 30th day of
July, 1998.
ORTHALLIANCE, INC.
By: /s/ Sam Westover
-------------------------------------
Sam Westover, Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Sam Westover and Robert S. Chilton and each of
them, as true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for such person and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same with all exhibits thereto and
other documents in connection therewith, with the Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite or necessary to be
done in and about the premises, as fully and to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, and any of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and as of
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Sam Westover President, Chief Executive July 30, 1998
- ----------------------------------- Officer and Director
Sam Westover (Principal Executive Officer)
/s/ Robert S. Chilton Chief Financial Officer July 30, 1998
- ----------------------------------- (Principal Financial and
Robert S. Chilton Accounting Officer)
/s/ Randall K. Bennett Director July 30, 1998
- -----------------------------------
Randall K. Bennett, D.D.S., M.S.
/s/ Douglas D. Durbin Director July 30, 1998
- -----------------------------------
Douglas D. Durbin, D.M.D., M.S.D.
/s/ U. Bertram Ellis, Jr. Director July 30, 1998
- -----------------------------------
U. Bertram Ellis, Jr.
/s/ Craig McKnight Director July 30, 1998
- -----------------------------------
Craig L. McKnight
/s/ Randall A. Schmidt Director July 31, 1998
- -----------------------------------
Randall A. Schmidt, D.D.S., M.S.D.
Director July __, 1998
- -----------------------------------
W. Dennis Summers
/s/ Jonathan E. Wilfong Chairman of the Board July 30, 1998
- -----------------------------------
Jonathan E. Wilfong
</TABLE>
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
------- ----------- ----
<S> <C> <C>
4.1 Amended and Restated Certificate of Incorporation of
Registrant (incorporated by reference to Exhibit 3.1 of
Registrant's Registration Statement on Form S-1,
Registration No. 333-27143).
4.2 Amended and Restated Bylaws of Registrant (incorporated
by reference to Exhibit 3.2 of Registrant's Registration
Statement on Form S-1, Registration No. 333-27143).
4.3 OrthAlliance, Inc. 1997 Orthodontist Stock Option Plan.
4.4 Form of Stock Option Agreement pursuant to OrthAlliance,
Inc. 1997 Orthodontist Stock Option Plan.
5.1 Opinion of King & Spalding regarding legality of shares
being registered.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of King & Spalding (included in Exhibit 5.1).
24.1 Power of Attorney (included on signature page).
</TABLE>
<PAGE> 1
ORTHALLIANCE, INC.
1997 ORTHODONTIST STOCK OPTION PLAN
<PAGE> 2
ORTHALLIANCE, INC.
1997 ORTHODONTIST STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless
the context clearly indicates to the contrary:
1.1 "Allied Orthodontist" shall mean an orthodontist or dentist
who (i) holds an equity interest in an Allied Practice, or (ii) is a party to
an existing employment agreement with an Allied Practice.
1.2 "Allied Practice" shall mean a professional business entity
that provides orthodontic or dental services to the public and is a party to an
existing (i) service agreement or (ii) consulting and business services
agreement with the Company or a subsidiary, whereby the Company or a subsidiary
provides management or consulting services to such entity in exchange for a
service or consulting fee.
1.3 "Board" shall mean the Board of Directors of the Company.
1.4 "Change in Control" shall mean the occurrence of any of the
following events:
(a) a reorganization, merger or consolidation
of the Company with one or more other corporations
(except with respect to a transaction in which the
sole purpose is to change the domicile or name of
the Company), as a result of which the Company
ceases to exist or becomes a subsidiary of another
corporation (which shall be deemed to have occurred
if another corporation shall own, directly or
indirectly, more than fifty percent (50%) of the
aggregate voting power of all outstanding equity
securities of the Company);
(b) a sale of all or substantially all of the
Company's assets; or
(c) Any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other
than any person who is a stockholder of the
<PAGE> 3
Company on or before the effective date of the
Plan, by the acquisition or aggregation of
securities is or becomes the beneficial owner,
directly or indirectly, of securities of the
Company representing fifty percent (50%) or more
of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from
rights accruing under special circumstances)
having the right to vote at elections of directors
(the "Base Capital Stock"); except that any change
in the relative beneficial ownership of the
Company's securities by any person resulting
solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock, and any
decrease thereafter in such person's ownership of
securities, shall be disregarded until such person
increases in any manner, directly or indirectly,
such person's beneficial ownership of any
securities of the Company.
