Exhibit 10.31
SUBSCRIPTION AGREEMENT
1. SUBSCRIPTION
The undersigned (the "Purchaser") hereby offers and agrees to purchase from
OMEGA Orthodontics, Inc., a Delaware corporation (the "Company"), the dollar
principal amount of 15% Senior Notes ("Notes") due September 30, 1997 of the
Company indicated on the Signature Page at the end of this Agreement. Notes
subscribed for shall be purchased for 100% of the principal amount in cash in
the form of a personal check of the undersigned made payable to "OMEGA
Orthodontics, Inc.", delivered to the Company along with completed and executed
Signature Pages for OMEGA Orthodontics, Inc., the Subscription Agreement and a
completed and signed Investor Questionnaire. The minimum investment in the
Company is Fifty Thousand Dollars ($50,000.00).
2. ACKNOWLEDGEMENT
The Purchaser hereby acknowledges receipt of a copy of the Confidential
Private Placement Memorandum dated as of September 4, 1996 (the "Memorandum")
concerning the Company and offering of the Notes. Unless otherwise stated, every
capitalized term used herein will have the meaning for purposes hereof assigned
to such term in the Memorandum or the Notes.
3. ACCEPTANCE
The Purchaser understands that this Agreement represents one of a limited
number of subscriptions for the Notes of the Company being presented to
individuals or entities that comply with the requirements of Rule 506 of
Regulation D ("Regulation D") promulgated under the Securities Act of 1933 (the
"Securities Act"), by the Company. The Purchaser further understands and agrees
that this Agreement may be accepted or rejected by the Company in whole or in
part, in the sole and absolute discretion of the Company, and if accepted, the
Notes purchased pursuant hereto and the "Shares" (as defined below) will be
issued only in the name of the Purchaser. The Purchaser hereby acknowledges and
agrees that this Agreement and any documents submitted herewith shall survive
(i) changes in the Memorandum which are not material; (ii) death or disability
of the Purchaser; and (iii) the acceptance of this Agreement by the Company. The
Purchaser acknowledges that the Company is relying upon the representations and
warranties of the Purchaser set forth herein and in the accompanying Investor
Questionnaire and agrees to notify the Company immediately upon the occurrence
of any circumstance or event which could affect the accuracy or completeness of
such representations and warranties.
4. REPRESENTATIONS AND WARRANTIES
The Purchaser hereby represents and warrants to the Company as follows:
(a) The Purchaser is relying solely upon the Memorandum, the Appendices
thereto, and independent investigations made by him or his representatives in
making his decision to purchase the Notes described herein. The Purchaser has
not been furnished any sales literature or offering other than the Memorandum
and the information referred to therein.
(b) The Purchaser understands that the Notes and Shares have not been
registered under the Securities Act or any state securities acts, in reliance on
exemptions for private offerings under the Securities Act and such state acts.
(c) The Notes for which the Purchaser hereby subscribes and the Shares to
be issued to the Purchaser are being acquired solely for his own account, for
investment, and are not being purchased with a view to or for the resale,
distribution, subdivision or fractionalization thereof; he has no present plans
to enter into any such contract, undertaking, agreement or arrangement. In order
to induce the Company to issue and sell the Notes subscribed for hereby to the
Purchaser, it is agreed that the Company will have no obligation to recognize
the ownership, beneficial or otherwise, of such Notes and Shares by anyone but
the Purchaser.
(d) The Purchaser has received, completed and returned to the Company the
Investor Questionnaire relating to his general ability to bear the risks of an
investment in the Company and his suitability as an investor in a private
offering, and the Purchaser hereby affirms the correctness of his answers in
such Questionnaire.
(e) The Purchaser acknowledges and is aware that the Company has minimal
assets and operating history and that the Notes are speculative investments.
