Credit Agreement - The Boston Beer Co. Inc. and Fleet National Bank
EXECUTION COPY
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BETWEEN
THE BOSTON BEER COMPANY, INC.
AND
BOSTON BEER CORPORATION
AS BORROWERS
AND
FLEET NATIONAL BANK
EFFECTIVE AS OF JULY 1, 2002
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TABLE OF CONTENTS
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1. DESCRIPTION OF CREDIT FACILITY.......................................... 2
1.1 THE LOANS.......................................................... 2
1.2 THE NOTES.......................................................... 2
1.3 INTEREST; DEFAULT RATE............................................. 2
1.4 NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS.............. 2
1.5 PREPAYMENTS........................................................ 3
1.6 FEES............................................................... 3
1.7 CAPITAL ADEQUACY................................................... 3
1.8 TAXES.............................................................. 4
1.9 METHOD AND APPLICATION OF PAYMENTS................................ 4
1.10 COMPUTATION OF INTEREST AND FEES.................................. 5
1.11 USE OF PROCEEDS................................................... 5
1.12 SUBSIDIARY GUARANTIES............................................. 5
2. CONDITIONS OF LOANS..................................................... 5
2.1 CONDITIONS PRECEDENT TO INITIAL LOAN............................... 5
2.2 CONDITIONS PRECEDENT TO ALL LOANS.................................. 5
3. REPRESENTATIONS AND WARRANTIES.......................................... 6
3.1 ORGANIZATION AND QUALIFICATION..................................... 6
3.2 AUTHORITY.......................................................... 7
3.3 CONSENTS; VALIDITY................................................. 7
3.4 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES....................... 7
3.5 FINANCIAL STATEMENTS............................................... 7
3.6 TAXES.............................................................. 8
3.7 LITIGATION......................................................... 8
3.8 COMPLIANCE WITH LAWS AND AGREEMENTS................................ 8
3.9 NO INSOLVENCY...................................................... 8
3.10 FULL DISCLOSURE................................................... 8
3.11 MARGIN STOCK...................................................... 9
3.12 PATENTS, TRADEMARKS, ETC.......................................... 9
3.13 ERISA............................................................. 9
3.14 ENVIRONMENTAL LAWS................................................ 10
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3.15 OWNERSHIP......................................................... 11
4. AFFIRMATIVE COVENANTS................................................... 11
4.1 FINANCIAL REPORTING................................................ 11
4.2 CONDUCT OF BUSINESS................................................ 12
4.3 MAINTENANCE AND INSURANCE.......................................... 13
4.4 TAXES AND ACCOUNTS PAYABLE......................................... 13
4.5 MAINTENANCE OF BOOKS AND RECORDS................................... 13
4.6 ENVIRONMENTAL LAWS................................................. 13
4.7 FURTHER ASSURANCES................................................. 13
4.8 PRINCIPAL DEPOSITORY............................................... 13
5. FINANCIAL COVENANTS..................................................... 14
5.1 COVENANTS.......................................................... 14
5.2 DEFINITIONS........................................................ 14
6. NEGATIVE COVENANTS...................................................... 16
6.1 INDEBTEDNESS, GUARANTEES........................................... 16
6.2 ENCUMBRANCES....................................................... 16
6.3 SALE AND LEASEBACK................................................. 17
6.4 MERGER; CONSOLIDATION; DISPOSITION OF ASSETS; ETC. ................ 17
6.5 INVESTMENTS........................................................ 17
6.6 TRANSACTIONS WITH AFFILIATES....................................... 17
6.7 DISTRIBUTIONS...................................................... 17
7. DEFAULTS................................................................ 18
7.1 EVENTS OF DEFAULT.................................................. 18
7.2 REMEDIES........................................................... 20
8. GENERAL PROVISIONS...................................................... 20
8.1 NOTICES............................................................ 20
8.2 EXPENSES........................................................... 21
8.3 SET-OFF............................................................ 21
8.4 NO WAIVERS; TERM................................................... 22
8.5 REPLACEMENT OF NOTES............................................... 22
8.6 USURY.............................................................. 22
8.7 GOVERNING LAW...................................................... 23
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8.8 ENTIRE AGREEMENTS; AMENDMENTS...................................... 23
8.9 BINDING EFFECT OF AGREEMENT; ASSIGNMENTS........................... 23
8.10 COUNTERPARTS, ETC................................................. 24
8.11 WAIVER OF JURY TRIAL.............................................. 24
8.12 CONSENT TO JURISDICTION........................................... 24
8.13 INDEMNIFICATION; JOINT AND SEVERAL LIABILITY...................... 24
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SCHEDULES
Schedule A General Defined Terms
Schedule B LIBOR Terms
EXHIBITS
Exhibit 1.2 Form of Revolving Credit Note
Exhibit 1.4 Notice of Borrowing or Conversion
Exhibit 2.1 Agenda of Closing
Exhibit 3.7 Litigation
Exhibit 3.14 Environmental Matters
Exhibit 3.15 Ownership
Exhibit 4.1 Form of Officer's Compliance Certificate
Exhibit 6.4 Form of Notice of New Subsidiary
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
effective as of July 1, 2002 by and among THE BOSTON BEER COMPANY, INC. (the
"Holding Company") and BOSTON BEER CORPORATION, the successor in interest to
Boston Beer Company Limited Partnership (the "Principal Operating Company"),
each a Massachusetts corporation (together, the "Borrowers" and each
individually, a "Borrower"); and FLEET NATIONAL BANK, a national banking
association (the "Bank"). Capitalized terms used herein are defined in Section 5
and SCHEDULES A and B hereto.
A. Boston Beer Company Limited Partnership, the predecessor in interest of
the Principal Operating Company (the "Partnership") and the Holding Company, as
borrowers, previously entered into a Credit Agreement dated as of March 21,
1997, as amended (the "Original Agreement"), pursuant to which the Partnership
and the Holding Company issued their joint and several Revolving Credit Note and
Revolving Credit and Term Note (together, the "Original Notes") to evidence
revolving lines of credit in the respective principal amounts of $15,000,000 and
$30,000,000 (together, the "Original Facilities"). $-0- is outstanding under the
Original Facilities.
B. Effective as of December 31, 2000, the Partnership transferred all of
its assets and properties (including its rights under the Original Agreement) to
the Principal Operating Company, which assumed all of the Partnership's
outstanding liabilities (including its obligations under the Original
Agreement). The Partnership was cancelled on November 19, 2001. (The foregoing
transactions are referred to collectively herein as the "Partnership Transfer".)
C. In connection with and subsequent to the Partnership Transfer, the
Holding Company also caused the transfer of the assets of certain other
Subsidiaries, the dissolution thereof and the formation of several new
Subsidiaries (collectively with the Partnership Transfer, the "Restructuring").
D. The Borrowers desire to (1) replace the Original Facilities with a new
revolving line of credit in the principal amount of $45,000,000, expiring March
31, 2007, (2) amend the Original Agreement to reflect the Restructuring and (3)
effect certain other amendments to the Original Agreement.
E. The Bank is willing to establish such replacement line of credit
facility and make such amendments, subject to the terms and conditions set forth
herein. This Agreement amends and restates the Original Agreement (which amended
and restated the Credit Agreement dated as of May 2, 1995 between the
Partnership and the Bank).
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto hereby agree as follows:
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1. DESCRIPTION OF CREDIT FACILITY.
1.1 THE LOANS. Subject to the terms and conditions of this Agreement, the
Bank agrees to make revolving credit loans (the "Loans") jointly to the
Borrowers from time to time until the close of business on March 31, 2007 (the
"Expiration Date"), in such sums as the Borrowers may request; provided,
however, that the aggregate principal amount of the Loans at any time
outstanding hereunder shall not exceed $45,000,000 (the "Commitment"). Within
the limits of the Commitment, the Borrowers may borrow, prepay and reborrow
hereunder from the date hereof to the Expiration Date; provided that each Loan
shall be in the amount of $100,000 or an integral multiple thereof. All of the
outstanding principal on the Loans, together with all accrued interest thereon
and all fees, expenses and other charges under the Loan Documents, shall be due
and payable in full on the Expiration Date.
1.2 THE NOTES. The Loans shall be evidenced by the joint and several
Revolving Credit Note of the Borrowers in the form of EXHIBIT 1.2 hereto payable
to the order of the Bank (together with any additional Revolving Credit Notes
issued to any assignee(s) of the Bank or otherwise issued in substitution
therefor or replacement thereof, the "Notes"). Said Revolving Credit Note amends
and restates the Original Revolving Note. The Notes are incorporated herein by
reference and made a part hereof.
1.3 INTEREST; DEFAULT RATE.
(a) Subject to this Agreement, the Borrowers may elect an interest rate
for each Loan based on either (i) the Alternative Prime Rate or (ii) the
applicable LIBOR Rate (as defined on SCHEDULE B hereto) plus .45%. Each Prime
Rate Loan shall bear interest on the outstanding principal amount thereof at a
rate per annum equal to the Alternative Prime Rate, payable on the last day of
each month, commencing on April 30, 2002, 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").
(b) Overdue principal (whether at maturity, by reason of acceleration or
otherwise) and, to the extent permitted by applicable law, overdue interest and
fees or any other amounts payable hereunder or under the Notes, shall bear
interest (whether or not the Bank has accelerated payment of the Notes) from and
including the due date until paid, payable on demand, at a rate per annum equal
to 4% above the rate then applicable to Prime Rate Loans. In addition, if the
entire amount of any required principal and/or interest is not paid in full
within ten days after the same is due, the Borrowers shall pay to the Bank a
late fee equal to 5% of the required payment.
1.4 NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS.
(a) Whenever the Borrowers desire to obtain or continue a Loan hereunder
or convert an outstanding Loan to a Loan of a different type, they shall notify
the Bank (which notice shall be irrevocable) by telecopy or telephone received
no later than 10:30 a.m. Boston time (i) on the date of the requested action,
with respect to a Loan to be made, continued or converted to a
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Prime Rate Loan, and (ii) not less than two, nor more than five, Business Days
before the requested action, with respect to a Loan to be made, continued as or
converted to a LIBOR Loan. Such notice shall specify (A) the effective date and
amount of each Loan or portion thereof to be made, continued or converted, (B)
the interest rate option to be applicable thereto, and (C) the duration of the
LIBOR Period, if applicable. Each such notification (a "Notice of Borrowing or
Conversion") shall be immediately followed by a written confirmation in the form
attached hereto as EXHIBIT 1.4.
(b) Subject to the LIBOR Terms, the Borrowers may convert all or any part
(in integral multiples of $100,000) of any outstanding Loan into a LIBOR Loan or
a Prime Rate Loan, as the case may be, in the same aggregate principal amount,
on any Business Day (which, in the case of a conversion of an existing LIBOR
Loan, must be on the last day of the LIBOR Period applicable to such existing
LIBOR Loan).
(c) Notwithstanding the foregoing, no LIBOR Loan may be continued as such
nor may any Prime Rate Loan be converted to a LIBOR Loan during the existence of
a Default if the Bank has determined, in its sole discretion, not to permit such
continuations and conversions.
1.5 PREPAYMENTS. LIBOR Loans may be prepaid, without premium or penalty
(but subject to the LIBOR Terms), on the last day of the applicable LIBOR
Period, upon at least three Business Days' prior written notice provided by the
Borrowers to the Bank. Prime Rate Loans may be prepaid at any time, without
premium or penalty, on same day notice if such notice is received prior to 10:30
a.m. on the date of such prepayment. Any interest accrued on the amounts so
prepaid to the date of such payment must be paid at the time of any such
payment.
