EXHIBIT 4.2
FORM OF SUBSCRIPTION AGREEMENT
ZSTAR ENTERPRISES, INC.
SUBSCRIPTION AGREEMENT
THE OFFER AND SALE OF THE SHARES OF COMMON STOCK REFERRED TO IN THIS
SUBSCRIPTION AGREEMENT (THE "OFFERING") HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM
THE SECURITIES REGISTRATION AND QUALIFICATION REQUIREMENTS OF THE ACT AND SUCH
LAWS. ACCORDINGLY, THE SHARES OF COMMON STOCK MAY NOT BE TRANSFERRED OR RESOLD
WITHOUT REGISTRATION AND QUALIFICATION UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION
UNDER THE ACT AND SUCH LAWS IS THEN AVAILABLE. THE SHARES OF COMMON STOCK 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 THE OFFERING OR THE
ADEQUACY OF THE INFORMATION SET FORTH IN THE OFFERING CIRCULAR DATED __________
WHICH RELATES TO THIS OFFERING.
I. SUBSCRIPTION.
A. THE SECURITIES. This Subscription Agreement relates to shares of the
Common Stock, par value U.S.$0.001 (the "Shares"), of Zstar Enterprises, Inc., a
Nevada corporation (the "Company"), which the Company is offering to sell, at
U.S.$_______ per Share, up to an aggregate maximum of _________ of such Shares
(the "Offering").
B. SUBSCRIPTION AND METHOD OF PAYMENT. The undersigned subscriber (the
"Subscriber") hereby subscribes, on the terms and conditions set forth in this
Subscription Agreement, to purchase Shares (the "Subscribed
Shares") at an aggregate purchase price (the number of Subscribed Shares times
U.S.$______) of U.S. $ (the "Purchase Price"). The Subscriber
acknowledges that by executing this Subscription Agreement he is making an
irrevocable offer to purchase the Subscribed Shares from the Company against
payment by him of the Purchase Price. This subscription may be rejected by the
Company in its sole discretion. The Subscriber hereby agrees, on the day upon
which he receives notification from the Company that this Subscription Agreement
has been unconditionally accepted by the Company, to deliver to the Company cash
or a personal or company check backed by immediately available funds in the
amount of the Purchase Price. Upon the receipt by the Company of the amount of
the Purchase Price in the specified manner, the Company shall deliver to the
Subscriber a share certificate(s) of the Company in the name of the Subscriber
evidencing the Subscribed Shares and the Subscriber's ownership thereof.
II. ACKNOWLEDGMENTS OF THE SUBSCRIBER
THE SUBSCRIBER ACKNOWLEDGES TO THE COMPANY THAT:
HE/SHE HAS RECEIVED A COPY OF THE OFFERING CIRCULAR DATED ____________
(THE "OFFERING CIRCULAR"), SETTING FORTH INFORMATION PERTINENT TO A PURCHASE OF
THE SUBSCRIBED SHARES (THE
"INVESTMENT"). THE SUBSCRIBER HAS CAREFULLY READ THE
OFFERING CIRCULAR. THE COMPANY HAS MADE AVAILABLE TO HIM AND/OR HIS ADVISORS
THE OPPORTUNITY TO OBTAIN ADDITIONAL WRITTEN INFORMATION, IF ANY, REQUESTED BY
HIM AND/OR HIS ADVISORS TO VERIFY THE ACCURACY OF THE INFORMATION CONTAINED IN
THE OFFERING CIRCULAR OR TO EVALUATE THE MERITS AND RISKS OF THE INVESTMENT. IN
REACHING THE CONCLUSION THAT HE DESIRES TO ACQUIRE THE SUBSCRIBED SHARES, THE
SUBSCRIBER HAS CAREFULLY EVALUATED HIS FINANCIAL RESOURCES AND INVESTMENT
POSITION, AS WELL AS THE RISKS ASSOCIATED WITH THE INVESTMENT, INCLUDING,
WITHOUT LIMITATION, THOSE DELINEATED IN THE RESPONSE TO QUESTION 2 OF THE
OFFERING CIRCULAR. THE SUBSCRIBER HAS NOT RELIED ON ANY ORAL REPRESENTATIONS OR
ORAL INFORMATION FURNISHED TO THE SUBSCRIBER OR HIS ADVISORS BY THE COMPANY OR
ITS OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS, AGENTS
OR REPRESENTATIVES (COLLECTIVELY, THE "COMPANY REPRESENTATIVES"), IN CONNECTION
WITH THE OFFERING. THE SUBSCRIBER HAS RELIED IN DETERMINING TO MAKE THE
INVESTMENT SOLELY ON THE INFORMATION CONTAINED IN THE OFFERING CIRCULAR AND
INFORMATION OTHERWISE PROVIDED TO THE SUBSCRIBER IN WRITING BY OFFICERS AND
