<PAGE> 1
As filed with the Securities and
Exchange Commission on July 30, 1999. Registration No. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
----------
PENTEGRA DENTAL GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0545043
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
2999 NORTH 44TH STREET, SUITE 650 85018
PHOENIX, ARIZONA (Zip Code)
(Address of principal executive offices)
----------
OMEGA ORTHODONTICS
INCENTIVE STOCK PLAN
(Full title of the Plan)
JAMES M. POWERS, JR., D.D.S.
2999 NORTH 44TH STREET, SUITE 650
PHOENIX, ARIZONA 85108
(602) 952-1200
(Name, address, including zip code and telephone number,
including area code, of agent of service)
----------
COPIES TO:
JAMES S. RYAN, III RICHARD S. ROTH
Jackson Walker, L.L.P. Jackson Walker, L.L.P.
901 Main Street, Suite 6000 1100 Louisiana, Suite 4200
Dallas, Texas 75202 Houston, Texas 77002
APPROXIMATE DATE OF PROPOSED COMMENCEMENT OF SALES
PURSUANT TO THE PLAN:
From time to time after this Registration Statement becomes effective.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Title of Proposed Proposed
Securities to Amount to be Maximum Maximum Amount of
be Registered Registered Offering Price Aggregate Registration
Per Share(1) Offering Price(1) Fee
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$0.001 par
value 29,676 shares $1.97 $58,462 $12.00
- -------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(h)(1) and Rule 457(c), the offering price and
registration fee are computed on the basis of the average high and low
prices of the Common Stock as listed on the American Stock Exchange on July
29, 1999.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed with the Securities and
Exchange Commission (the "Commission") by the Company, are incorporated herein
by reference and made a part hereof:
(i) Annual Report on Form 10-K for the fiscal year ended March 31, 1999;
(ii) Current Report on Form 8-K dated July 1, 1999; and
(iii) Registration Statement on Form 8-A/A (No. 001-13725), effective as of
March 24, 1998.
All documents filed with the Commission pursuant to Section 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to
the date of this Registration Statement and prior to the filing of a
post-effective amendment that indicates that all securities offered have been
sold or that deregisters all securities then remaining unsold, shall be deemed
to be incorporated herein by reference and to be a part hereof from the date of
filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
DELAWARE GENERAL CORPORATION LAW
Section 145(a) of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a
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<PAGE> 3
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 145(b) of the DGCL states that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view 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.
Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
Section 145(d) of the DGCL states that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsections (a) and (b). Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, even
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<PAGE> 4
though less than a quorum or (2) if there are no such directors or if such
directors so direct, by independent legal counsel in a written opinion, or (3)
by the stockholders.
Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in Section 145. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
Section 145(f) of the DGCL states that the indemnification and advancement
of expenses provided by, or granted pursuant to, the other subsections of
Section 145 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.
Section 145(g) of the DGCL provides that a corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of Section 145.
Section 145(j) of the DGCL states that the indemnification and advancement
of expenses provided by, or granted pursuant to, Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent, and shall inure to the
benefit of the heirs, executors and administrators of such a person.
RESTATED CERTIFICATE OF INCORPORATION
The Restated Certificate of Incorporation of the Company provides that a
director of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided for in Section 174 of the DGCL. If the
DGCL is amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the Company, in
addition to the limitation on personal liability described above, shall be
limited to the fullest extent permitted by the amended DGCL. Further, any repeal
or modification of such provision of the Restated Certificate of Incorporation
by the stockholders
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<PAGE> 5
of the Company shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Company existing at
the time of such repeal or modification.
BYLAWS
The Bylaws of the Company provide that the Company will indemnify any
director or officer of the Company to the full extent permitted by applicable
law, and may, if and to the extent authorized by the Board of Directors, so
indemnify such other persons whom it has the power to indemnify against any
liability, reasonable expense or other matter whatsoever.
INSURANCE
The Company maintains liability insurance for the benefit of its directors
and officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers or
controlling persons of the Company pursuant to the foregoing provisions, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act, as
amended, and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-8, including those incorporated herein by
reference.
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
- ------- ----------------------
<S> <C>
4.1 Restated Certificate of Incorporation of Pentegra Dental Group, Inc.
(previously filed as an exhibit to the Company's Registration
Statement on Form S-1 (File No. 333-37633) (the "Company's Form S-1"),
and incorporated herein by reference).
4.2 Bylaws of Pentegra Dental Group, Inc. (previously filed as an exhibit
to the Company's Form S-1, and incorporated herein by reference).
4.3 Form of certificate evidencing ownership of the Common Stock of
Pentegra Dental Group, Inc. (previously filed as an exhibit to the
Company's Form S-1, and incorporated herein by reference).
</TABLE>
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<PAGE> 6
<TABLE>
<S> <C>
4.4 Form of Registration Rights Agreement for the dentist-owners of the
founding affiliated dental practices of the Company (previously filed
as an exhibit to the Company's Form S-1, and incorporated herein by
reference).
4.5 Registration Rights Agreement, dated September 30, 1997, between
Pentegra Dental Group, Inc. and the stockholders named therein
(previously filed as an exhibit to the Company's Form S-1, and
incorporated herein by reference).
4.6 Form of Stockholders Agreement for owners of affiliated practices
(previously filed as an exhibit to the Company's Registration
Statement on Form S-4 (No. 333-78535), and incorporated herein by
reference).
4.7 Form of Indenture from Pentegra Dentist Group, Inc. to U.S. Trust
Company of Texas, N.A., as trustee relating to convertible debt
securities (previously filed as an exhibit to the Company's
Registration Statement on Form S-4 (No. 333-64665), and incorporated
herein by reference).