(f) The Purchaser acknowledges and is aware that there are substantial
restrictions on the transferability of the Notes and Shares; the Notes and
Shares will not be, and investors in the Company have no rights (other than to
the limited extent set forth below) to require that the Notes and Shares be,
registered under the Securities Act; there will be no public market for the
Notes and Shares; the Purchaser will not be able to avail himself of the
provisions of Rule 144 adopted by the Securities and Exchange Commission under
the Securities Act with respect to the resale of the Notes and will be able to
avail himself of the provisions of such Rule 144 with respect to the resale of
the Shares only under the circumstances set forth thereunder; and accordingly,
that he may have to hold the Notes and Shares indefinitely and that it may not
be possible for him to liquidate his investment in the Company.
(g) The Purchaser (i) has adequate means of providing for his current needs
and possible personal contingencies, and he has no need for liquidity of his
investment in the Company; (ii) has a net worth sufficient to bear the risk of
losing his entire investment; (iii) can bear the economic risk of losing his
entire investment herein; and (iv) does not have an overall commitment to
non-readily marketable investments which is disproportionate to his net worth
and the investment subscribed for herein will not cause such overall commitment
to become excessive.
(h) If the Purchaser is an individual, he warrants that he is over
twenty-one (21) years of age; and if the Purchaser is a corporation, trust or
partnership the Purchaser warrants that it is authorized and otherwise duly
qualified to hold investments in the Company.
5. INDEMNIFICATION
The Purchaser hereby indemnifies the Company and the Members of the Board
of Directors and the officers of the Company and all of their affiliates, agents
and controlling persons, and each of them, and agrees to hold them, and each of
them, harmless from and against any and all loss, damage, claim, liability or
expense (including reasonable attorneys' fees and expenses and costs of
investigation), which they or any of them may sustain or incur by reason of, or
in connection with any misrepresentation or breach of any warranty, agreement or
covenant made or undertaken in this Agreement, any Investor Questionnaire or
otherwise in connection with the sale or distribution by the Purchaser of the
Notes and Shares purchased by, or otherwise issued to, the Purchaser pursuant
hereto whether or not in violation of the Securities Act or other applicable
Federal or state law, provided, however, that such party or parties who may be
seeking indemnification hereunder were acting within the reasonable scope of
their authority and did not engage in gross negligence, wilful misconduct or bad
faith. The representations and warranties contained herein shall be binding upon
the Purchaser's heirs, executors, administrators, trustees, successors, and
assigns.
6. SHARES TO BE ISSUED PURSUANT TO NOTES
To induce the Purchaser to subscribe for Notes, the Company has agreed to
issue, for no additional consideration, the number of shares (the "Shares") of
Common Stock of the Company set forth on the face of the Note to be issued to
the Purchaser hereunder. Such Shares shall be subject to the terms and
conditions set forth in this Section 6.
A. Definitions
As used in this Section, the following terms have the respective meanings
set forth below:
"Business Day" shall mean any day that is not a Saturday, Sunday or a
federal holiday.
"Commission" shall mean the United States Securities and Exchange
Commission or any other federal agency then administering the Securities Act and
other federal securities laws.
"Common Stock" shall mean the authorized Common Stock, par value $0.01 per
share, of the Company as constituted on the date hereof, and any capital stock
into which such Common Stock may hereafter be changed, and shall also include
capital stock of the Company of any other class (regardless of how denominated)
issued to the holders of shares of Common Stock upon any reclassification
thereof.
"Fair Market Price" of a share of Common Stock means the closing price on
the day in question, or the immediately preceding Business Day if the day in
question is not a business day on the applicable national securities exchange
Nasdaq Stock Market system on which the Common Stock is included or listed or
if, on any day in question, the Common Stock shall not be listed on any national
securities exchange or quoted on the Nasdaq Stock Market, then such price shall
be equal to the last reported bid and asked prices on such day as reported by
the National Quotation Bureau, Inc. or any similar reputable quotation and
reporting service, if such quotation is not reported by the National Quotation
Bureau, Inc.); provided, however, that if the Common Stock is not traded in such
manner that the quotations referred to herein are available for the period
required hereunder, the Fair Market Price shall be determined in good faith by
the Board of Directors of the
Company, or if such determination cannot be made, by a nationally recognized
independent investment banking firm selected by the Board of Directors.
"Holder" shall mean the Purchaser, and any permitted transferees thereof of
all or part of the Shares.
