Credit Agreement [Amendment] - Boston Beer Co. LP, The Boston Beer Co. Inc. and Fleet National Bank
AMENDMENT TO CREDIT AGREEMENT
------------------------------
THIS AMENDMENT is made as of March 30, 1999 by and among BOSTON BEER
COMPANY LIMITED PARTNERSHIP (the "Partnership") and THE BOSTON BEER COMPANY,
-----------
INC. (the "Corporation") (collectively, the "Borrowers", and individually, a
----------- ---------
"Borrower")'; and FLEET NATIONAL BANK (the "Bank").
-------- ----
RECITALS
--------
A. The Bank and the Borrowers are parties to a Credit Agreement dated as
of March 21, 1997, as modified by a letter agreement dated July 11, 1997 (as
modified, the "Loan Agreement"). Capitalized terms used herein without
--------------
definition have the meanings assigned to them in the Loan Agreement.
B. The Borrowers have requested that, among other things, the Bank (i)
extend the Expiration Date, the Conversion Date and the Maturity Date and (ii)
reduce the interest rates applicable to the Loans.
C. Subject to certain terms and conditions, the Bank is willing to agree
to the same, as hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
I. Amendments to Loan Agreement.
----------------------------
A. Extension of Dates in Section 1.1. The "Expiration Date" as defined
---------------------------------
in Section 1.1(a) is hereby extended to mean March 31, 2004. The "Conversion
Date" as defined in Section 1.1(b) is hereby extended to mean March 31, 2002.
The date on which quarterly installments of Term Loan Principal repayments shall
commence under Section 1.1(c) is hereby extended to mean June 30, 2002 and
"Maturity Date" as defined in Section 1.1(c) is hereby extended to mean March
31, 2007.
B. Interest Rates. Section 1.3(a) is hereby deleted in its entirety and
--------------
replace with the following:
"(a) Subject to this Agreement, the Borrowers may elect an interest rate
for each Revolving Loans A and Revolving Loans B based on either (i)
the Alternative Prime Rate or (ii) the applicable Libor Rate (as
defined on Schedule B hereto) plus .45%. Subject to the terms and
----------
conditions of this Agreement, the Borrowers may elect an interest rate
for the Term Loan based on either (i) the Alternative Prime Rate or
(ii) the applicable Libor Rate plus .70%. Each Prime Rate Loan shall
bear interest on the outstanding principal amount thereof at a rate
per annum equal to the Prime Rate (which rate shall change
contemporaneously with any change in the Prime Rate), payable on the
last day of each fiscal quarter, commencing on March 31, 1999, and
when such Prime Rate Loan is due (whether at maturity, by reason of
acceleration or otherwise). Libor Loans shall bear interest, and
otherwise be governed, in accordance with Schedule B (the "Libor
---------- -----
Terms")."
C. Use of Proceeds. Section 1.10 is hereby amended to permit proceeds of
---------------
up to $10,000,000 in the aggregate to be used for Permitted Acquisitions.
D. Net Worth Covenant. Section 5.1(a) is hereby deleted in its entirety
------------------
and replaced with the following:
"(a) Maintain at all times during the period from March 31, 1999 through
June 29, 1999 a Tangible Net Worth of the Corporation of not less than
$70,000,000, plus 50% of the positive Net Income (with no reduction
for losses) for the fiscal quarter ended March 31, 1999; and,
thereafter maintain Tangible Net Worth of the Corporation at all times
during each fiscal quarter of at least (i) the minimum amount of
Tangible Net Worth required hereunder as of the last day of the
immediately
<PAGE>
preceding fiscal quarter, plus (ii) 50% of the positive Net Income
(with no reduction for losses) for such immediately preceding fiscal
quarter, plus (iii) 100% of Net Equity Proceeds received by the
Corporation during such fiscal quarter."
E. Profitability. Section 5.1(d) is hereby deleted in its entirety and
-------------
replaced with the following:
"(d) As to the Corporation, (i) for any trailing four consecutive fiscal
quarter-period earn Net Income of at least $1.00 and (ii) not have two
consecutive fiscal quarters in which Net Income for each such fiscal
quarter is less than $0."
F. Indebtedness. Section 6.1(b) is deleted in its entirety and replaced
------------
with the following:
"(b) Indebtedness represented by amortization of the signing payment
received by the Corporation under its 1998 glass bottle contract;"
G. New Provisions. The following provision is added to the Loan
--------------
Agreement as Section 8.13.
