EXHIBIT 10.65
STOCK SUBSCRIPTION AGREEMENT
May 29, 1998
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
c/o Galacticomm Technologies, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Mr. ▇▇▇▇▇ ▇▇▇▇, the CEO of Galacticomm Technologies, Inc. (the
"Company"), and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the President of the Company, hereby offer
solely to "accredited investors" (as defined in paragraph 3(k) hereof) up to
400,000 shares of the Company's common stock (the "Common Stock") owned by them
at a purchase price of $0.75 per share (the "Offering"). At the completion of
this Offering, ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ (the "Offerors") will loan (the "Loan")
the total proceeds of the Offering to the Company. The Company will primarily
use such proceeds to pay accrued accounting, legal and printing fees associated
with its initial public offering and, to a lesser extent, for working capital.
As consideration for the Loan, the Company will issue each of the
Offerors a promissory note accruing interest at the annual interest rate of 7%
(the "Promissory Note"), with principal and interest due and payable upon the
earlier to occur of: (a) September 30, 1999, or (b) twelve (12) months from the
completion of the Company's Initial Public Offering. The form of the Promissory
Note is attached hereto as Exhibit "A."
1. SUBSCRIPTION. The Purchaser ("Purchaser"), intending to be legally
bound, hereby irrevocably agrees to purchase from the Offerors the number of
shares (the "Shares") of Common Stock set forth on the signature page hereof, at
a purchase price of $0.75 per Share, in accordance with and subject to the terms
and conditions described in this Stock Subscription Agreement. The Offering
terminates on May 28, 1998, unless extended for an additional ten (10) days by
the Offerors.
2. PAYMENT. The Purchaser encloses herewith a check payable to or wire
transfer payment to ▇▇▇▇▇, Mandler, Croland, Bronstein, Garbett, Stiphany &
▇▇▇▇▇▇▇▇, P.A., as Escrow Agent for the Company ("Escrow Agent"), in the full
amount of the purchase price of the Shares being subscribed for. Wire
instructions for the Escrow Agent are: ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telephone: (▇▇▇) ▇▇▇-▇▇▇▇, facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇. ▇▇▇▇▇, Mandler, Croland, Bronstein, Garbett, Stiphany &
▇▇▇▇▇▇▇▇, P.A. Trust Account, Trust Account No. ▇▇▇▇▇▇▇▇▇▇, ABA No. ▇▇▇▇▇▇▇▇▇.
Such funds will be held for Purchaser's benefit by the Escrow Agent, and will be
returned promptly with no interest thereon if this Stock Subscription Agreement
is not accepted by the Company, or the Offering is terminated.
3. REPRESENTATIONS BY THE PURCHASER. The Purchaser hereby acknowledges,
represents, warrants and agrees as follows:
(a) The Common Stock is not registered under the Securities
Act of 1933 (the "Securities Act") or any state securities laws. The Purchaser
understands that the Offering is intended to be exempt from federal and state
registration by virtue of exemptions from registration available under the
Securities Act, including Section 4(1) thereof, based, in part, upon the
representations, warranties and agreements contained in this Stock Subscription
Agreement;
(b) Neither the Securities and Exchange Commission (the
"Commission") nor any state securities commission has approved the Shares or
passed upon or endorsed the merits of the Offering;
(c) The Purchaser has had a reasonable opportunity to ask
questions of and receive answers from the Offerors, or persons acting on behalf
of the Company, concerning the Offering and the Company, and all such questions
have been answered to the full satisfaction of the Purchaser;
(d) In evaluating the suitability of an investment in the
Shares, the Purchaser has not relied upon any representation or other
information (oral or written) other than as stated in the Company's prospectus
dated January 22, 1998, the Company's unaudited financial statements for the 12
month period ended December 31, 1997, the Company's unaudited financial
statements for the 3 months period ended March 31, 1998 and the letter of intent
for the Company's initial public offering, all of which are attached hereto as
Exhibit "B," and any other written information authorized by the Offerors to be
disclosed to the Purchaser;
(e) The Purchaser is unaware of, and in no way relying on, any
form of general solicitation or general advertising in connection with the
Offering;
(f) 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 Stock Subscription Agreement or the transactions contemplated
hereby;
(g) 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 Shares and to make an
informed investment decision with respect thereto;
(h) The Purchaser is not relying on the Offerors or the
Company respecting the tax and other economic considerations of an investment in
the Shares and the Purchaser has relied on the advice of, or has consulted with,
only his or her own advisors;
(i) The Purchaser is acquiring the Shares solely for his or
her own account for investment and not with a view to resale, assignment or
distribution to others;
(j) The Purchaser has adequate means of providing for the
Purchaser's current needs and foreseeable personal contingencies and has no need
for the Purchaser's investment in the Shares to be liquid;
(k) The Purchaser is an "accredited investor" as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act by satisfying
any one or more of the following criteria:
(i) The Purchaser is 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);
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(ii) The Purchaser is 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 Shares be in excess of
$1,000,000;
(iii) 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;"
(iv) The Purchaser is a private business development
company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
(v) 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;
(vi) 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;
(vii) The Purchaser is a director or executive officer of
the Company; or
(viii) 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.
