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EXHIBIT 4.3
ORTHALLIANCE, INC.
1997 DIRECTOR STOCK OPTION PLAN, AS AMENDED
ORTHALLIANCE, INC.
1997 DIRECTOR 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 "Board" shall mean the Board of Directors of the Company.
1.2 "Chairman of the Board" shall mean any Eligible Director who is the
Chairman of the Board of the Company.
1.3 "Change in Control" shall mean the occurrence of either of the
following events:
(a) any of the following events:
(i) the dissolution or liquidation of the Company; or
(ii) a reorganization, merger or consolidation of the Company
with one or more other corporations (except with respect
to a transaction, the sole purpose of which 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); or
(iii) a sale of all or substantially all of the Company's
assets; or
(b) 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 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.
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1.4 "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.
1.5 "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 need not be members of the Committee with respect to Options granted to any
other individuals) who are Non-Employee Directors (within the meaning of Rule
16b-3), and all authority and discretion shall be exercised by such Non-Employee
Directors, and references herein to the "Committee" shall mean such Non-Employee
Directors insofar as any actions or determinations of the Committee shall relate
to or affect Options made to or held by any Section 16 Insider. 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.
1.6 "Company" shall mean OrthAlliance, Inc., a Delaware corporation.
1.7 "Director" shall mean a member of the Board.
1.8 "Disabled Optionee" shall mean an Optionee who suffers a Disability.
1.9 "Disability" shall mean shall mean a physical or mental infirmity
which impairs an Optionee's ability to substantially perform his duties with the
Company for a period of 180 consecutive days, as determined by an independent
physician selected by agreement between the Company and the Optionee or, failing
such agreement, selected by two physicians (one of which shall be selected by
the Company and the other by the Optionee).
1.10 "Discretionary Grant" shall mean all Options issued to Eligible
Directors at the discretion of the Committee pursuant to Section 5.3 of this
Plan.
1.11 "Eligible Director" shall mean a member of the Board who is not a
full-time employee of the Company.
1.12 "Eligible Director Grant" shall mean those non-discretionary
Options that are automatically issued to Eligible Directors pursuant to Section
5.2 of this Plan.
1.13 "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.
1.14 "Exercise Price" shall mean the price at which an Optionee may
purchase a share of Stock under a Stock Option Agreement, determined in
accordance with Section 5.3 of this Plan.
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1.15 "Fair Market Value" on any date shall mean (i) the average closing
sales price of the Stock on the national securities exchange having the greatest
volume of trading in the Stock during the five (5) trading days preceding such
date; (ii) if the Stock is not traded on any national securities exchange, the
average of the closing bid prices of the Stock on the over-the-counter market
for the five (5) trading days preceding the date such value is to be determined;
or (iii) if the Stock is not traded on a national securities exchange or an
over-the-counter market, the fair market value as determined in good faith by
the Board 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.
1.16 "Option" shall mean the right and option to purchase Stock, whether
through a Discretionary Grant or an Eligible Director Grant, pursuant to the
provisions of Article V hereof. All Options under the Plan are non-qualified
stock options.
1.17 "Optionee" shall mean a person to whom an Option has been granted
hereunder or his or her permitted assign.
1.18 "Plan" shall mean the OrthAlliance, Inc. 1997 Director Stock Option
Plan, the terms of which are set forth herein.
1.19 "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act, as the same may be in effect or set forth from time to time.
1.20 "Stock" shall mean the Class A Common Stock, $.001 par value per
share, of the Company, subject to the antidilution provisions of Section 4.2 of
this Plan.
1.21 "Stock Option Agreement" shall mean a written agreement between the
Company and an Optionee under which the Optionee may purchase Stock hereunder,
in substantially the form attached hereto.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as the "1997 Director 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 the Eligible
Directors of the Company an opportunity to acquire or increase their proprietary
interests in the Company. The objective of the Plan is to (i) attract able
persons to serve as Eligible Directors of the Company and (ii) promote the
growth and profitability of the Company and its subsidiaries by providing
Optionees with an additional incentive to achieve the Company's objectives
through participation in its success and growth and by encouraging their
continued association with or service to the Company.