5.1 Opinion of Jackson Walker L.L.P. (filed herewith)
23.1 Consent of PricewaterhouseCoopers LLP (filed herewith)
23.2 Consent of Jackson Walker L.L.P. (contained in Exhibit 5.1)
24.1 Power of Attorney (contained on the signature page of this
Registration Statement).
99 Omega Orthodontics Incentive Stock Plan (filed herewith).
</TABLE>
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes:
(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;
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<PAGE> 7
(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;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Company pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference 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) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 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
Company pursuant to the foregoing provisions, or otherwise, the Company 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 Company of expenses incurred or paid
by a director, officer or controlling person of the Company 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
Company 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> 8
POWER OF ATTORNEY
Each person whose signature appears below authorizes James M. Powers, Jr.,
D.D.S. and Sam H. Carr, and each of them, each of whom may act without joinder
of the other, to execute in the name of each such person who is then an officer
or director of the Registrant, and to file any amendments to this Registration
Statement necessary or advisable to enable the Registrant to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission, in respect thereof, in connection
with the registration of the securities which are the subject of this
Registration Statement, which amendments may make such changes to such
Registration Statement as such attorney may deem appropriate.
SIGNATURE PAGE
Pursuant to the requirements of the Securities Act of 1933, as amended,
Pentegra Dental Group, Inc. 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 Phoenix, State of Arizona on July 30,
1999.
PENTEGRA DENTAL GROUP, INC.
By: /s/ Sam H. Carr
------------------------------------
Sam H. Carr
Senior Vice President, Chief Financial Officer
and Secretary
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<PAGE> 9
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ James M. Powers, Jr. Chairman, President and July 30, 1999
- ---------------------------- Chief Executive Officer
James M. Powers, Jr., D.D.S. (Principal Executive Officer)
/s/ Sam H. Carr Senior Vice President, July 30, 1999
- ---------------------------- Chief Financial Officer,
Sam H. Carr Secretary and Director
(Principal Financial and
Accounting Officer)
/s/ Omer K. Reed Clinical Officer and Director July 30, 1999
- ----------------------------
Omer K. Reed, D.D.S.
/s/ Ronnie L. Andress Director July 30, 1999
- ----------------------------
Ronnie L. Andress, D.D.S.
/s/ James H. Clarke, Jr. Director July 30, 1999
- ----------------------------
James H. Clarke, Jr., D.D.S.
/s/ Ronald E. Geistfeld Director July 30, 1999
- ----------------------------
Ronald E. Geistfeld, D.D.S.
/s/ Mack E. Greder Director July 30, 1999
- ----------------------------
Mack E. Greder, D.D.S.
/s/ Roger Allen Kay Director July 30, 1999
- ----------------------------
Roger Allen Kay, D.D.S.
/s/ Gerald F. Mahoney Director July 30, 1999
- ----------------------------
Gerald F. Mahoney
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C> <C>
/s/ Anthony P. Maris Director July 30, 1999
- ----------------------------
Anthony P. Maris
/s/ George M. Siegel Director July 30, 1999
- ----------------------------
George M. Siegel
/s/ Ronald M. Yaros Director July 30, 1999
- ----------------------------
Ronald M. Yaros, D.D.S.
</TABLE>
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<PAGE> 11
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
- ------- ----------------------
<S> <C>
4.1 Restated Certificate of Incorporation of Pentegra Dental Group, Inc.
(previously filed as an exhibit to the Company's Registration
Statement on Form S-1 (File No. 333-37633) (the "Company's Form
S-1"), and incorporated herein by reference.
4.2 Bylaws of Pentegra Dental Group, Inc. (previously filed as an
exhibit to the Company's Form S-1, and incorporated herein by
reference).
4.3 Form of certificate evidencing ownership of the Common Stock of
Pentegra Dental Group, Inc. (previously filed as an exhibit to the
Company's Form S-1, and incorporated herein by reference).
4.4 Form of Registration Rights Agreement for the dentist-owners of the
founding affiliated dental practices of the Company (previously
filed as an exhibit to the Company's Form S-1, and incorporated
herein by reference).
4.5 Registration Rights Agreement, dated September 30, 1997, between
Pentegra Dental Group, Inc. and the stockholders named therein
(previously filed as an exhibit to the Company's Form S-1, and
incorporated herein by reference).
4.6 Form of Stockholders Agreement for owners of affiliated practices
(previously filed as an exhibit to the Company's Registration
Statement on Form S-4 (No. 333-78535), and incorporated herein by
reference).
4.7 Form of Indenture from Pentegra Dentist Group, Inc. to U.S. Trust
Company of Texas, N.A., as trustee relating to convertible debt
securities (previously filed as an exhibit to the Company's
Registration Statement on Form S-4 (No. 333-64665), and incorporated
herein by reference).
5.1 Opinion of Jackson Walker L.L.P. (filed herewith)
23.1 Consent of PricewaterhouseCoopers LLP (filed herewith)
23.2 Consent of Jackson Walker L.L.P. (contained in Exhibit 5.1)
24.1 Power of Attorney (contained on the signature page of this
Registration Statement).
99 Omega Orthodontics Incentive Stock Plan (filed herewith).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[Jackson Walker L.L.P. Letterhead]
July 30, 1999
Pentegra Dental Group, Inc.
2999 N. 44th Street
Suite 650
Phoenix, Arizona 85018
Re: Registration Statement on Form S-8 of Pentegra Dental Group, Inc.
Gentlemen:
We are acting as counsel for Pentegra Dental Group, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of the offering and sale of up
to 29,676 shares of the Company's Common Stock, par value $0.01 per share (the
"Shares"), which Shares are issuable upon the exercise of options ("Options")
granted or to be granted from time to time to eligible persons pursuant to the
provisions of the Omega Orthodontics Incentive Stock Plan (the "Plan"). A
Registration Statement on Form S-8 covering the offering and sale of the Shares
(the "Registration Statement") is expected to be filed with the Securities and
Exchange Commission (the "Commission") on or about the date hereof.
