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Filed by OrthAlliance, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: OrthAlliance, Inc.
Commission Number: 000-22975
In connection with the proposed merger, OCA and OrthAlliance will file a proxy
statement/prospectus with the Securities and Exchange Commission ("SEC").
Investors are urged to read the proxy statement/prospectus, because it will
contain important information about the merger, OCA and OrthAlliance. After the
proxy statement/prospectus is filed with the SEC, the proxy statement/prospectus
will be available free of charge, both on the SEC's web site (www.sec.gov) and
from OCA and OrthAlliance by directing a request to Orthodontic Centers of
America, Inc., 5000 Sawgrass Village Circle, Suite 30, Ponte Vedra Beach, FL
32082, Attention: Investor Relations, or to OrthAlliance, Inc., 21535 Hawthorne
Boulevard, Suite 200, Torrance, CA 90503, Attention: Investor Relations.
OrthAlliance and its directors and officers may be deemed to be participants in
the solicitation of proxies with respect to a shareholder meeting to be held in
connection with the merger. Information about the participants in the
solicitation, including their interests in shares of OrthAlliance's common
stock, is set forth in OrthAlliance's Annual Report on Form 10-K for the year
ended December 31, 2000 filed with the SEC. Investors may obtain additional
information regarding the interests of OrthAlliance and its directors and
officers in the merger by reading the proxy statement/prospectus when it becomes
available. This does not constitute an offer of any securities for sale.
A. Email Message to OrthAlliance Members, dated June 19, 2001
Dear Members:
The two key dates to earn the maximum incentive for committing to Option #2 are
fast approaching. If you took cash/notes as your consideration upon affiliation,
we need to have your signed amendments in Torrance by this Friday, June 22nd. If
you took OrthAlliance stock as part or all of your consideration, we need your
signed amendments by next Friday, June 29th.
Last night, many of our "owner practitioners" joined us on a conference call
with OCA management. The new "stockholder bonus program" and the "high
participation bonus program" were discussed at length. These programs are
impressive and have significant upside financial impact for many of our members.
Further details about the incentive programs are attached. As you will see,
these incentives can be substantial, so we encourage you to send your amendments
in ASAP. We want you to receive the maximum incentive possible.
For those of you on the call last night...thank you! For those of you who missed
it, and would like to listen to the replay, it will be available through Monday,
June 25th. The playback number is (888) 891-8036 (no passcode needed). When you
dial the number, there may be a few seconds of silence.
The call is lengthy, approximately 2 hours, but filled with very useful
information concerning the incentives and business systems, as well as general
questions concerning OCA. Tony Paternostro, along with Michael Cusimano, MIS
Director, Cathy Feagin, Purchasing Manager, and Damian Leone, Human Resources
Director answered many questions posed by our members. Their answers were
concise and to the point. It is well worth two hours of your time.
OCA is hosting an Open House at their corporate offices in New Orleans this
Friday, June 22nd. Several of our doctors are planning to attend in order to
meet OCA management and see a demonstration of OCA's business systems. If you
would like to attend, please RSVP by Wednesday by calling Kat at the home office
(800) 401-9818.
As some doctors have requested, here is the current list of OCA's main "business
systems":
Software:
o Walrus (patient accounting, insurance, scheduling, and related
clinical applications)
o Penny Lane (purchasing) o Payroll Supreme (payroll and related
benefits)
o Abbey Road (financial and statistical reporting)
Other Systems and Services:
o Banking
o Accounts Payable
o Accounts Receivable
o Financial Accounting
o Media Buying (if advertising)
One high point from last night's call was the good news that the "Doctors'
Trust" available under Option #3 can now be put into your P.C. rather than being
held individually. It was always a great retirement program, now it can be a
great recruiting tool, too.
A description of Doctor Incentives and Q & A related to the merger are now
available on OCA's website: (www.orthodon.com/orthalliance). The material on the
website includes an updated version of the Incentive Plan description that OCA
revised yesterday after our distribution to you. As OCA announced on the call,
they have improved the plan to help the doctor who may experience a shortfall in
service fees below the target of 90% of service fees paid during the 12 months
preceding the merger. In other words, in the event of such a shortfall, if the
90% minimum target is then met during a subsequent 12 calendar month period
during the applicable vesting period, then the installment of shares would still
vest.
If you still have questions about the transaction, you can address them to Tony
Paternostro at OCA - (504) 834-4392, or to any member of the OrthAlliance Senior
Management Team - (800) 401-9818.
Sincerely,
W. Dennis Summers
Chairman of the Board
B. Orthodontic Centers of America, Inc. Incentive Programs for OrthAlliance
Allied Practitioners
ORTHODONTIC CENTERS OF AMERICA, INC.
INCENTIVE PROGRAMS FOR ORTHALLIANCE ALLIED PRACTITIONERS
Orthodontic Centers of America, Inc. ("OCA") is a party with OrthAlliance, Inc.
("OrthAlliance") to an Agreement and Plan of Merger, dated May 16, 2001 (the
"Merger Agreement"), which provides for the merger of one of OCA's wholly-owned
subsidiaries with and into OrthAlliance, with OrthAlliance becoming a
wholly-owned subsidiary of OCA (the "Merger"). Completion of this proposed
Merger is subject to a number of conditions, including approval of the Merger
Agreement by OrthAlliance stockholders. Additional information about this
proposed Merger may be obtained from a Registration Statement on Form S-4, and a
related prospectus/proxy statement, that OCA will file with the Securities and
Exchange Commission in connection with the proposed Merger.
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In connection with the proposed Merger, OCA has implemented the following
six programs under which it may offer shares of its common stock to certain
orthodontists and pediatric dentists who are owners and employees ("OrthAlliance
Affiliated Practitioners") of professional entities that are parties to service,
management services, consulting or similar long-term agreements ("OrthAlliance
Service or Consulting Agreements") with OrthAlliance and its subsidiaries:
o Stock Pool Program;
o Target Stock Program;
o OrthAlliance Stockholder Bonus Program;
o High Participation Bonus Program;
o Conversion Incentive Program; and
o Doctors Trust Program.
The Stock Pool Program, Target Stock Program, OrthAlliance Stockholder
Bonus Program and High Participation Bonus Program provide incentives to
OrthAlliance Affiliated Practitioners who, along with their respective
professional entities, either (a) amend their respective employment agreement
and OrthAlliance Service or Consulting Agreement as contemplated by Sections 2.4
and 7.2(e) of the Merger Agreement, or (b) enter into OCA's customary form of
business services agreement with OCA or its subsidiaries ("OCA Business Services
Agreement"), in replacement of their existing OrthAlliance Service or Consulting
Agreement, effective as of the proposed Merger with OrthAlliance.