DIRECTORS OF THE COMPANY. EXCEPT FOR THE INFORMATION CONTAINED IN THE OFFERING
CIRCULAR AND ANY WRITTEN INFORMATION REQUESTED BY AND FURNISHED TO THE
SUBSCRIBER OR THE SUBSCRIBER'S ADVISORS, AS DESCRIBED IN THIS SUBPARAGRAPH (A),
NEITHER THE SUBSCRIBER NOR ANY OF HIS ADVISORS HAS BEEN FURNISHED BY THE COMPANY
OR ANY COMPANY REPRESENTATIVE WITH ANY OTHER WRITTEN MATERIAL OR LITERATURE
RELATING TO THE OFFERING OR THE INVESTMENT. NEITHER THE COMPANY NOR ANY OF THE
COMPANY REPRESENTATIVES, NOR ANYONE PURPORTING TO ACT ON THEIR BEHALF, HAS MADE
ANY ORAL REPRESENTATION TO THE SUBSCRIBER WITH RESPECT TO ANY TAX, FINANCIAL OR
ECONOMIC BENEFITS TO BE DERIVED FROM THE INVESTMENT. THE SUBSCRIBER IS RELYING
SOLELY UPON THE SUBSCRIBER'S OWN KNOWLEDGE AND UPON THE ADVICE OF HIS PERSONAL
ADVISORS WITH RESPECT TO THE TAX, FINANCIAL, ECONOMIC AND OTHER PERTINENT
ASPECTS OF THE INVESTMENT.
The subscriber has carefully reviewed and analyzed the risks of, and other
pertinent considerations relating to, the Investment, based solely on the
information contained in the Offering Circular and the other written information
referenced in subparagraph (a) above.
THE COMPANY WAS INCORPORATED ON _________, AND HAS NO OPERATING HISTORY;
FOR THIS AND OTHER REASONS, THE INVESTMENT INVOLVES SIGNIFICANT FINANCIAL RISKS,
INCLUDING THE RISK OF LOSS TO THE SUBSCRIBER OF THE ENTIRE PURCHASE PRICE.
The Subscriber is aware that (i) the Company's founding shareholders
purchased ________ Shares at U.S.$0.001 per share for a total consideration of
u.s.$_____; and (ii) pursuant to an Offering Circular dated ________, the
Company sold _________ Shares at a price of U.S.$_____ per share for a total
consideration of U.S.$_______. These recent share issues have the effect of
substantially diluting the Subscriber's equity interest in the Company.
THE SUBSCRIBER IS NOT TO CONSTRUE THE PROVISION OF THE OFFERING CIRCULAR OR
THE FURNISHING OF THE OTHER WRITTEN INFORMATION REFERENCED IN SUBPARAGRAPH (a)
ABOVE TO THE SUBSCRIBER AS CONSTITUTING LEGAL, TAX OR INVESTMENT ADVICE, AND THE
SUBSCRIBER SHOULD CONSULT THE SUBSCRIBER'S OWN LEGAL COUNSEL, ACCOUNTANT AND/OR
OTHER PROFESSIONAL ADVISORS AS TO LEGAL, TAX AND RELATED MATTERS CONCERNING THE
INVESTMENT.
No assurance can be made that the Company will commence operations, or if
it does commence operations, that it will ever operate at a profit or, if it
does operate at a profit, that dividends will be declared and paid on the
Subscribed Shares.
THE SUBSCRIBER MAY NOT BE ABLE TO SELL OR DISPOSE OF THE SUBSCRIBED SHARES,
AS THERE IS NO, AND MAY NEVER BE ANY, PUBLIC MARKET FOR SUCH SECURITIES. THE
SUBSCRIBER'S COMMITMENT TO INVESTMENTS WHICH ARE NOT READILY MARKETABLE IS NOT
DISPROPORTIONATE TO THE SUBSCRIBER'S NET WORTH AND MAKING THE INVESTMENT WILL
NOT CAUSE THE SUBSCRIBER'S OVERALL COMMITMENT THERETO TO BECOME EXCESSIVE.
The Subscriber is aware that the offer and sale to him of the Subscribed
Shares have not been registered under the Securities Act of 1933, as amended
(the "act"), or registered or qualified under applicable state securities or
"Blue Sky" laws, and, therefore, the Subscribed Shares cannot be reoffered and
resold unless either the reoffer and resale thereof are subsequently registered
and qualified under the Act and said Blue Sky laws or an exemption from such
registration and qualification is available; the Company has no intention of
registering or qualifying under the Act or any such Blue Sky laws the
Subscriber's
reoffer and resale of any of the Subscribed Shares and no exemption
from registration or qualification may be available under the Act or such Blue
Sky laws to the Subscriber at the time he wishes to dispose of such Shares.