1.6 FEES. The Borrowers shall pay to the Bank during the Revolving Credit
Period a non-refundable commitment fee computed at the rate of .15% per annum on
the average daily unused portion of the Commitment, payable quarterly in
arrears, on the last day of March, June, September and December of each year and
on the last day of the Revolving Credit Period.
1.7 CAPITAL ADEQUACY. The Bank shall notify the Borrowers if after the
date hereof the Bank determines that (a) the adoption after the date hereof of
or change after the date hereof in any law, rule, regulation or guideline
regarding capital adequacy for banks or bank holding companies, or any change
after the date hereof in the interpretation or application thereof by any
governmental authority charged with the administration thereof (to the extent
such adoption or change occurs after the date hereof), or (b) compliance by the
Bank or its parent bank holding company with any guideline, request or directive
taking effect after the date hereof of any such entity regarding capital
adequacy (whether or not having the force of law), has the effect of reducing
the return on the Bank's or such holding company's capital as a consequence of
the Bank's commitment to make Loans hereunder to a level below that which the
Bank or such holding company could have achieved but for such adoption, change
or compliance (taking into consideration the Bank's or such holding company's
then existing policies with respect to capital adequacy and assuming the full
utilization of such entity's capital) by any amount the Bank considers to be
material. The Borrowers agree to pay to the Bank the actual amount of such
reduction of return as and when such reduction is determined, when the Bank
presents a
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statement of the amount and setting forth the Bank's calculation thereof. Such
statement shall be deemed true and correct, absent manifest error.
1.8 TAXES.
(a) All payments made by the Borrowers under this Agreement shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp, franchise, excise or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on the Bank as a result of a present or former connection between
the Bank and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Bank having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") or other stamp or documentary taxes or excise or property taxes, charges
or similar levies arising from any payment made hereunder or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document ("Other Amounts") are required to be withheld from any
amounts payable to the Bank hereunder, the amounts so payable to the Bank
(including any penalties, interest or expenses) shall be increased to the extent
necessary to yield to the Bank (after payment of all Non-Excluded Taxes and
Other Amounts) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement.
(b) In addition, the Borrowers shall pay any Other Amounts to the relevant
Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Amounts are payable by the
Borrowers, as promptly as possible thereafter the Borrowers shall send to the
Bank a certified copy of an original official receipt received by the Borrowers
showing payment thereof. If the Borrowers fail to pay any Non-Excluded Taxes or
Other Amounts when due pursuant to this Agreement to the appropriate taxing
authority or fails to remit to the Bank the required receipts or other required
documentary evidence, the Borrowers shall indemnify the Bank for any incremental
taxes, interest or penalties that may become payable by the Bank as a result of
any such failure.
1.9 METHOD AND APPLICATION OF PAYMENTS. All payments and prepayments of
principal and all payments of interest and fees shall be made by the Borrowers
to the Bank at its head office in immediately available funds, on or before
11:00 a.m. (Boston time) on the due date thereof, free and clear of, and without
set-off, deduction, withholding or counterclaim for, any taxes or other
payments. All payments shall be applied first to the payment of all fees,
expenses and other amounts due to the Bank (excluding principal and interest),
then to accrued interest, and the balance on account of outstanding principal;
provided, however, that after the occurrence
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of a Default payments will be applied to the Obligations as the Bank determines,
in its sole discretion..
1.10 COMPUTATION OF INTEREST AND FEES. All interest and fees payable
hereunder shall be computed daily on the basis of a 360-day year, counting the
actual number of days elapsed. If the due date for any payment of principal is
extended by operation of law, interest shall be payable for such extended time.
If any payment required by this Agreement becomes due on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day
(subject to the definition of LIBOR Period set forth in the LIBOR Terms), and
such extension shall be included in computing interest in connection with such
payment.
1.11 USE OF PROCEEDS. The proceeds of the Loans shall be used for the
working capital requirements of the Borrowers and their respective Subsidiaries
(collectively, the "Companies") and for fixed asset purchases by the Companies
made in the ordinary course of business and not pursuant to any business
acquisition. In addition, up to $20,000,000 in the aggregate may be used for
Permitted Acquisitions consummated by the Companies after the date hereof
("Acquisition Loans").
1.12 SUBSIDIARY GUARANTIES. The Obligations shall be unconditionally
guaranteed at all times by each Borrower's Material Subsidiaries pursuant to an
unconditional guaranty satisfactory to the Bank (each, a "Subsidiary Guaranty").
2. CONDITIONS OF LOANS.
2.1 CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of the Bank to
make its initial Loan under this Agreement is subject to the conditions
precedent that the Bank shall have received, in form and substance reasonably
satisfactory to the Bank and its counsel, (a) all of the agreements, instruments
and certificates described on the Closing Agenda attached as EXHIBIT 2.1, duly
executed and delivered, together with all other documents and materials referred
to in such Closing Agenda, and (b) satisfactory evidence of the completion of
all actions referred to in such Closing Agenda.
2.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Bank to make
each Loan, including the initial Loan under this Agreement, or to continue or
convert any Loan to a LIBOR Loan, is further subject to the following
conditions:
(a) the Bank shall have received a properly completed Notice of Borrowing
or Conversion;
(b) the representations and warranties contained in Section 3 shall be
true and accurate in all material respects on and as of the date of such Notice
of Borrowing or Conversion and on the effective date of the making, continuation
or conversion of each Loan as though made at and as of each such date (except to
the extent that such representations and warranties expressly relate to an
earlier date);
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(c) no Default shall have occurred and be continuing, or would exist after
giving effect to such Loan (on the proposed borrowing date thereof and, on a pro
forma basis, on the last day of the most recent fiscal quarter for which
financial statements and a Compliance Report have been delivered to the Bank
under Section 4.1, as applicable); and
(d) no change shall have occurred in any law or regulation or
interpretation thereof making it illegal or against the policy of any
governmental authority for the Bank to make Loans hereunder.
Each request for the making, continuation or conversion of a Loan shall be
deemed a representation and warranty to such effect by the Borrowers as of the
date of the making, continuation or conversion of such Loan.
3. REPRESENTATIONS AND WARRANTIES.
To induce the Bank to enter into this Agreement and to make Loans under
the Commitment, each of the Borrowers makes the representations and warranties
set forth below, each of which representations and warranties reflect the
execution hereof and the initial Loan hereunder, and shall survive the delivery
of the Notes and the making of all Loans:
3.1 ORGANIZATION AND QUALIFICATION.
(a) The Principal Operating Company (i) is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts, (ii) has all requisite corporate power to own its property and
conduct its business as now conducted and as presently contemplated, (iii) is
duly qualified and in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction where the nature of its
properties or business requires such qualification, and (iv) has no
Subsidiaries, except Hops Financial Holdings Business Trust, a Massachusetts
business trust ("Hops Financial"). Hops Financial was organized on March 4, 2002
and is a Material Subsidiary.
(b) The Holding Company (i) is a Massachusetts corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts, (ii) has all requisite corporate power to own its property and
conduct its business as now conducted and as presently contemplated, (iii) is
duly qualified and in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction where the nature of its property
or business requires such qualification, and (iv) has no Subsidiaries other than
as specified on EXHIBIT 3.15.
(c) Each of the Subsidiaries of the Borrowers (i) is a corporation,
limited liability company or business trust duly organized or formed, validly
existing and in good standing under its laws of its state of incorporation or
formation, as applicable, (ii) has all requisite power to own its own property
and conduct its business as now conducted and a presently contemplated, (iii) is
duly qualified and in good standing as a foreign business entity and is duly
authorized to
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do business in each jurisdiction where the nature of its property or business
requires such qualification, and (iv) has no Subsidiaries other than as
specified on EXHIBIT 3.15.
(d) This representation shall be updated from time to time by the
Borrowers when any new Subsidiary is formed, by delivery of a properly completed
Notice of New Subsidiary, as required under Section 6.4.
3.2 AUTHORITY. The execution, delivery and performance of this Agreement,
the Notes, the Subsidiary Guaranties and all related agreements, instruments and
certificates (all of the foregoing collectively referred to as the "Loan
Documents") and the transactions contemplated hereby are within the power and
authority of the Companies who are named as parties thereto, and have been
authorized by the governing bodies (and, if required, equityholders) of the
respective Companies, as applicable, and by all other necessary proceedings, and
do not and will not (a) violate the Organizational Documents of any Company or
any law, rule, order or regulation applicable to any of them, (b) contravene any
provision of, or constitute (with due notice or lapse of time or both), a
default under, any other agreement, instrument, order or undertaking binding on
any Company, or (c) result in the creation or imposition of any Encumbrance on
any of the properties, assets or rights of any Company.
3.3 CONSENTS; VALIDITY. The execution, delivery and performance by each
Company of the Loan Documents and the transactions contemplated therein do not
require any approval or consent of, or filing or registration with, any
Governmental Authority or any other party. The Loan Documents are the legal,
valid and binding obligations of each Company named as a party thereto,
enforceable in accordance with their respective terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally.
3.4 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. Each Company has good
title to all of the properties, assets and rights purported to be owned by it,
including without limitation, those reflected in the financial statements
referred to in Section 3.5 (except inventory and equipment disposed of in the
ordinary course of business since the date thereof), free from all Encumbrances,
except Permitted Encumbrances.
3.5 FINANCIAL STATEMENTS. The Holding Company has provided to the Bank its
consolidated balance sheet as of December 29, 2001 and the consolidated
statements of operations and cash flows for the fiscal year then ended, and
related footnotes, audited and certified by Arthur Andersen, LLC, together with
the related consolidating statements as of and for the fiscal year ending on
such date. Such financial statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods specified and present fairly the financial position of the Holding
Company and its Subsidiaries as of such dates and the results of the operations
of the Holding Company and its Subsidiaries for such periods. There are no
liabilities or commitments, contingent or otherwise, not disclosed in such
financial statements that involve a material amount. Since the date of the most
recent audited financial statements delivered to the Bank, except as otherwise
disclosed in writing prior to the date hereof to the Bank with respect to
certain unrealized loss in investment
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securities, there have been no changes in the assets, liabilities, financial
condition or business of any Company, other than changes in the ordinary course
of business, the effect of which has not, in the aggregate, been materially
adverse to any Company or its assets and properties.
3.6 TAXES. Each Company has filed all federal, state and other material
tax returns required to be filed by it, if any, and has paid or made adequate
provision for the payment of all federal, state and other taxes, charges and
assessments, if any.
3.7 LITIGATION. Except as disclosed on EXHIBIT 3.7, there is no
litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of any of the Borrowers' officers, threatened, against or affecting
any Company that, if adversely determined, would reasonably be likely (a) to
result in a material judgment not fully covered by insurance or a forfeiture of
all or any material part of the property of any Company, or (b) otherwise to
have a material adverse effect on the assets, business, prospects or condition,
financial or otherwise, of any Company.
3.8 COMPLIANCE WITH LAWS AND AGREEMENTS. None of the Companies is a party
to any agreement or instrument or subject to any corporate or partnership
restriction materially adversely affecting its assets, business, prospects or
condition, financial or otherwise. None of the Companies is in (a) violation or
alleged violation of any provision of law or regulation, including without
limitation any ERISA provision, any SEC law, rule or regulation or any
Environmental Law, the violation of which would reasonably be likely to have a
material adverse effect upon any Company, or any order, judgment or decree of
any court or other agency of government or (b) default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any material agreement or instrument to which it is a party. None
of the Companies is subject to regulation under the Investment Company Act of
1940, as amended.