2.3 Effective Date. The effective date of this Plan is May 13, 1997,
subject to stockholder approval of the Plan on or before the next annual meeting
of the Company's stockholders.
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2.4 Participants. All Eligible Directors of the Company shall
participate in the Plan.
ARTICLE III
ADMINISTRATION
3.1 Plan Administration.
(a) With respect to the Eligible Director Grants only, this Plan
shall be self-governing and provides for automatic grants of the Eligible
Director Grants in accordance with the provisions of Article V hereof. With
respect to the Eligible Director Grants only, this Plan is intended to be a
"formula plan" within the meaning of Note 3 to Rule 16b-3 and the Board shall
have no discretion as to (i) the selection of persons to whom Eligible Director
Grant Options are to be granted, (ii) the timing of such Eligible Director
Grants, (iii) the number of shares subject to any Option, (iv) the Exercise
Price of any Option, (v) the period(s) during which any Option may be exercised
or (vi) the expiration date of any option that is an Eligible Director Grant.
With respect to all Discretionary Grants, this Plan shall be administered by the
Committee of the Board of Directors.
(b) With respect to all Discretionary Grants, the Committee may
make discretionary grants to any Eligible Director. Subject to the provisions of
and in accordance with the Plan, with respect to Discretionary Grants, the
Committee will have the power to (i) grant options, (ii) determine those
directors to whom options will be granted, (iii) interpret the Director Plan,
(iv) promulgate rules and regulations relating to the Director Plan, and (v)
make all other determinations and take all other actions necessary or desirable
for the administration of the Director Plan. Decisions of the Committee
regarding interpretation and administration of the Director Plan are binding
upon all interested persons.
3.2 Interpretation; Rules. Subject to Sections 3.1 and 7.1 and the other
provisions of the Plan, the Board shall have complete authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it and
to make all other determinations necessary or advisable for the administration
of the Plan, including, without limitation, amending or altering the Plan as may
be required to comply with or to conform to any federal, state or local laws or
regulations.
3.3 No Liability. No Director 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.
ARTICLE IV
SHARES OF STOCK SUBJECT TO PLAN
4.1 Limitations. Subject to adjustment pursuant to the antidilution
provisions of Section 4.2 hereof, the maximum number of shares of Stock that may
be issued hereunder shall be Five Hundred Thousand (500,000). 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
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considered as having been optioned or issued in computing the number of shares
of Stock remaining available for Options hereunder.
4.2 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 (excluding mergers of
orthodontic practices with and into the Company), 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 Board; 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 Board.
(b) If not provided in a Stock Option Agreement to the contrary,
if a Change in Control occurs, the Board, in its discretion, may provide:
(i) notwithstanding other provisions hereof, that all Options
granted under this Plan shall become exercisable immediately,
notwithstanding the provisions of the respective Stock Option
Agreements regarding exercisability, and that all such Options
shall terminate ninety (90) days after the Board gives written
notice of the immediate right to exercise all such Options and of
the decision to terminate all Options not exercised within such
90-day period; or
(ii) 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 in connection
with a Change in Control, the provisions of Section 4.2(b) shall apply. In all
other instances, the adoption of a plan of dissolution or liquidation of the
Company shall, notwithstanding other provisions hereof, cause all then-remaining
restrictions pertaining to Options under the Plan to lapse, and shall cause
every Option outstanding under the Plan to terminate to the extent not exercised
prior to the adoption of the plan of dissolution or liquidation by the
stockholders; provided, however, that, notwithstanding any other provisions
hereof, the Board 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, notwithstanding the provisions of the respective Stock Option
Agreements regarding exercisability.