1.5 "Closing Stock Price" shall mean the price used to determine
the number of shares of Stock that a recruited or referred orthodontist or
dentist received upon the closing of the affiliation of such orthodontist or
dentist with the Company or a subsidiary.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as
amended, including effective date and transition rules (whether or not
codified). Any reference herein to a specific section of the Code shall be
deemed to include a reference to any applicable corresponding provision of
future law.
1.7 "Committee" shall mean a committee of at least two (2)
Directors appointed from time to time by the Board, having the duties and
authority set forth herein in addition to any other authority granted by the
Board, provided, however, that with respect to any Options granted to an
individual who is also a Section 16 Insider, the Committee shall consist of at
least two (2) Directors who are Non-Employee Directors (within the meaning of
Rule 16b-3). At any time that the Board shall not have appointed a committee as
described above, any reference herein to the Committee shall mean a reference
to the Board.
1.8 "Company" shall mean OrthAlliance, Inc., a Delaware
corporation.
1.9 "Director" shall mean a member of the Board and any person
who is an advisory, honorary or emeritus director of the Company if such person
is considered a director for the purposes of Section 16 of the Exchange Act, as
determined by reference to such Section 16 and to the rules, regulations,
judicial decisions, and interpretative or "no-action" positions with respect
2
<PAGE> 4
thereto of the Securities and Exchange Commission, as the same may be in effect
or set forth from time to time.
1.10 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended. Any reference herein to a specific section of the Exchange
Act shall be deemed to include a reference to any applicable corresponding
provision of future law.
1.11 "Exercise Price" shall mean the price at which an Optionee
may purchase a share of Stock under a Stock Option Agreement.
1.12 "Fair Market Value" on any date shall mean (i) the average
closing sales price of the Stock for the immediately preceding five (5) trading
days; (ii) if the Stock is not traded on any national securities exchange, the
average of the closing high bid and low asked prices of the Stock on the Nasdaq
National Market or other over-the-counter market on the date such value is to
be determined, or in the absence of closing bids on such date, the closing bids
on the next preceding date on which there were bids; or (iii) if the Stock is
not traded on a national securities exchange or the over-the-counter market,
the fair market value as determined in good faith by the Board or the Committee
based on such relevant facts as may be available, including, without
limitation, the price at which recent sales of Stock have been made, the book
value of the Stock and the Company's current and future earnings.
1.13 "Officer" shall mean a person who constitutes an officer of
the Company for the purposes of Section 16 of the Exchange Act, as determined
by reference to such Section 16 and to the rules, regulations, judicial
decisions, and interpretative or "no-action" positions with respect thereto of
the Securities and Exchange Commission, as the same may be in effect or set
forth from time to time.
1.14 "Option" shall mean an option to purchase Stock granted
pursuant to the provisions of Article VI hereof.
1.15 "Optionee" shall mean an Allied Orthodontist to whom an
Option has been granted hereunder or their permitted assign.
1.16 "Plan" shall mean the OrthAlliance, Inc. 1997 Orthodontist
Stock Option Plan, the terms of which are set forth herein.
1.17 "Section 16 Insider" shall mean any person who is subject to
the provisions of Section 16 of the Exchange Act.
3
<PAGE> 5
1.18 "Stock" shall mean the Class A Common Stock, $.001 par value
per share, of the Company, subject to applicable provisions of Section 5.2.
1.19 "Stock Option Agreement" shall mean a written agreement
between the Company and an Optionee under which the Optionee may purchase Stock
hereunder, as provided in Article VI hereof.