3.9 NO INSOLVENCY. None of the Companies is insolvent or unable to pay its
debts as they become due; the Loans made or to be made to the Borrowers do not
and will not render any Company insolvent or unable to pay its debts as they
become due; the capital of each Company is not unreasonably small, compared with
the capital of companies of similar size and engaged in similar activities, in
light of the needs and anticipated needs for capital of the businesses conducted
or anticipated to be conducted by it; none of the Companies is contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidating of all or a major portion of its property,
and none of the Borrowers' officers has knowledge of any person contemplating
the filing of any such petition against any Company or any of its properties and
assets.
3.10 FULL DISCLOSURE. No statement of fact made by or on behalf of any
Company in any Loan Document or other document provided to Bank contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained therein or herein not misleading. There
is no fact presently known to any of the Borrowers' officers which has not been
disclosed to the Bank which materially affects adversely or, as far as such
officer or partner can foresee, will materially affect adversely the assets,
business or condition (financial or otherwise) of any Company. As of the date of
this Agreement, no Default exists.
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3.11 MARGIN STOCK. Neither Borrower owns or has any present intention of
acquiring, and no portion of any Loan is to be used for the "purpose of
purchasing or carrying", any "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. 221 and 224, as amended.
3.12 PATENTS, TRADEMARKS, ETC. Each Company owns or possesses all the
patents, trademarks, service marks, trade names, copyrights, consents and
licenses, and all rights with respect to the foregoing, necessary for the
current and currently planned future conduct of its business, without any known
conflict with the rights of others.
3.13 ERISA. All contributions and other payments required to be made by
either Borrower or any entity with which either Borrower would be aggregated (a
"Commonly Controlled Entity") under Section 414(b), (c), (m), or (o) of the Code
to all employee benefit plans, as defined in Section 3(3) of ERISA which either
Borrower or any Commonly Controlled Entity maintains or maintained or to which
any of them contributes or has contributed (the "Employee Benefit Plans") have
been made or reserves adequate for such purposes have been set aside and
reflected on the Borrowers' financial statements. No Employee Benefit Plan which
is subject to Section 412 of the Code or Section 302 of ERISA has an accumulated
or waived funding deficiency, has permitted decreases in its funding standard
account, or has applied for a waiver of the minimum funding standard or an
extension of any amortization period. No proceedings have been instituted to
terminate, or to appoint a trustee to administer, any Employee Benefit Plan
subject to Section 412 of the Code of Section 302 of ERISA. No lien imposed
under the Code or ERISA on the assets of the Borrowers or any Commonly
Controlled Entity exists, or is likely to arise, on account of any Employee
Benefit Plan subject to Section 412 of the Code of Section 302 of ERISA. Neither
of the Borrowers and no Commonly Controlled Entity has incurred, or is likely to
incur, any material withdrawal liability with respect to any multiemployer plan
as defined in Section 4001(a)(3) of ERISA ("Multiemployer Plan"). No
Multiemployer Plan is insolvent, unable to pay its debts as they become due, or
in reorganization. Each Employee Benefit Plan which is an employee pension
benefit plan, as defined in Section 3(2) of ERISA, has been determined to be
qualified under Section 401(a) or Section 403(a) of the Code and nothing has
occurred which would cause the loss of such qualification or the imposition of
any tax liability or penalty under the Code or ERISA on either Borrower. Each
Employee Benefit Plan has been and is administered in accordance with its terms
and in material compliance with applicable law. To the best of their knowledge,
neither of the Borrowers and no Commonly Controlled Entity has breached any
fiduciary duty imposed on it under ERISA with respect to any Employee Benefit
Plan or has engaged in any prohibited transaction, as defined in Title I of
ERISA or Section 4975 of the Code, involving any Employee Benefit Plan for which
no exemption is available. No Employee Benefit Plan which is an employee welfare
benefit plan, as defined in Section 3(1) of ERISA, provides for continuing
benefits or coverage for any participant (or beneficiary) after the termination
of the participant's employment except as may be required under Section 4980B of
the Code or applicable state statutory law.
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3.14 ENVIRONMENTAL LAWS.
(a) Each Company has obtained all permits, licenses and other
authorizations which are required under all Environmental Laws, except to the
extent failure to have any such permit, license or authorization would not have
a material adverse effect on any Company's business, financial condition or
operations. Each Company is in compliance with the terms and conditions of all
such permits, licenses and authorizations, and is also in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not have a material
adverse effect on any Company's business, financial condition, prospects or
operations.
(b) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure by any Company
to have any permit, license or authorization required in connection with the
conduct of its business or with respect to any Environmental Laws, including,
without limitation, Environmental Laws relating to the generation, treatment,
storage, recycling, transportation, disposal or release of any Hazardous
Materials, except to the extent that such notice, complaint, penalty or
investigation did not or could not result in the remediation of any property
owned or used by any Company costing in excess of $10,000 in the aggregate.
(c) To the best of each Borrower's knowledge, no material oral or written
notification of a release of a Hazardous Material has been filed by or on behalf
of any Company and no property now or previously owned, leased or used by any
Company is listed or proposed for listing on the National Priorities List under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or on any similar state list of sites requiring investigation
or clean-up.
(d) There are no Encumbrances arising under or pursuant to any
Environmental Laws or any of the real property or properties owned, leased or
used by any Company and no governmental actions have been taken or are in
process which could subject any of such properties to such liens or encumbrances
or, as a result of which any Company would be required to place any notice or
restriction relating to the presence of Hazardous Materials at any property
owned by it in any deed to such property.
(e) Except as disclosed on EXHIBIT 3.14, none of the Companies and, to the
best knowledge of either Borrower, no previous owner, tenant, occupant or user
of any property owned, leased or used by any Company has (i) engaged in or
permitted any operations or activities upon or any use or occupancy of such
property, or any portion thereof, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal (whether legal or illegal, accidental or
intentional) of any Hazardous Materials on, under, in or about such property,
except to the extent commonly used in day-to-day operations of such property and
in such case only in compliance with all
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Environmental Laws, or (ii) transported any Hazardous Materials to, from or
across such property except to the extent commonly used in day-to-day operations
of such property and, in such case, in compliance with, all Environmental Laws;
nor, to the best knowledge of either Borrower, have any Hazardous Materials
migrated from other properties upon, about or beneath such property, nor, to the
best knowledge of either Borrower, are any Hazardous Materials presently
constructed, deposited, stored or otherwise located on, under, in or about such
property except to the extent commonly used in day-to-day operations of such
property and, in such case, in compliance with, all Environmental Laws.
3.15 OWNERSHIP. The Holding Company is the owner, directly or thorough
wholly-owned Subsidiaries, beneficially and legally, of all of the outstanding
equity interests in the Principal Operating Company. EXHIBIT 3.15 sets forth in
detail such direct and indirect ownership. No person or entity not identified on
EXHIBIT 3.15 has an equity interest in the Principal Operating Company or any
right to acquire such an interest. The Holding Company's authorized capital
stock consists of two classes, a limited voting rights Class A Common Stock and
a full voting rights Class B Common Stock. Among its voting rights, the holders
of the Class A Common Stock have the right to elect not fewer than two nor more
than four of the Holding Company's Directors, and the holders of the Class B
Common Stock have the right to elect no fewer than five nor more than seven of
the Holding Company's Directors. C. James Koch is currently the sole holder,
beneficially and legally, of all of the issued and outstanding shares of the
Class B Common Stock. The Class A Common Stock is publicly traded and is listed
on the New York Stock Exchange.
4. AFFIRMATIVE COVENANTS.
Each of the Borrowers covenants and agrees that, so long as the Bank has
any commitment to lend hereunder or in connection with any other Obligation, or
any Loan or other Obligation remains outstanding, each of the Borrowers will,
and (as applicable) will cause each Subsidiary to:
4.1 FINANCIAL REPORTING. Furnish to the Bank:
(a) Within 120 days after the end of each fiscal year, its consolidated
balance sheet as of the end of, and the related statements of operations and
cash flow for, such year, and comparisons to prior years, audited and certified
by Deloitte & Touche (or other independent certified public accountants
acceptable to the Bank), together with the related consolidating statements, and
promptly (and in any event within five days) after the same is available, a copy
of the management letter prepared by such accountants with respect thereto;
(b) Within 55 days after the end of each fiscal quarter, its consolidated
balance sheet as of the end of, and the related statements of operations and
cash flow for, the period then ended and year-to-date, and comparisons to prior
periods and years, certified by the Borrowers' chief financial officer (subject
to normal, recurring year-end adjustments that shall not in the aggregate be
material in amount);
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(c) On the date hereof and concurrently with the delivery of the annual
and quarterly financial statements required by Sections 4.1(a) and (b), a report
substantially in the form of EXHIBIT 4.1 hereto signed on behalf of each
Borrower by its chief financial officer;
(d) No later than 60 days after the beginning of each fiscal year,
financial projections of the Borrowers for such fiscal year;
(e) Immediately upon becoming aware of the existence of any condition or
event that constitutes a Default, written notice thereof specifying the nature
and duration thereof and the action being or proposed to be taken with respect
thereto;
(f) Promptly (and in any event within five days) after becoming aware of
any litigation or of any investigative proceedings by a governmental agency or
authority commenced or threatened against any Company, the outcome of which
would have a reasonable likelihood of resulting in a materially adverse effect
on any of its material assets or its business or financial condition, written
notice thereof and of the action being or proposed to be taken with respect
thereto;
(g) Promptly after the same are available, copies of all financial
statements, proxy statements and regular and periodic reports that the Holding
Company may send to its stockholders or file with the SEC or any other
governmental authority at any time having jurisdiction over any Company;
(h) If and when either Borrower gives or is required to give notice to the
PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Employee Benefit Plan that might constitute grounds for a
termination of such Employee Benefit Plan under Title IV of ERISA, or knows that
any member of the Commonly Controlled Entity or the Employee Benefit Plan
Administrator of any Employee Benefit Plan has given or is required to give
notice of any such Reportable Event, a copy of the notice of such Reportable
Event given or required to be given to the PBGC;
(i) Promptly upon becoming aware of any investigative proceedings by a
governmental agency or authority commenced or threatened against any Company
regarding any potential violation of Environmental Laws or any spill, release,
discharge or disposal of any Hazardous Material, written notice thereof and the
action being or proposed to be taken with respect thereto; and
(j) From time to time, such other data and information (financial and
otherwise) about any Company or its respective assets and properties as the Bank
may reasonably request.
4.2 CONDUCT OF BUSINESS. (a) Maintain in good standing its existence as a
corporation, limited liability company or business trust, as applicable, and its
foreign qualifications as required by applicable law where the failure to do so
qualify could have a material adverse effect on it (b) duly observe and comply
in all material respects with all applicable laws and all applicable
requirements of any Governmental Authorities whether now in effect or hereafter
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<PAGE>
enacted or promulgated, including without limitation Environmental Laws, SEC
laws, rules and regulations and ERISA, (c) comply in all material respects with
all material agreements to which it is or becomes a party, (d) maintain and keep
in full force and effect all rights, privileges, patents, trademarks, licenses,
permits and other intangibles necessary in any material respect to the proper
conduct of its business, and (e) remain and engage in substantially the same
business as that in which each is now engaged.
4.3 MAINTENANCE AND INSURANCE. Maintain its properties in good repair,
working order and condition as required for the normal conduct of its business;
and at all times maintain liability, product liability, builder's risk, workers'
compensation, casualty and other insurance insuring such Company and its
properties with financially sound and reputable insurers in such amounts as the
officers or partners of such Company in the exercise of their reasonable
judgment deem to be adequate and, in any event, in customary amounts with
respect to like properties or risks of companies conducting similar businesses;
at the Bank's request from time to time, deliver certificates of insurance
evidencing such coverage.