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(d) The adjustments described in paragraphs (a) through (c) of
this Section 4.2, and the manner of their application, shall be determined
solely by the Board, and any such adjustment may provide for the elimination of
fractional share interests. The adjustments required under this Article IV shall
apply to any successors of the Company and shall be made regardless of the
number or type of successive events requiring such adjustments.
ARTICLE V
OPTIONS
5.1 Types of Options Granted. All Options granted under this Plan shall
be non-qualified stock options (i.e., stock options which do not qualify as
incentive stock options under Sections 422 and 423 of the Code).
5.2 Eligible Director Grants. Automatic grants of Options shall be made
as follows:
(a) An initial grant of an Option to purchase 10,000 shares of
Stock shall be made to each Eligible Director, on the date he or she is
initially elected or appointed to the Board as an Eligible Director, pro-rated
to the date of the next annual meeting of the stockholders if appointed
mid-term, provided however, the Chairman of the Board shall receive an initial
grant of an Option to purchase 20,000 shares of Stock in lieu of such options to
purchase 10,000 shares of Stock made to each Eligible Director; and
(b) An annual grant of an Option to purchase 10,000 shares of
Stock shall be made on the date of the annual meeting of the Company's
stockholders to each Eligible Director, other than the Chairman of the Board,
who continues as such following such annual meeting. To the Chairman of the
Board, an annual grant of an Option to purchase 20,000 shares of Stock shall be
made on the date of the annual meeting of the Company's stockholders provided he
continues to serve as Chairman of the Board following such annual meeting.
5.3 Discretionary Grants. With respect to Discretionary Grants, this
Plan shall be administered by the Committee. The Committee shall select one of
its members as its Chairman and shall hold its meetings at such times and places
as it may determine. The Committee shall keep minutes of its meetings and 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
Discretionary Grants under this Plan, the Committee's actions and determinations
shall be binding on all interested parties. 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 persons 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.
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5.4 Exercise Price of Eligible Director Grants. The Exercise Price of
the Stock subject to each Option granted as an Eligible Director Grant shall be
equal to: (i) for initial grants, 100% of the Fair Market Value of the Company's
Stock on the date of the Eligible Director's election or appointment as a
Director or the initial public offering price for options granted before the
effective date of the Company's initial offering of shares of Stock; and (ii)
for annual grants, 100% of the Fair Market Value of the Company's Stock on the
date of the annual meeting of stockholders relating thereto.
5.5 Exercise Price of Discretionary Grants. The Exercise Price of the
Stock subject to each Option granted as a Discretionary Grant shall not be less
than the Fair Market Value of the Stock as of the date such Option is granted.
5.6 Exercise Period of Eligible Director Grants. Each Eligible Director
Option shall vest and become exercisable on the first anniversary of the grant
date of the Option and shall terminate and cease to be exercisable after the
expiration of ten (10) years from the grant date of the Option (the "Exercise
Period"). No Option shall be exercisable prior to the expiration of six (6)
months from the grant date of such Option, other than in the case of the death
or Disability of the Optionee.
5.7 Exercise Period for Discretionary Grants. The period for the
exercise of each Discretionary Grant Option granted hereunder shall be
determined by the Committee, but shall not be exercisable after the expiration
of ten (10) years from the date of grant (or modification) of the Option. In
addition, no Option granted to a Section 16 Insider shall be exercisable prior
to the expiration of six (6) months from the date such Option is granted, other
than in the case of the death or Disability of the Optionee.
5.8 Stock Option Agreement; Copy of Plan. Each Option granted hereunder
shall be evidenced by a written Stock Option Agreement executed by the Company
and the Optionee in substantially the form attached hereto. The terms of the
Option, including the Exercise Period and Exercise Price, shall be stated in the
Stock Option Agreement. Every Optionee shall be given a copy of the Plan.