1.20 "Subsidiary" shall mean any corporation in which the Company
directly or indirectly owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock of such corporation.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as the "OrthAlliance, Inc.
1997 Orthodontist Stock Option Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests
of the Company, its Subsidiaries and its stockholders by affording certain
Allied Orthodontists an opportunity to acquire or increase their proprietary
interests in the Company. The objective of the Options is to promote the growth
and profitability of the Company and its Subsidiaries by providing Allied
Orthodontists with an additional incentive to achieve the Company's objectives
through participation in its success and growth and by rewarding Allied
Orthodontists for successfully recruiting or referring additional orthodontists
or dentists to affiliate with the Company or a Subsidiary.
2.3 Effective Date. The effective date of this Plan is October
14, 1997, subject to stockholder approval.
4
<PAGE> 6
ARTICLE III
PARTICIPANTS
An Allied Orthodontist may be eligible to participate in the Plan if
the Committee determines, in its sole discretion, that such Allied Orthodontist
recruited or referred an orthodontist or dentist to the Company and such
orthodontist or dentist consummates a business combination with the Company or
a Subsidiary whereby such orthodontist or dentist becomes an Allied
Orthodontist.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. This Plan shall be
administered by the Committee. The Committee shall hold its meetings at such
times and places as it may determine and shall keep minutes of such meetings.
The Committee shall make such rules and regulations for the conduct of its
business as it may deem necessary. The Committee shall have the power to act by
unanimous written consent in lieu of a meeting, and to meet telephonically. In
administering this Plan, the Committee's actions and determinations shall be
binding on all interested parties. Only the Committee shall have the power to
grant Options in accordance with the provisions of this Plan. Subject to the
provisions of this Plan, the Committee shall have the discretion and authority
to determine those Allied Orthodontists to whom Options will be granted, the
number of shares of Stock subject to each Option, such other matters as are
specified herein, and any other terms and conditions of a Stock Option
Agreement. To the extent not inconsistent with the provisions of this Plan, the
Committee may give an Optionee an election to surrender an Option in exchange
for the grant of a new Option, and shall have the authority to amend or modify
an outstanding Stock Option Agreement or to waive any provision thereof,
provided that the Optionee consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of
the Plan, the Committee shall have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, and to make all
other determinations necessary or advisable for the administration of the Plan,
including, without limitation, the amending or altering of the Plan and any
Options granted hereunder as may be required to comply with or to conform to
any federal, state or local laws or regulations.
5
<PAGE> 7
4.3 No Liability. Neither any Director nor any member of the
Committee shall be liable to any person for any act or determination made in
good faith with respect to the Plan or any Option granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee
shall constitute a quorum, and any action taken by a majority at a meeting at
which a quorum is present, or any action taken without a meeting evidenced by a
writing executed by all the members of the Committee, shall constitute the
action of the Committee.
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to the eligibiltiy of
Allied Orthodontists to receive a grant under the Plan, their death,
disability, or other termination of status as an Allied Orthodontist and such
other pertinent facts as the Committee may require. The Company shall furnish
the Committee with such clerical and other assistance as is necessary in the
performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment pursuant
to the provisions of Section 5.2 hereof, the maximum number of shares of Stock
that may be issued hereunder shall be One Hundred Thousand (100,000). The
amount of Stock subject to the Plan may be increased from time to time in
accordance with Article VIII hereof. Shares of Stock subject to an Option may
be either authorized and unissued shares or shares issued and later acquired by
the Company. The shares covered by any unexercised portion of an Option that
has terminated for any reason (except as set forth in the following paragraph)
may again be optioned under this Plan, and such shares shall not be considered
as having been optioned or issued in computing the number of shares of Stock
remaining available for Options hereunder.
If Options are issued in respect of options to acquire stock of any
entity acquired, by merger or otherwise, by the Company or any Subsidiary, to
the extent that such issuance shall not be inconsistent with the terms,
limitations and conditions of Rule 16b-3 promulgated pursuant to the Exchange
Act, the aggregate number of shares of Stock for which Options may be granted
hereunder shall automatically be increased by the number of shares subject to
the Options so issued.