"8.13 Miscellaneous
-------------
(a) The Bank may assign its rights and interests under this Agreement, the
Notes and the other Loan Documents and delegate its obligations
hereunder and thereunder, in whole or in part; provided that in
connection with any such assignment, the assignee shall assume such
rights, interests and obligations in writing. The Bank may at any time
pledge all or any portion of its rights under any Loan Document
(including any portion of the Notes) to any of the 12 Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C.
Section 341. No such pledge or the enforcement thereof shall release
the Bank from its obligations under any of the Loan Documents. The
Bank shall have the unrestricted right at any time and from time to
time, and without the consent of or notice to the Borrowers to grant
to one or more banks or other financial institutions (each, a
"Participant") participating interests in the Bank's obligation to
------------
lend hereunder and/or any or all of the Obligations. In the event of
any such grant by the Bank of a participating interest to a
Participant, whether or not upon notice to the Borrowers, the Bank
shall remain responsible for the performance of its obligations
hereunder and the Borrowers shall continue to deal solely and directly
with the Bank in connection with its rights and obligations hereunder.
Each of the Borrowers authorizes the Bank to disclose to any
participant or assignee any prospective participant or assignee any
and all information in the Bank's possession concerning the Borrowers
which has been delivered to the Bank by or on behalf of the Borrowers
pursuant to this Agreement or which has been delivered to the Bank by
or on behalf of the Borrowers in connection with the Bank's credit
evaluation prior to becoming a party to this Agreement.
(b) Upon receipt of an appropriate and reasonably acceptable affidavit of
an officer of the Bank as to the loss, theft, destruction or
mutilation of the any Note or of any other Loan Document which is not
of public record and, in the case of any such mutilation, upon
surrender and cancellation of such Note or other Loan Document, the
Borrowers will issue, in lieu thereof, a replacement Note or other
Loan Document in the same principal amount and in any event of like
tenor.
(c) All agreements between any one or more of the Borrowers (on the one
hand) and the Bank (on the other hand) are hereby expressly limited so
that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the Notes or otherwise, shall the amount
paid or agreed to be paid to the Bank for the use or the forbearance
of the Obligations represented by the Notes exceed the maximum
permissible under applicable law. In this regard, it is expressly
agreed that it is the intent of the Borrowers and the Bank, in the
execution, delivery and acceptance of the Notes, to contract in strict
compliance with the laws of the Commonwealth of Massachusetts. If,
under any circumstances whatsoever, performance or fulfillment of any
provision of the Notes or any of the other Loan Documents at the time
such provision is to be performed or fulfilled shall involve exceeding
the limit of validity prescribed by applicable law, then the
obligation so to be performed or fulfilled shall be reduced
automatically to the limits of such validity, and if under any
<PAGE>
circumstances whatsoever the Bank should ever receive as interest an
amount which would exceed the highest lawful rate, such amount which
would be excessive interest shall be applied to the reduction of the
principal balance evidenced by the Notes and not to the payment of
interest. The provisions of this Section 8.13(c) shall control every
other provision of this Agreement and of the Notes."
H. Amended Definitions. The definitions of "Permitted Acquisition" and
-------------------
"Prime Rate" in Schedule A are amended to read in their entirety as follows:
Permitted Acquisitions: any acquisition of stock or assets by the
----------------------
Corporation which has met the following conditions: (a) the aggregate
amount of proceeds of the Loans used in all such acquisitions since
the date of this Agreement shall not exceed $10,000,000, (b) the
aggregate amount paid in cash or cash equivalents by the Borrowers and
their Subsidiaries in connection with all such acquisitions since the
date of this Agreement (whether or not proceeds of the Loans) shall
not exceed $20,000,000, (c) after giving effect to such acquisition,
on a pro forma basis as of the most recently ended fiscal quarter, the
--- -----
Borrowers shall be in full compliance with all of its obligations set
forth in Section 5 of this Agreement, (d) if such acquisition is a
stock acquisition and the acquired company or companies is not being
merged into the Corporation simultaneously and is or becomes a
Material Subsidiary, such acquired company or companies shall prior to
or upon becoming a Material Subsidiary execute an unlimited guaranty
in form satisfactory to the Bank, guaranteeing all existing and future
obligation of the Borrowers to the Bank, (e) prior notice of such
acquisition shall have been delivered to the Bank, describing the
terms of such acquisition, including the purchase price thereof, and
whether the acquired company or companies are or are intended to
become Material Subsidiaries, and (f) no Default shall exist hereunder
or result from such acquisition. The Bank acknowledges that the
Schoenling Brewery acquisition which closed in March, 1997 (and the
subsequent real property acquisition relating thereto) are Permitted
Acquisitions not included in the $10,000,000 and $20,000,000
thresholds set forth above.