The Conversion Incentive Program and Doctors Trust Program provide
incentives only to those OrthAlliance Affiliated Practitioners who, along with
their respective professional entities, enter into an OCA Business Services
Agreement effective as of the proposed Merger. Each of these programs would be
conditioned upon, and subject to, completion of the proposed Merger and
compliance with federal and state securities laws.
The amendments to employment agreements and OrthAlliance Service or
Consulting Agreement contemplated by Sections 2.4 and 7.2(e) of the Merger
Agreement would generally involve the following:
o AMENDMENT TO EMPLOYMENT AGREEMENT. In the amendment to their respective
employment agreement, the OrthAlliance Affiliated Practitioner and his or her
professional entity would agree to include OrthAlliance as a third party
beneficiary and continue the OrthAlliance Affiliated Practitioner's employment
as an orthodontist or pediatric dentist, as applicable, for a period of at least
three years following the proposed Merger.
o AMENDMENT TO SERVICE OR CONSULTING AGREEMENT. In the amendment to their
respective OrthAlliance Service or Consulting Agreement, the OrthAlliance
Affiliated Practitioner and his or her professional entity would agree to use
OCA's proprietary computer software and business systems in connection with the
business functions of their practice, maintain the current status of the
advertisement or non-advertisement, as the case may be, of their practice to the
general public, unless OCA otherwise agrees, and continue the OrthAlliance
Affiliated Practitioner's employment as an orthodontist or pediatric dentist, as
applicable, for a period of at least three years following the proposed Merger.
PLEASE NOTE THAT THIS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES FOR
SALE, NOR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. OCA ANTICIPATES
THAT IT WILL FILE A REGISTRATION STATEMENT WITH THE SECURITIES AND EXCHANGE
COMMISSION RELATING TO THE SHARES OF OCA COMMON STOCK THAT WOULD BE ISSUED UNDER
THESE PROGRAMS. THAT REGISTRATION STATEMENT HAS NOT YET BEEN FILED OR BECOME
EFFECTIVE. THOSE SHARES OF OCA COMMON
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STOCK MAY NOT BE SOLD, AND ANY OFFERS TO BUY THE SHARES MAY NOT BE ACCEPTED,
UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE, AND ANY SUCH OFFER MAY BE
WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY KIND, AT ANY TIME
PRIOR TO NOTICE OF ACCEPTANCE GIVEN AFTER THE EFFECTIVE DATE OF THE REGISTRATION
STATEMENT. ANY INDICATION OF INTEREST IN RESPONSE TO THIS COMMUNICATION WILL
INVOLVE NO OBLIGATION OR COMMITMENT. NO SECURITIES WILL BE SOLD OR GRANTED IN
ANY JURISDICTION IN WHICH THE OFFER, SOLICITATION OR SALE OF SUCH SECURITIES
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF SUCH JURISDICTION.
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INCENTIVES FOR AMENDING EXISTING EMPLOYMENT AGREEMENT AND ORTHALLIANCE
AGREEMENT, OR ENTERING INTO NEW OCA AGREEMENT
OCA may offer shares of its common stock to OrthAlliance Affiliated
Practitioners as an incentive for these individuals and their professional
entities to, prior to the Merger, either (a) amend their existing employment
agreement and OrthAlliance Service or Consulting Agreement, as contemplated by
Sections 2.4 and 7.2(e) of the Merger Agreement, or (b) enter into an OCA
Business Services Agreement in replacement of their existing OrthAlliance
Service or Consulting Agreement, effective as of the proposed Merger with
OrthAlliance. These shares may be issued to eligible OrthAlliance Affiliated
Practitioners generally on the following terms under OCA's:
o Stock Pool Program;
o Target Stock Program;
o OrthAlliance Stockholder Bonus Program; and
o High Participation Bonus Program.
1. STOCK POOL PROGRAM
Under OCA's Stock Pool Program, OCA may grant shares of its common stock to
eligible OrthAlliance Affiliated Practitioners who, along with their
professional entity, no later than July 27, 2001, either (1) amend their
existing employment agreement and OrthAlliance Service or Consulting Agreement,
as contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or (2) enter
into an OCA Business Services Agreement effective as of the Merger, as follows:
o ANNUAL SERVICE FEE/TENURE BASED AMOUNT. Shares in an amount equal to
the greater of 500 or:
(a) ANNUAL SERVICE FEE BASED AMOUNT. 30 shares for each $10,000 of
service, consulting or management fees (excluding any center or
other expense reimbursement) paid by the OrthAlliance Affiliated
Practitioner or his or her professional entity to OrthAlliance or
its subsidiaries during the period from April 1, 2000 through
March 31, 2001 (with certain adjustments and annualization as
described in Section 2.4 of the Merger Agreement), rounded to the
nearest whole number,
PLUS
(b) TENURE BASED AMOUNT. 10 shares for each whole calendar month
elapsed during the term of their OrthAlliance Service or
Consulting Agreement as of the closing date of the Merger but no
later than December 31, 2001.
o TIMING BASED AMOUNT. An additional number of shares for the first 180
OrthAlliance Affiliated Practitioners who either (1) amend their
existing employment agreement and OrthAlliance Service or Consulting
Agreement, as contemplated by Sections 2.4 and 7.2(e) of the Merger
Agreement, or (2) enter into an OCA Business Services Agreement
effective as of the Merger, within specified time limits as described
below:
>> By June 22, 2001:
(i) 900 shares,
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PLUS
(ii) 200 shares for each additional 20 of those OrthAlliance
Affiliated Practitioners who do so from June 23 - July 27,
2001.
>> June 23 - 29, 2001:
(i) 700 shares,
PLUS
(ii) 200 shares for each additional 20 of those OrthAlliance
Affiliated Practitioners who do so from June 30 - July 27,
2001.
EXCEPT, FOR
OrthAlliance Affiliated Practitioners who were issued shares of
OrthAlliance common stock in connection with entering into their
OrthAlliance Service or Consulting Agreement or their sale of
assets or capital stock to OrthAlliance, who would instead be
granted:
(i) 900 shares,
PLUS
(ii) 200 shares for each additional 20 of those OrthAlliance
Affiliated Practitioners who do so from June 30 - July 27,
2001.
>> June 30 - July 6, 2001:
(i) 600 shares,
PLUS
(ii) 200 shares for each additional 20 of those OrthAlliance
Affiliated Practitioners who do so from July 7 - 27, 2001.