4.4 TAXES AND ACCOUNTS PAYABLE. Pay or cause to be paid all taxes,
assessments or governmental charges on it or its respective properties, as well
as all lawful claims for labor, materials and supplies or otherwise, which, if
unpaid, could become a lien or charge upon such properties or any part thereof
when or before they become due; provided that this covenant shall not apply to
any tax, assessment or charge that is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
established and are being maintained in accordance with generally accepted
accounting principles.
4.5 MAINTENANCE OF BOOKS AND RECORDS. Keep adequate books and records of
account, in which true and complete entries will be made reflecting all of its
business and financial transactions and prepare financial statements hereunder
in accordance with U.S. generally accepted accounting principles consistently
applied and applicable law. Permit agents or representatives of the Bank, at any
reasonable time, and upon reasonable notice (or if a Default shall have occurred
and is continuing, at any time without prior notice), to (a) examine, make
copies of and take abstracts from the financial and accounting books and records
of the Companies, and (b) discuss the affairs, finances and accounts of the
Companies with their officers, partners, employees and accountants.
4.6 ENVIRONMENTAL LAWS. Comply in all material respects with, and perform
all Clean-up Work necessary under, all Environmental Laws applicable (now or in
the future) to any Company or its business.
4.7 FURTHER ASSURANCES. At any time and from time to time, (a) cause any
Subsidiary prior to or upon becoming a Material Subsidiary to execute and
deliver to Bank an unlimited guaranty in favor of Bank, guaranteeing all
existing and future obligations of Borrowers to Bank; and (b) execute and
deliver such further instruments and take such further action as may reasonably
be requested by the Bank to effect the purposes of the Loan Documents.
4.8 PRINCIPAL DEPOSITORY. Use the Bank as its principal depository.
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5. FINANCIAL COVENANTS.
5.1 COVENANTS. Each of the Borrowers covenants and agrees that, so long as
the Bank has any commitment to lend hereunder or any Loan or other Obligation to
the Bank remains outstanding, each of the Borrowers will:
(a) Maintain at all times during the period from the date hereof through
June 30, 2002, Tangible Net Worth of not less than (i) $68,000,000, plus (ii)
50% of positive Net Income (with no reduction for losses) for the fiscal
quarters ended March 31 and June 30, 2002 plus (iii) 100% of Net Equity Proceeds
received during such two fiscal quarters; and, thereafter, maintain Tangible Net
Worth at all times during each fiscal quarter (each, a "Test Quarter") of at
least (A) the minimum amount of Tangible Net Worth required hereunder as of the
last day of the immediately preceding fiscal quarter, plus (B) 50% of positive
Net Income (with no reduction for losses) for the Test Quarter, plus (C) 100% of
Net Equity Proceeds received during the Test Quarter; and
(b) Not permit at any time the ratio of Total Liabilities to Tangible Net
Worth to be greater than 1.00:1.00;
(c) Not permit the ratio of Total Funded Debt at any time to EBITDA for
the most recently ended period of four consecutive fiscal quarters to be greater
than 2.50:1.00; and
(d) As to the Holding Company, earn Net Income of at least $1.00 for each
trailing four consecutive fiscal quarter-period.
5.2 DEFINITIONS. For purposes of this Section, the following terms shall
have the following meanings and any undefined terms shall be defined in
accordance with generally accepted accounting principles on a basis consistent
with (a) that used in prior periods and (b) that in preparing the audited
financial statements referred to in Sections 3.5 and 4.1(a):
(a) As used herein, "EBITDA" shall mean, for any period, an amount equal
to Net Income for such period plus, to the extent deducted in the calculation of
Net Income for such period, (i) taxes in respect of income and profits paid or
accrued during such period (ii) Interest Expense for such period and (iii)
depreciation, amortization and other non-cash charges taken in accordance with
generally accepted accounting principles for such period.
(b) As used herein, "Indebtedness for Borrowed Money" shall mean, without
duplication, all indebtedness of the Companies with respect to any of the
following: (i) money borrowed (whether recourse or nonrecourse), including
principal, interest and premiums, (ii) obligations evidenced by a bond,
debenture, note or other similar written obligation to pay money, (iii)
capitalized lease obligations, (iv) obligations under conditional sales or other
title retention agreements or secured by any Encumbrance, (v) any letters of
credit or similar instruments (including reimbursement obligations with respect
thereto), (vi) the deferred purchase price of property or services, except trade
payables and accrued expenses as incurred in
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the ordinary course of business, or (vii) any guaranty of any or all of the
foregoing, in case each determined on a consolidated basis in accordance with
generally accepted accounting principles.
(c) As used herein, "Interest Expense" shall mean, for any period,
interest expense (including imputed interest on capital lease obligations) of
the Companies for such period, determining on a consolidated basis in accordance
with generally accepted accounting principles.
(d) As used herein, "Net Equity Proceeds" shall mean, for any period, the
aggregate cash proceeds (net of reasonable out-of-pocket fees and expenses)
received by the Holding Company during such period in connection with any
issuance by the Holding Company 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 (i) an officer, employee or director of any Company or
(ii) either Borrower, with respect to capital contributions to their respective
Subsidiaries), minus cash payments made to effect (i) any Phase 1 Stock
Repurchases during such period and (ii) solely to the extent such deduction is
permitted by the Bank, in its sole discretion, any Phase 2 Stock Repurchases
during such period.
(e) As used herein, "Net Income" shall mean the net income (or loss) of
the Companies, after deducting all operating expenses, provisions for all taxes
and reserves (including reserves for deferred income taxes) and all other proper
deductions, all determined on a consolidated in accordance with generally
accepted accounting principles.
(f) As used herein, "Tangible Net Worth" shall mean as of any date as of
which the amount thereof shall be determined, the total consolidated assets of
the Companies minus (a) the sum of any amounts attributable to (i) goodwill,
(ii) intangible items such as unamortized debt discount and expense, patents,
trade and service marks and names, copyrights and research and development
expenses except prepaid expenses, (iii) all reserves not already deducted from
assets, (iv) any write-up in the book value of assets resulting from any
revaluation thereof subsequent to the date of the Holding Company's audited
financial statements referred to in Section 3.5, and (v) the value of any
minority interest in any Subsidiaries (other than Permitted Acquisitions), and
(b) Total Liabilities.
(g) As used herein, "Total Funded Debt" shall mean, at any time, all
Indebtedness for Borrowed Money at such time, determined in accordance with
generally accepted accounting principles. The aggregate amount of Total Funded
Debt at any time shall include all accrued interest which has become due and
payable but has not been paid (whether or not capitalized).
(h) As used herein, "Total Liabilities" shall mean at any date as of which
the amount thereof shall be determined, all obligations which should, in
accordance with generally accepted accounting principles, be classified as
liabilities on the consolidated balance sheet of the Holding Company, including
in any event all Indebtedness.
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6. NEGATIVE COVENANTS.
Each of the Borrowers covenants and agrees that, so long as the Bank has
any commitment to lend hereunder or any Loan or other Obligation to the Bank
remains outstanding, each of the Borrowers will not, and will cause each of the
Subsidiaries to not:
6.1 INDEBTEDNESS, GUARANTEES. Create, incur, assume or be or remain liable
with respect to any Indebtedness or Guarantees, other than the following:
(a) Indebtedness of the Borrowers to the Bank or any of its affiliates;
(b) Indebtedness represented by amortization of the signing payment
received by the Holding Company under its 1998 glass bottle contract;
(c) Purchase money Indebtedness permitted under Section 6.2(c);
(d) Guarantees made by the Borrowers' Subsidiaries in favor of the Bank or
any of its affiliates; and
(e) Guarantees resulting from the endorsement of negotiable instruments
for collection in the ordinary course of business.
6.2 ENCUMBRANCES. Create, incur, assume or suffer to exist any mortgage,
pledge, security interest, lien or other charge or encumbrance, including the
lien or retained security title of a conditional vendor upon or with respect to
any of its property or assets ("Encumbrances"), or assign or otherwise convey
any right to receive income, except the following ("Permitted Encumbrances"):
(a) landlords' and lessors' liens in respect of rent not in default or
liens in respect of pledges or deposits under workers' compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics' and similar liens, if the obligations secured by such liens are not
then delinquent; liens securing the performance of bids, tenders, contracts
(other than for the payment of money); and statutory obligations incidental to
the conduct of its business that do not in the aggregate materially detract from
the value of the property of the Borrowers, or materially impair the use thereof
in the operation of the businesses of the Borrowers;
(b) judgment liens that shall not have been in existence for a period
longer than 30 days after the creation thereof or, if a stay of execution shall
have been obtained, for a period longer than 30 days after the expiration of
such stay;
(c) Encumbrances against any Company securing purchase money Indebtedness
for tangible personal property (other than inventory) in the ordinary course of
business in an aggregate amount (for the Companies as a group) of no more than
$5,000,000, provided that (i) the obligations secured by any such Encumbrance
shall not exceed 100% of the lesser of cost or
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<PAGE>
fair market value as of the time of the acquisition of such property covered
thereby, and (ii) each such Encumbrance shall at all times be limited solely to
the item or items of property so acquired;
(d) Encumbrances on certain assets of the Borrowers (other than
accounts and inventory and proceeds thereof) securing only the Indebtedness
permitted under Section 6.1(b); and
(e) Easements, rights of way, restrictions and other similar charges or
Encumbrances relating to real property and not interfering in a material way
with the ordinary conduct of the business of the Borrowers and the Subsidiaries.
6.3 SALE AND LEASEBACK. Enter into any arrangement, directly or
indirectly, whereby it shall sell or transfer any property owned by it, in order
to lease such property or lease other property that any Company intends to use
for substantially the same purpose as the property being sold or transferred.
6.4 MERGER; CONSOLIDATION; DISPOSITION OF ASSETS; ETC. Without the
Bank's prior written consent: (a) sell, lease or otherwise dispose of any of its
assets or properties except inventory and/or equipment in the ordinary course of
business; (b) amend or permit the amendment of its Organizational Documents in
any way that could have a material adverse effect upon its business or the
Bank's rights under any Obligation or alter the relative voting rights of the
Class A and Class B Common Stock of the Holding Company (whether for the Board
of Directors or otherwise); (c) dissolve, liquidate, merge or consolidate into
or with any other person or entity; (d) form (by spin-off or otherwise) any
Subsidiary unless (i) no Default then exists or would result therefrom, (ii) at
least ten days prior notice thereof shall have been provided to the Bank by
delivery of a properly completed Notice of New Subsidiary in the form of EXHIBIT
6.4 and (iii) such Subsidiary, if a Material Subsidiary, shall have executed and
delivered in favor of the Bank an unlimited guaranty, in form satisfactory to
the Bank, guaranteeing all existing and future obligations of the Borrowers to
the Bank; or (e) change its fiscal year.
6.5 INVESTMENTS. Make or maintain any Investments other than Permitted
Investments.
6.6 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or
assets or the rendering or accepting of any service with or to any Affiliate of
any Company except in the ordinary course of business and pursuant to the
reasonable requirements of such Borrower's business or Subsidiary's and upon
terms not less favorable to the Borrowers and the Material Subsidiaries than
they could obtain in a comparable arm's-length transaction with a third party
other than such Affiliate.