NO FEDERAL OR STATE AGENCY HAS PASSED UPON THE SUBSCRIBED SHARES, MADE ANY
FINDING OR DETERMINATION AS TO THE FAIRNESS OF THE INVESTMENT, OR PASSED ON THE
ADEQUACY OF THE INFORMATION SET FORTH IN THE OFFERING CIRCULAR.
Neither the Company nor any Company Representative offered to sell the
Subscriber any Shares by means of any form of general advertising or general
solicitation, such as media advertising or seminars.
III. CERTIFICATION OF SUBSCRIBER STATUS.
If the Subscriber is a "U.S. person", the Subscriber hereby certifies to the
Company that the Subscriber is, as reflected by checking the appropriate box (or
boxes) below and initialing in the margin directly across from such checked box
(or boxes):
i. [ ] ________ (INITIAL) a natural person whose individual net worth,
or joint net worth with that person's spouse (including the value of his or her
principal residence valued at either (A) cost, including cost of improvements,
net of current encumbrances on the property, or (B) the appraised value of the
property as determined by a written appraisal used by an institutional lender
making a loan to him or her secured by the property, including subsequent
improvements, net of current encumbrances on the property), at the time of his
or her purchase of the Subscribed Shares exceeds U.S. $1,000,000; or
ii. [ ] ________ (INITIAL) a natural person who had individual annual
income in excess of U.S. $200,000 in each of 1996 and 1997 and who reasonably
expects that his or her individual annual income will exceed U.S. $200,000 in
1998; or
iii. [ ] ________ (INITIAL) a natural person who had joint annual
income with that person's spouse in excess of $300,000 in each of 1996 and 1997
and who reasonably expects to have joint annual income in excess of U.S.
$300,000 in 1998; or
iv. [ ] ________ (INITIAL)
a. [ ] ________ (INITIAL) a bank as defined in Section 3(a)(2) of the
Act or a 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;
b. [ ] ________ (INITIAL) a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended;
c. [ ] ________ (INITIAL) an insurance company as defined in Section
2(13) of the Act;
d. [ ] _______ (INITIAL) an investment company registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act");
e. [ ] ________ (INITIAL) a business development company as defined in
Section 2(a) (48) of the Investment Company Act;
f. [ ] __________ (INITIAL) a Small Business Investment Company
licensed by the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958;
g. [ ] __________ (INITIAL) 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
the plan has total assets in excess of U.S. $5,000,000;
h. [ ] _______ (INITIAL) an employee benefit plan within the meaning
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, that is a bank, a savings and loan association, an insurance company
or a registered investment adviser, or if the employee benefit plan has
total assets in excess of U.S. $5,000,000, or, if a self-directed plan,
with investment decisions made solely by persons that meet any one or more
of the tests set forth in Section III. (i) through (v) hereof;
i. [ ] ________ (INITIAL) a private business development company as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as
amended;
j. [ ] ________ (INITIAL) an organization described in Section 501(c)(3)
of the Internal Revenue Code, a corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
making the Investment, with total assets in excess of U.S. $5,000,000
k. [ ] ________ (INITIAL) a trust, with total assets in excess of U.S.
$5,000,000, not formed for the specific purpose of making the Investment,
whose purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D promulgated under the Act; or
i. [ ] ________ (INITIAL) an entity in which all of the equity owners meet
any one or more of the tests set forth in Section III.(i) through (iv); or
ii. [ ] ________ (INITIAL) none of the above.
IV. REPRESENTATIONS AND WARRANTIES OF NATURAL PERSON SUBSCRIBER.
The Subscriber, if a natural person, represents and warrants to the Company
that:
THE SUBSCRIBER IS 21 YEARS OF AGE OR OLDER, HAS ADEQUATE MEANS OF
PROVIDING FOR HIS OR HER CURRENT NEEDS AND PERSONAL CONTINGENCIES AND HAS NO
NEED FOR LIQUIDITY IN THE INVESTMENT.
The Subscriber is able to bear the economic risks attendant on the
Investment.
THE SUBSCRIBER IS A BONA FIDE RESIDENT AND DOMICILIARY (NOT A TEMPORARY OR
TRANSIENT RESIDENT) OF THE STATE OR COUNTRY SET FORTH BELOW HIS SIGNATURE ON THE
SIGNATURE PAGE HEREOF.