>> July 7 - 13, 2001:
(i) 500 shares,
PLUS
(ii) 200 shares for each additional 20 of those OrthAlliance
Affiliated Practitioners who do so from July 14 - 27, 2001.
>> July 14 - 20, 2001:
(i) 400 shares,
PLUS
(ii) 200 shares for each additional 20 of those OrthAlliance
Affiliated Practitioners who do so from July 21 - 27, 2001.
>> July 21 - 27, 2001:
(i) 300 shares.
CLINICAL ADVISORY COMMITTEE MEMBERS. In addition, each of the 12
OrthAlliance Affiliated Practitioners who are selected by OCA and OrthAlliance,
and agree, to serve on OCA's Clinical Advisory Committee upon the Merger may be
granted 2,500 shares of OCA common stock if, by June 22, 2001, that individual
and his or her professional entity (1) amend
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their existing employment agreement and OrthAlliance Service or Consulting
Agreement, as contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement,
or (2) enter into an OCA Business Services Agreement effective as of the Merger.
DATES OF GRANTS; CONDITION TO VESTING. Shares granted under this program
would be issuable in three annual installments, with one-third of the shares to
be issued following each of the first, second and third anniversaries of the
Merger if, during the 12 calendar months immediately preceding that anniversary,
the amount of service or consulting fees paid by the OrthAlliance Affiliated
Practitioner and his or her professional entity to OCA or its subsidiary is at
least 90% of the amount of service or consulting fees they paid to OrthAlliance
or its subsidiary during the 12 calendar months immediately preceding the
Merger. However, if that 90% minimum target is not achieved in a particular 12
calendar month period, but is achieved during one of the subsequent 12 calendar
month periods prior to the third anniversary of the Merger, then the installment
of shares would be issuable at that time.
PRACTICES WITH MULTI-OWNERS. If an OrthAlliance Affiliated Practitioner's
professional entity is partially owned by one or more other OrthAlliance
Affiliated Practitioners, the number of shares to be granted based on the amount
of service or consulting fees paid would be computed on a pro rata basis. In
addition, the co-owner OrthAlliance Affiliated Practitioners would have to
execute and deliver the applicable amendments to their employment agreement and
OrthAlliance Service or Consulting Agreement, or new OCA Business Services
Agreement, as applicable, by July 27, 2001.
ELIGIBILITY TO PARTICIPATE. To be eligible to participate in this program,
an OrthAlliance Affiliated Practitioner, along with his or her professional
entity, would have to, by the specified dates, either (1) amend their existing
employment agreement and OrthAlliance Service or Consulting Agreement, as
contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or (2) enter
into an OCA Business Services Agreement in replacement of their existing
OrthAlliance Service or Consulting Agreement (effective as of the Merger).
Participation would also require the execution of a written participation
agreement between OCA and the OrthAlliance Affiliated Practitioner that sets
forth, or incorporates by reference, the terms of the program. Participation in
and the grant of any shares under this program would also be conditioned upon,
and subject to, completion of the Merger.
In addition, to be eligible to participate in this program, an OrthAlliance
Affiliated Practitioner, along with his or her professional entity, may not be a
party to any pending or threatened litigation against OrthAlliance, OCA or their
subsidiaries, nor have given notice of termination or intention to terminate
their respective OrthAlliance Service or Consulting Agreement, and must be in
compliance with their obligation to pay service or consulting fees under their
OrthAlliance Service or Consulting Agreement. If such litigation or notice has
been commenced, threatened or given, it would need to have been dismissed with
prejudice or fully withdrawn in a manner acceptable to OCA.
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2. TARGET STOCK PROGRAM
Under OCA's Target Stock Program, OCA may grant eligible OrthAlliance
Affiliated Practitioners shares of OCA common stock (except as described below)
as follows:
NEW OCA AGREEMENT. For OrthAlliance Affiliated Practitioners who, along
with their respective professional entities, enter into an OCA Business Services
Agreement prior to the Merger (which would become effective upon the Merger),
OCA may issue them a number of shares of its common stock equal to:
(a) 3,
TIMES
(b) 70% OF ASSUMED SERVICE FEES IN PRIOR 12 MONTHS. 70% of the amount
of service or consulting fees (excluding any center or other
expense reimbursement) that would have been payable to OCA or its
subsidiary by the OrthAlliance Affiliated Practitioner or his or
her professional entity under the OCA Business Services Agreement
during the 12 calendar months immediately preceding the Merger
(assuming that the OCA Business Services Agreement had been in
effect during that period and also assuming that the operating
margin of the practice during that period was 5% higher than the
actual operating margin for that period),
DIVIDED BY
(c) AVERAGE CLOSING PRICE AT THIRD ANNIVERSARY. The average closing
price of OCA common stock during the 10 trading days immediately
preceding the third anniversary of the Merger,
IF, during the 12 calendar months immediately preceding the third
anniversary of the Merger:
70% INCREASE IN SERVICE FEES IN YEAR 3. The amount of (A) service
or consulting fees (excluding any center or other expense
reimbursement) paid to OCA or its subsidiary by the OrthAlliance
Affiliated Practitioner or his or her professional entity under
the OCA Business Services Agreement, is at least 70% greater than
(B) service or consulting fees (excluding any center or other
expense reimbursement) that would have been payable to OCA or its
subsidiary by the OrthAlliance Affiliated Practitioner or his or
her professional entity under the OCA Business Services Agreement
during the 12 calendar months immediately preceding the Merger
(assuming that the OCA Business Services Agreement had been in
effect during that period and also assuming that the operating
margin of the practice during that period was 5% higher than the
actual operating margin for that period).
PRO RATA AMOUNT. However, if this 70% target increase in service or
consulting fees is not achieved during the 12 calendar months immediately
preceding the third anniversary of the Merger, but the amount of service or
consulting fees paid during that period is at least equal to the amount
that would have been paid under the OCA Business Services Agreement during
the 12 calendar months immediately preceding
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the Merger (based on the assumptions described above), then OCA may grant
the OrthAlliance Affiliated Practitioner a pro rata amount of the shares of
OCA common stock that OCA may have granted if the target amount had been
achieved. For example, if the amount of service or consulting fees
increased 35% (i.e., one-half of the targeted increase) during that period,
then the OrthAlliance Affiliated Practitioner may be granted one-half of
the number of shares issuable if the target had been achieved.