6
<PAGE> 8
5.2 Antidilution.
(a) If (i) the outstanding shares of Stock are increased,
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of merger, consolidation,
reorganization, recapitalization, reclassification, combination or exchange of
shares, or stock split or stock dividend (excluding the conversion of the
Company's Class B Common Stock into shares of Stock as set forth in the
Company's Amended and Restated Certificate of Incorporation), (ii) any
spin-off, split-off or other distribution of assets materially affects the
price of the Company's stock, or (iii) there is any assumption and conversion
to this Plan by the Company of an acquired company's outstanding option grants,
then:
(A) the aggregate number and kind of shares of Stock
for which Options may be granted hereunder shall be adjusted
appropriately by the Committee; and
(B) the rights of Optionees (concerning the number of
shares of Stock subject to Options and the Exercise Price)
under outstanding Options shall be adjusted appropriately by
the Committee.
(b) If a Change in Control occurs, the Committee, in its
discretion, may provide notice to all Optionees that all Options granted under
this Plan shall be assumed by the successor corporation or substituted on an
equitable basis with options issued by such successor corporation.
(c) If the Company is to be liquidated or dissolved, the
adoption of a plan of dissolution or liquidation of the Company shall cause
every Option outstanding under the Plan to terminate to the extent not
exercised prior to the adoption of such plan of dissolution or liquidation by
the stockholders, provided, however, that, notwithstanding any other provisions
hereof, the Committee may declare all Options granted under the Plan to be
exercisable at any time on or before the fifth (5th) business day following
such adoption.
(d) The adjustments described in paragraphs (a) through (c)
of this Section 5.2, and the manner of their application, shall be determined
solely by the Committee, and any such adjustment may provide for the
elimination of fractional share interests. The adjustments required under this
Article V shall apply to any successors of the Company and shall be made
regardless of the number or type of successive events requiring such
adjustments.
7
<PAGE> 9
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. The Committee may, under this Plan,
grant only non-qualified Options. Neither the Company, any Subsidiary nor any
other person warrants or otherwise represents that favorable or desirable tax
treatment or characterization will be applicable in respect of any Option or
shares of Stock relating thereto.
6.2 Option Grant and Agreement. Each Option granted hereunder
shall be evidenced by minutes of a meeting or the written consent of the
Committee and by a written Stock Option Agreement executed by the Company and
the Optionee. The terms of the Option, including the Option's duration and
exercise price, shall be stated in the Stock Option Agreement. Every Optionee
shall be given a copy of the Plan.
6.3 Exercise Price. The Exercise Price of the Stock subject to
each Option shall be the same as the Closing Stock Price used for the
orthodontist or dentist that the Optionee recruited or referred to the Company
that created such Optionee's eligibility for a grant of an Option hereunder.
6.4 Exercise Period. The period for the exercise of each Option
granted hereunder shall commence immediately upon the grant date and remain
exercisable until such Option expires and is no longer exercisable after the
fifth anniversary of the grant date of such Option.
6.5 Option Exercise.
(a) Unless otherwise provided in the Stock Option Agreement
or this Section, an Option may be exercised at any time or from time to time
during the term of the Option as to any or all full shares subject to the
Option, but not at any time as to less than one hundred (100) shares unless the
remaining shares subject to the Option are less than one hundred (100) shares.
The Committee shall have the authority to prescribe in any Stock Option
Agreement that the Option may be exercised only in accordance with a vesting
schedule during the term of the Option.
(b) An Option shall be exercised by (i) delivery to the
Company at its principal office of a written notice of exercise with respect to
a specified number of shares of Stock and (ii) payment to the Company at that
office of the full amount of the Exercise Price for such number of shares in
accordance with Section 6.5(c).