"Initial Public Offering" shall mean the first firm commitment underwritten
public offering of Common Stock (and other securities exercisable for the
purchase of Common Stock) by the Company pursuant to an effective Registration
Statement.
"Other Shares" shall have the meaning ascribed to in Section 6(c)(1)(b)
hereof.
"Outstanding" when used with reference to Common Stock shall mean, at any
date as of which the number of shares thereof is to be determined, all issued
shares of Common Stock, except shares then owned or held by or for the account
of the Company, and shall include shares of Common Stock then issuable pursuant
to any other warrants, options or other purchase rights, however denominated.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, incorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Primary Shares" shall mean at any time the authorized but unissued shares
of Common Stock held by the Company in its treasury.
"Registrable Shares" shall have the meaning ascribed to it in Section
6(c)(1) hereof.
"Registration Expenses" shall mean expenses relating to compliance by the
Company with its obligations under Section 6(c)(4) hereof, including all
registration and filing fees, exchange listing fees, printing expenses, fees and
disbursements of counsel for the Company, state blue sky fees and expenses, and
the expense of any special audits and other expert reports incident to or
required by any such registration, but excluding underwriting discounts, selling
commissions and the fees and expenses of personal counsel selected by the
Holder.
"Registration Statement" shall mean a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successor forms, or any registration statement covering only securities proposed
to be issued in exchange for securities or assets of another entity), including
the prospectus, amendments and supplements to such registration statement or
prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated or deemed to be incorporated by reference in such
registration statement.
"Restricted Shares" shall mean, at any time, the Holder's Shares, and any
securities received in respect thereof, which are at such time held by the
Holder and which theretofore have not been sold to the public pursuant to a
registration statement under the Securities Act or Rule 144.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act or any
complementary rule thereto (including without limitation Rule 144A).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Shares" shall have the meaning ascribed to it above in this Section 6.
B. Sale or Transfer of Shares; Legend
(a) The Shares and the Registerable Shares and shares issued in respect of
the Shares or the Registrable Shares shall not be sold or transferred unless
either (i) they first shall have been registered under the Securities Act, or
(ii) the Company first shall have been furnished with an opinion of legal
counsel, reasonably satisfactory to the Company, to the effect that such sale or
transfer is exempt from the registration requirements of the Securities Act.
(b) Each certificate representing the Shares and the Registrable Shares,
and shares issued in respect of the Shares and the Registrable Shares, shall
bear a legend substantially in the following form:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be offered, sold or
otherwise transferred or pledged unless and until such shares are
registered under such Act or an opinion of counsel reasonably satisfactory
to the Company is obtained to the effect that such registration is not
required."
The foregoing legend shall be removed from the certificates representing
any Registrable Shares, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
C. Registration Rights
1. Incidental Registration Rights. (a) If the Company at any time proposes
for any reason to register any of its securities under the Act (other than in
connection with its Initial Public Offering or pursuant to a registration
statement on Forms X-0, X-0 or similar or successor or another form which is not
available for registering Registrable Securities for sale to the public), it
shall each such time promptly give written notice to all Holders of Registrable
Securities of its intention so to do, and, upon the written request, given
within 10 days after receipt of any such notice, of such Holder to register any
Registrable Securities, which request shall specify the number of Registrable
Securities intended to be sold or disposed of by such Holders and shall state
the intended method of disposition of such Registrable Securities by such
Holders, the Company shall use its best efforts to cause all such Registrable
Securities to be registered under the Act as required to permit the sale or
other disposition (in accordance with the intended methods thereof, as
aforesaid) by such Holders. Notwithstanding the foregoing, the Company shall
have the right to withdraw such registration statement, if so required by
prudent business judgment, provided it shall reimburse the persons who indicated
their intention to include Registrable Securities therein for the out-of-pocket
expenses reasonably incurred by such persons in connection therewith.
"Registrable Securities", for purposes of this Section 6(c), means (i) the
Shares and (ii) any shares of Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for, or in
replacement of, any of such Shares.