AMENDMENTS. For OrthAlliance Affiliated Practitioners who, along with their
respective professional entities, amend their respective employment agreement
and OrthAlliance Service or Consulting Agreement prior to the Merger as
contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, OCA may issue
them a number of shares of OCA common stock equal to:
(a) 3,
TIMES
(b) 70% OF SERVICE FEES IN PRIOR 12 MONTHS. 70% of the amount of
service, consulting or management fees (excluding any center or
other expense reimbursement) paid by the OrthAlliance Affiliated
Practitioner or his or her professional entity to OrthAlliance or
its subsidiaries during the 12 calendar months prior to the
Merger,
DIVIDED BY
(c) AVERAGE CLOSING PRICE AT THIRD ANNIVERSARY. The average closing
price of OCA common stock during the 10 trading days immediately
preceding the third anniversary of the Merger,
IF, during the 12 calendar months immediately preceding the third
anniversary of the Merger:
70% INCREASE IN SERVICE FEES IN YEAR 3. The amount of (A) service
or consulting fees (excluding any center or other expense
reimbursement) paid to OCA or its subsidiary by the OrthAlliance
Affiliated Practitioner or his or her professional entity under
their OrthAlliance Service or Consulting Agreement is at least
70% greater than (B) service or consulting fees (excluding any
center or other expense reimbursement) paid to OrthAlliance or
its subsidiary by the OrthAlliance Affiliated Practitioner or his
or her professional entity under their OrthAlliance Service or
Consulting Agreement during the 12 calendar months immediately
preceding the Merger.
PRO RATA AMOUNT. However, if this 70% target amount of increased service or
consulting fees is not achieved during the 12 calendar months immediately
preceding the third anniversary of the Merger, but the amount of service or
consulting fees paid during that period is at least equal to the amount
paid during the 12 calendar months immediately preceding the Merger, then
OCA may grant the OrthAlliance Affiliated Practitioner a pro rata amount of
the shares of OCA common stock that OCA may have granted if the target
amount had been achieved. For example, if the amount of service or
consulting fees increased 35% (i.e., one-half of the targeted increase)
during that period, then the OrthAlliance Affiliated Practitioner may be
granted one-half of the number of shares issuable if the target had been
achieved.
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OCA MAY CHOOSE TO SUBSTITUTE INTEREST BEARING NOTE. OCA could elect, in its
sole discretion, to issue the OrthAlliance Affiliated Practitioner a promissory
note in an amount equal to that computed as described above, which would be
payable over 5 years and bear interest at the prime rate plus 1.5% per year, in
lieu of shares of OCA common stock. Payments under the note would be subject to
same condition described in the following paragraph with respect to issuance of
shares of OCA common stock.
DATES OF GRANTS; CONDITION TO VESTING. Shares granted under this program
would be issuable in four annual installments, with one-fourth of the shares to
be issued following each of the fifth, sixth, seventh and eighth anniversaries
of the Merger if, during the 12 calendar months prior to that anniversary, the
amount of service or consulting fees paid by the OrthAlliance Affiliated
Practitioner and his or her professional entity to OCA or its subsidiary is at
least 90% of the amount of service or consulting fees they paid to OrthAlliance
or its subsidiary during the 12 calendar months prior to the Merger. However, if
that 90% minimum target is not achieved in a particular 12 calendar month
period, but is achieved during one of the subsequent 12 calendar month periods
prior to the eighth anniversary of the Merger, then the installment of shares
would be issuable at that time.
PRACTICES WITH MULTI-OWNERS. If an OrthAlliance Affiliated Practitioner's
professional entity is partially owned by one or more other OrthAlliance
Affiliated Practitioners, these amounts would be computed on a pro rata basis.
In addition, the co-owner OrthAlliance Affiliated Practitioners would have to
execute and deliver the applicable amendments to their employment agreement and
OrthAlliance Service or Consulting Agreement, or new OCA Business Services
Agreement, as applicable, prior to the Merger.
ELIGIBILITY TO PARTICIPATE. To be eligible to participate in this program,
an OrthAlliance Affiliated Practitioner, along with his or her professional
entity, prior to the Merger would have to either (1) amend their existing
employment agreement and OrthAlliance Service or Consulting Agreement, as
contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or (2) enter
into an OCA Business Services Agreement in replacement of their existing
OrthAlliance Service or Consulting Agreement (effective as of the Merger).
Participation would also require the execution of a written participation
agreement between OCA and the OrthAlliance Affiliated Practitioner that sets
forth, or incorporates by reference, the terms of the program. Participation in
and the grant of any shares under this program would also be conditioned upon,
and subject to, completion of the Merger.
In addition, to be eligible to participate in this program, an OrthAlliance
Affiliated Practitioner, along with his or her professional entity, may not be a
party to any pending or threatened litigation against OrthAlliance, OCA or their
subsidiaries, nor have given notice of termination or intention to terminate
their respective OrthAlliance Service or Consulting Agreement, and must be in
compliance with their obligation to pay service or consulting fees under their
OrthAlliance Service or Consulting Agreement. If such litigation or notice has
been commenced, threatened or given, it would need to have been dismissed with
prejudice or fully withdrawn in a manner acceptable to OCA.
In addition, to be eligible to participate in this program, an OrthAlliance
Affiliated Practitioner, along with his or her professional entity, may not be a
party to any practice improvement performance guarantee agreement with
OrthAlliance or its subsidiary.
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DUE DILIGENCE TO DETERMINE OPERATING MARGIN. To permit OCA to determine the
appropriate operating margin for computing the number of shares to be granted
under this program with respect to a new OCA Business Services Agreement, the
OrthAlliance Affiliated Practitioner would provide OCA with financial
information OCA reasonably requests about his or her practice.
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3. ORTHALLIANCE STOCKHOLDER BONUS PROGRAM
Several OrthAlliance Affiliated Practitioners have indicated that they
received as consideration a large number of shares of OrthAlliance common stock
in connection with originally entering into their OrthAlliance Service or
Consulting Agreement or selling assets or capital stock to OrthAlliance, which
have declined in value since the date of issuance. OCA has received from
OrthAlliance a listing of those OrthAlliance Affiliated Practitioners who did
receive shares of OrthAlliance common stock shares as 50% or more of the
consideration paid in connection with originally entering into their
OrthAlliance Service or Consulting Agreement or selling assets or capital stock
to OrthAlliance ("OrthAlliance Stock Recipients").
