GALACTICOMM TECHNOLOGIES, INC.
SUBSCRIPTION AGREEMENT
Galacticomm Technologies, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
1. SUBSCRIPTION. The purchaser ("Purchaser"), intending to be legally
bound, hereby agrees to purchase from Galacticomm Technologies, Inc. (the
"Company") the number of units (the "Units") set forth on the signature page
hereof, at a purchase price of $50,000 per Unit. Each Unit consists of one
non-negotiable 10% unsecured promissory note of the Company in the principal
amount of $50,000 (the "Promissory Note") and warrants (the "Warrants") to
purchase 30,000 shares of the Company's common stock, par value $.0001 per share
(the "Common Stock"). The Units, Promissory Note, Warrants and Common Stock are
sometimes hereinafter collectively referred to as the "Securities."
Purchaser submits this subscription in accordance with and subject to
the terms and conditions described in this Subscription Agreement.
2. PAYMENT. The Purchaser encloses herewith a check payable to or wire
transfer payment to Xxxxx, Mandler, Croland, Bronstein, Garbett, Stiphany &
Xxxxxxxx, P.A., as Escrow Agent for the Company ("Escrow Agent"), in the full
amount of the purchase price of the Units being subscribed for. Wire
instructions for the Escrow Agent are: Xxxxxxxx Xxx Xxx, XxxxxxxXxxx, 000
Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, telephone: (000) 000-0000, facsimile:
(000) 000-0000. Xxxxx, Mandler, Croland, Bronstein, Garbett, Stiphany &
Xxxxxxxx, P.A. Trust Account, Trust Account No. 0000000000, ABA No. 000000000.
Such funds will be held for Purchaser's benefit by the Escrow Agent, and will be
returned promptly with no interest thereon if this Subscription Agreement is not
accepted by the Company, or the Offering is terminated pursuant to its terms.
3. REPRESENTATIONS BY THE PURCHASER. The Purchaser hereby acknowledges,
represents, warrants and agrees as follows:
(a) The Securities are not registered under the Securities Act
of 1933 (the "Securities Act") or any state securities laws. The Purchaser
understands that this offering of Units to the Holder (the "Offering") is
intended to be exempt from registration under the Securities Act by virtue of
Section 4(2) of the Securities Act and the provisions of Rules 505 and 506 of
Regulation D promulgated thereunder, based, in part, upon the representations,
warranties and agreements contained in this Subscription Agreement;
(b) The Purchaser has received the Company's prospectus dated
July 2, 1998 (the "Prospectus") and all other documents requested by the
Purchaser, has carefully reviewed them and understands the information contained
therein. In connection therewith, the Purchaser understands that the Company has
recently settled litigation with DataSafe Publications, Inc. ("DataSafe"), which
is described on page 37 of the Prospectus. Under the terms of the settlement,
DataSafe has dismissed its lawsuit and in return, the Company has issued to
DataSafe 253,907 shares of Common Stock. However, pursuant to the settlement,
the Company must complete an initial public offering of its securities before
December 31, 1998 or DataSafe has the option of returning its 253,907 shares of
Common Stock to the Company and resuming its lawsuit against the Company.