In reaching the conclusions expressed in this opinion we have examined and
relied on such documents, corporate records and other instruments, including
certificates of public officials and certificates of officers of the Company,
and made such further investigation and inquiry as we have deemed necessary to
reach the opinions expressed herein. In making the foregoing examinations, we
have assumed the genuineness of all signatures on original documents, the
authenticity, accuracy and completeness of all documents submitted to us as
originals and the conformity to original documents of all copies submitted to
us.
Based solely upon the foregoing, subject to the comments and exceptions
hereinafter stated, it is our opinion that the Shares, when issued upon exercise
of Options in accordance with the terms of the Plan, will be validly and legally
issued, fully paid and nonassessable.
We express no opinion as to the laws of any jurisdiction other than the
State of Texas and, solely with respect to matters of corporate law, the State
of Delaware. You should be aware that we are not admitted to practice law in the
State of Delaware. Accordingly, any opinion herein as to the laws of the State
of Delaware is based solely upon the latest generally available compilation of
the statutes and case law of such state.
<PAGE> 2
Pentegra Dental Group, Inc.
July 30, 1999
Page 2
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement. In giving this consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
JACKSON WALKER L.L.P.
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated May 20, 1999 relating to the financial
statements, which appears in the 1999 Annual Report to Shareholders of Pentegra
Dental Group, Inc., which is incorporated by reference in the Company's Annual
Report on Form 10-K for the year ended March 31, 1999.
PricewaterhouseCoopers LLP
July 30, 1999
<PAGE> 1
EXHIBIT 99
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN
I. ESTABLISHMENT OF PLAN; DEFINITIONS
1. Purpose. The purpose of the Omega Orthodontics Incentive Stock Plan is
to provide an incentive to key employees, directors and consultants to Omega
Orthodontics, Inc. (the "Corporation") who are in a position to contribute
materially to the long-term success of the Corporation, to increase their
interest in the Corporation's welfare, and to aid in attracting and retaining
employees, directors and consultants of outstanding ability.
2. Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the meanings set forth below:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
(c) "Committee" shall mean a committee whose members shall, from time
to time, be appointed by the Board; provided, however, that such Committee shall
at all times consist of at least two non-employee Directors.
(d) "Consultants" shall mean individuals who provide services to the
Corporation who are not Employees or Directors.
(e) "Corporation" shall mean Omega Orthodontics, Inc., a Delaware
corporation.
(f) "Directors" shall mean those members of the Board of Directors of
the Corporation who are not Employees.
(g) "Disability" shall mean a medically determinable physical or mental
condition which causes an Employee, Director or Consultant to be unable to
engage in any substantial gainful activity and which can be expected to result
in death or to be of long-continued and indefinite duration.
(h) "Employee" shall mean any common law employee, including officers,
of the Corporation as determined under the Code and the Treasury Regulations
thereunder.
(i) "Fair Market Value" shall mean the fair market value of the Stock
as determined by the Committee on the basis of a review of the facts and
circumstances at the time.
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 1
<PAGE> 2
(j) "Grantee" shall mean an Employee, Director or Consultant granted a
Stock Option or Stock Award under this Plan.
(k) "Incentive Stock Option" shall mean an option granted pursuant to
the Incentive Stock Option provisions as set forth in Part II of this Plan.
(l) "Non-Qualified Stock Option" shall mean an option granted pursuant
to the Non-Qualified Stock Option provisions as set forth in Part III of this
Plan.
(m) "Performance Shares" shall mean Stock which is issued pursuant to
the performance share provisions as set forth in Part VII of this Plan.
(n) "Plan" shall mean the Omega Orthodontics Incentive Stock Plan as
set forth herein and as amended from time to time.
(o) "Reload Option" shall mean an option granted pursuant to the reload
option provisions as set forth in Part IV of this Plan.
(p) "Restricted Stock" shall mean Stock which is issued pursuant to the
Restricted Stock as set forth in Part V of this Plan.
(q) "Stock" shall mean authorized but unissued shares of the Common
Stock of the Corporation or reacquired shares of the Corporation's Common Stock.
(r) "Stock Appreciation Right" shall mean a stock appreciation right
granted pursuant to the Stock Appreciation Right provisions as set forth in Part
II and III of this Plan.
(s) "Stock Award" shall mean an award of Restricted or Unrestricted
Stock or Performance Shares granted pursuant to this Plan.
(t) "Stock Option" shall mean an option granted pursuant to the Plan to
purchase shares of Stock.
(u) "Ten Percent Shareholder" shall mean an Employee who at the time a
Stock Option is granted owns stock possessing more than ten percent (10%) of the
total combined voting power of all stock of the Corporation or of its parent or
subsidiary corporation.
(v) "Unrestricted Stock" shall mean Stock which is issued pursuant to
the Unrestricted Stock provisions as set forth in Part VI of this Plan.
3. Shares of Stock Subject to the Plan. Subject to the provisions of
Paragraph 2 of Part VIII of the Plan, the Stock which may be issued or
transferred pursuant to Stock Options and Stock Awards granted under the Plan
and the Stock which is subject to outstanding but unexercised Stock
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 2
<PAGE> 3
Options under the Plan shall not exceed 450,000 shares in the aggregate. If a
Stock Option shall expire and terminate for any reason, in whole or in part,
without being exercised or, if Stock Awards are forfeited because the
restrictions with respect to such Stock Awards shall not have been met or have
lapsed, the number of shares of Stock which are no longer outstanding as Stock
Awards or subject to Stock Options may again become available for the grant of
Stock Awards or Stock Options. There shall be no terms and conditions in a Stock
Award or Stock Option which provide that the exercise of an Incentive Stock
Option reduces the number of shares of Stock for which an outstanding
Non-Qualified Stock Option may be exercised; and there shall be no terms and
conditions in a Stock Award or Stock Option which provide that the exercise of a
Non-Qualified Stock Option reduces the number of shares of Stock for which an
outstanding Incentive Stock Option may be exercised.
