EXHIBIT 4.2
FORM OF SUBSCRIPTION AGREEMENT
AZEL 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.$0.001 (the "Shares"), of Azel Enterprises, Inc., a Nevada
corporation (the "Company"), which the Company is offering to sell, at
U.S.$_______ 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
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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.$_____ per share for a
total
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consideration of U.S.$_______. 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
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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
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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
v. [ ] ________ (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
vi. [ ] ________ (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.
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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,
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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.
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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.
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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:
B. Purchase Price (the number filled in A. multiplied by U.S.$___): U.S. $
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FOR INDIVIDUAL SUBSCRIBER(S)
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Signature Name(s) Typed or Printed
-------------------------------- --------------------------------
Social Security No/Government ID Resident Address
-------------------------- --------------------------------
Mailing Address, if different City, State and Zip Code
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Mailing Address, if different Country
FOR ENTITY SUBSCRIBER
--------------------------- -----------------------------
Signature Of Capacity Signature of Capacity
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Name(s) Typed or Printed Name(s) Typed or Printed
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Tax Identification No Social Security No.
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Address City, State and Zip Code
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Mailing Address, if different City, State and Zip Code
ACCEPTED AS OF THIS ___________DAY OF _______________, _____:
AZEL ENTERPRISES, INC., a Nevada corporation
By: ______________________________ Its: PRESIDENT
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