(l) 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 Stock 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 Shares; (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 Shares, such entity is duly organized validly
existing and in good standing under the laws do the jurisdiction of its
organization, the consummation of the transactions contemplated hereby is
authorized by, and will not result in a violation of any applicable law or its
charter or other organizational documents, such entity has full power and
authority to execute and deliver this Stock Subscription Agreement and all other
related agreements or certificates and to carry out the provisions hereof and
thereof and to purchase and
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hold the Shares, the execution and delivery of this Stock Subscription Agreement
has been fully authorized by all necessary action, this Stock 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
Stock Subscription Agreement in a representative or fiduciary capacity,
represents that it has full power and authority to execute and deliver this
Stock Subscription Agreement in such capacity and on behalf of the subscribing
individual, ▇▇▇▇, partnership, trust, estate, corporation, or other entity for
whom the Purchaser is executing this Stock Subscription Agreement, and such
individual, ▇▇▇▇, partnership, trust, estate, corporation, or other entity has
full right and power to perform pursuant to this Stock Subscription Agreement
and make an investment in the Company, and that this Stock Subscription
Agreement constitutes a legal, valid and binding obligation of such entity. The
execution and delivery of this Stock 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;
(m) The Purchaser has had the opportunity to obtain any
additional reasonably available information necessary to verify the accuracy of
the information contained in Exhibit "B" attached hereto and all reasonably
available documents received or reviewed in connection with the Offering and has
had the opportunity to meet with the Offerors or 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 the Purchaser's full satisfaction;
(n) The information contained herein is complete and accurate
and may be relied upon by the Company and the Offerors in determining the
availability of an exemption from registration under federal and state
securities laws in connection with the Offering;
(o) The Purchaser has significant prior investment experience,
including investment in non-listed and non-registered securities. The Purchaser
is knowledgeable about investment consideration 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 Shares will not cause such commitment to become
excessive. The investment is a suitable one for the Purchaser;
(p) The Purchaser is satisfied that it has received
information with respect to all matters which it considers material to the
Purchaser's decision to make this investment;
(q) The Purchaser acknowledges that the Offerors shall, in
their sole discretion, have the right to accept or reject Purchaser's
subscription, in whole or in part, for any reason or for no reason. If
Purchaser's subscription is accepted by the Offerors, Purchaser shall, and
Purchaser hereby elects to, execute any and all further documents necessary, in
the opinion of the Company, to complete the Purchaser's subscription and become
a shareholder of the Company.
(r) NOTICES TO PURCHASERS
THE SHARES 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 SHARES 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
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OR THE ACCURACY OR ADEQUACY OF THE OFFERING DOCUMENTS. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
THE SHARES 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
PURCHASER WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE
BY THE PURCHASER TO THE ESCROW AGENT, OR WITHIN THREE (3) DAYS AFTER THE
AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO THE PURCHASER, WHICHEVER
OCCURS LATER.
4. REPRESENTATIONS BY THE OFFERORS. Each of the Offerors,
jointly and severally, acknowledges, represents, warrants and agrees as follows:
(a) ORGANIZATION AND GOOD STANDING. The Company and its
sole subsidiary, Galacticomm, Inc., are Florida corporations duly organized,
validly existing and in good standing under the laws of the State of Florida,
with full power and authority, corporate and other, to own or lease and operate
their respective properties and to conduct their business. The Company and its
subsidiary are duly qualified to do business as foreign corporations and are in
good standing in all jurisdictions where such qualification is necessary and
where failure to so qualify could have a material adverse effect on the
financial condition, results of operations, business or properties of the
Company or its subsidiary.
