EXHIBIT 10(lx)
U.S. SUBSCRIPTION AGREEMENT
THIS U.S. SUBSCRIPTION AGREEMENT IS EXECUTED IN RELIANCE UPON THE
EXEMPTION PROVIDED BY SECTION 4(2) ("SECTION 4(2)") FOR TRANSACTIONS NOT
INVOLVING ANY PUBLIC OFFERING UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(the "SECURITIES ACT").
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THIS U.S. SUBSCRIPTION AGREEMENT (this "Agreement") has been executed
by the undersigned in connection with the private placement of up to a maximum
of 500 shares of Series G Convertible Preferred Stock, par value $.01
(hereinafter referred to as the "Preferred Stock"), of Xxxxxxxxx Brewing Co., a
corporation organized under the laws of the State of Maryland, Nasdaq SmallCap
Market symbol "BLUE") (hereinafter referred to as the "Company"). The Preferred
Stock being sold pursuant to this Agreement has not been registered under the
Securities Act. In addition to such other terms as are set forth in this
Agreement, the terms on which the Preferred Stock may be converted into shares
of Common Stock, $.00004 par value, of the Company (the "Common Stock") and the
other terms of the Preferred Stock are set forth in the Articles Supplementary
of the Preferred Stock attached hereto as Annex I (the "Articles
Supplementary"). The offer of the Preferred Stock and, if this Subscription
Agreement is accepted by the Company, the sale of Preferred Stock is being made
in reliance upon Section 4(2). (All dollar amounts in this Agreement are
expressed in U.S. Dollars.)
The undersigned Purchaser
NAME:________________________________________________________________
ADDRESS______________________________________________________________
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if applicable, a [Corporate] [Partnership] [Trusts] organized under the laws of
______________, a non USA Jurisdiction] hereinafter referred to as "Purchaser")
hereby represents and warrants to, and agrees with the Company as follows:
1. Agreement to Subscribe
a. Subscription. The undersigned Purchaser hereby
subscribes to purchase_____________ shares of
Preferred Stock, having a purchase price of $1,000
per share of Preferred Stock, at an aggregate
purchase price of $_____________.
b. Form of Payment. Purchaser shall pay the purchase
price for the Preferred Stock by delivering good
funds in United States Dollars in accordance with
Paragraph 1(c) below, to the Company.
c. Method of Payment. Payment of the purchase price for
the Preferred Stock shall be made by wire transfer of
funds directly to the Company, upon which the Company
shall deliver the certificates for the shares of
Preferred Stock to the Purchaser (the "Closing
Date"). Such delivery to the Purchaser shall be by
hand delivery or by overnight courier to such address
as the Purchaser may direct.
2. Purchaser Representations: Access to Information; Independent
Investigation
a. Purchaser Representations and Warranties. Purchaser
represents and warrants to the Company as follows:
(i) Purchaser is either an "accredited
investor" or a "sophisticated
purchaser" as such terms are defined
in Rule 501 promulgated under the
Securities Act.
(ii) Purchaser is sufficiently
experienced in financial and
business matters to be capable of
evaluating the merits and risks of
its investments, and to make an
informed decision relating thereto,
and to protect its own interests in
connection with the transaction.
(iii) Purchaser is purchasing the
Preferred Stock for its own account
or for the account of beneficiaries
for whom the Purchaser has full
investment discretion, each of which
beneficiaries is bound to all of the
terms and provisions hereof
including all representations and
warranties herein. Purchaser is
purchasing the Preferred Stock for
investment purposes only and not
with an intent towards further sale
or distribution thereof, and has not
pre-arranged any sale with any other
purchaser.
(iv) The Preferred Stock has not been
registered under the Securities Act
and may not be transferred, sold,
assigned, hypothecated or otherwise
disposed of, unless such transaction
is the subject of a registration
statement filed with and declared
effective by the Securities and
Exchange Commission (the "SEC") or
unless an exemption from the
registration requirements under the
Securities Act such as Rule 144 is
available. Purchaser represents and
warrants and hereby agrees that all
offers and sales of the Preferred
Stock and the Common Stock issuable
upon conversation thereof
(collectively, the "Securities")
shall be made only pursuant to such
registration or to such exemption
from registration.
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No later than 60 days after the
Closing Date, the Company shall file
a registration statement on Form S-3
under the Securities Act and under
all applicable Blue Sky laws
covering the Common Stock and to
cause such registration statement to
be declared effective, by
acceleration, within 120 days
thereafter, by the SEC, all at the
Company's sole cost and expense.