(c) Neither the Securities and Exchange Commission (the
"Commission") nor any state securities commission has approved the Securities or
passed upon or endorsed the merits of the Offering;
(d) The Purchaser has had a reasonable opportunity to ask
questions of and receive answers from a person or persons acting on behalf of
the Company concerning the Offering and all such questions have been answered to
the full satisfaction of the Purchaser;
(e) In evaluating the suitability of an investment in the
Company, the Purchaser has not relied upon any representation or other
information (oral or written) other than as stated in the Prospectus, and any
other information authorized by the Company to be disclosed to the Purchaser;
(f) The Purchaser is unaware of, and in no way relying on, any
form of general solicitation or general advertising in connection with the
Offering;
(g) The Purchaser has taken no action which would give rise to
any claim by any person for brokerage commissions, finders' fees or the like
relating to this Subscription Agreement or the transactions contemplated hereby;
(h) The Purchaser has such knowledge and experience in
financial, tax, and business matters so as to enable him or her to utilize the
information made available to him or her in connection with the Offering to
evaluate the merits and risks of an investment in the Units and to make an
informed investment decision with respect thereto;
(i) The Purchaser is not relying on the Company respecting the
tax and other economic considerations of an investment in the Units and the
Purchaser has relied on the advice of, or has consulted with, only his or her
own advisors;
(j) The Purchaser is acquiring the Securities solely for his
or her own account for investment and not with a view to resale or distribution;
(k) The Purchaser must bear the economic risk of the
investment indefinitely because the Securities may not be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities Act
and applicable state securities laws or an exemption from registration is
available. Legends shall be placed on the certificates for each of the
Securities to the effect that the Securities have not been registered under the
Securities Act or applicable state securities laws and appropriate notations
thereof will be made in the Company's transfer books. Stop transfer instructions
will be placed with the transfer agent with respect to each of the Securities,
or, if the Company acts as its own transfer agent, the Company will make a
notation on its record concerning these restrictions on transfer;
(l) The Purchaser is aware that an investment in the
Securities involves a number of very significant risks and has carefully read
and considered the matters set forth under the caption "Risk Factors" in the
Prospectus;
(m) The Purchaser has completed the Purchaser Questionnaire
contained herein, and that the information contained therein does not contain
any untrue statements of fact or omit to state any fact necessary in order to
make such statements not misleading;
2
(n) The Purchaser: (i) if a natural person represents that the
Purchaser has reached the age of 21 and has full power and authority to execute
and deliver this Subscription Agreement and all other related agreements or
certificates and to carry out the provisions hereof and thereof and has adequate
means for providing for his or her current financial needs and anticipated
future needs and possible contingencies and emergencies and has no need for
liquidity in the investment in the Securities; (ii) if a corporation,
partnership, association, joint stock company, trust, unincorporated
organization or other entity represents that such entity was not formed for the
specific purpose of acquiring the Securities, such entity is duly organized
validly existing and in good standing under the laws do the state of its
organization, the consummation of the transactions contemplated hereby is
authorized by, and will not result in a violation of state law or its charter or
other organizational documents, such entity has full power and authority to
execute and deliver this Subscription Agreement and all other related agreements
or certificates and to carry out the provisions hereof and thereof and to
purchase and hold the Securities, the execution and delivery of this
Subscription Agreement has been fully authorized by all necessary action, this
Subscription Agreement has been duly executed and delivered on behalf of such
entity and is a legal, valid and binding obligation of such entity; and (iii) if
executing this Subscription Agreement in a representative or fiduciary capacity,
represents that it has full power and authority to execute and deliver this
Subscription Agreement in such capacity and on behalf of the subscribing
individual, xxxx, partnership, trust, estate, corporation, or other entity for
whom the Purchaser is executing this Subscription Agreement, and such
individual, xxxx, partnership, trust, estate, corporation, or other entity has
full right and power to perform pursuant to this Subscription Agreement and make
an investment in the Company, and that this Subscription Agreement constitutes a
legal, valid and binding obligation of such entity. The execution and delivery
of this Subscription Agreement will not violate or be in conflict with any
order, judgment, injunction, agreement or controlling document to which the
Purchaser is a party or by which it is bound;