"Prime Rate: The variable per annum rate of interest so designated
----------
from time to time by the Bank as its prime rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best
rate being charged to any customer."
I. New Definition: "Net Equity Proceeds." The definition of the term
-------------------------------------
"Net Equity Proceeds" is hereby added to Schedule A in the proper alphabetical
order:
"Net Equity Proceeds": The cash proceeds (net of reasonable out-of-
-------------------
pocket fees and expenses) received by the Corporation or any of its
Subsidiaries in connection with any issuance by the Corporation or any
its Subsidiaries after March 31, 1999 of any shares of its capital
stock, other equity interests or options, warrants or other purchase
rights to acquire such capital stock or other equity interests to, or
receipt of a capital contribution from, any Person (other than an
officer, employee or director of the Borrower or any its Subsidiaries
or the Borrower with respect to capital contributions to such
Subsidiaries)."
J. Libor Terms. The following changes are made to Schedule B regarding
----------- ----------
Libor Terms:
(a) The definition of "Libor Base Rate" and "Adjusted Libor Rate are
hereby deleted in their entirety.
(b) All references in the Loan Agreement to "Libor Base Rate" or "Adjusted
Libor Rate" shall hereafter mean and be a reference to the "Libor
Rate".
(c) The following definition of "Libor Rate" is added to Schedule B:
Libor Rate: With respect to each Interest Period for a Libor Loan,
-----------
that rate per annum (rounded upward, if necessary, to the nearest
1/32nd of one percent) which represents the offered rate for deposits
in U.S. Dollars, for a period of time comparable to such Interest
Period, which appears on the Telerate page 3750 as of 11:00 a.m.
(London time) on that day that is two London Banking
<PAGE>
Days preceding the first day of such Interest Period; provided,
however, that if the rate described above does not appear on the
Telerate System on any applicable interest determination date, the
Libor Rate for such Interest Period shall be the rate (rounded upwards
as described above, if necessary) for deposits in dollars for a period
substantially equal to such Interest Period shown on the Reuters Page
"LIBO" (or such other page as may replace the LIBO Page on that
service for the purpose of displaying such rates), as of 11:00 a.m.
(London Time), on that day that is two London Banking Days prior to
the beginning of such Interest Period. "London Banking Day" shall mean
------------------
any date on which commercial banks are open for business in London. If
both the Telerate and Reuters systems are unavailable, then the Libor
Rate for any Interest Period will be determined on the basis of the
offered rates for deposits in U.S. Dollars for a period of time
comparable to such Interest Period which are offered by four major
banks in the London interbank market at approximately 11:00 a.m.,
London time, on that day that is two London Banking Days preceding the
first day of such Interest Period, as selected by the Bank. The
principal London office of each of four major London banks will be
requested to provide a quotation of its U.S. Dollar deposit offered
rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in U.S. Dollars
to leading European banks for a period of time comparable to such
Interest Period offered by major banks in New York City at
approximately 11:00 a.m., New York City time, on that day that is two
London Banking Days preceding the first day of such Interest Period.
In the event that the Bank is unable to obtain any such quotation as
provided above, it will be deemed that the Libor Rate for the proposed
Interest Period cannot be determined. The Bank shall give prompt
notice to the Borrowers of the Libor Rate as determined for each Libor
Loan and such notice shall be conclusive and binding, absent manifest
error. In the event that the Board of Governors of the Federal Reserve
System shall impose a Libor Reserve Requirement with respect to Libor
deposits of the Bank, then for any period during which such Libor
Reserve Requirement shall apply, the Libor Rate shall be equal to the
amount determined above, divided by an amount equal to 1 minus the
Libor Reserve Requirement. The Libor Rate shall be adjusted
automatically on and as of the effective date of any change in the
Libor Reserve Requirement with respect to the Bank.