Such best efforts shall include
promptly responding to all comments
received by the staff of the SEC,
providing Purchaser or its counsel
with contemporaneous copies of all
written communications form the
staff of the SEC and promptly
preparing and filing amendments to
such registration statement which
are responsive to the comments
received from the staff of the SEC.
Such registration statement shall
name Purchaser as a selling
shareholder and shall provide for
the sale of the Common Stock by
Purchaser or in the-over-the-counter
market through or to securities
brokers or dealers that may receive
compensation in the form of
discounts, concessions, or
commissions. This obligation to
register the Common Stock is in
addition to the Company's
registration obligation described in
Section 10 hereunder. None of the
foregoing shall in any way limit
Purchaser's rights to sell the
Common Stock in reliance on an
exemption from the registration
requirements under the Securities
Act in connection with a particular
transaction.
In the event the Company either (a)
fails to file a registration
statement covering the Common Stock
issuable upon conversion of the
Preferred Stock, within 60 days of
the first Closing Date or (b) fails
to have such registration statement
declared effective by the Securities
and Exchange Commission within 120
days of the first Closing Date, the
Conversion Price shall be increased,
in each case as liquidated damages
and not as a penalty, to give the
Holder upon conversion additional
shares of common stock equal to 5%
of the shares that would otherwise
be issuable for each violation of
the foregoing covenants.
Regardless of whether the Company
registers the resale of the Common
Stock issuable upon conversion of
the Preferred Stock, the Company
will, upon the presentation of an
opinion of the Purchaser's counsel,
allow the Purchaser to offer and
sell the shares of Common Stock in
reliance on the provisions of Rule
144, at the option of Purchaser.
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(v) Purchaser acknowledges that the
purchase of the Securities involves
a high degree of risk, is aware of
the risks and further acknowledges
that it can bear the economic risk
of the Securities, including the
total loss of its investment.
(vi) Purchaser understands that the
Securities are being offered and
sold to it reliance on an exemption
from the registration requirements
of the Securities Act, and that the
Company is relying upon the truth
and accuracy of the representations,
warranties, agreements,
acknowledgments and understandings
of Purchaser set forth herein in
order to determine the applicability
of such safe harbor and the
suitability of Purchaser to acquire
the Securities.
(vii) Purchaser is purchasing the
Securities for its own account or
for the account of beneficiaries for
whom Purchaser has full investment
discretion and not with a view to,
or for sale in connection with, any
"distribution" (as such term is used
in Section 2(11) of the Securities
Act) thereof.
(viii) In evaluating its investment,
Purchaser has consulted its own
investment and/or legal and/or tax
advisors.
(ix) Purchaser is not an underwriter or,
or dealer in, the Securities, and
Purchaser is not participation,
pursuant to a contractual agreement,
in the distribution of the
Securities.
b. Current Public Information. Purchaser
acknowledges that Purchaser has been
furnished with or has acquired copies of the
Company's most recent annual Report on the
Form 10-K or 10-KSB filed with the
Securities and Exchange Commission and the
Forms 10-Q or 10- QSB and 8-K filed
thereafter (collectively the "SEC Filings").
c. Independent Investigation; Access. Purchaser
acknowledges that Purchaser, in making the
decision to purchase the Preferred Stock
subscribed for, has relied upon independent
investigations made by it and its purchaser
representatives, if any, and Purchaser and
such representatives, if any, have prior to
any sale to it, been given access and the
opportunity to examine all material
contracts and documents relating to this
offering and an opportunity to ask questions
of, and to receive answers from, the Company
or any person acting on its behalf
concerning the terms and conditions of this
offering. Purchaser and its advisors, if
any, have been furnished with access to all
publicly available materials relating to the
business, finances and operation of the
Company and materials relating to the offer
and sale of the Securities which have been
requested. Purchaser and its advisors, if
any, have received complete and satisfactory
answers to any such inquiries.
F:\WP\XXXXXXXX\REGNOV98.WPD
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d. No Government Recommendation or Approval.
Purchaser understands that no federal or
state agency has passed on or made any
recommendation or endorsement of the
Preferred Stock.
e. Entity Purchasers. If Purchaser is a
partnership, corporation or trust, the
person executing this Agreement on its
behalf represents and warrants that:
(i) He or she has made due inquiry to
determine the truthfulness of the
representations and warranties made
pursuant to this Agreement.