5.9 Termination of Service; Death or Disability. In the event an
Optionee ceases to be a Director by reason of his or her death or Disability,
the Optionee or the Optionee's, heirs, administrators, executors or personal
representatives may exercise the Optionee's Options, to the extent such Options
are vested and purchasable on the date of such death or Disability, at any time
prior to the earlier of (i) the last day of the one year period following the
Optionee's death or the beginning of the Optionee's Disability or (ii) the
expiration of the Optionee's Options.
5.10 Termination of Service; Other. In the event an Optionee ceases to
be a Director for any reason other than his or her death or Disability, the
Optionee (or his or her personal representative) may exercise his or her
Options, to the extent such Options are vested and purchasable on the date of
termination, at any time prior to the earlier of (i) the last day of the one
year period following the date the Optionee ceases to be a Director or (ii) the
expiration of the Optionee's Options.
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5.11 Option Exercise.
(a) An Option may be exercised at any time or from time to time
during the Exercise Period as to any or all full shares which are subject to the
Option, but not at any time as to less than one hundred (100) shares unless the
remaining vested shares purchasable under the Option are less than one hundred
(100) shares.
(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 5.11(c). If requested by an Optionee, an Option may be exercised with
the involvement of a stockbroker in accordance with the federal margin rules set
forth in Regulation T (in which case the certificates representing the
underlying shares will be delivered by the Company directly to the stockbroker).
(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. In lieu of cash, (i) 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); or (ii)
full payment may be effected through a broker-dealer sale and remittance
procedure pursuant to which the Optionee (A) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate Exercise Price
(plus all applicable Federal and State income and employment taxes required to
be withheld by the Company by reason of such purchase) and (B) shall provide
written directives to the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction.
(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 Company determines are required to be withheld under
federal, state or local law in connection with the exercise of an Option;
provided, however, 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.
(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.
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(f) Notwithstanding anything to the contrary herein or in a Stock
Option Agreement, a given Option shall not be exercisable to the extent the
exercise thereof would cause the Company to be a reporting company under the
Exchange Act.
5.12 Nontransferability of Option. No Option shall be transferable by an
Optionee other than by will or the laws of descent and distribution. During the
lifetime of an Optionee, Options shall be exercisable only by such Optionee (or
by such Optionee's guardian or legal representative, should one be appointed).
5.13 Service Rights. Nothing in the Plan or in any Stock Option
Agreement shall confer on any person any right to continue as a Director of the
Company, or shall interfere in any way with the right of the stockholders of the
Company to terminate such person's service as a Director at any time.
ARTICLE VI
STOCK CERTIFICATES
6.1 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 authorization to list such shares on all stock exchanges
or over-the-counter markets on which the Stock is then listed or quoted;
(b) The completion of any registration or other qualification of
such shares which the Board 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 Board 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.
6.2 Legends. 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.
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ARTICLE VII
TERMINATION AND AMENDMENT OF PLAN
7.1 Termination and Amendment. The right to amend the Plan at any time
and from time to time and the right to terminate the Plan at any time are hereby
specifically reserved to the Board, provided always that no such termination
shall terminate any outstanding Options granted under the Plan and provided
further that no amendment to the Plan shall (i) be made without stockholder
approval if stockholder approval of the amendment is at the time required for
Options under the Plan to qualify for the exemption from Section 16 of the
Exchange Act provided by Rule 16b-3, or any successor rule, or by the rules of
any stock exchange or over-the-counter market on which the Stock may then be
listed, or (ii) otherwise amend the Plan in any manner that would cause Options
under the Plan not to qualify for the exemption provided by Rule 16b-3, or any
successor rule. No amendment or termination of the Plan shall, without the
written consent of the holder of an outstanding Option awarded under the Plan,
adversely affect the rights of such Optionee with respect thereto.