(b) In the event that the proposed registration by the Company is, in whole
or in part, an underwritten public offering of securities of the Company (other
than the Initial Public Offering as to which the Holder shall have no
registration rights under this Section 6(c)), any request pursuant to this
Section 6 to register may specify that the Registrable Securities are to be
included in the underwriting (i) on the same terms and conditions as the shares
of Common Stock, if any, otherwise being sold through underwriters under such
registration or (ii) on terms and conditions comparable to those normally
applicable to offerings of common stock in reasonably similar circumstances in
the event that no shares of Common Stock other than Registrable Securities are
being sold through underwriters under such registration; provided, however, that
if the managing underwriter determines and advises in writing that the inclusion
of all Registrable Securities proposed to be included in the underwritten public
offering and other issued and outstanding shares of Common Stock proposed to be
included therein by persons other than holders of Registrable Securities (the
"Other Shares") would interfere with the successful marketing of such
securities, then the number of Registrable Securities and Other Shares shall be
reduced pro rata among the holders of Registrable Securities and Other Shares,
as necessary.
2. Demand Registration. At any time after the Company becomes eligible to
file a Registration Statement on Form S-3 (or any successor form relating to
secondary offerings), a Holder holding in the aggregate at least 25% of the
Registrable Shares may request the Company, in writing, to effect the
registration on Form S-3 (or such successor form). Upon receipt of any such
request, the Company shall promptly give written notice of such proposed
registration to all Holders. Such Holders shall have the right by giving written
notice to the Company within 30 days after the Company provides its notice, to
elect to have included in such registration such of their Registrable Shares as
such Holders may request in such notice of Election. Thereupon, the Company
shall, as expeditiously as possible, use its best efforts to effect the
registration on Form S-3, or such successor form, of all Registrable Shares
which the Company has been requested to register.
3. Preparation and Filing. If and whenever the Company is under an
obligation pursuant to the provisions of this Section 6(c) to use its best
efforts to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as practicable:
(a) prepare and file with the SEC a registration statement with respect to
such securities and use its best efforts to cause such registration statement to
become and remain effective;
(b) prepare and file with the SEC such amendments and supplements to such
registration statements and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for at least nine
months and to comply with the provisions of the Securities Act with respect to
the sale or other disposition of all Registrable Securities covered by such
registration statement;
(c) furnish to each seller such number of copies of a summary prospectus
or other prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such seller may
reasonably request in order to facilitate the public sale or other disposition
of such Registrable Securities;
(d) use its best efforts to register or qualify the Registrable Securities
covered by such registration statement under the securities or blue sky laws of
such jurisdictions as each
such seller shall reasonably request (provided, however, that the Company shall
not be required to consent to general service of process for all purposes or
qualify to do business in any jurisdiction where it is not then qualified) and
do any and all other acts or things which may be reasonably necessary or
advisable to enable such seller to consummate the public sale or other
disposition in such jurisdictions of such securities; and
(e) notify each seller of Registerable Securities covered by such
registration statement at any time when a prospectus relating thereto covered by
such registration statement is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (b) of this ss.8.3, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
4. Registration Expenses. All Registration Expenses incurred in complying
with this Section 6(c) shall be paid for by the Company.
5. Indemnification. In the event of any registration of Registrable
Securities under the Securities Act pursuant to this Section 6(c) or other
registration or qualification thereof pursuant to Section 6(c)(3)(d) hereof, the
Company shall enter into an indemnity agreement with the sellers of Registrable
Securities in customary form relating thereto.
6. Assignment. The rights to cause the Company to register Registrable
Securities pursuant to this Section 6 may be assigned by a Holder to any
transferee or assignee of Registrable Securities upon the transfer or assignment
of all Registrable Securities held by such Holder or a minimum of 20% of shares
of such Registrable Securities; provided that the Company is notified in writing
of such transfer, the proposed transferee or assignee agrees to be bound by the
provisions of this Subscription Agreement.
7. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior understanding and agreements between them respecting
the subject matter of this Agreement.