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(c) The Exercise Price is to be paid in full in cash by a
certified or cashier's check payable to the Company upon the exercise of the
Option and the Company shall not be required to deliver certificates for the
shares purchased until such payment has been made; provided, however, that the
Committee may provide in a Stock Option Agreement (or may otherwise determine
in its sole discretion at the time of exercise) that in lieu of cash, all or
any portion of the Exercise Price may be paid by tendering to the Company
shares of Stock duly endorsed for transfer and owned by the Optionee, or by
authorization to the Company to withhold shares of Stock otherwise issuable
upon exercise of the Option, in each case to be credited against the Exercise
Price at the Fair Market Value of such shares on the date of exercise (however,
no fractional shares may be so transferred, and the Company shall not be
obligated to make any cash payments in consideration of any excess of the
aggregate Fair Market Value of shares transferred over the aggregate Exercise
Price).
(d) In addition to and at the time of payment of the
Exercise Price, the Company may withhold, or require the Optionee to pay to the
Company in cash, the amount of any federal, state and local income, employment
or other withholding taxes which the Committee determines are required to be
withheld under federal, state or local law in connection with the exercise of
an Option; provided, however, the Committee may provide in a Stock Option
Agreement (or may otherwise determine in its sole discretion at the time of
exercise) that all or any portion of such tax obligations may, upon the
election of the Optionee, be paid by tendering to the Company whole shares of
Stock duly endorsed for transfer and owned by the Optionee, or by authorization
to the Company to withhold shares of Stock otherwise issuable upon exercise of
the Option, in either case in that number of shares having a Fair Market Value
on the date of exercise equal to the amount of such taxes thereby being paid,
and subject to such restrictions as to the approval and timing of any such
election as the Committee may from time to time determine to be necessary or
appropriate to satisfy the conditions of the exemption set forth in Rule 16b-3
under the Exchange Act, if such rule is applicable.
(e) The holder of an Option shall not have any of the
rights of a stockholder with respect to the shares of Stock subject to the
Option until such shares have been issued and transferred to the Optionee upon
the exercise of the Option.
6.6 Nontransferability of Option. No Option shall be transferable
by an Optionee other than by will or the laws of descent and distribution.
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ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate
for shares of Stock purchased upon the exercise of any Option granted hereunder
or any portion thereof, prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on the stock
exchange, Nasdaq National Market or other over-the-counter market on which the
Stock is then listed;
(b) The completion of any registration or other
qualification of such shares which the Committee shall deem necessary or
advisable under any federal or state law or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory
body;
(c) The obtaining of any approval or other clearance from
any federal or state governmental agency or body which the Committee shall
determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following
the exercise of the Option as the Board from time to time may establish for
reasons of administrative convenience.
Stock certificates issued and delivered to Optionees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant
to applicable federal and state securities laws.
ARTICLE VIII
TERMINATION AND AMENDMENT OF PLAN
8.1 Termination and Amendment. The Board may at any time terminate
the Plan, and may at any time and from time to time and in any respect amend
the Plan; provided, however, that the Board (unless its actions are approved or
ratified by the stockholders of the Company within twelve (12) months of the
date that the Board amends the Plan) may not amend the Plan to:
(a) Materially increase the number of shares of Stock
subject to the Plan, except as contemplated in Section 5.2 hereof;
(b) Materially change the class of persons that may
participate in the Plan; or
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(c) Otherwise materially increase the benefits accruing to
participants under the Plan.
8.2 Effect on Optionee's Rights. No termination, amendment
or modification of the Plan shall affect adversely an Optionee's rights under a
Stock Option Agreement without the consent of the Optionee or his legal
representative, unless such termination, amendment or modification is required
to comply with applicable state and federal laws.
ARTICLE IX
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for employees or Directors of the Company or any of its
Subsidiaries.
ARTICLE X
MISCELLANEOUS
10.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of the Plan, the Committee may modify
outstanding Options or accept the surrender of outstanding Options and grant
new Options in substitution for them. However no modification of an Option
shall adversely affect an Optionee's rights under a Stock Option Agreement
without the consent of the Optionee or his legal representative, unless such
modification is required to comply with applicable state and federal laws.