Notwithstanding anything contained in the preceding paragraph or any
other provision of the Plan or any Stock Option Agreement, the Board shall have
the power to amend the Plan in any manner deemed necessary or advisable for
Options granted under the Plan to qualify for the exemption provided by Rule
16b-3 (or any successor rule relating to exemption from Section 16(b) of the
Exchange Act). Any such amendment shall, to the extent deemed necessary or
advisable by the Board, be applicable to any outstanding Options granted under
the Plan notwithstanding any contrary provisions contained in any Stock Option
Agreement. In the event of any such amendment of the Plan, the holder of any
Option shall, upon request by the Board and as a condition to the exercisability
of such Option, execute a conforming amendment in a form prescribed by the Board
to his or her Stock Option Agreement within such reasonable time as the Board
shall specify in such request.
ARTICLE VIII
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 IX
MISCELLANEOUS
9.1 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.
9.2 Singular; Plural; Gender. Whenever used herein, nouns in the
singular shall include the plural and the masculine pronoun shall include the
feminine gender and vice versa.
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9.3 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.
9.4 Interpretation. All transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act.
9.5 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.
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OrthAlliance, Inc.
1997 Director Stock Plan
Form of Stock Option Agreement
ORTHALLIANCE, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), entered into as of this
_____ day of ________________, 1997 by and between OrthAlliance, Inc., a
Delaware corporation (the "Company"), and _________________ (the "Optionee").
WHEREAS, on May 13, 1997, the Board of Directors of the Company adopted
a stock option plan known as the "OrthAlliance, Inc. 1997 Director Stock Plan"
(the "Plan") and recommended that the Plan be approved by the Company's
stockholders; and
WHEREAS, on August 11, 1997, the stockholder of the Company approved the
Plan; and
WHEREAS, Optionee has been granted an Option (as defined below) to
purchase _________________________ shares of the Company's Class A Common Stock,
par value $.001 per share (the "Stock") and the Company and the Optionee desire
to enter into a written agreement with respect to the Option in accordance with
the Plan.
NOW, THEREFORE, as an incentive to serve as an Eligible Director of the
Company and to encourage stock ownership, and also 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 conditions 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. Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the meanings given such terms in the Plan.
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 (the "Option") to purchase all
or any part of ____________________________ shares of Stock. 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. Vesting Date. The Option shall vest and become exercisable in
accordance with Schedule A.
4. Expiration Date. The Option shall expire and shall cease to be
exercisable on the date set forth on Schedule A. In the event this Option is not
exercised with respect to all or any part of
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the shares of Stock subject to this Option prior to its expiration, the shares
with respect to which this Option has not been exercised shall no longer be
subject to this Option.
5. Exercise Price. The price per share to be paid by the Optionee for
the shares of stock subject to this Option (the "Exercise Price") shall be
determined in accordance with the Plan and specified on Schedule A.
6. Restrictions on Transferability. No Option shall be transferable by
Optionee other than by will or the laws of descent and distribution. During the
lifetime of Optionee, Options shall be exercisable only by Optionee (or by
Optionee's guardian or legal representative, should one be appointed).
7. 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 15(c) hereof to the attention of the
President, 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 13
hereof, and (c) be accompanied by (i) a certified or cashier's check payable to
the Company in payment of the total Exercise Price applicable to such shares as
provided herein, (ii) 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 (iii) 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, or (iv) payment
through a broker-dealer sale and remittance procedure pursuant to which Optionee
shall provide irrevocable written instructions to a designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the Company, out
of the sale proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price (plus all applicable Federal and State income and
employment taxes required to be withheld by the Company by reason of such
exercise) and written directives to the Company to deliver the certificates for
the purchased shares directly to such brokerage firm in order to complete the
sale transaction. 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.
8. 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.
9. Service as a Director. Nothing in this Stock Option Agreement shall
confer upon the Optionee any right with respect to continuance of service as a
Director of the Company, or shall interfere in any way with the right of the
stockholders of the Company to terminate such person's service as a Director at
any time.
