GALAXY ENTERPRISES, INC.
AFFILIATE LOCK-UP AGREEMENT
This AFFILIATE LOCK-UP AGREEMENT ("Agreement") dated as of March 9, 2000,
is entered into between Netgateway, Inc., a Delaware corporation ("Netgateway")
and the undersigned officer, director or affiliate ("Affiliate") of Galaxy
Enterprises, Inc., a Nevada corporation ("Company").
WHEREAS, Netgateway and Company have entered into an Agreement and Plan of
Reorganization dated March 9, 2000 ("Merger Agreement") pursuant to which a
subsidiary of Netgateway will merge with and into Company ("Merger"), and
Company will become a subsidiary of Netgateway (capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Merger
Agreement);
WHEREAS, pursuant to the Merger, at the Effective Time outstanding shares
of Common Stock of the Company ("Company Common Stock"), including all shares
owned by Affiliate, will be converted into the right to receive shares of
Netgateway Common Stock;
WHEREAS, it is intended that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986 as
amended (the "Code");
WHEREAS, it is further intended that the Merger will qualify for
"pooling-of-interests" accounting treatment;
WHEREAS, the execution and delivery of this Agreement by Affiliate is a
material inducement to Netgateway to enter into the Merger Agreement; and
WHEREAS, Affiliate has been advised that Affiliate may be deemed to be an
"affiliate" of Company, as the term "affiliate" is used (i) for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") and
(ii) in the Commission's Accounting Series Release ("ASR") Nos. 130 and 135, as
amended.
NOW, THEREFORE, intending to be legally bound, the parties hereby agree as
follows:
1. Acknowledgments by Affiliate. Affiliate acknowledges and understands
that the representations, warranties and covenants by Affiliate set forth herein
will be relied upon by Netgateway, the Company, and their respective
"affiliates", counsel and accountants, and that substantial losses and damages
may be incurred by these persons if Affiliate's representations, warranties or
covenants are not true when given or are breached by Affiliate. Affiliate has
carefully read this Agreement and the Merger Agreement and has had the
opportunity to discuss the requirements of this Agreement with his professional
advisors who are qualified to advise him with regard to such matters.
2. Covenants Related to Pooling of Interests. Notwithstanding any other
provision hereof to the contrary and in accordance with XXX Xx. 000, during the
period commencing on the date hereof and continuing until such date after the
Effective Time as shall be the first market trading day following the date
Netgateway publishes financial results covering at least thirty (30) days of
combined operations of Netgateway and the Company, Affiliate will not sell,
exchange, transfer, pledge, distribute, make any gift or otherwise dispose of or
grant any option, establish any "short" or put-equivalent position with respect
to or enter into any similar transaction (through derivatives or otherwise)
intended to reduce or having the effect, directly or indirectly, of reducing his
risk relative to any shares of Company Common Stock, or any rights, options or
warrants to purchase Company Common Stock, or any Netgateway Common Stock
received by Affiliate in connection with the Merger. For the purposes of this
Agreement, (i) "Company Common Stock" shall mean all shares of Company Common
Stock and any other securities of the Company held by Affiliate, including all
securities as to which Affiliate has sole or shared voting or investment power,
and all rights, options and warrants to acquire shares of capital stock or other
securities of Company granted to or held by Affiliate, and (ii) "Netgateway
Common Stock" shall mean all Netgateway Common Stock that are issued by
Netgateway to Affiliate in connection with the Merger. Netgateway may, at its
discretion, cause a restrictive legend to the foregoing effect to be placed on
certificates representing Netgateway Common Stock issued to Affiliate in the
Merger and place a stop transfer notice consistent with the foregoing with its
transfer agent with respect to the certificates.
Notwithstanding the foregoing, Affiliate shall be entitled to sell or
dispose of shares so long as such sale or disposition is in accordance with XXX
Xx. 000 and the "de minimis" test set forth in the Commission's Staff Accounting
Bulletin No. 76; provided that Affiliate has first obtained Netgateway's prior
written approval of any such proposed sale or disposition. 3. Representations
and Warranties of Affiliate. (a) Affiliate has full power and authority to
execute this Agreement, to make the representations and warranties herein
contained and to perform Affiliate's obligations hereunder. (b) Affiliate is the
beneficial owner of the Company Common Stock (including any shares issuable upon
exercise of granted options) set forth on the signature page below and did not
acquire any of such Company Common Stock in contemplation of the Merger. (c)
Affiliate has not engaged in any sale or other transfer of any Company Common
Stock (including shares issuable upon exercise of granted options) in
contemplation of the Merger.
4. Miscellaneous.
(a) For the convenience of the parties hereto, 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 document.
(b) This Agreement shall be enforceable by, and shall inure to the benefit
of and be binding upon, the parties hereto and their respective successors and
assigns. As used herein, the term "successors and assigns" shall mean, where the
context so permits, heirs, executors, administrators, trustees and successor
trustees, and personal and other representatives.
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(c) This Agreement shall be governed by and construed, interpreted and
enforced in accordance with the internal laws of the State of California.
(d) If a court of competent jurisdiction determines that any provision of
this Agreement is not enforceable or enforceable only if limited in time or
scope, this Agreement shall continue in full force and effect with such
provision stricken or so limited.
(e) Counsel to the parties and the independent accountants of Netgateway
and the Company shall be entitled to rely upon this Agreement as appropriate.
(f) This Agreement shall not be modified or amended, or any right hereunder
waived or any obligation excused, except by a written agreement signed by both
parties.
(g) This Affiliate Agreement shall be terminated and of no further force
and effect upon termination of the Merger Agreement pursuant to its terms.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth on the first page of this Agreement.
NETGATEWAY, INC.
By:______________________________
Title:
AFFILIATE
Name of Affiliate:
Name of Signatory (if different from name of
Affiliate):
Title of Signatory
(if applicable):
Company shares beneficially owned:
_______________ shares of Common Stock
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SCHEDULE OF OMITTED AFFILIATE LOCK-UP AGREEMENT
Affiliate Lock-Up Agreement dated as of March 10, 2000 by and among Xxxx X.
Xxxxxxx and Netgateway, Inc.
Affiliate Lock-Up Agreement dated as of March 10, 2000 by and among Xxxxxxx
Xxxxx and Netgateway, Inc.
Affiliate Lock-Up Agreement dated as of March 10, 2000 by and among
Xxxxx X. Xxxxxx and Netgateway, Inc.
Affiliate Lock-Up Agreement dated as of March 10, 2000 by and among
Xxxxxx Xxxxx and Netgateway, Inc.
Affiliate Lock-Up Agreement dated as of March 10, 2000 by and among
Xxxxx Xxxx and Netgateway, Inc.
Affiliate Lock-Up Agreement dated as of March 10, 2000 by and among
Xxxxxxxx Xxxxxxx and Netgateway, Inc.