Under OCA's OrthAlliance Stockholder Bonus Program, OCA may grant shares of
OCA common stock to certain eligible OrthAlliance Stock Recipients who, along
with their professional entity, by July 27, 2001, either (1) amend their
existing employment agreement and OrthAlliance Service or Consulting Agreement,
as contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or (2) enter
into an OCA Business Services Agreement effective as of the Merger, as follows:
MINIMUM NUMBER OF ORTHALLIANCE AFFILIATED PRACTITIONERS SIGNING AMENDMENTS
OR NEW OCA AGREEMENT
No shares will be issued to anyone under this program unless, by July 27,
2001, the following minimum amount of OrthAlliance Affiliated Practitioners,
along with their professional entity, either amend their existing employment
agreement and OrthAlliance Service or Consulting Agreement, as contemplated by
Sections 2.4 and 7.2(e) of the Merger Agreement, or enter into an OCA Business
Services Agreement effective as of the Merger:
Minimum Number of OrthAlliance Affiliated Practitioners:
(1) At least 120 OrthAlliance Affiliated Practitioners,
AND
(2) OrthAlliance Affiliated Practitioners representing at least
65.0% of OrthAlliance's service fees during the 12 months
ended March 31, 2001.
TOTAL NUMBER OF SHARES AVAILABLE FOR GRANT UNDER PROGRAM
The total number of shares of OCA common stock available for grant under
this program varies depending on (1) the number of OrthAlliance Affiliated
Practitioners who, along with their professional entity, either amend their
existing employment agreement and OrthAlliance Service or Consulting Agreement,
as contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or enter
into an OCA Business Services Agreement effective as of the Merger, and (2) the
percentage of OrthAlliance's service fees during the 12 months ended March 31,
2001 represented by those OrthAlliance Affiliated Practitioners, as described in
the following chart:
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ORTHALLIANCE AFFILIATED PRACTITIONERS EXECUTING
AMENDMENTS OR NEW OCA AGREEMENT
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TOTAL NUMBER OF SHARES PERCENTAGE OF ORTHALLIANCE ANNUAL
AVAILABLE UNDER PROGRAM NUMBER SERVICE FEES REPRESENTED
- -------------------------------------------------------------------------------------------------------
400,000........................ 138 or more and 75.00% or more
300,000........................ 129 to 137 and 70.00% - 74.99%
200,000........................ 120 to 128 and 65.00% - 69.99%
0........................ Less than 120 or Less than 65.00%
ALLOCATION OF AVAILABLE SHARES AMONG PARTICIPATING ORTHALLIANCE STOCK
RECIPIENTS
An eligible OrthAlliance Stock Recipient participating in this program
would receive a number of shares of OCA common stock that varies depending on:
(1) (A) the number of OrthAlliance Affiliated Practitioners who, along
with their professional entity, either amend their existing employment
agreement and OrthAlliance Service or Consulting Agreement, as
contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or
enter into an OCA Business Services Agreement effective as of the
Merger, and (B) the percentage of OrthAlliance's service fees during
the 12 months ended March 31, 2001 represented by those OrthAlliance
Affiliated Practitioners, as described in the following chart:
ORTHALLIANCE AFFILIATED PRACTITIONERS EXECUTING
AMENDMENTS OR NEW OCA AGREEMENT
-------------------------------------------------------------
BASE NUMBER OF SHARES PER PERCENTAGE OF ORTHALLIANCE ANNUAL
PARTICIPANT IN PROGRAM NUMBER SERVICE FEES REPRESENTED
- ---------------------------------------------------------------------------------------------------------
2,000......................... 138 or more and 75.00% or more
1,500......................... 129 to 137 and 70.00% - 74.99%
1,000......................... 120 to 128 and 65.00% - 69.99%
0......................... Less than 120 or Less than 65.00%
PLUS
(2) A pro rata amount of any remaining shares available for grant under
the program based on the Potential Loss of Stock Consideration (as
defined below) in comparison to the total Potential Loss of Stock
Consideration for all of the participants in the program.
"Potential Loss of Stock Consideration" means the result of the
following:
(i) The number of shares originally issued to the participant in
connection with his or her original affiliation with OrthAlliance
or its subsidiary, times an assumed stock price per share of
$5.30, plus the dollar amount of cash and promissory notes
received from OrthAlliance or its subsidiary by the participant
in that transaction,
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MINUS
(ii) A multiple (based on the amount of OrthAlliance Affiliated
Practitioners entering into the amendments or new OCA Business
Services Agreements, as described in the following table) of the
amount of service fees paid by the participant to OrthAlliance or
its subsidiary during the 12 months ended March 31, 2001,
excluding any fees paid with respect to any practice acquired
under OrthAlliance's "buy a practice" program or otherwise
without payment of significant consideration.
ORTHALLIANCE AFFILIATED PRACTITIONERS EXECUTING
AMENDMENTS OR NEW OCA AGREEMENT
----------------------------------------------------------
MULTIPLE FOR POTENTIAL LOSS PERCENTAGE OF ORTHALLIANCE ANNUAL
IN STOCK CONSIDERATION NUMBER SERVICE FEES REPRESENTED
- -------------------------------------------------------------------------------------------------------
4.50 x...................... 138 or more and 75.00% or more
3.35 x...................... 129 to 137 and 70.00% - 74.99%
2.75 x ..................... 120 to 128 and 65.00% - 69.99%
0 x...................... Less than 120 or Less than 65.00%
AT LEAST 50% OF ORIGINAL CONSIDERATION FROM ORTHALLIANCE IN STOCK.
To be eligible to participate in this program, at least 50% of the
OrthAlliance Stock Recipient's consideration from OrthAlliance or its subsidiary
when originally affiliating with OrthAlliance or its subsidiary must have been
in the form of shares of OrthAlliance common stock, based on an assumed price
per share of $5.30.
DATES OF GRANTS; CONDITION TO VESTING. Shares granted under this program
would be issuable in four annual installments, with one-fourth of the shares to
be issued following each of the second, third, fourth and fifth anniversaries of
the Merger if, during the 12 calendar months prior to that anniversary, the
amount of service or consulting fees paid by the OrthAlliance Affiliated
Practitioner and his or her professional entity to OCA or its subsidiary is at
least 90% of the amount of service or consulting fees they paid to OrthAlliance
or its subsidiary during the 12 calendar months prior to the Merger. However, if
that 90% minimum target is not achieved in a particular 12 calendar month
period, but is achieved during one of the subsequent 12 calendar month periods
prior to the fifth anniversary of the Merger, then the installment of shares
would be issuable at that time.
ELIGIBILITY TO PARTICIPATE. To be eligible to participate in this program,
an OrthAlliance Affiliated Practitioner, along with his or her professional
entity, would have to by July 27, 2001 either (1) amend their existing
employment agreement and OrthAlliance Service or Consulting Agreement, as
contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or (2) enter
into an OCA Business Services Agreement in replacement of their existing
OrthAlliance Service or Consulting Agreement (effective as of the Merger).
Participation would also require the execution of a written participation
agreement between OCA and the OrthAlliance Affiliated Practitioner that sets
forth, or incorporates by reference, the terms of the program. Participation in
and the grant of any shares under this program would also be conditioned upon,
and subject to, completion of the Merger.