6.7 DISTRIBUTIONS. Without the Bank's prior written consent, no
Borrower shall make any distributions on account of or in redemption, retirement
or purchase its capital stock, partnership or other equity interests; except
that (a) the Borrowers' respective Subsidiaries may make distributions on
account of their capital stock to the Borrowers, (b) the Holding Company
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may redeem from former employees non-vested shares in the Holding Company's
Class A Common Stock issued under the Holding Company's Employee Equity
Incentive Plan, to the extent that the Holding Company has the right to redeem
such shares under said Plan, and (c) the Holding Company may redeem additional
shares of its Class A Common Stock, (i) as approved by its Board of Directors
between January 4, 2000 and February 20, 2002 (collectively, the "Phase 1 Stock
Repurchases") or (ii) as approved by its Board of Directors at any time after
the date hereof (collectively, the "Phase 2 Stock Repurchases").
7. DEFAULTS.
7.1 EVENTS OF DEFAULT. There shall be an Event of Default hereunder if
any of the following events occurs:
(a) default in the payment or mandatory prepayment of any amount of
principal, interest, fees or expenses of any Loan or any other Obligation when
due; or
(b) failure to perform any term, covenant or agreement contained in
Section 4, Section 5, Section 6 or Section 8.2; or
(c) failure by any Company, as applicable, to perform any other term,
covenant or agreement contained in any Loan Document if such default shall
continue for 30 days after the earlier of (i) actual knowledge thereof on the
part of either Borrower or (ii) notice thereof is sent to the Borrowers by the
Bank; or
(d) any representation or warranty made in this Agreement or any
certificate or other document furnished by or on behalf of any Company,
including without limitation, in any Subsidiary Guaranty, at the closing
hereunder or otherwise shall prove to have been false in any material respect
upon the date when made or deemed to have been made; or
(e) default or breach (after the applicable grace period, if any) under
the Indebtedness described in Section 6.1(b) or under any instrument or
agreement of any Company with respect to other Indebtedness of any Company
(other than to the Bank) for borrowed money or with respect to financing
available to any Company (other than from the Bank), if the effect of such
default or breach is to permit the holder of such Indebtedness to accelerate the
maturity thereof; or
(f) any Company shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee, liquidator or
similar official of itself or of all or a substantial part of its property, (ii)
be generally not paying its debts as such debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect), (v) take any
action or commence any case or proceeding under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts, or
any other law providing for the relief of debtors, (vi) fail to contest in a
timely or appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code or other
law, (vii) take any action under the laws of its jurisdiction of incorporation
or organization
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<PAGE>
similar to any of the foregoing, or (viii) take any corporate action for the
purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the application or
consent of any Company in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding up, or composition or
readjustment of such Borrower's or such Subsidiary's debts, (ii) the appointment
of a trustee, receiver, custodian, liquidator or the like of all or any
substantial part of any Company's assets, or (iii) similar relief in respect of
any Company, under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts or any other law providing for
the relief of debtors, and such proceeding or case shall continue undismissed,
or unstayed and in effect, for a period of 60 days; or an order for relief shall
be entered in an involuntary case under the Federal Bankruptcy Code, against any
Company; or action under the laws of the jurisdiction of incorporation or
organization similar to any of the foregoing shall be taken with respect to any
Company and shall continue unstayed and in effect for any period of 60 days; or
(h) a judgment or order for the payment of money shall be entered
against any Company by any court, or a warrant of attachment or execution or
similar process shall be issued or levied against property of any Company, that
in the aggregate exceeds $500,000 in value and such judgment, order, warrant or
process shall continue undischarged or unstayed for 60 days or execution shall
have issued in respect thereto; or
(i) there shall occur any material adverse change in the assets,
liabilities, financial condition, business or prospects of any Company, as
reasonably determined by the Bank acting in good faith; or
(j) for any reason, any Loan Document (including any Subsidiary
Guaranty) at any time shall not be in full force and effect in all material
respects or shall not be enforceable in all material respects in accordance with
its terms, or any Encumbrance granted pursuant thereto shall fail to be
perfected, or any person or entity (other than the Bank) shall contest the
validity, enforceability or perfection of any Encumbrance granted pursuant
thereto, or any party thereto (other than the Bank) shall seek to disaffirm,
terminate, limit or reduce its obligations under any of the Loan Documents; or
(k) for any reason, (i) C. James Koch and (ii) either Martin Roper or
Richard Lindsay (or their successors, approved as provided below) shall cease to
be actively engaged in the management of the Borrowers, unless a manager or
management team with qualifications, experience and reputation within the
consumer beverage business reasonably acceptable to the Bank commences
management of the Borrowers within 180 days after such cessations; or
(l) for any reason, the Principal Operating Company shall cease to be
wholly owned, directly or indirectly through one or more wholly owned
Subsidiaries, by the Holding Company; or
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<PAGE>
(m) for any reason, (i) C. James Koch (or, in the event of his death or
disability, his heirs, legatees or legal representatives) shall cease to be the
beneficial and legal owner of at least 51% of all issued and outstanding Class B
Common Stock of the Holding Company on a fully diluted basis or (ii) no Class B
Common Stock of the Holding Company shall be issued and outstanding.
7.2 REMEDIES. Upon the occurrence of an Event of Default described in
Section 7.1(f) or and (g), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the Bank's option and upon the Bank's
declaration, (a) the Commitment and all other commitments of the Bank to lend to
the Borrowers shall terminate; (b) the unpaid principal amount of the Loans,
together with accrued interest and all other Obligations, shall become
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived; and (c) the Bank
may exercise any and all rights it has under the Loan Documents or at law or in
equity and proceed to protect and enforce the Bank's rights by any action at
law, in equity or other appropriate proceeding.
8. GENERAL PROVISIONS.
8.1 NOTICES. Unless otherwise specified herein, all notices hereunder
to any party hereto shall be in writing, shall be addressed to such party at its
address indicated below, and shall be deemed to have been given when delivered
by hand, two days after being properly deposited in the mails postage prepaid,
when sent by electronic telecopy transmission, or one day after delivery to an
overnight courier:
If to the Borrowers:
The Boston Beer Company, Inc.
Boston Beer Corporation
75 Arlington Street
Boston, Massachusetts 02116
Attention: Mr. Richard P. Lindsay, Chief Financial Officer
Telecopy No.: (617) 368-5530
email: richard.lindsay@bostonbeer.com
with copies to:
Ms. Kathleen H. Wade
Boston Beer Corporation
75 Arlington Street
Boston, Massachusetts 02116
Telecopy No.: (617) 368-5553
email: kathy.wade@bostonbeer.com
and
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<PAGE>
Frederick H. Grein, Jr., Esq.
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, Massachusetts 02110
Telecopy No.: (617) 951-1295
email: fhg@hutch.com
If to the Bank:
Fleet National Bank
100 Federal Street
Boston, Massachusetts 02110
Attention: Thomas F. Brennan, Senior Vice President
Telecopy No.: (617) 434-8102
email: thomas_f_brennan@Fleet.com
with a copy to:
Susan E. Siebert, Esq.
Edwards & Angell, LLP
101 Federal Street
Boston, Massachusetts 02110
Telecopy No.: (617) 439-4170
email: ssiebert@ealaw.com
or at any other address specified by such party in writing.
8.2 EXPENSES. The Borrowers shall pay to the Bank on demand all
Expenses incurred by the Bank and the amount of all such Expenses remaining
unpaid thirty (30) days after receipt by the Borrowers of an invoice therefor
shall, until paid, bear interest at the rate applicable to principal hereunder
(including any default rate) and be an Obligation guaranteed under the
Subsidiary Guaranties.
8.3 SET-OFF. The Borrowers hereby grant to the Bank, a continuing lien,
security interest and right of setoff as security for all liabilities and
obligations to the Bank, whether now existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of the Bank or any entity under the
control of FleetBoston Financial Corporation and its successors and assigns or
in transit to any of them. At any time after the occurrence and during the
continuance of an Event of Default, without demand or notice (any such notice
being expressly waived by the Borrowers), the Bank may set off the same or any
part thereof and apply the same to any and all Obligations of the Borrowers even
though unmatured and regardless of the adequacy of any other collateral securing
the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS
OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
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<PAGE>
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO
SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWERS OR ANY GUARANTOR, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
8.4 NO WAIVERS; TERM. No failure or delay by the Bank in exercising any
right, power or privilege hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein and in the other Loan
Documents are cumulative and not exclusive of any rights or remedies otherwise
provided by agreement or law. This Agreement shall continue in force and effect
so long as the Bank has any commitment to make Loans hereunder or any Loan or
any other Obligation shall be outstanding, provided that the Borrowers
agreements under Sections 1.7, 1.8, 8.2, 8.13 and Part B, Sections 2, 3 and 4 of
SCHEDULE B shall survive the payment of the obligations and the expiration of
the Commitment.
8.5 REPLACEMENT OF NOTES. Upon receipt of an appropriate and reasonably
acceptable affidavit of an officer of the Bank as to the loss, theft,
destruction or mutilation of 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.
8.6 USURY. All agreements between one or both 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. As used herein, the
term "applicable law" shall mean the law in effect as of the date hereof;
provided, however, that in the event there is a change in the law which results
in a higher permissible rate of interest, then this Agreement and the Notes
shall be governed by such new law as of its effective date. 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 this Agreement and the Notes to contract
in strict compliance with the laws of the Commonwealth of Massachusetts from
time to time in effect. 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 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 8.6 shall control every other provision of this
Agreement and of the Notes.
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<PAGE>
8.7 GOVERNING LAW. This Agreement, the Notes and the other Loan
Documents shall be deemed to be contracts made under seal and shall be construed
in accordance with and governed by the laws of the Commonwealth of Massachusetts
(without giving effect to any conflicts of laws provisions contained therein).
8.8 ENTIRE AGREEMENTS; AMENDMENTS. This Agreement is intended by the
parties as the final, complete and exclusive statement of the transactions
evidenced by this Agreement. All prior or contemporaneous promises, agreements
and understandings, whether oral or written, are deemed to be superceded by this
Agreement and no party is relying on any promise, agreement or understanding not
set forth in this Agreement. Neither this Agreement nor the Notes nor any other
Loan Document nor any provision hereof or thereof may be amended or waived
except by a written instrument signed by the Bank and, in the case of
amendments, by the Bank and the other parties named thereto.
8.9 BINDING EFFECT OF AGREEMENT; ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrowers and the Bank and their respective successors and assigns; provided
that neither Borrower may assign or transfer its rights or obligations
hereunder.
(b) 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.
(c) 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.
(d) 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.
- 23 -
<PAGE>
8.10 COUNTERPARTS, ETC. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument. The invalidity or unenforceability of any one or more
phrases, clauses or sections of this Agreement shall not affect the validity or
enforceability of the remaining portions hereof. The captions and headings of
the various sections and subsections of this Agreement are provided for
convenience only and shall not be construed to modify the meaning of such
sections or subsections.
8.11 WAIVER OF JURY TRIAL. THE BORROWERS AND THE BANK MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING,
WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR
ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT
OF THE LOAN DOCUMENTS, AND AGREE THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH BORROWER HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO THIS AGREEMENT,
ACCEPT THE NOTES AND MAKE THE LOANS.
8.12 CONSENT TO JURISDICTION. EACH OF THE BORROWERS HEREBY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, AS WELL AS TO
THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN OR OTHER REVIEW
SOUGHT FROM THE AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF EITHER BORROWER'S OBLIGATIONS UNDER OR WITH RESPECT TO
ANY LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER
OBLIGATION TO BANK, AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE AS
TO VENUE IN ANY OF SUCH COURTS.