4. Administration of the Plan. The Plan shall be administered by the
Committee. Subject to the express provisions of the Plan, the Committee shall
have authority to interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to it, to determine the terms and provisions of Stock
Option agreements, and to make all other determinations necessary or advisable
for the administration of the Plan. Any controversy or claim arising out of or
related to this Plan shall be determined unilaterally by and at the sole
discretion of the Committee.
5. Amendment or Termination. The Board may, at any time, alter, amend,
suspend, discontinue, or terminate this Plan; provided, however, that such
action shall not adversely affect the right of Grantees to Stock Awards or Stock
Options previously granted and no amendment, without the approval of the
stockholders of the Corporation, shall increase the maximum number of shares
which may be awarded under the Plan in the aggregate, materially increase the
benefits accruing to Grantees under the Plan, change the class of Employees
eligible to receive options under the Plan, or materially modify the eligibility
requirements for participation in the Plan.
6. Effective Date and Duration of the Plan. This Plan shall become
effective on January 31, 1997. This Plan shall terminate at the close of
business on January 31, 2007, and no Stock Award or Stock Option may be issued
or granted under the Plan thereafter, but such termination shall not affect any
Stock Award or Stock Option theretofore issued or granted.
II. INCENTIVE STOCK OPTION PROVISIONS
1. Granting of Incentive Stock Options.
(a) Only key Employees of the Corporation shall be eligible to receive
Incentive Stock Options under the Plan. Directors and Consultants of the
Corporation who are not also Employees shall not be eligible to receive
Incentive Stock Options.
(b) The purchase price of each share of Stock subject to an Incentive
Stock Option shall not be less than 100% of the Fair Market Value of a share of
the Stock on the date the Incentive Stock Option is granted; provided, however,
that the purchase price of each share of Stock subject
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 3
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to an Incentive Stock Option granted to a Ten Percent Shareholder shall not be
less than 110% of the Fair Market Value of a share of the Stock on the date the
Incentive Stock Option is granted.
(c) No Incentive Stock Option shall be exercisable more than ten years
from the date the Incentive Stock Option was granted; provided, however, that an
Incentive Stock Option granted to a Ten Percent Shareholder shall not be
exercisable more than five years from the date the Incentive Stock Option was
granted.
(d) The Committee shall determine and designate from time to time those
Employees who are to be granted Incentive Stock Options and specify the number
of shares subject to each Incentive Stock Option.
(e) The Committee, in its sole discretion, shall determine whether any
particular Incentive Stock Option shall become exercisable in one or more
installments, specify the installment dates, and, within the limitations herein
provided, determine the total period during which the Incentive Stock Option is
exercisable. Further, the Committee may make such other provisions as may appear
generally acceptable or desirable to the Committee or necessary to qualify its
grants under the provisions of Section 422 of the Code.
(f) The Committee may grant at any time new Incentive Stock Options to
an Employee who has previously received Incentive Stock Options or other options
whether such prior Incentive Stock Options or other options are still
outstanding, have previously been exercised in whole or in part, or are canceled
in connection with the issuance of new Incentive Stock Options. The purchase
price of the new Incentive Stock Options may be established by the Committee
without regard to the existing Incentive Stock Options or other options.
(g) Notwithstanding any other provisions hereof, the aggregate fair
market value (determined at the time the option is granted) of the Stock with
respect to which Incentive Stock Options are exercisable for the first time by
the Employee during any calendar year (under all such plans of the Grantee's
employer corporation and its parent and subsidiary corporation) shall not exceed
$100,000.
2. Exercise of Incentive Stock Options. The option price of an Incentive
Stock Option shall be payable on exercise of the option (i) in cash or by check,
bank draft or postal or express money order, (ii) by the surrender of Stock then
owned by the Grantee, or (iii) partially in accordance with clause (i) and
partially in accordance with clause (ii) of this Paragraph. Shares of Stock so
surrendered in accordance with clause (ii) or (iii) shall be valued at the Fair
Market Value thereof on the date of exercise, surrender of such Stock to be
evidenced by delivery of the certificate(s) representing such shares in such
manner, and endorsed in such form, or accompanied by stock powers endorsed in
such form, as the Committee may determine.
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 4
<PAGE> 5
3. Termination of Employment.
(a) If a Grantee's employment with the Corporation is terminated other
than by Disability or death the terms of any then outstanding Incentive Stock
Option held by the Grantee shall extend for a period ending on the earlier of
the date on which such Stock Option would otherwise expire or three months after
such termination of employment, and such Stock Option shall be exercisable to
the extent it was exercisable as of such last date of employment.
(b) If a Grantee's employment with the Corporation is terminated by
reason of Disability, the term of any then outstanding Incentive Stock Option
held by the Grantee shall extend for a period ending on the earlier of the date
on which such Stock Option would otherwise expire or twelve months after such
termination of employment, and such Stock Option shall be exercisable to the
extent it was exercisable as of such last date of employment.
(c) If a Grantee's employment with the Corporation is terminated by
reason of death, the representative of his estate or beneficiaries thereof to
whom the Stock Option has been transferred shall have the right during the
period ending on the earlier of the date on which such Stock Option would
otherwise expire or twelve months after such date of death, to exercise any then
outstanding Incentive Stock Options in whole or in part. If a Grantee dies
without having fully exercised any then outstanding Incentive Stock Options, the
representative of his estate or beneficiaries thereof to whom the Stock Option
has been transferred shall have the right to exercise such Stock Options in
whole or in part.