8. GOVERNING LAW
This Agreement shall be governed, construed, and interpreted in all
respects, in accordance with the internal laws of the State of California
applicable to contracts made and to be performed wholly therein, except to the
extent that by its terms the General Corporation Law of the State of Delaware
shall, by reason of the status of the Company as a Delaware business
corporation, control, and the Purchaser hereby submits to jurisdiction and venue
of the courts located in the State of California.
9. NOTICES
All notices, consents, requests, demands, offers, reports and other
communications required or permitted shall be deemed to be given when personally
delivered to the party entitled thereto, or when sent by United States mail,
certified or registered, in a sealed envelope, with postage prepaid, or by
receipted, commercial overnight courier addressed if to the Purchaser at the
respective location set below his name, and if to the Company to OMEGA
Orthodontics, Inc., 0000 Xxxxxx Xxxx Xxxx, Xxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxx, President.
IN WITNESS WHEREOF, the Purchaser has executed or has caused to be executed
this Subscription Agreement by execution of the following signature page as of
the date set forth therein.
SUBSCRIPTION AGREEMENT
SIGNATURE PAGE FOR INDIVIDUAL
AND JOINT TENANT INVESTORS
Executed this 28th day of April, 1997
Dollar Amount of Notes Subscribed for: $25,000 (in Multiples of $5,000/minimum
investment: $50,000)
Printed Name of Subscriber: Xxxxx X. Xxxxx
Signature of Subscriber: /s/ Xxxxx X. Xxxxx
-------------------
Address of Subscriber
Number and Street: 000 00xx Xxxxxx
Xxxx-Xxxxx-Xxx Code: Xxxx, XX 00000
Printed Name of Joint Tenant, if applicable*:
Signature of Joint Tenant, if applicable Social Security No.
----------
* All joint tenants, including married couples, must execute this signature
page and check the following as appropriate indicating nature of tenancy: (a)
_____ Tenants in common; (b) _____ Joint tenants with right of survivorship; (c)
_____ Community property.
SUBSCRIPTION AGREEMENT
SIGNATURE PAGE FOR CORPORATE INVESTORS
Executed this ___ day of _________, 1996
Dollar Amount of Notes Subscribed for: ______ (in Multiples of $5,000/minimum
investment: $50,000)
Name of corporation (please print or type)
ADDRESS:
Number and Street
City-State-Zip Code
BY:
Signature of authorized officer
Title:
Taxpayer Identification No.:
SUBSCRIPTION AGREEMENT
SIGNATURE PAGE FOR LIMITED LIABILITY COMPANY INVESTORS
Executed this ___ day of _________, 1996
Dollar Amount of Notes Subscribed for: _________ (in Multiples of $5,000/minimum
investment: $50,000)
Name of limited liability company (please print or type)
ADDRESS:
Number and Street
City-State-Zip Code
BY:
Signature of authorized officer
Title:
Taxpayer Identification No.:
SUBSCRIPTION AGREEMENT
SIGNATURE PAGE FOR TRUST INVESTORS
Executed this ____ day of _________, 1996
Dollar Amount of Notes Subscribed for: _________ (in Multiples of $5,000/minimum
investment: $50,000)
Name of trust (please print or type):
Name of trustee (please print or type):
ADDRESS:
Number and Street:
City-State-Zip Code:
BY:
-------------------
Trustee's signature
BY:
Additional trustee's signature (if required by Trust
Agreement)
Taxpayer Identification No. or
Social Security No.:
SUBSCRIPTION AGREEMENT
SIGNATURE PAGE FOR PARTNERSHIP INVESTORS
Executed this ___ day of __________, 1996
Dollar Amount of Notes Subscribed for: _________ (in Multiples of $5,000/minimum
investment: $50,000)
Name of partnership (please print or type)
Name of general partner
ADDRESS:
Number and Street
City-State-Zip Code
BY:
Authorized signature of general partner
Print name of signer and title of signer's office
(or other capacity, as applicable)
Taxpayer Identification No:
ACCEPTANCE OF SUBSCRIPTION
Approved and accepted as of the 28th day of April, 1997
OMEGA ORTHODONTICS, INC.
By /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxxx, President