10.2 Plan Binding on Successors. The Plan shall be binding upon
the successors and assigns of the Company.
10.3 Headings Not Part of Plan. Headings of Articles and Sections
hereof are inserted for convenience and reference and do not constitute part of
the Plan.
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10.4 Interpretation. With respect to Section 16 Insiders,
transactions under this Plan, are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the Plan or action by the Plan administrators fails to
so comply, it shall be deemed void to the extent permitted by law and deemed
advisable by the Plan administrators.
10.5 Governing Law. This Plan shall be governed by, and construed
in accordance with, the laws of the State of Delaware without regard to
conflicts of laws principles.
* * * *
12
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OrthAlliance, Inc.
1997 Orthodontist Stock Option Plan
Form of Stock Option Agreement
ORTHALLIANCE, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), entered into as of the
_____ day of ________________, 1997 by and between OrthAlliance, Inc., a
Delaware corporation (the "Company"), and _________________ (the "Optionee").
WHEREAS, on October 14, 1997, the Board of Directors of the Company
adopted a stock option plan known as the "OrthAlliance, Inc. 1997 Orthodontist
Stock Option Plan" (the "Plan") and recommended that the Plan be approved by
the Company's stockholders; and
WHEREAS, on ______, 1998, the stockholders of the Company approved the
Plan;
WHEREAS, the Committee has granted the Optionee an Option (as
described below) to purchase the number of shares of the Company's Common Stock
(the "Stock") as set forth below; and
WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to the Option in accordance with the Plan; and
WHEREAS, capitalized terms not defined herein shall have the meanings
ascribed to them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows.
1. Incorporation of Plan. This Option is granted pursuant to the
provisions of the Plan and the terms and definitions of the Plan are
incorporated herein by reference and made a part hereof. A copy of the Plan has
been delivered to, and receipt is hereby acknowledged by, the Optionee.
Notwithstanding anything in this Agreement to the contrary, to the extent the
terms of this Agreement conflict with or otherwise attempt to exceed the
authority set forth under the Plan, the Plan shall govern and control in all
respects.
2 Grant of Option. Subject to the terms, restrictions, limitations,
and conditions stated herein and the terms of the Plan, the Company hereby
evidences its grant to the Optionee of the right and option to purchase all or
any part of the number of shares of Stock (as defined under the
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<PAGE> 2
Plan), set forth on Schedule A attached hereto and incorporated herein by
reference (the "Option"). The Option shall be exercisable in the amounts
specified on Schedule A. The Option shall expire and shall not be exercisable
after the date specified on Schedule A as the expiration date or on such
earlier date as determined pursuant to the Plan.
3 Purchase Price. The price per share to be paid by the Optionee
for the shares subject to this Option (the "Exercise Price") shall be as
specified on Schedule A.
4 Exercise Terms. In the event this Option is not exercised with
respect to all or any part of the shares subject to this Option prior to its
expiration, the shares with respect to which this Option was not exercised
shall no longer be subject to this Option.
5 Restrictions on Transferability. No Option shall be transferable
by Optionee other than by will or the laws of descent and distribution.