(ii) He or she is duly authorized (if the
undersigned is a trust, by the trust
agreement) to make this investment
and to enter into and execute this
Agreement on behalf of such entity.
f. Non-Affiliate. Purchaser and any affiliate
of Purchaser represent, warrant and covenant
that they are not an affiliate of the
Company.
3. Issuer Representations
a. Reporting Company Status. The Company is a
"Reporting Issuer". The Company is in full
compliance, to the extent applicable, with
all reporting obligations under either
Section 12(b), 12(g), 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Company has
registered its Common Stock pursuant to
Section 12 of the Exchange Act, and the
Common Stock is listed on the Nasdaq
SmallCap Market, and the Company has
received no notice, either oral or written,
with respect to its continued eligibility
for such listing other than as disclosed to
Purchaser. The Company has taken all such
steps as may be necessary for the additional
listing of the Common Stock issuable upon
conversion of the Preferred Stock on the
Nasdaq SmallCap Market. The Company has
filed all material required to be filed by
it pursuant to all applicable reporting
obligations under Section 13(a) or 15(d) of
the Exchange Act.
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b. Terms of Preferred Stock. The Terms of the
Preferred Stock shall be as set forth in the
form of Articles Supplementary delivered to
Purchaser as Annex I.
c. Legality. The Company has the requisite
corporate power and authority to enter into
this Agreement and to issue, sell and
deliver the Securities; this Agreement and
the issuance, sale and delivery of the
Securities hereunder and the transactions
contemplated hereby have been duly and
validly authorized by all necessary
corporate action by the Company; this
Agreement and the Securities have been duly
and validly executed and delivered by and on
behalf of the Company, and are valid and
binding agreements of the Company,
enforceable in accordance with their
respective terms, except as enforceability
may be limited by general equitable
principles, bankruptcy, insolvency,
fraudulent conveyance, reorganization,
moratorium, or other laws affecting
creditors' rights generally. The Preferred
Stock and the Common Stock issuable upon
conversion of the Preferred Stock will not
subject the holders thereof to personal
liability by reason of being such holders.
d. Proper Organization. The Company is a
corporation duly organized, validly existing
and in good standing under the laws of its
jurisdiction of incorporation and is duly
qualified as a foreign corporation in all
jurisdictions where the failure to be so
qualified would have a materially adverse
effect on its business, taken as whole.
e. No Legal Proceedings. There is no action,
suit or proceeding before or by any court or
any governmental agency or body, domestic or
foreign, now pending or, to the knowledge of
the Company, threatened, against or
affecting the Company, or any of its
properties or assets, which might result in
any material adverse change in the condition
(financial or otherwise) or in the earnings,
business affairs of business prospects of
the Company, or which might materially and
adversely affect the properties or assets
thereof, except as described in the SEC
Filings.
f. Non-default. The Company, except as
described in the SEC Filings, is not in
default in the performance or observance of
any material obligation, agreement, covenant
or condition contained in any indenture,
mortgage, deed of trust or other material
instrument or agreement to which it is a
party or by which it or its property may be
bound.
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g. No Misleading Statements. None of the SEC
Filings, and as of their respective dates,
none of the Company's other filings with the
SEC, contain any untrue statement of a
material fact or omit to state any material
fact required to be stated therein or
necessary to make the statements therein, in
light of the circumstances under which they
were made, not misleading.
h. No Adverse Change. There has been no
material adverse change in the financial
condition, earnings, business affairs or
business prospects of the Company since the
date of the Company's most recent Form 10-Q
filed pursuant to the Exchange Act.
i. Absence of Non-Disclosed Facts. There is no
fact known to the Company (other than
general economic conditions known to the
public generally) that has not been
disclosed in writing to the Purchaser that:
(i) could reasonably be expected to have a
material adverse effect on the condition
(financial or otherwise) or in the earnings,
business affairs, business prospects,
properties or assets of the Company; or (ii)
could reasonably be expected to materially
and adversely affect the ability of the
Company to perform its obligations pursuant
to this Agreement and the Preferred Stock,
except as described in the SEC Filings.
j. Transfer Restrictions. The Company has
provided its Transfer Agent with irrevocable
instructions as attached hereto as Annex II
(the "Irrevocable Instructions"), to issue
one or more certificate(s) representing the
shares of Common Stock to the holders of the
Preferred Stock upon the conversion of the
Preferred Stock at any time after the
Closing Date without any restrictive legend
or stop transfer instructions and without
any further instruction or opinion from the
Company, provided that the Company is
presented with certificates representing
shares of the Preferred Stock to be
converted, together with an executed
Conversion Certificate in the form of
Exhibit A attached to the Articles
Supplementary, and provided further that the
Common Stock is being sold pursuant to the
registration statement on Form S-3 as set
forth in Paragraph 2(a) (iv) of this
Agreement. Upon compliance with the
foregoing, upon issuance, such Common Stock
shall be freely transferrable on the books
and records of the Company.