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In addition, to be eligible to participate in this program, an OrthAlliance
Affiliated Practitioner, along with his or her professional entity, may not be a
party to any pending or threatened litigation against OrthAlliance, OCA or their
subsidiaries, nor have given notice of termination or intention to terminate
their respective OrthAlliance Service or Consulting Agreement, and must be in
compliance with their obligation to pay service or consulting fees under their
OrthAlliance Service or Consulting Agreement. If such litigation or notice has
been commenced, threatened or given, it would need to have been dismissed with
prejudice or fully withdrawn in a manner acceptable to OCA.
In addition, to be eligible to participate in this program, an OrthAlliance
Affiliated Practitioner, along with his or her professional entity, may not be a
party to any practice improvement performance guarantee agreement with
OrthAlliance or its subsidiary.
PRACTICES WITH MULTI-OWNERS. If an OrthAlliance Affiliated Practitioner's
professional entity is partially owned by one or more other OrthAlliance
Affiliated Practitioners, the co-owner OrthAlliance Affiliated Practitioners
would have to execute and deliver the applicable amendments to their employment
agreement and OrthAlliance Service or Consulting Agreement, or new OCA Business
Services Agreement, as applicable, prior to the Merger.
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4. HIGH PARTICIPATION BONUS PROGRAM
Under OCA's High Participation Bonus Program, OCA may grant shares of OCA
common stock to certain eligible OrthAlliance Affiliated Practitioners who,
along with their professional entity, by July 27, 2001, either (1) amend their
existing employment agreement and OrthAlliance Service or Consulting Agreement,
as contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or (2) enter
into an OCA Business Services Agreement effective as of the Merger, as follows:
MINIMUM NUMBER OF ORTHALLIANCE AFFILIATED PRACTITIONERS SIGNING AMENDMENTS
OR NEW OCA AGREEMENT
No shares will be issued to anyone under this program unless, by July 27,
2001, the following minimum amount of OrthAlliance Affiliated Practitioners,
along with their professional entity, either amend their existing employment
agreement and OrthAlliance Service or Consulting Agreement, as contemplated by
Sections 2.4 and 7.2(e) of the Merger Agreement, or enter into an OCA Business
Services Agreement effective as of the Merger:
Minimum Number of OrthAlliance Affiliated Practitioners:
(1) At least 148 OrthAlliance Affiliated Practitioners,
AND
(2) OrthAlliance Affiliated Practitioners representing at least
80.0% of OrthAlliance's service fees during the 12 months
ended March 31, 2001.
TOTAL NUMBER OF SHARES AVAILABLE FOR GRANT UNDER PROGRAM
The total number of shares of OCA common stock available for grant under
this program varies depending on (1) the number of OrthAlliance Affiliated
Practitioners who, along with their professional entity, either amend their
existing employment agreement and OrthAlliance Service or Consulting Agreement,
as contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or enter
into an OCA Business Services Agreement effective as of the Merger, and (2) the
percentage of OrthAlliance's service fees during the 12 months ended March 31,
2001 represented by those OrthAlliance Affiliated Practitioners, as described in
the following chart:
ORTHALLIANCE AFFILIATED PRACTITIONERS EXECUTING
AMENDMENTS OR NEW OCA AGREEMENT
--------------------------------------------------------
TOTAL NUMBER OF SHARES PERCENTAGE OF ORTHALLIANCE ANNUAL
AVAILABLE UNDER PROGRAM NUMBER SERVICE FEES REPRESENTED
- -----------------------------------------------------------------------------------------------------
200,000....................... 157 or more and 85.00% or more
100,000....................... 148 to 156 and 80.00% - 84.99%
0...................... Less than 148 or Less than 80.00%
ALLOCATION OF AVAILABLE SHARES AMONG PARTICIPATING ORTHALLIANCE STOCK
RECIPIENTS
An eligible OrthAlliance Stock Recipient participating in this program
would receive a number of shares of OCA common stock that varies depending on
(A) the number of OrthAlliance Affiliated Practitioners who, along with their
professional entity, either amend their
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existing employment agreement and OrthAlliance Service or Consulting Agreement,
as contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or enter
into an OCA Business Services Agreement effective as of the Merger, and (B) the
percentage of OrthAlliance's service fees during the 12 months ended March 31,
2001 represented by those OrthAlliance Affiliated Practitioners, as described in
the following chart:
ORTHALLIANCE AFFILIATED PRACTITIONERS EXECUTING
AMENDMENTS OR NEW OCA AGREEMENT
------------------------------------------------------------
NUMBER OF SHARES PER PERCENTAGE OF ORTHALLIANCE ANNUAL
PARTICIPANT IN PROGRAM NUMBER SERVICE FEES REPRESENTED
- -------------------------------------------------------------------------------------------------------
1,000................. 157 or more and 85.00% or more
500................ 148 to 156 and 80.00% - 84.99%
0.............. Less than 148 or Less than 80.00%
DATES OF GRANTS; CONDITION TO VESTING. Shares granted under this program
would be issuable in four annual installments, with one-fourth of the shares to
be issued following each of the second, third, fourth and fifth anniversaries of
the Merger if, during the 12 calendar months prior to that anniversary, the
amount of service or consulting fees paid by the OrthAlliance Affiliated
Practitioner and his or her professional entity to OCA or its subsidiary is at
least 90% of the amount of service or consulting fees they paid to OrthAlliance
or its subsidiary during the 12 calendar months prior to the Merger. However, if
that 90% minimum target is not achieved in a particular 12 calendar month
period, but is achieved during one of the subsequent 12 calendar month periods
prior to the fifth anniversary of the Merger, then the installment of shares
would be issuable at that time.
ELIGIBILITY TO PARTICIPATE. To be eligible to participate in this program,
an OrthAlliance Affiliated Practitioner, along with his or her professional
entity, would have to by July 27, 2001 either (1) amend their existing
employment agreement and OrthAlliance Service or Consulting Agreement, as
contemplated by Sections 2.4 and 7.2(e) of the Merger Agreement, or (2) enter
into an OCA Business Services Agreement in replacement of their existing
OrthAlliance Service or Consulting Agreement (effective as of the Merger).
Participation would also require the execution of a written participation
agreement between OCA and the OrthAlliance Affiliated Practitioner that sets
forth, or incorporates by reference, the terms of the program. Participation in
and the grant of any shares under this program would also be conditioned upon,
and subject to, completion of the Merger.