(b) CORPORATE AUTHORIZATION. Each of the Offerors have full
power and authority, to execute, deliver and perform this Agreement and will
cause the Company to have full power and authority to execute, deliver and
perform the Registration Rights Agreement in the form attached hereto as Exhibit
"C," and to consummate the transactions contemplated hereby and thereby. This
Agreement has been, and the Registration Rights Agreement will be, duly executed
and delivered by the Offerors and the Company, respectively, and constitute, or
will constitute, as applicable, valid and binding obligations of the Offerors
and the Company, respectively. This Agreement is enforceable against the
Offerors and the Registration Rights Agreement is enforceable against the
Company in accordance with their respective terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, or other
similar laws or arrangements affecting creditors' rights generally and the
discretion of courts in granting equitable remedies and except that
enforceability of the indemnification provisions set forth herein may be limited
by federal or state securities laws or public policy underlying such laws. The
execution, delivery and performance of this Agreement by each of the Offerors
and the execution, delivery and performance of the Registration Rights Agreement
by the Company, the consummation by the Offerors and the Company of transactions
herein and therein contemplated and the compliance by the Offerors and the
Company with the terms of this Agreement and the Registration Rights Agreement,
respectively, have been or will be duly authorized by all necessary corporate
action and do not and will not, with or without the giving of notice or the
lapse of time, or both: (i) result in any violation of the Articles of
Incorporation or Bylaws of the Company; (ii) result in a material breach of or
conflict with any of the terms of provisions of , or constitute a default under,
or result in the modification or termination of, or result in the creation or
imposition of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the company pursuant to any indenture, mortgage, note,
contract, commitment or other agreement or instrument to which the Company or
its subsidiary, Galacticomm, Inc., is a party or by which the Company or such
subsidiary or any of their respective properties or assets are or may be bound
or affected; (iii) violate in any material respect any existing applicable law,
rule or regulation, or any judgment, order or decree of any governmental agency
or court, domestic or foreign, having jurisdiction over the Offerors, the
Company or Galacticomm, Inc., or any of their respective properties or business;
or (iv) have any effect or any permit, certification, registration, approval,
consent, license or franchise necessary for the Company or Galacticomm, Inc. to
own or lease
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and operate their respective properties and to conduct their
business or the ability of the Company or Galacticomm, Inc. to make use thereof.
(c) CONSENTS. No authorization, approval, consent,
order, registration, license or permit of any court or governmental agency or
body, other than under the Securities Act, the rules and regulations of the
Commission promulgated pursuant thereto, and the rules and regulations of the
state securities laws of the states in which offers or sales will be made, is
required for the valid authorization, issuance, sale and delivery of the Common
Stock in accordance herewith or the consummation by the Offerors or the Company
of the transactions contemplated by this Agreement or the Registration Rights
Agreement.
(d) COMPLIANCE WITH DOCUMENTS AND LAWS. Neither the
Company nor Galacticomm, Inc. is in violation of its respective Articles of
Incorporation or Bylaws, or other governing documents, or in material default in
the due performance of any material lease or other material contract, indenture,
mortgage, deed of trust, note, loan, or other material agreement or instrument
to which the Company or Galacticomm, Inc., as applicable, is a party or by which
it, or any of its properties or businesses is subject or any applicable material
license, franchise, certificate, permit, authorization, statute, rule or
regulation of or from any public, regulatory, or governmental agency or
authority having jurisdiction over the Company or Galacticomm, Inc. or any of
their respective properties or assets, or any approval, consent, order, judgment
or decree, except such as could not reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), earnings, business,
assets and results of operations of the Company.
(e) FINANCIAL STATEMENTS. Prior to the date hereof,
the Purchaser has been provided with the unaudited financial statements of the
Company for the twelve (12) month period ended December 31, 1997 and the
unaudited financial statements for the three (3) month period ended March 31,
1998 (the "Financial Statements"). The Financial Statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis, fairly represent the Company's financial condition and
results of its operations at and for the period specified therein and give a
true and accurate view of the affairs of the Company during such periods. The
Financial Statements are included as part of Exhibit "B."