k. Non-Contravention. The execution and
delivery of this Agreement and the
consummation of the issuance of the
Securities and the transactions contemplated
by this Agreement do not and will not
conflict with or result in a breach by the
Company of any of the terms or provisions
of, or constitute a default under the
Articles of Incorporation or by-laws of the
Company, or any indenture, mortgage, deed of
trust, or other material agreement or
instrument to
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which the Company is a party or by which it
or any of its properties or assets are
bound, or any existing applicable Federal or
State law, rule, or regulation or any
applicable decrees, judgment or order of any
court, Federal or State regulatory body,
administrative agency or other domestic
governmental body having jurisdiction over
the Company or any of its properties or
assets.
l. Filings. The Company undertakes and agrees
pursuant to the sale hereunder of its
Securities hereunder to make all necessary
filings in connection with the sale of its
Securities as required by the laws and
regulations of all appropriate jurisdictions
and securities exchanges in the United
States, if any.
4. Covenants of the Company. For so long as any Preferred
Stock held by the Purchaser shall remain outstanding, the Company covenants and
agrees with the Purchaser that:
a. It will at all times fully reserve from its
authorized but unissued shares of Common
Stock such sufficient number of shares of
Common Stock to permit he conversion in full
of the outstanding Preferred Stock.
b. Upon receipt by the Company of the items set
forth in Paragraph 3(1) of this Agreement,
the Company will not issue stop transfer
instructions to its Transfer Agent with
respect to, and will not place a restrictive
legend on, the certificates representing
shares of Common Stock issued or issuable
upon conversion of the Preferred Stock.
5. Legend.
a. On or prior to the Closing Date, the Company
will prepare and issue on or more
certificates for the Preferred Stock
registered in such name or names as
specified by the Purchaser and cause the
same to be delivered to the Escrow Agent.
Such certificate(s) and the certificates
representing the Common Stock shall bear a
legend in substantially the following form:
These shares have been issued pursuant to
the Section 4(2) exemption to the
registration provisions under the Securities
Act of 1933, as amended. These shares cannot
be transferred, offered, or sold unless the
securities are registered under the
Securities Act or an exemption from the
registration requirements of the Securities
Act is available.
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The Company has provided its Transfer Agent
with the Irrevocable Instructions and
pursuant a thereto the Company shall issue
one or more certificates representing shares
of Common Stock upon the conversion of the
Preferred Stock in accordance with the
Articles Supplementary.
The Company warrants that no restriction or
instruction other than the foregoing
instructions and a corresponding "stop
transfer" restriction on the Company's stock
ledger will be imposed by the Company or
given by the Company to its Transfer Agent
with respect to the Securities, and that,
subject to the foregoing, the Preferred
Stock and the Common Stock issued and
issuable upon conversion of the Preferred
Stock shall otherwise be freely transferable
on the books and records of the Company.
Nothing in this Section shall affect in any
way the Purchaser's obligations and
agreement to comply with all applicable
securities laws upon resale of the
Securities.
b. The Purchaser acknowledges that the Company
is under no obligation to register the
Preferred Stock or the Common Stock issuable
upon the conversion thereof under the
Securities Act other than as set forth in
Section 10 or Paragraph 2(a)(iv) hereunder.
6. Exemption: Reliance on Section 4(2). Purchaser understands
that the offer and sale of the Preferred Stock is not being registered under the
Securities Act based on the exemption from registration provided by Section 4(2)
of the Securities Act. The Company is relying on such exemption.
7. Closing Date and Escrow Agent Closing shall be effected
through delivery of funds to the Company by the Escrow Agent, and delivery of
certificates evidencing the Preferred Stock to the Purchaser by the Escrow
Agent. Each of the Company and the Purchaser agrees that the Escrow Agent has no
liability as a result of any fraudulent or unlawful conduct of any other party,
and agrees to hold the Escrow Agent harmless.