The Subscriber understands, or has relied upon the advice of his or her own
personal tax and legal counsel, accountants, and/or other professional advisors
with regard to, the financial, tax and other pertinent considerations in making
the Investment.
THE SUBSCRIBER IS ACQUIRING THE SUBSCRIBED SHARES FOR THE SUBSCRIBER'S OWN
ACCOUNT, AS PRINCIPAL, FOR INVESTMENT AND NOT WITH A VIEW TO THE RESALE OR
DISTRIBUTION OF ANY INTEREST THEREIN.
[ ] ________ (INITIAL) the total purchase price of securities at time of
sale of the securities will not exceed 10% of subscriber's net worth
(Individuals: either independently or jointly with your spouse).
V. REPRESENTATIONS AND WARRANTIES OF ENTITY SUBSCRIBER.
The Subscriber, if a corporation, partnership or other entity, represents and
warrants to the Company that:
IT IS DULY FORMED AND IS VALIDLY EXISTING IN GOOD STANDING UNDER THE
LAWS OF THE JURISDICTION OF ITS FORMATION, WITH FULL POWER AND AUTHORITY TO
ENTER INTO THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT.
It has not been formed for the purpose of making the Investment.
ITS REPRESENTATIVE WHO, ON ITS BEHALF, HAS CONSIDERED THE MAKING OF THE
INVESTMENT (THE "AUTHORIZED REPRESENTATIVE"), IS THE PERSON WHO EXECUTED THIS
SUBSCRIPTION AGREEMENT ON ITS BEHALF, AND THE AUTHORIZED REPRESENTATIVE WAS
DULY AUTHORIZED TO ACT FOR IT IN REVIEWING THE INVESTMENT.
This Subscription Agreement has been duly and validly authorized,
executed and delivered by the Subscriber, and when executed and delivered by
the other parties hereto, will constitute the valid, binding and enforceable
obligation of the Subscriber.
THE SUBSCRIBER IS ACQUIRING THE SUBSCRIBED SHARES FOR ITS OWN ACCOUNT, AS
PRINCIPAL, FOR INVESTMENT AND NOT WITH A VIEW TO THE RESALE OR DISTRIBUTION OF
ANY INTEREST THEREIN.
VI. CORRECTNESS AND COMPLETENESS OF INFORMATION RELATING TO SUBSCRIBER;
ACKNOWLEDGMENT RE SECURITIES LAW MATTERS.
All the information which the Subscriber has heretofore furnished to the
Company, or which is set forth herein or in any document delivered by the
Subscriber pursuant hereto or in connection herewith, with respect to the
Subscriber's status, financial condition and knowledge and experience is
correct and complete as of the date hereof, and if there should be any
material change in such information prior to the sale of the Subscribed
Shares to the Subscriber, the Subscriber will immediately furnish such
revised or corrected information to the Company. In furnishing the
information, representations and warranties set forth herein, the Subscriber
acknowledges that the Company will be relying thereon in determining, INTER
ALIA, whether the offer and sale of the Subscribed Shares to the Subscriber
is exempt from the requirement to register or qualify said offer and sale
under applicable state securities or "Blue Sky" laws.
VII. COVENANT OF SUBSCRIBER TO COMPLY WITH BLUE SKY LAWS.
The Subscriber agrees that if the Subscriber is a resident of any state whose
"Blue Sky" laws or other local securities laws require a restriction on
transferability of any of the securities referred to in this Subscription
Agreement, the Subscriber will specifically and fully comply with such
restrictions.
VIII. INDEMNIFICATION.
The Subscriber hereby agrees to indemnify, defend and hold harmless the
Company and its subsidiaries, and any and all of the employees, directors,
officers, attorneys, accountants, agents, affiliates or control persons of
any such entity, who were or are a party or are threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, from and against any and
all damage, loss, cost, expense (including judgments, fines and amounts paid
in settlement), obligation, claim, cause of action or liability (including
attorneys' fees, expert witness fees, investigative fees, accountants' fees,
and the costs incurred by such individuals, concerns or entities) any of them
may incur by reason of any breach by the Subscriber of the representations,
warranties, covenants and agreements made by the Subscriber in this
Subscription Agreement or any false statement contained in any document
delivered by the Subscriber pursuant hereto or in connection herewith.