4. Stock Appreciation Rights
(a) Grant. Stock Appreciation Rights related to all or any portion of
an Incentive Stock Option may be granted by the Committee to any Grantee in
connection with the grant of an Incentive Stock Option or unexercised portion
thereof held by the Grantee at any time and from time to time during the term
thereof. Each Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the provisions of this Part II as shall be
determined by the Committee and included in the agreement relating to such Stock
Appreciation Right, subject in any event, however, to the following terms and
conditions of this Section 4. Each Stock Appreciation Right may include
limitations as to the time when such Stock Appreciation Right becomes
exercisable and when it ceases to be exercisable that are more restrictive than
the limitations on the exercise of the Incentive Stock Option to which it
relates.
(b) Exercise. No Stock Appreciation Right shall be exercisable with
respect to such related Incentive Stock Option or portion thereof unless such
Incentive Stock Option or portion shall itself be exercisable at that time. A
Stock Appreciation Right shall be exercised only upon surrender of the related
Incentive Stock Option or portion thereof in respect of which the Stock
Appreciation Right is then being exercised.
(c) Amount of Payment. On exercise of a Stock Appreciation Right, a
Grantee shall be entitled to receive an amount equal to the product of (i) the
amount by which the Fair Market
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 5
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Value of a share of Stock on the date of exercise of the Stock Appreciation
Right exceeds the option price per share specified in the related Incentive
Stock Option and (ii) the number of shares of Stock in respect of which the
Stock Appreciation Right shall have been exercised.
(d) Form of Payment. The Committee shall have the sole discretion
either (i) to determine the form in which payment in settlement of a Stock
Appreciation Right will be made (i.e., cash, Stock or any combination thereof),
or (ii) to consent to or disapprove the election by the Grantee to receive cash
in full or partial settlement of the Stock Appreciation Right, such consent or
disapproval to be given at any time after the election to which it relates. If
settlement of a Stock Appreciation Right, or portion thereof, is to be made in
the form of Stock, the number of shares of Stock to be distributed shall be the
largest whole number obtained by dividing the cash sum otherwise distributable
in respect of such settlement by the Fair Market Value of a share of Stock on
the date of exercise of the Stock Appreciation Right. The value of fractional
shares of Stock shall be paid in cash.
(e) Effect of Exercise of Right or Related Option. If the related
Incentive Stock Option is exercised in whole or in part, then the Stock
Appreciation Right with respect to the Stock purchased pursuant to such exercise
(but not with respect to any unpurchased Stock) shall be terminated as of the
date of exercise if such Stock Appreciation Right is not exercised on such date.
(f) Non-transferability. A Stock Appreciation Right shall not be
transferable or assignable by the Grantee other than by will or the laws of
descent and distribution, and shall be exercisable during the Grantee's lifetime
only by the Grantee.
(g) Termination of Employment. If the Grantee ceases to be an Employee
of the Corporation for any reason, each outstanding Stock Appreciation Right
shall be exercisable for such period and to such extent as the related Incentive
Stock Option or portion thereof.
III. NON-QUALIFIED STOCK OPTION PROVISIONS
1. Granting of Stock Options.
(a) Employees, Directors and Consultants shall be eligible to receive
Non-Qualified Stock Options under the Plan.
(b) The Committee shall determine and designate from time to time those
Employees, Directors and Consultants who are to be granted Non-Qualified Stock
Options and the amount subject to each Non-Qualified Stock Option.
(c) The Committee may grant at any time new Non-Qualified Stock Options
to an Employee, Director or Consultant who has previously received Non-Qualified
Stock Options or other Stock Options, whether such prior Non-Qualified Stock
Options or other Stock Options are still outstanding, have previously been
exercised in whole or in part, or are canceled in connection with the issuance
of new Non-Qualified Stock Options.
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 6
<PAGE> 7
(d) The Committee shall determine the purchase price of each share of
Stock subject to a Non-Qualified Stock Option. Such price shall not be less than
[100%] of the Fair Market Value of such Stock on the date the Non-Qualified
Stock Option is granted.
(e) The Committee, in its sole discretion, shall determine whether any
particular Non-Qualified Stock Option shall become exercisable in one or more
installments, specify the installment dates, and, within the limitations herein
provided, determine the total period during which the Non-Qualified Stock Option
is exercisable. Further, the Committee may make such other provisions as may
appear generally acceptable or desirable to the Committee.
(f) No Non-Qualified Stock Option shall be exercisable more than ten
years from the date such option is granted.
2. Exercise of Stock Options. The option price of a Non-Qualified Stock
Option shall be payable on exercise of the Stock Option (i) in cash or by check,
bank draft or postal or express money order, (ii) by the surrender of Stock then
owned by the Grantee, or (iii) partially in accordance with clause (i) and
partially in accordance with clause (ii) of this Paragraph. Shares of Stock so
surrendered in accordance with clause (ii) or (iii) shall be valued at the Fair
Market Value thereof on the date of exercise, surrender of such to be evidenced
by delivery of the certificate(s)representing such shares in such manner, and
endorsed in such form, or accompanied by stock powers endorsed in such form, as
the Committee may determine.
3. Termination of Relationship.
(a) If a Grantee's employment with the Corporation is terminated, a
Director Grantee ceases to be a Director, or a Consultant Grantee ceases to be a
Consultant, other than by reason of Disability or death, the terms of any then
outstanding Non-Qualified Stock Option held by the Grantee shall extend for a
period ending on the earlier of the date established by the Committee at the
time of grant or three months after the Grantee's last date of employment or
cessation of being a Director or Consultant, and such Stock Option shall be
exercisable to the extent it was exercisable as of the date of termination of
employment or cessation of being a Director or Consultant.