(o) The Purchaser has had the opportunity to obtain any
additional information necessary to verify the accuracy of the information
contained in the Prospectus and all documents received or reviewed in connection
with the Offering and has had the opportunity to meet with representatives of
the Company and to have them answer any questions and provide additional
information regarding the terms and conditions of this particular investment and
the finances, operations, business and prospects of the Company and the Offering
deemed relevant by the Purchaser and all such questions have been answered and
requested information provided to its full satisfaction;
(p) The information contained herein is complete and accurate
and may be relied upon by the Company in determining the availability of an
exemption from registration under federal and state securities laws in
connection with the Offering;
(q) The Purchaser has significant prior investment experience,
including investment in non-listed and non-registered securities. The Purchaser
is knowledgeable about investment considerations in small companies in early
stages of development. The Purchaser has a sufficient net worth to sustain a
loss of its entire investment in the Company in the event such a loss should
occur. The Purchaser's overall commitment to investments which are not readily
marketable is not excessive in view of its net worth and financial circumstances
and the purchase of the Securities will not cause such commitment to become
excessive. The investment is a suitable one for the Purchaser;
(r) The Purchaser is satisfied that it has received
information with respect to all matters which is considers material to its
decision to make this investment;
(s) The Purchaser acknowledges that any projections or
estimations of, among other things, market size, commercial viability of the
Company's products and services, and anticipated research and development
expenses and other applications of the net proceeds of the Offering included
3
in the Prospectus were prepared by the Company in good faith but that the
attainment of such projections and estimations cannot be guaranteed by the
Company;
(t) NOTICE TO PURCHASERS:
THE UNITS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR THE
SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
LAWS. THE UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING DOCUMENTS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE UNITS HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES AND
INVESTOR PROTECTION ACT (THE "FLORIDA ACT") IN RELIANCE UPON EXEMPTIONS
CONTAINED THEREIN. PROSPECTIVE INVESTORS WHO RESIDE IN FLORIDA ARE ADVISED THAT
WHERE SALES ARE MADE TO FIVE (5) OR MORE PERSONS PURSUANT TO SECTION
517.061(11)(a)5. OF THE FLORIDA ACT, SUCH SALES ARE VOIDABLE BY THE PURCHASERS
WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY THE
PURCHASER TO THE COMPANY OR AN AGENT OF THE COMPANY, OR WITHIN THREE (3) DAYS
AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO THE PURCHASER,
WHICHEVER OCCURS LATER.
4. LOCK-UP AGREEMENT. Until 12 months after the date that the Company's
initial public offering of its securities ("IPO") is declared effective by the
Commission (the "Effective Date"), the Purchaser will not directly or
indirectly, sell, offer for sale, transfer, hypothecate, pledge or otherwise
dispose of, pursuant to Rule 144 promulgated under the Securities Act or
otherwise, the Securities (including Common Stock issuable upon exercise of
Warrants) directly or indirectly or beneficially owned by the Purchaser.
Notwithstanding the foregoing, (i) the Purchaser may sell or
otherwise dispose of the Company's securities in a privately negotiated
transaction, provided that (a) the acquiror of such securities agrees in advance
in writing with the Underwriter to the restrictions on transfer of the
securities as set forth herein and (b) the disposition is otherwise in
accordance with the federal securities and other laws, and (ii) the Purchaser,
if a present shareholder, may make gifts and transfers of securities of the
Company to the Purchaser's immediate family (as such term is defined in rules
promulgated under the Securities Exchange Act of 1934, as amended).
Furthermore, the terms of the Units (including the Warrants
contained therein) shall be automatically revised or adjusted if and as required
or requested by the NASD, NASDAQ or any other federal or state regulatory agency
in connection with the Company's IPO.
5. LEGEND. The Purchaser consents to the placement of an appropriate
legend upon any certificates evidencing his/her/its stock or right to acquire
stock in the Company. Upon request by the Company, the Purchaser will submit
his/her/its securities of the Company for legending in accordance with this
Agreement.
6. INDEMNIFICATION. The Purchaser agrees to indemnify and hold harmless
the Company and the Placement Agent and their respective officers, directors,
employees, agents, control persons and
4
affiliates against all losses, liabilities, claims, damages, and expenses
(including, but not limited to, any and all expenses incurred in investigating,
preparing, or defending against any litigation commenced or threatened) by
reason of or arising out of any actual or alleged false representation or
misrepresentation or warranty or breach or omission to state a material fact by
the Purchaser of any agreement herein or in any other document delivered in
connection with this Subscription Agreement.