8.13 INDEMNIFICATION; JOINT AND SEVERAL LIABILITY. Each of the
Borrowers will indemnify and hold the Bank harmless against any and all claims,
demands, suits, actions, causes of action, damages, losses, settlement payments,
obligations, costs, expenses and all other liabilities whatsoever which shall at
any time or times be incurred or sustained by the Bank or by
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<PAGE>
any of its shareholders, directors, officers, employees, subsidiaries,
affiliates or agents (except any of the foregoing incurred or sustained as a
result of the gross negligence or willful misconduct of the Bank) on account of,
or in relation to, or in any way in connection with, any of the arrangements or
transactions contemplated by, associated with or ancillary to any of the
Obligations. All of the obligations of the Borrowers under any and all of the
Loan Documents are and shall be joint and several.
* THE NEXT PAGE IS THE SIGNATURE PAGE *
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed under seal by their duly authorized officers as of the day and year
first above written.
THE BOSTON BEER COMPANY, INC.
By:
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
BOSTON BEER CORPORATION
By:
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
FLEET NATIONAL BANK
By:
-----------------------------------------
Thomas F. Brennan, Senior Vice President
[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT]
<PAGE>
SCHEDULE A
GENERAL DEFINED TERMS
As used herein, the following terms shall have the following meanings
and any undefined accounting terms shall be defined in accordance with generally
accepted accounting principles on a basis consistent with (a) that used in prior
periods and (b) that used in preparing the audited financial statements referred
to in Sections 3.5 and 4.1(a):
ACQUISITION LOANS: See Section 1.11.
AFFILIATE: As applied to any Company, any member, trustee, director,
officer, manager or employee, any corporation, association, partnership, firm or
other entity in which such Company is a partner, shareholder (except any holder
of not more than 5% of the outstanding stock of any company listed on a national
securities exchange or actively traded on the over-the-counter securities
market), warrant holder, option holder, member, director or officer, and any
other person or entity directly or indirectly controlling, controlled by, or
under common control with, such Company.
ALTERNATIVE PRIME RATE: The higher of (i) the Prime Rate and (ii) the
Federal Funds Rate plus 1/2 of 1% per annum (rounded upwards, if necessary, to
the next 1/8 of 1%). The Alternative Prime Rate is not necessarily intended to
be the lowest rate of interest determined by the Bank in connection with
extensions of credit. Changes in the rate of interest resulting from changes in
the Alternative Prime Rate shall take place immediately without notice or demand
of any kind.
BANK: See Preamble.
BORROWER AND BORROWERS: See Preamble.
BUSINESS DAY: (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or a day which shall be, in the
Commonwealth of Massachusetts, a legal holiday or day on which banking
institutions are required or authorized to close business; and (ii) if the
applicable day relates to a LIBOR Loan or an interest period for a LIBOR Loan,
the day on which dealings in Dollar deposits are also carried on in the London
interbank market and banks are open for business in London.
CLEAN-UP WORK: All activities, including, without limitation, cleanup
design and implementation, removal activities, investigation, field and
laboratory testing and analysis, monitoring and other remedial and response
actions, taken or to be taken, arising out of or in connection with Hazardous
Materials, including without limitation (a) all activities included within the
meaning of the terms "removal," "remedial action" or "response", as defined in
42 U.S.C. Section 9601(23), (24) and (25), and (b) all activities included
within the meaning of
<PAGE>
the terms "remedial response actions" and "Remedial Response Implementation Plan
(RRIP)," as defined in 310 CMR 40.
CODE: The Internal Revenue Code of 1986 and the rules and regulations
thereunder, as may be supplemented or amended from time to time.
COMMITMENT: See Section 1.1.
COMMONLY CONTROLLED ENTITY: See Section 3.13.
COMPANIES. See Section 1.11.
DEFAULT: An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
EBITDA: See Section 5.2(a).
EMPLOYEE BENEFIT PLAN: See Section 3.13.
ENCUMBRANCE: See Section 6.2.
ERISA: The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, as supplemented or amended from time to time.
ENVIRONMENTAL LAWS: The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Emergency Planning and
Community Right-to-Know Act of 1986, as amended, the Resources Conservation and
Recovery Act of 1976, as amended, and any applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders, approvals, plans,
authorizations, concessions, and similar items of all governmental authorities
and all applicable judicial, administrative and regulatory decrees, judgments
and orders, any of which relate to the protection of human health or the
environment from the effects of Hazardous Substances, including, but not limited
to, those pertaining to reporting, licensing, permitting, investigating and
remediating emissions, discharges, releases or threatened releases of Hazardous
Substances into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
EVENT OF DEFAULT: Any event described in Section 7.1.
EXPENSES: Any and all present and future expenses incurred by or on
behalf of the Bank in connection with this Agreement or any of the other Loan
Documents or in connection with the Bank's exercise, preservation or enforcement
of any of its rights, remedies or options hereunder or thereunder, whether
incurred heretofore or hereafter, which expenses shall include, without being
limited to, (a) the cost of record searches, fees of outside legal counsel or
the allocated costs of in-house legal counsel (for regulation, preparation,
execution and delivery of the Loan
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<PAGE>
Documents and amendments and waivers thereto and enforcement and collection and
bankruptcy services with respect thereto), disbursements and expenses, all costs
and expenses incurred by the Bank in connection with the administration of the
Loans, including without limitation opening bank accounts, depositing checks,
receiving and transferring funds, and any charges due to "insufficient funds" of
deposited checks and the Bank's standard fee relating thereto, the fees payable
to the collateral examination staff of the Bank, fees and expenses of
accountants, appraisers, financial advisors or other experts or advisors
retained by the Bank, fees and taxes relative to the filing of financing
statements, costs of preparing and recording the Loan Documents and all other
expenses, costs and fees contemplated by this Agreement.
EXPIRATION DATE: See Section 1.1.
FEDERAL FUNDS RATE: For any day, a fluctuating interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the Bank
from three Federal funds brokers of recognized standing selected by the Bank.
GOVERNMENTAL AUTHORITY: Any nation or government, or any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.
HAZARDOUS MATERIAL: Any material or substance (a) which, whether by its
nature or use, is now or hereafter defined as a hazardous waste, hazardous
substance, hazardous material, pollutant or contaminant under any Environmental
Law, including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601(14)
and (33), the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section
6903(5), and the Massachusetts Oil and Hazardous Material Chapter 21E, Section
2, (b) which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous to human health or the
environment, (c) which is or contains petroleum or any fraction thereof,
including crude oil, heating oil, gasoline or diesel fuel, or (d) the presence
of which requires investigation or remediation under any Environmental Law.
INDEBTEDNESS: (a) All obligations for borrowed money or other
extensions of credit whether or not secured or unsecured, absolute or
contingent, including, without limitation, unmatured reimbursement obligations
with respect to letters of credit, bankers acceptance, surety bonds and other
financial guaranties issued for the account of or on behalf of either Borrower
and all obligations representing the deferred purchase price of assets, services
or securities (including related noncompetition, consulting and stock repurchase
obligations), other than trade accounts payable and accrued expenses arising in
the ordinary course of business, (b) all obligations evidenced by bonds, notes,
debentures or other similar instruments, (c) all obligations in respect
- 3 -
<PAGE>
of mandatory redemption or cash dividend rights on equity interests, (d) all
obligations secured by any mortgage, pledge, security interest or other lien on
property owned or acquired by either Borrower whether or not the obligations
secured thereby shall have been assumed, (d) all obligations arising under
capital leases, and (e) all obligations relating to securitization transactions
and synthetic lease and sale-leaseback transactions. Indebtedness of any Person
shall include any Indebtedness of any partnership in which such Person is a
general partner, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.
INTEREST EXPENSE: See Section 5.2(c).
INVESTMENT: As applied to the Borrowers, the purchase or acquisition of
any share of capital stock, partnership interest, evidence of indebtedness or
other equity security or all or substantially all of the assets of any other
person or entity, any loan, advance or extension of credit to, or contribution
to the capital of, any other person or entity, any real estate held for sale or
investment, any commodities futures contracts held other than in connection with
bona fide hedging transactions, any other investment in any other person or
entity, and the making of any commitment or acquisition of any option to make an
Investment.
LIBOR RATE: See SCHEDULE B.
LIBOR LOAN: Any Loan bearing interest at a rate determined with
reference to the LIBOR Rate.
LIBOR PERIOD: See SCHEDULE B.
LIBOR TERMS: See Section 1.3 and SCHEDULE B.
LOAN DOCUMENTS: See Section 3.2.
LOANS: See Section 1.1.
MATERIAL SUBSIDIARY: At any date of determination, any Subsidiary (i)
whose total assets at the last day of the most recently ended fiscal quarter
have a market value equal to or greater than 5% of the consolidated total assets
of the Companies at such date, determined in accordance with generally accepted
accounting principles, (ii) whose Tangible Net Worth at the last day of the most
recently ended fiscal quarter is equal to or greater than 5% of Tangible Net
Worth at such date, or (iii) whose gross revenues with respect to the most
recently ended four-quarter period are equal to or greater than 5% of the
consolidated gross revenues of the Companies for such four-quarter period. The
Material Subsidiaries as of the date of this Agreement are designated as such on
EXHIBIT 3.15.
MULTIEMPLOYER PLAN: See Section 3.13.
NET EQUITY PROCEEDS: See Section 5.2(d).
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<PAGE>
NET INCOME: See Section 5.2(e).
NOTES: See Section 1.2.
NOTICE OF BORROWING OR CONVERSION: See Section 1.4.
NOTICE OF NEW SUBSIDIARY. See Section 6.4.
OBLIGATIONS: Any and all existing and future obligations now or
hereafter owed by the Borrowers to the Bank, whether direct or indirect,
contingent or due or to become due.
ORGANIZATIONAL DOCUMENTS: (a) With respect to any corporation, its
certificate or articles of incorporation and by-laws, (b) with respect to any
partnership, its partnership certificate and partnership agreement, (c) with
respect to any limited liability company, its certificate of formation and
operating agreement or other comparable agreement and (d) with respect to any
other entity, the documents pursuant to which such entity was formed and
organized.
ORIGINAL FACILITIES: See Recitals.
ORIGINAL REVOLVING NOTE: See Recitals.
PARTICIPANT: See Section 8.9.
PARTNERSHIP: See Recitals.
PARTNERSHIP TRANSFER: See Recitals.
PBGC: The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA. ----
PERMITTED ACQUISITIONS: Any acquisition of stock or assets by a
Borrower or a Subsidiary of a Borrower 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 $20,000,000, (b) the aggregate
amount paid in cash or cash equivalents by the Companies in connection with all
such acquisitions since the date of this Agreement (whether or not proceeds of
the Loans) shall not exceed $40,000,000, (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 their 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 simultaneously being
merged into an acquiring Borrower or Material Subsidiary 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 to assure compliance
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<PAGE>
with Section 1.12, (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.
PERMITTED ENCUMBRANCES: see Section 6.2.
PERMITTED INVESTMENTS: As applied to any Company, investments (i) in
notes, bonds or other obligations of the United States of America or any agency
thereof that as to principal and interest constitute direct obligations of or
are guaranteed by the United States of America; (ii) in certificates of deposit
or other deposit instruments or accounts of the Bank or any other banks or trust
companies organized under the laws of the United States or any state thereof
that have capital and surplus of at least $500,000,000; (iii) in mutual funds
investing only in commercial paper that is rated not less than P-2 or A-2 or
their equivalents by Moody's Investors Service, Inc. or Standard & Poor's
Ratings Services, respectively, or their successors; (iv) up to $7,500,000 in
the aggregate in connection with Permitted Acquisitions after the date of this
Agreement, (v) the investments of the Holding Company in its existing
Subsidiaries, and (vi) advances to employees for the purchase of stock options
not to exceed $1,000,000 outstanding at any time in the case of any one employee
and not to exceed $2,000,000 outstanding at any time in the aggregate to all
employees of the Companies.