8. Conditions to the Company's Obligation to Sell. Purchaser
understands that the Company's obligation to sell the Preferred Stock is
conditioned upon:
a. The receipt and acceptance by the Company of
this Agreement, as evidence by execution of
this Agreement by the President or any Vice
President or the Chief Financial Officer of
the Company;
b. Delivery to the Escrow Agent by Purchaser of
good funds as payment in full for the
purchase of the Preferred Stock; and
c. The accuracy as of the Closing Date of the
representations and warranties of the
Purchaser contained in this Agreement, and
performance by the Purchaser of all
covenants and agreements of the Purchaser
required to be performed on or before the
Closing Date.
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9. Conditions to Purchaser's Obligation to Purchase. The
Company understands that Purchaser's obligation to purchase the Preferred Stock
is conditioned upon:
a. Execution by Purchaser of this Agreement and
the receipt of the Company's acceptance of
this Agreement as provided in Paragraph 8(a)
above;
b. Delivery of certificates evidencing the
Preferred Stock to the Escrow Agent, as
heretofore set forth, and by the Escrow
Agent to Purchaser;
c. Acceptance by the Company of subscriptions
from the Purchaser and other subscribers and
the sale by the Company pursuant thereto of
a maximum of 500 shares of Preferred Stock;
d. The accuracy as of the Closing Date of the
representations and warranties of the
Company contained in this Agreement and the
performance by the Company on or before the
Closing Date of all covenants and agreements
of the Company required to be performed on
or before the Closing Date; and
e. The filing of the Articles Supplementary
attached hereto as Annex I with the
Secretary of State of the State of Maryland
on or before the Closing Date; and
10. Registration of the Securities. The Company hereby agrees
that in the event that the shares of Common Stock issuable upon conversion of
the Preferred Stock are not subject to an effective Registration Statement on
Form S-3 filed under the Securities Act, the Company shall promptly and
expeditiously file within 60 days of the Closing, and use its best efforts to
cause to become effective by acceleration, within 120 days of the acceptance of
this Agreement by the Company, a registration statement on Form S-3 under the
Securities Act and all applicable Blue Sky Laws covering the sale of the Common
Stock issuable upon conversion of the Preferred Stock. Such best efforts shall
include, but not be limited to, promptly responding to all comments received by
the staff of the SEC, providing Purchaser or its counsel with contemporaneous
copies of all written communications from the staff of the SEC and promptly
preparing and filing amendments to such registration statement which are
responsive to the comments received from the staff of the SEC. Any such
registration statement shall name Purchaser from time to time directly to
purchasers in the over-the-counter market through or to securities
broker-dealers that may receive compensation in the form of discounts,
concessions, or commissions. Any such registration statement shall remain
effective for up to 12 months or until all of the Securities are sold, whichever
is earlier. The Company shall provide the Purchaser with such number of copies
of the prospectus as shall be reasonably requested to facilitate the sale of the
Common Stock issuable upon conversion of the Preferred Stock. The Company shall
bear and pay all expenses incurred in connection with any such registration,
excluding discounts and commissions. The foregoing shall not in any way limit
Purchaser's rights in connection with the shares of Common Stock issuable upon
conversion of the Preferred Stock from selling such shares (i) pursuant to Rule
144 or (ii) pursuant to any other exemption from registration under the
Securities Act.
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11. Governing Law. This Agreement shall be governed by and
construed under the law of the State of Maryland without regard to its choice of
law provision. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto.
12. Survival of Representations, Warranties, and Covenant.
Each of the Company's and Purchaser's representations, warranties, and covenants
shall survive the execution and delivery of this Agreement and the delivery of
the certificates representing the Securities.
13. Successors and Assigns. This Agreement shall inure the
benefit of and be binding on the respective successors and assigns of the
parties hereto.
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SIGNATURE PAGE FOR INDIVIDUAL SUBSCRIBER
IN WITNESS WHEREOF, the undersigned represents that the
foregoing statements are true and that he, she, or they have executed this
Subscription Agreement on this ____day of _____________, 1998.
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Printed Name Signature
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Printed Name Signature
Accepted this ____ day of ___________, 1998:
XXXXXXXXX BREWING CO.
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By:
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Title:
SIGNATURE PAGE FOR ENTITIES
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IN WITNESS WHEREOF, the undersigned represents that the
foregoing statements are true and that it has caused this Subscription Agreement
to be duly executed on its behalf on this____ day of __________, 1998.
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Printed Name of Subscriber
By: ________________________________
(Signature of Authorized Person)
------------------------------------
(Printed Name and Title)
Accepted this _____ day of _______, 1998:
XXXXXXXXX BREWING CO.
By:________________________
Title:_____________________
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