7. IRREVOCABILITY; BINDING EFFECT. The Purchaser hereby acknowledges
and agrees that the subscription hereunder is irrevocable by the Purchaser,
except as required by applicable law and as referred to herein, and that this
Subscription Agreement shall survive the death or disability of the Purchaser
and shall be binding upon and inure to the benefit of the parties and their
heirs, executors, administrators, successors, legal representatives, and
permitted assigns. If the Purchaser is more than one person, the obligations of
the Purchaser hereunder shall be joint and several and the agreements,
representations, warranties, and acknowledgments herein shall be deemed to be
made by and be binding upon each such person and his heirs, executors,
administrators, successors, legal representatives, and permitted assigns.
8. MODIFICATION. This Subscription Agreement shall not be modified or
waived except by an instrument in writing signed by the party against whom any
such modification or waiver is sought.
9. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given (a) if to the Company, at the address set forth above, or (b) if
to the Purchaser, at the address set forth on the signature page hereof (or, in
either case, to such other address as the party shall have furnished in writing
in accordance with the provisions of this section). Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
10. ASSIGNABILITY. This Subscription Agreement and the rights,
interests and obligations hereunder are not transferrable or assignable by the
Purchaser and further agrees that the transfer or assignment of the Shares shall
be made only in accordance with all applicable laws.
11. APPLICABLE LAWS. This Subscription Agreement shall be governed by
and construed in accordance with the laws of the State of Florida without regard
to its conflicts of laws principles. The Purchaser hereby irrevocably submits to
the jurisdiction of any Florida state or United States federal court sitting in
Broward or Dade County, Florida over any action or proceeding arising out of or
relating to this Subscription Agreement or any agreement contemplated hereby,
and the Purchaser hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such Florida state or
federal court. The Purchaser further waives any objection to venue in such state
and any objection to an action or proceeding in such state on the basis of a
non-convenient forum. The Purchaser further agrees that any action or proceeding
brought against the Company shall be brought only in Florida state or United
States federal courts sitting in Broward or Dade County, Florida. THE PURCHASER
AGREES TO WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT
CONTEMPLATED HEREBY.
12. BLUE SKY QUALIFICATION. The right of the Purchaser to purchase the
Securities under this Subscription Agreement is expressly conditioned upon the
exemption from qualification of the offer and
5
sale of the Securities from applicable federal and state securities laws. The
Company shall not be required to qualify this transaction under the securities
laws of any jurisdiction and, should qualification be necessary, the Company
shall be released from any and all obligations to maintain its offer, and may
rescind any sale contracted, in the jurisdiction.
13. USE OF PRONOUNS. All pronouns and any variations thereof used
herein shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identify of the person or persons referred to may require.
14. CONFIDENTIALITY. The Purchaser acknowledges and agrees that any
information or data it has acquired from or about the Company, not otherwise
properly in the public domain, was received in confidence. The Purchaser agrees
not to divulge, communicate or disclose, except as may be required by law or for
the performance of this Agreement, or use to the detriment of the Company or for
the benefit of any other person or persons, or misuse in any way, any
confidential information of the Company, including any scientific, technical,
trade or business secrets of the Company and any scientific, technical, trade or
business materials that are treated by the Company as confidential or
proprietary, including, but not limited to, ideas, discoveries, inventions,
developments and improvements belonging to the Company and confidential
information obtained by or given to the Company about or belonging to third
parties.
15. MISCELLANEOUS.
(a) This Subscription Agreement constitutes the entire
agreement between the Purchaser and the Company with respect to the subject
matter hereof and supersedes all prior oral or written agreements and
understandings, if any, relating to the subject matter hereof. The terms and
provisions of this Agreement may be waived, or consent for the departure
therefrom granted, only by a written document executed by the party entitled to
the benefits of such terms or provisions.
(b) The Purchaser's representations and warranties made in
this Agreement shall survive the execution and delivery hereof and of the
Securities.
(c) Each of the parties hereto shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Subscription Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
(d) This Subscription Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
(e) Each provision of this Subscription Agreement shall be
considered separable and if for any reason any provision or provisions hereof
are determined to be invalid or contrary to applicable law, such invalidity
shall not impair the operation of or affect the remaining portions of this
Subscription Agreement.