(b) If a Grantee's employment is terminated by reason of Disability, a
Director Grantee ceases to be a Director by reason of Disability or a Consultant
Grantee ceases to be a Consultant by reason of Disability, the term of any then
outstanding Non-Qualified Stock Option held by the Grantee shall extend for a
period ending on the earlier of the date on which such Stock Option would
otherwise expire or twelve months after the Grantee's last date of employment or
cessation of being a Director or Consultant, and such Stock Option shall be
exercisable to the extent it was exercisable as of such last date of employment
or cessation of being a Director or Consultant.
(c) If a Grantee's employment is terminated by reason of death, a
Director Grantee ceases to be a Director by reason of death or a Consultant
Grantee ceases to be a Consultant by reason of death, the representative of his
estate or beneficiaries thereof to whom the Stock Option
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 7
<PAGE> 8
has been transferred shall have the right during the period ending on the
earlier of the date on which such Stock Option would otherwise expire or twelve
months following his death to exercise any then outstanding Non-Qualified Stock
Options in whole or in part. If a Grantee dies without having fully exercised
any then outstanding Non-Qualified Stock Options, the representative of his
estate or beneficiaries thereof to whom the Stock Option has been transferred
shall have the right to exercise such Stock Options in whole or in part.
4. Stock Appreciation Rights.
(a) Grant. Stock Appreciation Rights related to all or any portion of a
Non-Qualified Stock Option may be granted by the Committee to any Grantee in
connection with the grant of a Non-Qualified Stock Option or unexercised portion
thereof held by the Grantee at any time and from time to time during the term
thereof. Each Stock Appreciation Right shall be subject to such terms and
conditions not inconsistent with the provisions of this Part III as shall be
determined by the Committee and included in the agreement relating to such Stock
Appreciation Right, subject in any event, however, to the following terms and
conditions of this Section 4. Each Stock Appreciation Right may include
limitations as to the time when such Stock Appreciation Right becomes
exercisable and when it ceases to be exercisable that are more restrictive than
the limitations on the exercise of the Non-Qualified Stock Option to which it
relates.
(b) Exercise. No Stock Appreciation Right shall be exercisable with
respect to such related Non-Qualified Stock Option or portion thereof unless
such Non-Qualified Stock Option or portion shall itself be exercisable at that
time. A Stock Appreciation Right shall be exercised only upon surrender of the
related Non-Qualified Stock Option or portion thereof in respect of which the
Stock Appreciation Right is then being exercised.
(c) Amount of Payment. On exercise of a Stock Appreciation Right, a
Grantee shall be entitled to receive an amount equal to the product of (i) the
amount by which the Fair Market Value of a share of Stock on the date of
exercise of the Stock Appreciation Right exceeds the option price per share
specified in the related Non-Qualified Stock Option and (ii) the number of
shares of Stock in respect of which the Stock Appreciation Right shall have been
exercised.
(d) Form of Payment. The Committee shall have the sole discretion
either (i) to determine the form in which payment in settlement of a Stock
Appreciation Right will be made (i.e., cash, Stock or any combination thereof),
or (ii) to consent to or disapprove the election by the Grantee to receive cash
in full or partial settlement of the Stock Appreciation Right, such consent or
disapproval to be given at any time after the election to which it relates. If
settlement of a Stock Appreciation Right, or portion thereof, is to be made in
the form of Stock, the number of shares of Stock to be distributed shall be the
largest whole number obtained by dividing the cash sum otherwise distributable
in respect of such settlement by the Fair Market Value of a share of Stock on
the date of exercise of the Stock Appreciation Right. The value of fractional
shares shall be paid in cash.
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 8
<PAGE> 9
(e) Effect of Exercise of Right or Related Option. If the related
Non-Qualified Stock Option is exercised in whole or in part, then the Stock
Appreciation Right with respect to the Stock purchased pursuant to such exercise
(but not with respect to any unpurchased Stock) shall be terminated as of the
date of exercise if such Stock Appreciation Right is not exercised on such date.
(f) Non-transferability. A Stock Appreciation Right shall not be
transferable or assignable by the Grantee other than by will or the laws of
descent and distribution, and shall be exercisable during the Grantee's lifetime
only by the Grantee.
(g) Termination of Employment. If the Grantee ceases to be an Employee,
Director or Consultant of the Corporation for any reason, each outstanding Stock
Appreciation Right shall be exercisable for such period and to such extent as
the related Non-Qualified Stock Option or portion thereof.
IV. RELOAD OPTIONS
1. Grant of Reload Options.
(a) Employees, Directors and Consultants shall be eligible to receive
Reload Options under the Plan.
(b) Concurrently with the award of Incentive Stock Options or
Non-Qualified Stock Options, the Committee may grant Reload Options to purchase
Stock. The number of Reload Options shall, at the discretion of the Committee,
equal the number of shares of Stock used to exercise the Incentive Stock Options
or Non-Qualified Stock Options and the number of shares of Stock used to satisfy
any tax withholding requirement applicable to the exercise of the underlying
Stock Options.
(c) The grant of a Reload Option shall become effective upon the
exercise of the underlying Incentive Stock Options or Non-Qualified Stock
Options.
(d) Reload Options are not intended to qualify as incentive stock
options pursuant to Section 422 of the Code.
(e) The purchase price of each share of Stock subject to a Reload
Option shall be the Fair Market Value of a share of the Stock on the date the
Reload Option becomes effective.
(f) The term of a Reload Option shall be equal to the remaining term of
the underlying Incentive Stock Option or Non-Qualified Stock Option.
(g) The terms and conditions of a Reload Option shall be same as the
underlying Incentive Stock Option or Non-Qualified Stock Option.
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 9
<PAGE> 10
2. Exercise of Reload Options. The option price of a Reload Option shall
be payable on exercise of the Stock Option (i) in cash or by check, bank draft
or postal or express money order, (ii)by the surrender of Stock then owned by
the Grantee, or (iii) partially in accordance with clause (i) and partially in
accordance with clause (ii) of this Paragraph. Shares of Stock so surrendered in
accordance with clause (ii) or (iii) shall be valued at the Fair Market Value
thereof on the date of exercise, surrender of such to be evidenced by delivery
of the certificate(s) representing such shares in such manner, and endorsed in
such form, or accompanied by stock powers endorsed in such form, as the
Committee may determine.