PHASE 1 STOCK REPURCHASE: See Section 6.7.
PHASE 2 STOCK REPURCHASE: See Section 6.7.
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.
PRIME RATE LOAN: Any Loan bearing interest determined with reference to
the Prime Rate.
REVOLVING CREDIT PERIOD: The period from the date hereof through and
including the Expiration Date or such earlier date or dates as of which the
Commitment expires or is terminated.
RESTRUCTURING: See Recitals.
SEC: The Securities and Exchange Commission and any successor agency
thereof.
SUBSIDIARIES: (a) Any corporation, association, limited liability
company, joint stock company, business trust or other similar organization of
which 50% or more of the ordinary voting power for the election of a majority of
the members of the board of directors or other governing body of such entity is
held or controlled by any Subsidiary of either Borrower; (b) any other such
organization the management of which is directly or indirectly controlled by any
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<PAGE>
Subsidiary of either Borrower through the exercise of voting power or otherwise;
or (c) any joint venture, association, partnership or other entity in which any
Subsidiary of either Borrower has at least a 50% equity interest, directly or
indirectly.
SUBSIDIARY GUARANTY: See Section 1.12.
TANGIBLE NET WORTH: See Section 5.2(f).
TEST QUARTER. See Section 5.1(a).
TOTAL LIABILITIES: See Section 5.2(h).
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<PAGE>
SCHEDULE B
LIBOR TERMS
A. DEFINITIONS.
As used in this SCHEDULE A, the following terms have the following
meanings:
LIBOR PERIOD: With respect to each LIBOR Loan, the period commencing on
the date such Loan is made or converted from a Prime Rate Loan, or the
last day of the immediately preceding LIBOR Period, as to LIBOR Loans
being continued as such, and ending one month, two months or three
months thereafter, as the Borrowers may elect in the applicable Notice
of Borrowing or Conversion; provided that:
(i) any LIBOR Period (other than a LIBOR Period determined pursuant to
clause (iv) below) that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in the next calendar month, in which
case such Interest Period shall end on the immediately preceding
Business Day;
(ii) if the Borrowers shall fail to give notice as provided in Section
1.4, the Borrowers shall be deemed to have requested a conversion of
the affected LIBOR Loan to a Prime Rate Loan on the last day of the
then current LIBOR Period with respect thereto;
(iii) any LIBOR Period relating to a LIBOR Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (iv) below, end on the last
Business Day of a calendar month;
(iv) no LIBOR Period may end after the Expiration Date;
(v) no LIBOR Period shall include a principal repayment date for the
Loans unless an aggregate principal amount of Loans at least equal to
the principal amount due on such principal repayment date shall be
Prime Rate Loans or LIBOR Loans having LIBOR Periods ending on or
before such date; and
(vi) notwithstanding clauses (iv) and (v) above, no LIBOR Period shall
have a duration of less than one month.
LIBOR RATE: With respect to any LIBOR Loan, the rate per annum as
determined on the basis of the offered rates for deposits in U.S.
Dollars, for a period of time comparable to the LIBOR Period for such
LIBOR Loan which appears on the Telerate page 3750 as of 11:00 a.m.
London time on the day that is two Business Days preceding the first
day of
<PAGE>
such LIBOR Period; provided, however, if the rate described above does
not appear on the Telerate System on any applicable interest
determination date, the LIBOR Rate shall be the rate (rounded upward,
if necessary, to the nearest one hundred-thousandth of a percentage
point), determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such LIBOR Period which
are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is two Business
Days preceding the first day of such LIBOR Period as selected by the
Bank. The principal London office of each of the 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 LIBOR Period offered by major banks in New York City at
approximately 11:00 a.m. New York City time, on the day that is two
Business Days preceding the first day of such LIBOR Loan. In the event
that the Bank is unable to obtain any such quotation as provided above,
it will be deemed that LIBOR Rate for such LIBOR Loan cannot be
determined. In the event that the Board of Governors of the Federal
Reserve System shall impose a Reserve Percentage with respect to LIBOR
deposits of the Bank, then for any period during which such Reserve
Percentage shall apply, the LIBOR Rate shall be equal to the amount
determined above divided by an amount equal to 1 minus the Reserve
Percentage.
REGULATORY CHANGE: Any change after the date of this Agreement in
United States federal, state or foreign law or regulation (including
without limitation Regulation D), including without limitation the
issuance of any final regulations or guidelines, or the adoption or
making after such date of any interpretation, directive or request
applying to a class of banks including the Bank or under any United
States federal, state or foreign law or regulations (whether or not
having the force of law and whether or not failure to comply therewith
would be unlawful) by any court or governmental or monetary authority
charged with the interpretation thereof.
REGULATION D: Regulation D of the Board of Governors of the Federal
Reserve System, as the same may be amended or supplemented from time to
time.
RESERVE PERCENTAGE: The maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which
is imposed on member banks of the Federal Reserve System against
"Euro-currency Liabilities", as defined in Regulation D."
B. GENERAL TERMS.
1. LIBOR LOANS. Each LIBOR Loan shall bear interest on the outstanding
principal amount thereof, for each LIBOR Period applicable thereto, at a rate as
set forth in Section 1.3. Such interest shall be payable for such LIBOR Period
on the last day thereof and when such LIBOR Loan is due (whether at maturity, by
reason of acceleration or otherwise) and,
- 2 -
<PAGE>
if such LIBOR Period is longer than three months, at intervals of three months
after the first day thereof. There shall be no more than five LIBOR Loans
outstanding at any time.
2. REQUIREMENTS OF LAW.
(a) In the event that any Regulatory Change shall:
(i) subject the Bank to any tax of any kind whatsoever with
respect to this Agreement, either Note or any Loans made by it, or
change the basis of taxation in respect thereof (other than taxes
imposed on the overall net income of the Bank);
(ii) impose or modify any reserve, compulsory loan assessment,
special deposit or similar requirement relating to any extensions of
credit or other assets of, or any deposits with or other liabilities
of, any office of the Bank (including any of such LIBOR Loans or any
deposits referred to in the definition of "LIBOR Rate"); or
(iii) impose any other conditions affecting this Agreement (or
any of such extensions of credit, assets, deposits or liabilities);
and the result of any of the foregoing shall be to increase the Bank's costs of
making or maintaining any LIBOR Loans, or the Commitment, or to reduce any
amount receivable by the Bank hereunder in respect of any of its LIBOR Loans or
the Commitment, in each case only to the extent that such additional amounts are
not included in the LIBOR Rate applicable thereto, then the Borrowers shall pay
to the Bank, within 15 days after its demand therefor, such additional amounts
as shall be sufficient to compensate the Bank for such increased costs or
reduced amount receivable.
3. LIMITATIONS ON LIBOR LOANS; ILLEGALITY.
(a) Anything herein to the contrary notwithstanding, if, on or prior to
the determination of an interest rate for any LIBOR Loans for any applicable
LIBOR Period, the Bank shall determine (which determination shall be conclusive
absent manifest error) that:
(i) by reason of any event affecting United States money
markets or the London interbank market, quotations of interest rates
for the relevant deposits are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining the
rate of interest for such Loans under this Agreement; or
(ii) the rates of interest referred to in the definition of
"LIBOR Rate", on the basis of which the rate of interest on any LIBOR
Loans for such period is determined, do not accurately reflect the cost
to the Bank of making or maintaining such LIBOR Loans for such period;
then the Bank shall give the Borrowers prompt notice thereof (and shall
thereafter give the Borrowers prompt notice of the cessation, if any, of such
condition), and so long as such
- 3 -
<PAGE>
condition remains in effect, the Bank shall be under no obligation to make LIBOR
Loans or to convert Prime Rate Loans into LIBOR Loans and the Borrowers shall,
on the last day(s) of the then current LIBOR Period(s) for any outstanding LIBOR
Loans, either prepay such LIBOR Loans in accordance with Section 4 of this
SCHEDULE B or convert such Loans into Prime Rate Loans in accordance with
Section 1.4.
(b) Notwithstanding any other provision herein, if any Regulatory
Change shall make it unlawful for the Bank to make or maintain LIBOR Loans as
contemplated by this Agreement, (i) the Bank's commitment hereunder to make
LIBOR Loans, continue LIBOR Loans as such and convert Prime Rate Loans to LIBOR
Loans shall thereupon terminate and (ii) the Loans then outstanding as LIBOR
Loans, if any, shall be converted automatically to Prime Rate Loans on the
respective last days of the then current LIBOR Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a LIBOR Loan occurs on a day which is not the last day of the then current
LIBOR Period with respect thereto, the Borrowers shall pay to such Bank such
amounts, if any, as may be required pursuant to Section 4 of this SCHEDULE B.
4. PAYMENTS BEFORE END OF LIBOR PERIOD, ETC.
The Borrowers shall pay to the Bank, upon request of the Bank, such
amount or amounts as shall be sufficient (in the reasonable opinion of the Bank)
to compensate it for any loss (including loss of profit), cost, or expense
incurred as a result of:
(a) any payment or conversion of a LIBOR Loan on a date other than the
last day of the LIBOR Period for such Loan;
(b) any failure by the Borrowers to borrow, convert a Prime Rate Loan
into or continue a LIBOR Loan on the date specified by the Borrowers' written
notice;
(c) any failure by the Borrowers to pay a LIBOR Loan on the date for
payment specified in the Borrowers' written notice.
Without limiting the foregoing, the Borrowers shall pay to the Bank a "yield
maintenance fee" in connection with the prepayment of any LIBOR Loan in an
amount computed as follows: The current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the LIBOR Period for the LIBOR Loan being
prepaid shall be subtracted from the LIBOR Rate in effect at the time of
prepayment. If the result is zero or a negative number, there shall be no yield
maintenance fee. If the result is a positive number, then the resulting
percentage shall be multiplied by the amount of the principal balance being
prepaid. The resulting amount shall be divided by 360 and multiplied by the
number of days remaining in such LIBOR period. Such amount shall be reduced to
present value calculated by using the above referenced United States Treasury
securities rate and the number of days remaining in such LIBOR Period. The
resulting amount shall be the yield maintenance fee due to any Bank upon the
prepayment of such LIBOR Loan. If by reason of an Event of Default, the Banks
elect to declare the Notes to be immediately due and payable, then any yield
maintenance
- 4 -
<PAGE>
fee with respect to the LIBOR Loan then outstanding shall become due and payable
in the same manner as though the Borrowers had elected to prepay such Loan.
- 5 -
<PAGE>
EXHIBIT 1.2
REVOLVING CREDIT NOTE
$45,000,000 Boston, Massachusetts
July 1, 2002
FOR VALUE RECEIVED, THE BOSTON BEER COMPANY, INC. and BOSTON BEER
CORPORATION, each a Massachusetts corporation (the "Borrowers"), hereby jointly
and severally promise to pay to FLEET NATIONAL BANK (the "Bank"), or order, the
principal amount of $45,000,000, or, if less, the aggregate unpaid principal
amount of Loans hereunder made by the Bank to the Borrowers under the Second
Amended and Restated Credit Agreement of even date herewith by and among the
Borrowers and the Bank (as amended or extended from time to time, the "Loan
Agreement"), together with interest thereon at the rate provided in the Loan
Agreement, payable on the dates and in such amounts as specified in the Loan
Agreement, and at the final maturity of this Note, whether by payment or
prepayment, acceleration or otherwise, without set-off, deduction or
counterclaim. The principal amount hereof may be advanced, repaid and readvanced
in accordance with the terms of the Loan Agreement.