In addition, to be eligible to participate in this program, an OrthAlliance
Affiliated Practitioner, along with his or her professional entity, may not be a
party to any pending or threatened litigation against OrthAlliance, OCA or their
subsidiaries, nor have given notice of termination or intention to terminate
their respective OrthAlliance Service or Consulting Agreement, and must be in
compliance with their obligation to pay service or consulting fees under their
OrthAlliance Service or Consulting Agreement. If such litigation or notice has
been commenced, threatened or given, it would need to have been dismissed with
prejudice or fully withdrawn in a manner acceptable to OCA.
In addition, to be eligible to participate in this program, an OrthAlliance
Affiliated Practitioner, along with his or her professional entity, may not be a
party to any practice improvement performance guarantee agreement with
OrthAlliance or its subsidiary.
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PRACTICES WITH MULTI-OWNERS. If an OrthAlliance Affiliated Practitioner's
professional entity is partially owned by one or more other OrthAlliance
Affiliated Practitioners, the co-owner OrthAlliance Affiliated Practitioners
would have to execute and deliver the applicable amendments to their employment
agreement and OrthAlliance Service or Consulting Agreement, or new OCA Business
Services Agreement, as applicable, prior to the Merger.
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ADDITIONAL INCENTIVES FOR ENTERING INTO NEW OCA AGREEMENT
In addition to the four programs described above, OCA may offer additional
shares of its common stock to OrthAlliance Affiliated Practitioners as an
incentive for these individuals and their professional entities to enter into an
OCA Business Services Agreement prior to the Merger, in replacement of their
existing OrthAlliance Service or Consulting Agreement effective as of the
Merger. These shares may be issued to eligible OrthAlliance Affiliated
Practitioners generally on the following terms under OCA's:
o Conversion Incentive Program; and
o Doctors Trust Program.
1. CONVERSION INCENTIVE PROGRAM
Under OCA's Conversion Incentive Program, OCA may grant shares of its
common stock to eligible OrthAlliance Affiliated Practitioners who, along with
their professional entity, enter into an OCA Business Services Agreement (which
would be effective upon the Merger) on or before July 27, 2001, in an amount
equal to:
(a) 4,
TIMES
(b) The amount by which:
(i) FEES UNDER OCA AGREEMENT. Service or consulting fees
(excluding any center or other expense reimbursement) that
would have been payable to OCA or its subsidiary by the
OrthAlliance Affiliated Practitioner or his or her
professional entity under the OCA Business Services
Agreement during the 12 calendar months immediately
preceding the Merger (assuming that the OCA Business
Services Agreement had been in effect during that period and
also assuming that the operating margin of the practice
during that period was 5% higher than the actual operating
margin for that period),
EXCEEDS
(ii) FEES UNDER EXISTING AGREEMENT. Service, consulting or
management fees (excluding any center or other expense
reimbursement) paid to OrthAlliance or its subsidiaries by
the OrthAlliance Affiliated Practitioner or his or her
professional entity during the 12 calendar months
immediately preceding the Merger under their existing
OrthAlliance Service or Consulting Agreement,
DIVIDED BY
(c) AVERAGE CLOSING PRICE AT MERGER. The average closing price of OCA
common stock during the 10 trading days prior to the Merger.
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DATES OF GRANTS; CONDITION TO VESTING. Shares granted under this program
would be issuable in four annual installments, with one-fourth of the shares to
be issued following each of the second, third, fourth and fifth anniversaries of
the Merger if, during the 12 calendar months prior to that anniversary, the
amount of service or consulting fees paid by the OrthAlliance Affiliated
Practitioner and his or her professional entity to OCA or its subsidiary is at
least 90% of the amount of service or consulting fees they paid to OrthAlliance
or its subsidiary during the 12 calendar months prior to the Merger. However, if
that 90% minimum target is not achieved in a particular 12 calendar month
period, but is achieved during one of the subsequent 12 calendar month periods
prior to the fifth anniversary of the Merger, then the installment of shares
would be issuable at that time.
ELIGIBILITY TO PARTICIPATE. To be eligible to participate in this program,
an OrthAlliance Affiliated Practitioner, along with his or her professional
entity, would have to, on or before July 27, 2001 enter into an OCA Business
Services Agreement in replacement of their existing OrthAlliance Service or
Consulting Agreement (effective as of the Merger). Participation would also
require the execution of a written participation agreement between OCA and the
OrthAlliance Affiliated Practitioner that sets forth, or incorporates by
reference, the terms of the program. Participation in and the grant of any
shares under this program would also be conditioned upon, and subject to,
completion of the Merger.
In addition, to be eligible to participate in this program, an OrthAlliance
Affiliated Practitioner, along with his or her professional entity, may not be a
party to any pending or threatened litigation against OrthAlliance, OCA or their
subsidiaries, nor have given notice of termination or intention to terminate
their respective OrthAlliance Service or Consulting Agreement, and must be in
compliance with their obligation to pay service or consulting fees under their
OrthAlliance Service or Consulting Agreement. If such litigation or notice has
been commenced, threatened or given, it would need to have been dismissed with
prejudice or fully withdrawn in a manner acceptable to OCA.
DUE DILIGENCE TO DETERMINE OPERATING MARGIN. To permit OCA to determine the
appropriate operating margin for computing the number of shares to be granted
under this program, the OrthAlliance Affiliated Practitioner would provide OCA
with financial information OCA reasonably requests about the practice.
PRACTICES WITH MULTI-OWNERS. If an OrthAlliance Affiliated Practitioner's
professional entity is partially owned by one or more other OrthAlliance
Affiliated Practitioners, these amounts would be computed on a pro rata basis.
In addition, the co-owner OrthAlliance Affiliated Practitioners would have to
execute and deliver the new OCA Business Services Agreement by July 27, 2001.
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2. DOCTORS TRUST PROGRAM
Under OCA's Doctors Trust Program, for eligible OrthAlliance Affiliated
Practitioners:
TWO YEAR OPTION TO PURCHASE SHARES. At anytime during the two years
immediately following the Merger, the OrthAlliance Affiliated Practitioner could
elect, by giving OCA written notice, to purchase a number of shares of OCA
common stock equal to (A) $60,000, divided by (B) the average closing sales
price per share of OCA common stock reported for the 10 trading days immediately
prior to the Merger.
INSTALLMENT PAYMENTS OF PURCHASE PRICE. The purchase price of the shares
would equal $40,000 and would be payable by the OrthAlliance Affiliated
Practitioner in 40 equal quarterly installments of $1,000 each over a period of
10 years, beginning on the second anniversary of the Merger.