3. Termination of Relationship.
(a) If a Grantee's employment with the Corporation is terminated, a
Director Grantee ceases to be a Director, or a Consultant Grantee ceases to be a
Consultant other than by reason of Disability or death, the terms of any then
outstanding Reload Option held by the Grantee shall extend for a period ending
on the earlier of the date established by the Committee at the time of grant or
three months after the Grantee's last date of employment or cessation of being a
Director or Consultant, and such Stock Option shall be exercisable to the extent
it was exercisable as of the date of termination of employment or cessation of
being a Director or Consultant.
(b) If a Grantee's employment is terminated by reason of Disability, a
Director Grantee ceases to be a Director by reason of Disability or a Consultant
Grantee ceases to be a Consultant by reason of Disability, the term of any then
outstanding Non-Qualified Stock Option held by the Grantee shall extend for a
period ending on the earlier of the date on which such Stock Option would
otherwise expire or twelve months after the Grantee's last date of employment or
cessation of being a Director or Consultant, and such Stock Option shall be
exercisable to the extent it was exercisable as of such last date of employment
or cessation of being a Director or Consultant.
(c) If a Grantee's employment is terminated by reason of death, a
Director Grantee ceases to be a Director by reason of death or a Consultant
Grantee ceases to be a Consultant by reason of death, the representative of his
estate or beneficiaries thereof to whom the Stock Option has been transferred
shall have the right during the period ending on the earlier of the date on
which such Stock Option would otherwise expire or twelve months following his
death to exercise any then outstanding Non-Qualified Stock Options in whole or
in part. If a Grantee dies without having fully exercised any then outstanding
Non-Qualified Stock Options, the representative of his estate or beneficiaries
thereof to whom the Stock Option has been transferred shall have the right to
exercise such Stock Options in whole or in part.
V. RESTRICTED STOCK AWARDS
1. Grant of Restricted Stock.
(a) Employees, Directors and Consultants shall be eligible to receive
grants of Restricted Stock under the Plan.
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 10
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(b) The Committee shall determine and designate from time to time those
Employees, Directors and Consultants who are to be granted Restricted Stock and
the number of shares of Stock subject to such Stock Award.
(c) The Committee, in its sole discretion, shall make such terms and
conditions applicable to the grant of Restricted Stock as may appear generally
acceptable or desirable to the Committee.
2. Termination of Relationship.
(a) If a Grantee's employment with the Corporation, a Director Grantee
ceases to be a Director, or a Consultant Grantee ceases to be a Consultant,
prior to the lapse of any restrictions applicable to the Restricted Stock such
Stock shall be forfeited and the Grantee shall return the certificates
representing such Stock to the Corporation.
(b) If the restrictions applicable to a grant of Restricted Stock shall
lapse, the Grantee shall hold such Stock free and clear of all such restrictions
except as otherwise provided in the Plan.
VI. UNRESTRICTED STOCK AWARDS
1. Grant of Unrestricted Stock.
(a) Employees, Directors and Consultants shall be eligible to receive
grants of Unrestricted Stock under the Plan.
(b) The Committee shall determine and designate from time to time those
Employees, Directors and Consultants who are to be granted Unrestricted Stock
and number of shares of Stock subject to such Stock Award.
2. Issuance of Stock. The Grantee shall hold Stock issued pursuant to an
Unrestricted Stock award free and clear of all restrictions except as otherwise
provided in the Plan.
VII. PERFORMANCE SHARES
1. Grant of Performance Shares.
(a) Employees, Directors and Consultants shall be eligible to receive
grants of Performance Shares under the Plan.
(b) The Committee shall determine and designate from time to time those
Employees, Directors and Consultants who are to be granted Performance Shares
and the number of shares of Stock subject to such Stock Award.
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 11
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(c) The Committee, in its sole discretion, shall make such terms and
conditions applicable to the grant of Performance Shares as may appear generally
acceptable or desirable to the Committee.
2. Issuance of Stock. Upon the satisfaction of the terms and conditions
applicable to the Performance Shares, the Grantee shall hold Stock issued
pursuant to the Performance Share award free and clear of all restrictions
except as otherwise provided in the Plan.
VIII. GENERAL PROVISIONS
1. Substitution of Options. In the event of a corporate merger or
consolidation, or the acquisition by the Corporation of property or stock of an
acquired corporation or any reorganization or other transaction qualifying under
Section 424 of the Code, the Committee may, in accordance with the provisions of
that Section, substitute Stock Options, Stock Awards and Stock Appreciation
Rights under this Plan for Stock Options, Stock Awards and Stock Appreciation
Rights under the plan of the acquired corporation provided (i) the excess of the
aggregate fair market value of the shares of Stock subject to Stock Option
immediately after the substitution over the aggregate option price of such Stock
is not more than the similar excess immediately before such substitution and
(ii)the new Stock Option does not give the Grantee additional benefits,
including any extension of the exercise period
2. Adjustment Provisions.
(a) In the event that a dividend shall be declared upon the Stock
payable in shares of the Corporation's common stock, the number of shares of
Stock then subject to any Stock Option or Stock Award outstanding under the Plan
and the number of shares reserved for the grant of Stock Options or Stock Awards
pursuant to the Plan shall be adjusted by adding to each such share the number
of shares which would be distributable in respect thereof if such shares had
been outstanding on the date fixed for determining the shareholders of the
Corporation entitled to receive such share dividend.