(f) LEGAL PROCEEDINGS. There are no claims or
proceedings against the Company or Galacticomm, Inc. pending or, to the
knowledge of the Offerors, threatened in which, if adversely determined could
reasonably be expected to have a material adverse effect upon the business,
operations, assets or liabilities, results of operations or the financial
condition of the Company or Galacticomm, Inc.. The Company has recently settled
the litigation with DataSafe Publications, Inc. ("DataSafe"), which is described
on page 33 of the Company's prospectus dated January 22, 1998. 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 IPO 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.
(g) OFFERORS SHARES IN THE COMPANY. Until the
completion of a Qualifying IPO (as defined in Paragraph 5(a) herein), the
Offerors shall not privately sell or grant any warrants or options in their
shares of Common Stock without first obtaining approval of such sale by a
majority of the disinterested members of the Company's Board of Directors and
the holders of a majority of the Shares purchased in this Offering.
5. VOTING RIGHTS. The Offerors will cause the Company to grant
the following voting rights to the Purchasers of the Shares offered hereby:
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(a) the right to nominate and have elected two (2)
persons to serve on the Board of Directors of the Company (the "Board") out of a
total of not more than nine (9) directors until an IPO totalling at least
$6,000,000 in gross proceeds (a "Qualifying IPO") is completed. After such a
Qualifying IPO is completed, the right to nominate two (2) persons will be
reduced to one (1) person for a period of two (2) years, after which time this
right shall terminate altogether.
(b) the right to approve or disapprove any proposed
amendments to the Company's Articles of Incorporation or Bylaws until a
Qualifying IPO is completed, at which time such right shall terminate.
(c) the right to approve the following major
transactions until the earlier to occur of the completion of a Qualifying IPO or
December 31, 1998:
(i) issuance on any preferred stock; and
(ii) any financing transaction in excess of
$100,000 which involves a change in the control of the Company.
6. CO-SALE RIGHTS.
(a) OBLIGATIONS OF THE COMPANY. The Offerors agree to
cause the Company not to issue or transfer on its records any common stock,
preferred stock, or other securities convertible into common stock or preferred
stock, held by the Offerors to any person, corporation, partnership or other
entity unless the Company has verified that the Offerors have complied with
their obligations under this Agreement.
(b) TAG-ALONG RIGHTS OF PURCHASER. With respect to
any proposed transfer of shares of Common Stock by the Offerors to a third party
(the "Third Party"), which transfer would result in a change of control of the
Company, the Offerors shall not effect such a transfer without first offering
the Purchaser the right to sell its shares of Common Stock, pro rata with the
Offerors, to the Third Party, at the same price per share and upon the same
terms and conditions of the proposed transfer by the Offerors. The Purchaser
shall have five (5) business days after receiving written notice of such
transaction to advise the Offerors in writing of the Purchaser's desire to
participate in such transaction. However, the Purchaser shall not be able to
exercise its rights under this paragraph with regard to any of its shares of
Common Stock if such shares are not registered with the Commission and the
Purchaser previously failed to exercise its right to register such shares in a
Piggyback Registration (as such term is defined in the Registration Rights
Agreement).
7. ANTI-DILUTION PROTECTION. If the Company issues or sells,
at any time, any shares ("Dilution Shares") of its equity securities for
consideration per share (the "Issue Price") which is less than $0.75 per share
(a "Dilutive Issuance"), other than by reason of the exercise of rights to
acquire such securities existing as of the date of this Agreement or employee
stock options pursuant to a plan approved by the Board and the shareholders of
the Company, the Offerors shall cause the Company to agree to promptly issue to
the Purchaser, without the payment of any additional consideration by the
Purchaser, the aggregate number of shares of Common Stock calculated by:
(a) multiplying (A) the "Weighted Average Price"
(defined as the aggregate Issue Price of all Dilution Shares issued in all prior
Dilutive Issuances divided by the aggregate number of Dilution Shares issued in
such Dilutive Issuances), by (B) the lesser of (x) the aggregate number of
Dilution Shares issued in such Dilutive Issuances and (y) the number of Shares
issued to the Purchaser on the date of this Agreement (the "Current Number");
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(b) adding to the resulting product, the product of
(A) $0.75 (the "Per Share Purchase Price") multiplied by (B) either (x) if the
number of Dilution Shares issued in such Dilutive Issuances is less than the
Current Number, the excess of the Current Number over the number of Dilution
Shares; or (y) if the number of Dilution Shares is equal to, or greater than,
the Current Number, zero (0);
(c) dividing the resulting sum by the Current Number;
(d) dividing the purchase price of the Shares by the
quotient resulting from the division referred to in (c); and
(e) subtracting the Current Number from the resulting
quotient.