RESTRICTIONS ON TRANSFER. These shares would be subject to contractual
restrictions on transfer. No shares could be sold or transferred prior to the
eleventh anniversary of the Merger. Beginning on that eleventh anniversary,
one-seventh of the shares would become eligible for sale or transfer during each
of the following seven years.
FORFEITURE OF SHARES. Shares that are not then granted or eligible for sale
or transfer would be forfeited if the OrthAlliance Affiliated Practitioner:
(a) Ceases to be employed full-time as an orthodontist or pediatric
dentist, as applicable, in his or her respective practice prior to the
tenth anniversary of the Merger, or
(b) Ceases to own an equity interest in the professional entity that is a
party to the OCA Business Services Agreement prior to the tenth
anniversary of the Merger, or
(c) And his or her professional entity's OCA Business Services Agreement
terminates, or
(d) Or his or her professional entity fails to utilize OCA's proprietary
computer software and business systems in connection with the business
functions of their practice, or
(e) Or his or her professional entity fails to comply with OCA's policies,
procedures and systems, including a productive working relationship
with OCA's corporate office staff and other orthodontists and dental
professionals who are affiliated with OCA, fulfil his or her financial
obligations to OCA or its subsidiaries, or breaches his or her OCA
Business Services Agreement.
NO RETURN OF PURCHASE PRICE. If shares acquired under this program are
forfeited, any purchase price previously paid would not be returned, but further
obligations to pay the quarterly installments would be canceled.
DEATH OR DISABILITY. If the OrthAlliance Affiliated Practitioner dies or
becomes permanently disabled (and ceases to practice orthodontics or pediatric
dentistry, as applicable), a proportionate number of shares for which quarterly
installments of purchase price had then been paid (that is, one-fortieth of the
number of shares for each quarterly installment of purchase price that had been
paid) would not be forfeited due to those events, and one-seventh of that
proportionate amount would become eligible for sale or transfer during each of
the following seven years.
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TRANSFER OF PRACTICE AFTER 10 YEARS. If the OrthAlliance Affiliated
Practitioner remains employed full-time as an orthodontist or pediatric dentist,
as applicable, in his or her respective practice, owns an equity interest in the
professional entity that is a party to the OCA Business Services Agreement,
remains a party to an OCA Business Services Agreement and otherwise complies
with the terms and conditions of this program through the tenth anniversary of
the Merger, then the OrthAlliance Affiliated Practitioner could thereafter
transfer his practice to another orthodontist or pediatric dentist, as
applicable, acceptable to OCA who assumes all of the OrthAlliance Affiliated
Practitioner's obligations under the OCA Business Services Agreement and,
subject to continued compliance with his or her covenant not to compete, a
proportionate number of shares for which quarterly installments of purchase
price had then been paid would not be forfeited due to those events, and
one-seventh of that proportionate amount would become eligible for sale or
transfer during each of the following seven years.
ELIGIBILITY TO PARTICIPATE. To be eligible to participate in this program,
an OrthAlliance Affiliated Practitioner, along with his or her professional
entity, would have to, prior to the Merger, enter into an OCA Business Services
Agreement in replacement of their existing OrthAlliance Service or Consulting
Agreement (effective as of the Merger). Participation would also require the
execution of a written participation agreement between OCA and the OrthAlliance
Affiliated Practitioner that sets forth, or incorporates by reference, the terms
of the program. Participation in and purchase of shares under this program would
also be conditioned upon, and subject to, completion of the Merger.
In addition, to be eligible to participate in this program, an OrthAlliance
Affiliated Practitioner, along with his or her professional entity, may not be a
party to any pending or threatened litigation against or involving OrthAlliance,
OCA or their subsidiaries, nor have given notice of termination or intention to
terminate their respective OrthAlliance Service or Consulting Agreement, and
must be in compliance with their obligation to pay service or consulting fees
under their OrthAlliance Service or Consulting Agreement. If such litigation or
notice has been commenced, threatened or given, it would need to have been
dismissed with prejudice or fully withdrawn in a manner acceptable to OCA.
PRACTICES WITH MULTI-OWNERS. If an OrthAlliance Affiliated Practitioner's
professional entity is partially owned by one or more other OrthAlliance
Affiliated Practitioners, the co-owner OrthAlliance Affiliated Practitioners
would have to execute and deliver the new OCA Business Services Agreement prior
to the Merger.
ISSUANCE TO PROFESSIONAL CORPORATION. Shares of OCA common stock issued
under this program may be issued to the participant's professional corporation
or other entity, rather than to the individual participant. If the professional
corporation is conveyed to a successor practitioner in accordance with the
applicable OCA Business Services Agreement, the shares of OCA common stock would
not be forfeited due to that event, but rather would continue as an asset of the
professional corporation under the ownership of the successor practitioner. For
purposes of the minimum number of years of full-time employment and ownership of
the professional corporation required under this program, the successor would be
credited with those of the original owner of the professional corporation.
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IN CONNECTION WITH THE PROPOSED MERGER, OCA WILL FILE A REGISTRATION STATEMENT
ON FORM S-4 WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC"). INVESTORS ARE
URGED TO READ THE PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE
REGISTRATION STATEMENT, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
MERGER, OCA AND ORTHALLIANCE. AFTER THE REGISTRATION STATEMENT IS FILED WITH THE
SEC, THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS WILL BE
AVAILABLE FREE OF CHARGE, BOTH ON THE SEC'S WEB SITE (WWW.SEC.GOV) AND FROM OCA
AND ORTHALLIANCE BY DIRECTING A REQUEST TO ORTHODONTIC CENTERS OF AMERICA, INC.,
5000 SAWGRASS VILLAGE CIRCLE, SUITE 30, PONTE VEDRA BEACH, FL 32082, ATTENTION:
INVESTOR RELATIONS, OR TO ORTHALLIANCE, INC., 21535 HAWTHORNE BOULEVARD, SUITE
200, TORRANCE, CA 90503, ATTENTION: INVESTOR RELATIONS. ORTHALLIANCE AND ITS
DIRECTORS AND OFFICERS MAY BE DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF
PROXIES WITH RESPECT TO A SHAREHOLDER MEETING TO BE HELD IN CONNECTION WITH SUCH
MERGER. INFORMATION ABOUT THE PARTICIPANTS IN THE SOLICITATION, INCLUDING THEIR
INTERESTS IN SHARES OF ORTHALLIANCE'S COMMON STOCK, IS SET FORTH IN
ORTHALLIANCE'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000
FILED WITH THE SEC. INVESTORS MAY OBTAIN ADDITIONAL INFORMATION REGARDING THE
INTERESTS OF ORTHALLIANCE AND ITS DIRECTORS AND OFFICERS BY READING THE PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE.
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