II. No Further Amendments.
---------------------
Except as specifically amended hereby, the Loan Agreement shall remain
unmodified and in full force and effect and is hereby ratified and affirmed in
all respects, and the indebtedness of the Borrowers to the Bank evidenced
thereby and by the Notes is hereby reaffirmed in all respects. On and after the
date hereof, each reference in the Loan Agreement to "this Agreement",
"hereunder", "hereof", or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement as amended by this
Amendment, and each reference in any of the Loan Documents, to the Loan
Agreement, "thereunder", "thereof", or words of like import referring to the
Loan Agreement shall mean a reference to the Loan Agreement as amended by this
Amendment.
III. Certain Representations of the Borrowers.
----------------------------------------
As a material inducement to the Bank to enter into this Amendment, the
Borrowers hereby represent and warrant to the Bank (which representations and
warranties shall survive the delivery of this Amendment), after giving effect to
this Amendment, as follows:
A. The execution and delivery of this Amendment has been duly authorized
by all requisite corporate action on the part of the Borrower.
B. The representations and warranties contained in Section 4 of the Loan
Agreement are true and correct in all material respects on and as of the date of
this Amendment as though made at and as of such date (except to the extent that
such representations and warranties expressly relate to an earlier date or
except to the extent variations therefrom have been permitted under the terms of
the Loan Agreement or otherwise in writing by the Bank). No material adverse
change has occurred in the assets, liabilities, financial condition, business or
prospects of Borrower from that disclosed in the financial statements most
recently furnished to the Bank pursuant to
<PAGE>
Sections 4.1(a) or (b) to the Loan Agreement. To the knowledge of the Borrower,
no Default has occurred and is continuing.
C. This Amendment constitutes the legal, valid and binding obligation of
each Borrower, enforceable against each Borrower in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights and remedies of creditors generally or the application of
principles of equity, whether in any action at law or proceeding in equity, and
subject to the availability of the remedy of specific performance or of any
other equitable remedy or relief to enforce any right thereunder.
IV. Miscellaneous.
-------------
A. The Borrowers represent, warrant, and agree that the Borrowers have no
claims, defenses, counterclaims, or offsets against the Bank in connection with
the Loan Agreement or the Obligations and, to the extent that any such claim,
defense, counterclaim, or offset may exist, the Borrower hereby affirmatively
WAIVES AND RELEASES the Bank from the same.
B. As provided in the Loan Agreement, the Borrowers agree to reimburse
the Bank upon demand for all reasonable out-of-pocket costs, charges,
liabilities, taxes and expenses of the Bank (including reasonable fees and
disbursements of counsel to the Bank) in connection with the (a) preparation,
negotiation, interpretation, execution and delivery of this Amendment and any
other agreements, instruments and documents executed pursuant or relating
hereto, and (b) any enforcement hereof.
C. This Amendment shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
D. This Amendment may be executed by the parties hereto in several
counterparts hereof and by the different parties hereto on separate counterparts
hereof, all of which counterparts shall together constitute one and the same
agreement.
**The Next Page is the Signature Page**
<PAGE>
IN WITNESS WHEREOF, the Bank and the Borrowers have caused this Amendment
to be duly executed as a sealed instrument by their duly authorized
representatives, all as of the day and year first above written.
THE BOSTON BEER COMPANY, INC.
By: /s/ Alfred W. Rossow, Jr.
Treasurer and CFO
BOSTON BEER COMPANY LIMITED PARTNERSHIP
By: Boston Brewing Company, Inc., its General
Partner
By: /s/ Alfred W. Rossow, Jr.
Title: Vice President
FLEET NATIONAL BANK
By: /s/ Susan Mason
Vice President
<PAGE>
GUARANTOR CONFIRMATION
----------------------
The undersigned being guarantor of the Obligations (as defined in a
certain Unlimited Guaranty dated March 21, 1997) of the Borrowers to the Bank
and intending to be legally bound thereunder hereby agrees and consents to the
above Amendment. The undersigned hereby further confirms and reaffirms, all and
singular, the terms of such Unlimited Guaranty.
Dated as of March 30, 1999.
SAMUEL ADAMS BREWERY COMPANY, LTD.
By: /s/ Alfred W. Rossow, Jr.
Treasurer and CFO