7. INDEMNIFICATION. The Purchaser agrees to indemnify and hold
harmless the Offerors, the Company, its officers, directors, employees, agents,
control persons and 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 Stock Subscription Agreement.
8. LOCK-UP AGREEMENT FOR PUBLIC OFFERING. In the event that
the Company undertakes a public offering of its securities, the Purchaser agrees
to fully cooperate with the Company and the underwriters of such offering and to
execute all documents and agreements that may be requested by either the Company
or the underwriters, including, without limitation, an agreement not to sell,
transfer, pledge or otherwise dispose of the Shares beneficially owned by the
Purchaser for a period of twelve (12) months after the effective date of such
public offering, or such longer period of time as required by the National
Association of Securities Dealers, Inc., The Nasdaq Stock Market, Inc. or other
regulatory authority and to thereafter sell such Shares through one of the
underwriters.
9. 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 that this Stock
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 or her heirs, executors,
administrators, successors, legal representatives, and permitted assigns.
10. MODIFICATION. This Stock 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.
11. 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 Offerors, 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 a party hereto shall
have furnished in writing in accordance with the provisions of this paragraph).
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.
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12. ASSIGNABILITY. This Stock Subscription Agreement and the
rights, interests and obligations hereunder are not transferrable or assignable
by the Purchaser and the Purchaser further agrees that the transfer or
assignment of the Shares shall be made only in accordance with all applicable
laws.
13. APPLICABLE LAWS. This Stock 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 Miami-Dade, Florida over any action or proceeding
arising out of or relating to this Stock 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 Offerors and/or the Company shall be
brought only in Florida state or United States federal courts sitting in
Miami-Dade, 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 STOCK
SUBSCRIPTION AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.
14. BLUE SKY QUALIFICATION. The right of the Purchaser to
purchase the Shares under this Stock Subscription Agreement is expressly
conditioned upon the exemption from qualification of the offer and sale of the
Shares from applicable federal and state securities laws. The Offerors and the
Company shall not be required to qualify this transaction under the securities
laws of any jurisdiction and, should qualification be necessary, the Offerors
shall be released from any and all obligations to maintain their offer, and may
rescind any sale contracted, in the jurisdiction.
15. 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.
16. CONFIDENTIALITY. The Purchaser acknowledges and agrees
that any information or data the Purchaser 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 Stock Subscription
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.
17. MISCELLANEOUS.
(a) This Stock Subscription Agreement constitutes the
entire agreement between the Purchaser and the Offerors 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 Stock Subscription 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.
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(b) The Purchaser's representations and warranties made in
this Stock Subscription Agreement shall survive the execution and delivery
hereof and of the Shares.
(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 Stock Subscription Agreement and
the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated.
(d) This Stock 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 Stock 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 Stock Subscription Agreement.
(f) Paragraph titles are for descriptive purposes only and
shall not control or alter the meaning of this Stock Subscription Agreement as
set forth in the text.
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 an
underwriter in connection with its proposed underwriting of the Company's
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?
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[ ] 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
----------------------------------------------------------------------------------------------------------------------------
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.
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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.
MATERIAL RELATIONSHIPS WITH UNDERWRITER
1. Do you have a material relationship with First Equity Corporation of
Florida, Security Capital Trading, Inc. or any other investment banking firm or
underwriting organization?
[ ] Yes [ ] No
If "yes", please provide a detailed description.
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
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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.
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.
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IN WITNESS WHEREOF, the Purchaser has executed this Stock Subscription
Agreement this _______ day of _________________ 1998.
______________________ x $0.75 = ____________________________
(Shares being purchased) (Share Price) (Aggregate 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
----------------------------------- ---------------------------------------
Date 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 _________1998.
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