(f) Paragraph titles are for descriptive purposes only and
shall not control or alter the meaning of this Subscription Agreement as set
forth in the text.
6
PURCHASER QUESTIONNAIRE
(Check the appropriate box(es))
I. ACCREDITED INVESTOR STATUS
__ 1. I am a natural person who had individual income of more than
$200,000 in each of the most recent two years or joint income with my
spouse in excess of $300,000 in each of the most recent two years and
reasonably expect to reach that same income level for the current year
("income," for purposes hereof, should be computed as follows:
individual adjusted gross income, as reported (or to be reported) on a
federal income tax return, increased by (1) any deduction of long-term
capital gains under Section 1202 of the Internal Revenue Code of 1986
(the "Code"), (2) any deduction for depletion under Section 611 et.
seq. of the Code, (3) any exclusion for interest under Section 103 of
the Code and (4) any losses of a partnership as reported on Schedule E
of Form 1040);
__ 2. I am a natural person whose individual net worth (I.E., total assets
in excess of total liabilities), or joint net worth with my spouse,
will at the time of purchase of the Securities be in excess of
$1,000,000;
__ 3. The Purchaser is a bank as defined in Section 3(a)(2) of the Act, or
any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; a broker or dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934; an insurance company as
defined in Section 2(13) of the Act; an investment company registered
under the Investment Corporation Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; a Small Business
Investment Corporation licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; a plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if
such plan has total assets in excess of $5,000,000; an employee benefit
plan within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in
excess of $5,000,000 or if a self-directed plan, with investment
decisions made solely by persons that are "accredited investors;"
__ 4. The Purchaser is a private business development company as defined
in Section 202(a)(22) of the Investment Advisers Act of 1940;
__ 5. The Purchaser is an organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, corporation,
Massachusetts business trust, or partnership, not formed for the
specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
__ 6. The Purchaser is a trust, which trust has total assets in excess of
$5,000,000, which is not formed for the specific purpose of acquiring
the Shares offered hereby and whose purchase is directed by a
sophisticated person as described in Rule 506(b)(ii) of Regulation D
and who has such knowledge and experience in financial and business
matters that he is capable of evaluating the risks and merits of an
investment in the Shares;
__ 7. I am a director or executive officer of the Company;
__ 8. The Purchaser is an entity (other than a trust) in which all of the
equity owners meet the requirements of at least one of the above
subparagraphs; or
__ 9. NONE OF THE ABOVE.
7
II. NASD MATTERS
1. Do you know of any information pertaining to underwriting
compensation and arrangements or any dealings between any Underwriter or Related
Person (see definition), NASD Member (see definition) or Person Associated with
a Member of the NASD (see definition) on the one hand, and the Company or any
parent, subsidiary or controlling (see definition) shareholder thereof on the
other hand, other than information relating to the compensation to be paid to
First Equity Corporation in connection with its proposed underwriting of the
initial public offering of securities (the "IPO")?
|_| Yes |_| No
If "yes", please provide a detailed description (please attach a separate sheet
describing such information if necessary).
2. Are you an NASD Member (see definition), an owner of stock or other
securities of an NASD Member, a Person Associated with a Member of the NASD (see
definition), an Affiliate of an NASD Member (see definition), an Underwriter or
Related Person (see definition) with respect to the IPO or an Immediate Family
Member (see definition) of any of the aforementioned; or have you made any
outstanding subordinated loans to any NASD Member?
|_| Yes |_| No
If "yes", please provide a detailed description.
3. Have you been an underwriter, or a controlling (see definition)
person or member of any investment banking or brokerage firm which has been or
might be an underwriter for securities of the Company or which might participate
in the IPO?
|_| Yes |_| No
If "yes", please provide a detailed description.