6 Notice of Exercise of Option. This Option may be exercised by the
Optionee, or by the Optionee's administrators, executors or personal
representatives, by a written notice (in substantially the form of the Notice
of Exercise attached hereto as Schedule B) signed by the Optionee, or by such
administrators, executors or personal representatives, and delivered or mailed
to the Company as specified in Section 13 hereof to the attention of the Senior
Vice President, General Counsel or such other officer as the Company may
designate. Any such notice shall (a) specify the number of shares of Stock
which the Optionee or the Optionee's administrators, executors or personal
representatives, as the case may be, then elects to purchase hereunder, (b)
contain such information as may be reasonably required pursuant to Section 10
hereof, and (c) be accompanied by a certified or cashier's check payable to the
Company in payment of the total Exercise Price applicable to such shares as
provided herein; or, if approved by the Committee (i) shares of Stock owned by
the Optionee and duly endorsed or accompanied by stock transfer powers having a
Fair Market Value equal to the total Exercise Price applicable to such shares
purchased hereunder or (ii) a certified or cashier's check accompanied by the
number of shares of Stock whose Fair Market Value when added to the amount of
the check equals the total Exercise Price applicable to such shares purchased
hereunder, subject to compliance with applicable federal and state laws. Upon
receipt of any such notice and accompanying payment, and subject to the terms
hereof, the Company agrees to issue to the Optionee or the Optionee's
administrators, executors or personal representatives, as the case may be,
stock certificates for the number of shares specified in such notice registered
in the name of the person exercising this Option.
7 Adjustment in Option. The number of shares of Stock subject to
this Option, the Exercise Price and other matters are subject to adjustment
during the term of this Option in accordance with the Plan.
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<PAGE> 3
8 Death of Optionee. In the event of the Optionee's death, the
appropriate persons described in Section 6 hereof or persons to whom all or a
portion of this Option is transferred in accordance with Section 5 hereof may
exercise this Option at any time within a period ending on the earlier of (a)
the last day of the one (1) year period following the Optionee's death or (b)
the expiration date of this Option.
9 Date of Grant. This Option was granted by the Committee on the
date set forth in Schedule A (the "Date of Grant").
10 Compliance with Regulatory Matters. The Optionee acknowledges
that the issuance of capital stock of the Company is subject to limitations
imposed by federal and state law and the Optionee hereby agrees that the
Company shall not be obligated to issue any shares of Stock upon exercise of
this Option that would cause the Company to violate law or any rule,
regulation, order or consent decree of any regulatory authority (including
without limitation the Securities and Exchange Commission) having jurisdiction
over the affairs of the Company. The Optionee agrees that he or she will
provide the Company with such information as is reasonably requested by the
Company or its counsel to determine whether the issuance of Stock complies with
the provisions described by this Section.
11 Investment Representation of Optionee
(a) Optionee represents to the Company the following:
(i) that Optionee has read and understands the terms and
provisions of the Plan, and hereby accepts this Agreement subject
to all the terms and provisions of the Plan;
(ii) that Optionee shall accept as binding and final all
decisions or interpretations of the Board or of the Committee
upon any questions arising under the Plan; and
(iii) Optionee understands that, unless at the time of
exercise of the Option, a registration statement under the
Securities Act of 1933, as amended, is in effect covering the
Stock, as a condition to the exercise of the Option the Company
may require Optionee to represent that Optionee is acquiring the
Stock for Optionee's own account only and not with a view to, or
for sale in connection with, any distribution of the Stock.
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<PAGE> 4
(b) The Optionee understands and agrees that the certificate or
certificates representing any shares of Stock acquired hereunder may bear an
appropriate legend relating to registration and resale under federal and state
securities laws.
(c) The Optionee shall not have any rights of a stockholder of the
Company with respect to the shares of Stock which may be purchased upon
exercise of this Option, unless and until such shares shall have been issued
and delivered and his/her name has been entered as a stockholder on the stock
transfer records of the Company.
12 Miscellaneous.
(a) This Agreement shall be binding upon the parties hereto and
their representatives, successors and assigns.
(b) This Agreement is executed and delivered in, and shall be
governed by the laws of, the State of Delaware, without regard to conflicts of
laws principles.
(c) Any notice, request, document or other communication given
hereunder shall be deemed to be sufficiently given upon personal delivery to
the other party or upon the expiration of three (3) days after depositing same
in the United States mail, return receipt requested, properly addressed to the
respective parties or such other address as they may give to the other party in
writing in the same manner as follows:
Company: OrthAlliance, Inc.
23848 Hawthorne Blvd., Suite 200
Torrance, California 90505
Attention: Senior Vice President, General Counsel
Optionee:
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
(d) This Agreement may not be modified except in writing
executed by each of the parties hereto.