(b) If the shares of Stock outstanding are changed into or exchanged
for a different number or class or other securities of the Corporation or of
another corporation, whether through split-up, merger, consolidation,
reorganization, reclassification or recapitalization then there shall be
substituted for each share of Stock subject to any such Stock Option or Stock
Award and for each share of Stock reserved for the grant of Stock Options or
Stock Awards pursuant to the Plan the number and kind of shares or other
securities into which each outstanding share of Stock shall have been so changed
or for which each share shall have been exchanged.
(c) In the event there shall be any change, other than as specified
above in this Section 2, in the number or kind of outstanding shares of Stock or
of any shares or other securities into which such shares shall have been changed
or for which they shall have been exchanged, then if the Board shall, in its
sole discretion, determine that such change equitably requires an adjustment in
the number or kind of shares theretofore reserved for the grant of Stock Options
or Stock Awards
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 12
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pursuant to the Plan and of the shares then subject to Stock Options or Stock
Awards, such adjustment shall be made by the Board and shall be effective and
binding for all purposes of the Plan and of each Stock Option and Stock Award
outstanding thereunder.
(d) Each Stock Appreciation Right outstanding at the time of any
adjustment pursuant to this Section 2 and the number of outstanding Stock
Appreciation Rights, shall be adjusted, changed or exchanged in the same manner
as related Stock Options.
(e) In the case of any such substitution or adjustment as provided for
in this Section 2, the option price set forth in each outstanding Stock Option
for each share covered thereby prior to such substitution or adjustment will be
the option price for all shares or other securities which shall have been
substituted for such share or to which such share shall have been adjusted
pursuant to this Section 2, and the price per share shall be adjusted
accordingly.
(f) No adjustment or substitution provided for in this Section 2 shall
require the Corporation to sell a fractional share, and the total substitution
or adjustment with respect to each outstanding Stock Option shall be limited
accordingly.
(g) Upon any adjustment made pursuant to this Section 2 the Corporation
will, upon request, deliver to the Grantee a certificate setting forth the
option price thereafter in effect and the number and kind of shares or other
securities thereafter purchasable on the exercise of such Stock Option.
3. General.
(a) Each Stock Option, Stock Award and Stock Appreciation Right shall
be evidenced by a written instrument containing such terms and conditions, not
inconsistent with this Plan, as the Committee shall approve.
(b) The granting of a Stock Option, Stock Award or Stock Appreciation
Right in any year shall not give the Grantee any right to similar grants in
future years or any right to be retained in the employ of the Corporation, and
all Employees shall remain subject to discharge to the same extent as if the
Plan were not in effect.
(c) No Employee, Director or Consultant and no beneficiary or other
person claiming under or through him, shall have any right, title or interest by
reason of any Stock Option or any Stock Award to any particular assets of the
Corporation, or any shares of Stock allocated or reserved for the purposes of
the Plan or subject to any Stock Option or any Stock Award except as set forth
herein. The Corporation shall not be required to establish any fund or make any
other segregation of assets to assure the payment of any Stock Option or Stock
Award.
(d) No right under the Plan shall be subject to anticipation, sale,
assignment, pledge, encumbrance, or charge except by will or the laws of descent
and distribution, and a Stock Option shall be exercisable during the Grantee's
lifetime only by the Grantee or his conservator.
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 13
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(e) Notwithstanding any other provision of this Plan or agreements made
pursuant thereto, the Corporation's obligation to issue or deliver any
certificate or certificates for shares of Stock under a Stock Option or Stock
Award, and the transferability of Stock acquired by exercise of a Stock Option
or grant of a Stock Award, shall be subject to all of the following conditions:
(i) Any registration or other qualification of such shares under
any state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Board shall, in its absolute
discretion upon the advice of counsel, deem necessary or advisable; and
(ii) The obtaining of any other consent, approval, or permit from
any state or federal governmental agency which the Board shall, in its absolute
discretion upon the advice of counsel, determine to be necessary or advisable.
(f) All payments to Grantees or to their legal representatives shall be
subject to any applicable tax, community property, or other statutes or
regulations of the United States or of any state having jurisdiction thereof.
The Grantee may be required to pay to the Corporation the amount of any
withholding taxes which the Corporation is required to withhold with respect to
a Stock Option or its exercise or a Stock Award. In the event that such payment
is not made when due, the Corporation shall have the right to deduct, to the
extent permitted by law, from any payment of any kind otherwise due to such
person all or part of the amount required to be withheld.
(g) In the case of a grant of a Stock Option or Stock Award to any
Employee of a subsidiary of the Corporation, the Corporation may, if the
Committee so directs, issue or transfer the shares, if any, covered by the Stock
Option or Stock Award to the subsidiary, for such lawful consideration as the
Committee may specify, upon the condition or understanding that the subsidiary
will transfer the shares to the Employee in accordance with the terms of the
Stock Option or Stock Award specified by the Committee pursuant to the
provisions of the Plan. For purposes of this Section, a subsidiary shall mean
any subsidiary corporation of the Corporation as defined in Section 424 of the
Code.
(h) A Grantee entitled to Stock as a result of the exercise of a Stock
Option or grant of a Stock Award shall not be deemed for any purpose to be, or
have rights as, a shareholder of the Corporation by virtue of such exercise,
except to the extent a stock certificate is issued therefor and then only from
the date such certificate is issued. No adjustments shall be made for dividends
or distributions or other rights for which the record date is prior to the date
such stock certificate is issued. The Corporation shall issue any stock
certificates required to be issued in connection with the exercise of a Stock
Option with reasonable promptness after such exercise.
(i) The grant or exercise of Stock Options granted under the Plan or
the grant of a Stock Award under the Plan shall be subject to, and shall in all
respects comply with, applicable law relating to such grant or exercise, or to
the number of shares of Stock which may be beneficially owned or held by any
Grantee.
OMEGA ORTHODONTICS INCENTIVE STOCK PLAN - PAGE 14