4. If your answer to Questions (2) or (3) above was "Yes", please set
forth below information as to (a) all of your previous purchases and/or
acquisitions (including contracts for purchase or acquisition) of securities of
the Company or of any subsidiary of the Company, (b) all purchases and/or
acquisitions (including contracts for purchase or acquisition) of any such
securities (regardless of who the purchaser or acquiror was ) which resulted in
your Beneficial Ownership (see definition) of such securities, and (c) all
proposed purchases and acquisitions of such securities by you, or which will
result in your Beneficial Ownership (see definition) thereof, which are to be
consummated, in whole or in part, within the next 12 months:
-----------------------------------------------------------------------------------------------------------------------
SELLER OR PROSPECTIVE AMOUNT AND NATURE PRICE OR OTHER DATE OR PROPOSED
SELLER OF SECURITIES CONSIDERATION DATE OF ACQUISITION
-----------------------------------------------------------------------------------------------------------------------
8
5. Set forth below information as to all sales and/or dispositions
(including contracts to sell or to dispose) of securities of the Company or of
its subsidiaries by you to any NASD Member (see definition), any Person
Associated with a Member of the NASD (see definition), any Affiliate of an NASD
Member (see definition), any Underwriter or Related Person (see definition) with
respect to the IPO or any Immediate Family Member (see definition) of any of the
aforementioned, as well as to all proposed sales and/or dispositions of such
securities by you to any of the foregoing persons or entities which are to be
consummated, in whole or in part, within the next 12 months:
-----------------------------------------------------------------------------------------------------------------------
SELLER OR PROSPECTIVE AMOUNT AND NATURE PRICE OR OTHER DATE OR PROPOSED
SELLER OF SECURITIES CONSIDERATION DATE OF ACQUISITION
-----------------------------------------------------------------------------------------------------------------------
6. If you have had, or are to have, any transactions of the character
referred to in Question (5) above, describe briefly the relationship,
affiliation or association of you and, if known, the other party or parties to
any such transaction with any underwriter or other person or entity "in the
stream of a distribution" with respect to the IPO. In any case, where the
purchaser (whether you or any such party) is known by you to be a member of a
private investment group, such as a hedge fund or other group of purchasers,
furnish, if know, the names of all persons comprising the Group (see definition)
and their association with or relationship to any broker-dealer.
7. Provide a detailed description of any services rendered by you,
directly or indirectly, to or on behalf of the Company, including also the dates
of such services and any compensation you received, either directly or
indirectly, in connection with such services.
III. TRANSACTIONS RELATED TO THE IPO
Except with respect to the proposed IPO, do you know of any plan,
agreement, arrangement, authorization or understanding made or to be made by any
person, or any transaction already effected:
(a) To limit or restrict the sale of the Common Stock during
the period of the IPO?
|_| Yes |_| No
If "yes", please provide a detailed description.
(b) To stabilize the market for the Common Stock?
|_| Yes |_| No
If "yes", please provide a detailed description.
(c) To withhold commissions or otherwise to hold each
underwriter or dealer responsible for the distribution of its participation in
the IPO?
|_| Yes |_| No
If "yes", please provide a detailed description.
9
IV. MATERIAL RELATIONSHIPS WITH UNDERWRITER
1. Do you have a material relationship with First Equity Corporation of
Florida, Security Capital or any other investment banking firm or underwriting
organization?
|_| Yes |_| No
If "yes", please provide a detailed description.
V. DEFINITIONS
For purposes of the foregoing questions, the following terms have the
following meanings:
AFFILIATE OF AN NASD MEMBER. The term "affiliate of an NASD member"
includes a company which controls, is controlled by or is under common control
with a member of the National Association of Securities Dealers, Inc. (the
"NASD"). A company will be presumed to control an NASD member if the company
beneficially owns 10 percent or more of the outstanding voting securities of an
NASD member which is a corporation, or beneficially owns a partnership interest
in 10 percent or more of the distributable profits or losses of an NASD member
which is a partnership. An NASD member will be presumed to control a company if
the NASD member and persons associated with the NASD member beneficially own 10
percent or more of the outstanding voting securities of the company (if it is a
corporation), or beneficially own a partnership interest in 10 percent or more
of the distributable profits or losses of the company (if it is a partnership).