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10. Termination of Service as a Director. In the event of the
termination of the Optionee's service as a Director for any reason other than
his or her death or Disability, the Optionee (or his or her personal
representative) may exercise this Option, to the extent such Option is vested
and purchasable on the date of termination, at any time prior to the earlier of
(i) the last day of the one year period following the date the Optionee ceases
to be a Director or (ii) the expiration of the Optionee's Option.
11. Disabled Optionee. In the event of termination of service as a
Director of the Company because of the Optionee's becoming a Disabled Optionee,
the Optionee (or his or her legal representative) may exercise this Option, to
the extent such Option is vested and purchasable on the date of termination, at
any time prior to the earlier of (a) the last day of the one year period
following the beginning of the Optionee's Disability or (b) the expiration date
of this Option.
12. Death of Optionee. In the event of the Optionee's death, the
Optionee's administrators, executors or personal representatives or persons to
whom all or a portion of this Option is transferred in accordance with Section 6
hereof may exercise this Option at any time prior to the earlier of (a) the last
day of the one year period following the Optionee's death or (b) the expiration
date of this Option. If the Optionee was a Director of the Company at the time
of death, this Option may be so exercised to the extent of the number of shares
that were vested and purchasable hereunder at the date of death. If the
Optionee's service as a Director of the Company terminated prior to his or her
death, this Option may be exercised only to the extent of the number of shares
covered by this Option which were vested and purchasable hereunder at the date
of such termination.
13. Compliance with Regulatory Matters. The Optionee acknowledges that
the issuance of 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 13.
14. 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; and (ii) 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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(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.
15. 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.
21535 Hawthorne Blvd., Suite 200
Torrance, California 90503
Attention: Senior Vice President, General Counsel
Optionee:
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(d) This Agreement may not be modified except in writing executed
by each of the parties hereto.
(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 of Articles and 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.
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(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 Company has caused this Agreement to be
executed on its behalf and the Optionee has executed this Agreement, all as of
the day and year first above written.
ORTHALLIANCE, INC.
By:
--------------------------------
Title:
-----------------------------
OPTIONEE:
- -----------------------------------
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SCHEDULE A
TO
STOCK OPTION AGREEMENT
BETWEEN
ORTHALLIANCE, INC.
AND
[Name of Optionee]
Dated [Date of Agreement]
1. Number of Shares Subject to Option: _________________ shares of Stock.
2. Option Exercise Price: $_________________ per share.
3. Grant Date: ________________________
4. Option Vesting Schedule:
Options are exercisable with respect to the number of shares of Stock
indicated below on or after the dated indicated next to the number of shares:
No. of Shares Vesting Date
5. Option Expiration Date:
The Option shall expire and shall cease to be exercisable on
__________________, subject to any earlier termination of this Option that may
be set forth in the Plan or in this Agreement.
6. Change in Control.
Notwithstanding the vesting schedule and option expiration date set
forth above, upon a Change in Control, as defined in the Plan, all Options
granted hereunder shall become exercisable immediately upon the occurrence of
such Change in Control for a period of ninety (90) days after written notice to
Optionee of the right to such Options. Any Options not exercised within such
ninety (90) day period shall terminate after the expiration of such period.
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SCHEDULE B
TO
STOCK OPTION AGREEMENT
BETWEEN
ORTHALLIANCE, INC.
AND
[Name of Optionee]
Dated [Date of Agreement]
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 5 of the
Agreement multiplied by the number of shares being purchased hereby (in each
instance subject to appropriate adjustment pursuant to Section 8 of the
Agreement), and/or (3) evidence of a cashless exercise as set forth in Section 7
of the Agreement.
The undersigned is a resident of the State of ______________.
IN WITNESS WHEREOF, the undersigned has set his/her hand this
________ day of ________________, ______.
OPTIONEE [OR OPTIONEE'S ADMINISTRATOR,
EXECUTOR OR PERSONAL REPRESENTATIVE]
--------------------------------------------
Name:
Position (if other than Optionee):
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