IX. OBLIGATIONS OF SUBSCRIBER.
The Subscriber hereby acknowledges and agrees that the subscription hereunder
is irrevocable, that the Subscriber is not entitled to cancel, terminate or
revoke this Subscription Agreement or any agreements of the Subscriber
hereunder and that this Subscription Agreement and such other agreements
shall survive the death or disability of the Subscriber and shall be binding
upon and inure to the benefit of the parties and their respective heirs,
executors, administrators, successors, legal representatives and permitted
assigns. If the Subscriber is more than one person, the obligations of such
persons hereunder shall be joint and several and the representations,
warranties, covenants, agreements and acknowledgments of the Subscriber
herein contained shall be deemed to be made by and be binding upon each such
person and his or her respective heirs, executors, administrators,
successors, legal representatives and permitted assigns.
X. GOVERNING LAW.
This Subscription Agreement shall be governed by and
interpreted and enforced in accordance with the internal substantive laws of
the State of Nevada without regard to choice of law or conflicts of law
principles.
XI. COUNTERPARTS.
This Subscription Agreement may be executed through the
use of separate signature pages or in any number of counterparts, and each of
such counterparts shall, for all purposes, constitute one agreement binding
on all parties, notwithstanding that all parties are not signatories to the
same physical counterpart.
XII. ENTIRE AGREEMENT.
This Subscription Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and there
are no representations, warranties, covenants or other agreements or
understandings between such parties except as stated or referred to herein.
XIII. SEVERABILITY.
Any provision of this Subscription Agreement which is invalid or unenforceable
in any jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
XIV. BACK-UP WITHHOLDING.
The Subscriber verifies under penalty of perjury that the Taxpayer
Identification Number or Social Security Number shown on the signature page of
this Subscription Agreement is true, correct and complete and that the
Subscriber is not subject to backup withholding either (a) because the
Subscriber has not been notified that it is subject to backup withholding as a
result of a failure to report all interest or dividends or (b) because the U.S.
Internal Revenue Service has notified the Subscriber that the Subscriber is no
longer subject to backup withholding.
XV. ASSIGNABILITY.
This Subscription Agreement shall not be assignable by the Subscriber without
the prior written consent of the Company.
XVI. GENDER, NUMBER AND HEADINGS.
As used in this Subscription Agreement, the masculine gender will include the
feminine and neuter, and vice versa, as the context so requires; and the
singular number will include the plural, and vice versa, as the context so
requires. As used in this Subscription Agreement, section and subsection
headings are for convenience of reference only and shall not be used to modify,
interpret, limit, expand or construe the terms of this Subscription Agreement.
THERE IS NO ESTABLISHED MARKET FOR THESE SECURITIES AND THERE MAY NOT BE ANY
MARKET FOR THESE SECURITIES IN THE FUTURE. THE SUBSCRIPTION PRICE OF THESE
SECURITIES HAS BEEN ARBITRARILY DETERMINED BY THE COMPANY AND IS NOT AN
INDICATION OF THE ACTUAL VALUE OF THESE SECURITIES.
IN WITNESS WHEREOF, the parties have executed this Subscription Agreement this
____ day of _________________, _____.
INDIVIDUAL SUBSCRIBER(S)
_____ Individual Ownership
_____ Joint Tenants with Right of survivorship (both Tenants must sign)
_____ Husband and Wife as Community Property (both Spouses must sign)
_____ Tenants-in-Common (all Tenants must sign)
_____ A Married (Man) (Woman) as (His) (Her) Separate Property
ENTITY SUBSCRIBER
_____ Corporation (Please affix corporate seal on signature page)
_____ Partnership
_____ Trust: Name of Trustee: ____________________________________
Name of Trust: ____________________________________
Date of Trust Instrument: ____________________________
_______ Other (Explain):________________________________
State of Formation of Entity: _____________________________
A. Number of Subscribed Shares for which Subscriber is subscribing:
A. Purchase Price (the number filled in A.
multiplied by U.S.$___): U.S. $
FOR INDIVIDUAL SUBSCRIBER(S)
___________________________ ___________________________
Signature Name(s) Typed or Printed
___________________________ ___________________________
Social Security No/Government ID Resident Address
___________________________ ___________________________
Mailing Address, if different City, State and Zip Code
___________________________ ___________________________
Mailing Address, if different Country
FOR ENTITY SUBSCRIBER
___________________________ ___________________________
Signature Of Capacity Signature of Capacity
___________________________ ____________________________
Name(s) Typed or Printed Name(s) Typed or Printed
__________________________ ____________________________
Tax Identification No Social Security No.
__________________________ ____________________________
Address City, State and Zip Code
__________________________ ___________________________
Mailing Address, if different City, State and Zip Code
ACCEPTED AS OF THIS ___________DAY OF _______________, _____:
ZSTAR ENTERPRISES, INC., a Nevada corporation
By: ______________________ Its: PRESIDENT
____________________