A company will be presumed to be under common control with an NASD member if (i)
the same natural person or company controls both the NASD member and the company
by beneficially owning 10 percent or more of the outstanding voting securities
of the NASD member (if it is a corporation) or a partnership interest in 10
percent or more of the distributable profits or losses of the NASD member (if it
is a partnership) AND 10 percent or more of the outstanding voting securities of
the company (if it is a corporation) or a partnership interest in 10 percent or
more of the distributable profits or losses of the company (if it is a
partnership) or (ii) a person having the power to direct or cause the direction
of the management or policies of the NASD member also has the power to direct or
cause the direction of the management or policies of the company.
BENEFICIAL OWNERSHIP. The terms "beneficial ownership" and "
beneficially owns" shall mean the right to the economic benefits of a security.
COMPANY. The term "company" includes a corporation, partnership,
association, joint stock company, trust, fund, or any organized group of
persons, whether incorporated or not, or any receiver, trustee in bankruptcy or
similar official or any liquidating agent for any of the foregoing, in its
capacity as such.
CONTROL. The term "control" (including the terms " controlling,"
"controlled by" and "under common control with") includes the possession, direct
or indirect, of the power, either individually or with others, to direct or
cause the direction of the management and policies of a person or entity,
whether through the ownership of voting securities, by contract, or otherwise.
GROUP. The term "group" includes a partnership, syndicate or other
group, whether formally organized or not, which has as a purpose the acquiring,
holding or disposing of securities of the Company.
IMMEDIATE FAMILY MEMBER. An "immediate family member" includes mother,
father, sister, brother, cousin, niece, nephew, spouse, father-in-law,
mother-in-law, brother-in-law, sister-in-law, son, daughter, son-in-law or
daughter-in-law or any other person who is supported, directly or indirectly, to
a material extent by an employee of, or person associated with, an NASD member.
10
NASD MEMBER OR MEMBER OF THE NASD. The terms "NASD member" and "member
of the NASD" means any broker or dealer or any individual, partnership,
corporation or other legal entity admitted to membership in the NASD under the
provisions of Article I of the By-Laws of the NASD.
PERSON ASSOCIATED WITH A MEMBER OF THE NASD. The term " person
associated with a member" of the NASD shall be deemed to include every sole
proprietor, partner (general or limited), shareholder, officer, director or
branch manager of any member or any natural person occupying a similar status or
performing similar functions, or any natural person engaged in the investment
banking or securities business who is directly OR INDIRECTLY controlling or
controlled by such member, whether or not such person is registered by exempt
from registration with the NASD pursuant to its By-Laws.
UNDERWRITER OR RELATED PERSON. The term "underwriter or related person"
shall be deemed to include, with respect to a public offering, underwriters,
underwriters' counsel, financial consultants and advisors, finders, members of
the selling or distribution group, any NASD member participating in the public
offering and any and all other persons associated with or related to any of the
aforementioned persons.
11
IN WITNESS WHEREOF, the Purchaser has executed this day Subscription
Agreement this______ day of ___ _____________of 1998.
_______________________ x ____________ = ____________________
(Units being purchased) (Unit Price) (Subscription Price)
If the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS,
as TENANTS IN COMMON, or as COMMUNITY PROPERTY:
___________________________________ _________________________________________
Print Name Print Name
___________________________________ _________________________________________
Social Security Number Social Security Number
___________________________________ _________________________________________
Signature of Purchaser Signature of Purchaser
___________________________________ _________________________________________
Address Address
If the Purchaser is a PARTNERSHIP, CORPORATION, or TRUST:
___________________________________ _________________________________________
Name of Partnership, Federal Taxpayer
Corporation or Trust Identification Number
By:________________________________ _________________________________________
Name Title
___________________________________ _________________________________________
Address
___________________________________ _________________________________________
Date State of Organization
SUBSCRIPTION ACCEPTED AND AGREED
this ____ day of ___________ 199__.
GALACTICOMM TECHNOLOGIES, INC.
By: _______________________________
____________________ , its ________
12