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<PAGE> 5
(e) This Agreement, together with the Plan, contains the entire
understanding of the parties hereto and supersedes any prior understanding
and/or written or oral agreement between them respecting the subject matter
hereof.
(f) The parties agree that the provisions of this Agreement are
severable and the invalidity or unenforceability of any provision in whole or
part shall not affect the validity or enforceability of any enforceable part of
such provision or any other provisions hereof.
(g) The headings with Sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
(h) No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
(i) This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Committee has caused this Stock Option
Agreement to be executed on behalf of the Company and attested by the Secretary
or an Assistant Secretary of the Company, and the Optionee has executed this
Stock Option Agreement, all as of the day and year first above written.
COMPANY:
ORTHALLIANCE, INC.
By:
Name:
Title:
OPTIONEE:
By:
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<PAGE> 6
SCHEDULE A
TO
STOCK OPTION AGREEMENT
BETWEEN
ORTHALLIANCE, INC.
AND
[Name of Optionee]
Dated ________________
10 Number of Shares Subject to Option: ________________ shares of Stock.
20 Option Exercise Price: $__________________ per share.
30 Date of Grant: ________________________
40 Option Exercise Period:
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<PAGE> 7
SCHEDULE B
TO
STOCK OPTION AGREEMENT
BETWEEN
ORTHALLIANCE, INC.
AND
[Name of Optionee]
Dated ________________
NOTICE OF EXERCISE
The undersigned hereby notifies OrthAlliance, Inc. (the
"Company") of this election to exercise the undersigned's stock option to
purchase ________________ shares of Stock (as defined under the Plan) pursuant
to the Stock Option Agreement (the "Agreement") between the undersigned and the
Company dated ________________. Accompanying this Notice is (1) a certified or
a cashier's check in the amount of $________________ payable to the Company,
and/or (2) _______________ shares of Stock (as defined under the Plan)
presently owned by the undersigned and duly endorsed or accompanied by stock
transfer powers, having an aggregate Fair Market Value (as defined under the
Plan) as of the date hereof of $__________________, such amounts being equal,
in the aggregate, to the purchase price per share set forth in Section 3 of the
Agreement multiplied by the number of shares being purchased hereby (in each
instance subject to appropriate adjustment pursuant to Section 7 of the
Agreement).
The undersigned is a resident of the State of .
IN WITNESS WHEREOF, the undersigned has set his/her hand and
seal, this ________ day of ________________, ______.
OPTIONEE [OR OPTIONEE'S ADMINISTRATOR,
EXECUTOR OR PERSONAL REPRESENTATIVE]
Name:
Position (if other than Optionee):
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<PAGE> 1
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Telephone (404) 572-4600
Telecopier (404) 572-5100
August 12, 1998
OrthAlliance, Inc.
23848 Hawthorne Boulevard
Suite 200
Torrance, California 90505
Ladies and Gentlemen:
We have acted as counsel to OrthAlliance, Inc. (the "Company") in
connection with the filing of a Registration Statement on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended,
covering the offering of up to 100,000 shares (the "Shares") of the Company's
Common Stock, pursuant to the OrthAlliance, Inc. 1997 Orthodontist Stock Option
Plan (the "Plan"). In connection therewith, we have examined such corporate
records, certificates of public offices and other documents and records as we
have considered necessary or proper for the purpose of this opinion.
This opinion is limited by and is in accordance with, the January 1,
1992, edition of the Interpretive Standards applicable to Legal Opinions to
Third Parties in Corporate Transactions adopted by the Legal Opinion Committee
of the Corporate and Banking Law Section of the State Bar of Georgia.
Based on the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that the Shares, when issued and
delivered as described in the Registration Statement and Plan, will be validly
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ King & Spalding
King & Spalding
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 27, 1998
included in OrthoAlliance, Inc.'s Form 10-K for the year ended December 31,
1997, and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Los Angeles, California
August 12, 1998