Overdue principal (whether on the due date of a Loan, by reason of
acceleration or otherwise) and, to the extent permitted by applicable law,
overdue interest and fees or any other amounts payable under the Loan Agreement
(including without limitation overadvances) due to the Borrowers' failure to pay
the same in full shall bear interest from and including the due date thereof
until paid, at a rate per annum equal to 4% above the rate then applicable to
Prime Rate Loans, which interest shall be compounded daily and payable on
demand. In addition, if the entire amount of any required principal and/or
interest is not paid in full within ten days after the same is due, the
Borrowers shall pay to the Bank a late fee equal to 5% of the required payment.
The outstanding principal amount of this Note and accrued and unpaid
interest thereon shall be due and payable as provided in the Loan Agreement. The
Borrowers have the right in certain circumstances to prepay this Note in whole
or in part subject to the terms and conditions provided in the Loan Agreement.
All payments under this Note shall be made at the head office of the
Bank at 100 Federal Street, Boston, Massachusetts 02110 (or at such other place
as the Bank may designate to the Borrowers from time to time in writing) in
lawful money of the United States of America in federal or other immediately
available funds.
This Note is one of the "Notes" referred to in and is entitled to the
benefits of the Loan Agreement (including the Schedules thereto) and all other
instruments evidencing and/or securing the indebtedness hereunder, which Loan
Agreement and other instruments are hereby made part of this Note and are deemed
incorporated herein in full; but neither this reference to
<PAGE>
the Loan Agreement nor any provision thereof shall affect or impair the absolute
and unconditional obligation of the Borrowers to pay the principal of and
interest on this Note as herein provided. The occurrence or existence of an
"Event of Default" as defined in the Loan Agreement shall constitute a default
under this Note and shall entitle the Bank to accelerate the entire indebtedness
hereunder and to take such other action as may be provided for in the Loan
Agreement or any other instrument or agreement evidencing and/or securing this
Note.
The Borrowers hereby waives presentment, demand, notice of dishonor,
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.
All agreements between one or both 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 this Note 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 this Note
exceed the maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof; provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then this Note shall be governed by such
new law as of its effective date. 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 this Note to contract in strict compliance with the laws of the
Commonwealth of Massachusetts from time to time in effect. If, under any
circumstances whatsoever, performance or fulfillment of any provision of this
Note 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
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
this Note and not to the payment of interest.
If this Note shall not be paid when due and shall be placed by the
holder hereof in the hands of any attorney for collection, through legal
proceedings or otherwise, the Borrowers will pay reasonable attorneys' fees to
the holder hereof together with reasonable costs and expenses of collection,
including, without limitation, any such reasonable attorneys' fees, costs and
expenses relating to any proceedings with respect to the bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation of
either of the Borrowers or any party to any instrument or agreement securing
this Note, all as provided in the Loan Agreement.
EACH BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON THIS NOTE OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY RELATED DOCUMENTS
OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION OF THE LOANS OR
ENFORCEMENT OF THE RELATED LOAN DOCUMENTS, AND AGREES THAT
- 2 -
<PAGE>
SUCH BORROWER WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION
IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY
LAW, EACH BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH BORROWER CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR
THE BANK TO ACCEPT THIS NOTE AND TO MAKE LOANS AS CONTEMPLATED IN THE LOAN
AGREEMENT.
- 3 -
<PAGE>
This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts (without giving effect to any conflicts of laws
provisions contained therein).
THE BOSTON BEER COMPANY, INC.
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
BOSTON BEER CORPORATION
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[SIGNATURE PAGE TO REVOLVING CREDIT NOTE]
<PAGE>
EXHIBIT 1.4
NOTICE OF BORROWING OR CONVERSION
Fleet National Bank
100 Federal Street Date:
Boston, Massachusetts 02110 --------------
Attention: Thomas F. Brennan, Senior Vice President
Re: Second Amended and Restated Credit Agreement dated as of July 1, 2002
(as amended from time to time, the "Agreement") between Fleet National
Bank, as the "Bank", and The Boston Beer Company, Inc. and Boston Beer
Corporation (collectively, the "Borrowers")
Dear Mr. Brennan:
Please accept this notice as the election of the Borrowers as follows [each
Loan must be in the amount of $100,000 or an integral multiple thereof]:
A new Loan request in the principal amount of $ to
---- be borrowed as a [Prime Rate Loan/LIBOR Loan]. [Such LIBOR
Rate option is selected for a term of:
one month
-----
two months
-----
three months from the date the Loan is funded.]
-----
Conversion or continuation of a portion of the outstanding
Loans in the principal amount of $ from a [Prime Rate
Loan/LIBOR Loan] to a [Prime Rate Loan/LIBOR Loan]. [Such
LIBOR Rate option is selected for a term of:
one month
----
two months
----
three months from the date of such conversion or continuation.]
----
This Notice of Borrowing or Conversion is issued in accordance with the
provisions of Section 1.4 of the Loan Agreement and of the LIBOR Terms and is
subject to all other terms and conditions of the Loan Agreement.
The representations and warranties contained in the Agreement are true and
accurate on and as of the effective date of such advance, conversion or
continuation as though made at and as of such date (except to the extent that
such representations and warranties expressly relate to an earlier date); and no
Default has occurred and is continuing or will result from such advance,
<PAGE>
conversion or continuance. The undersigned represents and warrants that he is
authorized to execute and deliver this Notice on behalf of the Borrowers.
THE BOSTON BEER COMPANY, INC.
and BOSTON BEER CORPORATION
By:
--------------------------------------
Duly authorized signatory as to both
<PAGE>
EXHIBIT 2.1
$45,000,000 REVOLVING CREDIT FINANCING
OF
THE BOSTON BEER COMPANY, INC.
AND
BOSTON BEER CORPORATION
BY
FLEET NATIONAL BANK
JULY 1, 2002
AGENDA OF CLOSING
<TABLE>
<CAPTION>
Responsible
Counsel
-------
<S> <C> <C>
1. Second Amended and Restated Credit Agreement between the Bank and the Agreement: E&A
Borrowers Disclosure Exhibits: HWD
2. $45,000,000 Revolving Credit Note E&A
3. Guaranties of all Material Subsidiaries (see Annex 1) E&A
4. Certificate of Insurance HWD
5. Officer's Certificate certifying as to (and attaching) the Holding HWD
Company's (a) corporate charter, (b) by-laws, (c) directors'
votes authorizing all transactions contemplated by the Loan
Documents, and certifying as to the incumbency of the officers
signing on behalf of the Holding Company
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
6. Officer's Certificate certifying as to (and attaching) the Principal HWD
Operating Company's (a) corporate charter, (b) bylaws and (c)
directors' votes authorizing all transactions contemplated by the Loan
Documents; and certifying as to the incumbency of the officers signing
on behalf of the Principal Operating Company
7. Officer's Certificates certifying as to (and attaching) each Material HWD
Subsidiary's (a) corporate charter or declaration of trust, as
applicable, (b) bylaws, and (c) director's votes authorizing all
transactions contemplated by the Subsidiary Guaranties; and certifying
as to the incumbency of the officers signing on behalf of such
Material Subsidiary
8. Certificates of legal existence, corporate good standing and foreign HWD
qualification of each Borrower and Material Subsidiary
9. UCC searches against the Borrowers and each Material Subsidiary HWD
10. Opinion of General Counsel to the Borrowers HWD
and the Material Subsidiaries
</TABLE>
ABBREVIATIONS
Borrowers The Boston Beer Company, Inc. (the "Holding Company")
and Boston Beer Corporation (the "Principal Operating
Company")
Bank Fleet National Bank
E&A Edwards & Angell, LLP, special counsel to the Bank
HWD Hutchins, Wheeler & Dittmar
Material Subsidiaries See Annex 1
- 2 -
<PAGE>
ANNEX 1
Material Subsidiaries as of July 1, 2002
Samuel Adams Brewery Company, Ltd.
Malt Holdings Business Trust
Hops Financial Holdings Business Trust
<PAGE>
EXHIBIT 3.7
LITIGATION
None
<PAGE>
EXHIBIT 3.14
ENVIRONMENTAL MATTERS
None.
<PAGE>
EXHIBIT 3.15
OWNERSHIP
[BOSTON BEER COMPANY AND SUBSIDIARIES FLOW CHART]
<PAGE>
EXHIBIT 4.1
OFFICER'S COMPLIANCE CERTIFICATE FOR PERIOD ENDED []
THE BOSTON BEER COMPANY, INC. and BOSTON BEER CORPORATION (together,
the "Borrowers") HEREBY JOINTLY AND SEVERALLY CERTIFY that:
This Report is furnished pursuant to Section 4.1(c) of the Second
Amended and Restated Credit Agreement dated as of July 1, 2002 by and among the
Borrowers and Fleet National Bank, as amended from time to time (the
"Agreement"). Unless otherwise defined herein, the terms used in this Report
have the meanings assigned to them in the Agreement.
As required by Section 4.1[(a)] or [(b)] of the Agreement, the
Borrowers' financial statements for the [year/quarter] ended , 200__ (the
"Financial Statements"), prepared in accordance with generally accepted
accounting principles consistently applied, accompany this Report. The Financial
Statements present fairly the financial position of the Borrowers and their
Subsidiaries as at the date thereof and the results of operations for the period
covered thereby [(subject only to normal recurring year-end adjustments)].
Based on the Financial Statements provided with this Report, the
figures set forth in SCHEDULE A hereto for determining compliance by the
Borrowers with the financial covenants contained in Section 5 of the Agreement
for the applicable reporting periods are true, complete and correct.
The activities of the Borrowers during the periods covered by such
Financial Statements have been reviewed by the Chief Financial Officer of the
Borrowers or by employees or agents under his or her immediate supervision.
Based on such review, to the best knowledge and belief of the undersigned, and
as of the date of this Report, the representations and warranties contained in
the Agreement are true and accurate as of the date hereof (except to the extent
that such representations and warranties relate to an earlier date) and no
Default has occurred.*
WITNESS my hand this day of , 200___.
----------- ---------
THE BOSTON BEER COMPANY, INC. and
BOSTON BEER CORPORATION
By:
---------------------------------------
Chief Financial Officer
* If a Default has occurred as of or prior to such date, this paragraph
is to be modified with an appropriate statement as to the nature
thereof, the period of existence thereof and what action the Borrowers
have taken, is taking, or proposes to take with respect thereto.
<PAGE>
Schedule A to
Compliance Certificate for Period Ended []
<TABLE>
<S> <C> <C>
1. MINIMUM TANGIBLE NET WORTH (Section 5.1(a))
(a) Actual Tangible Net Worth
(i) Total Assets $
----------------
(ii) minus goodwill $
----------------
(iii) minus intangible items $
----------------
(iv) minus reserves not already deducted $
----------------
(v) minus write-up in book value of assets $
----------------
(vi) minus value of minority interests $
----------------
(excluding Permitted Acquisitions)
(vii) minus Total Liabilities $
----------------
Actual Tangible Net Worth $
----------------
(b) Net Income $
----------------
(c) Net Equity Proceeds $
----------------
(i) Equity Proceeds $
----------------
(ii) minus Phase 1 Stock Repurchases $
----------------
(iii) minus Phase 2 Stock Repurchases $
----------------
(only if exclusion is approved by the Bank)
Actual Net Equity Proceeds $
----------------
(d) Minimum Tangible Net Worth required $
----------------
($68,000,000, or prior quarter's Minimum Tangible Net Worth
plus 50% positive Net Income step up in each fiscal quarter
plus Net Equity Proceeds)
2. LEVERAGE (Section 5.1(b))
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
(a) Actual Ratio of Total Liabilities to Tangible Net Worth:
(i) Total Liabilities $
----------------
(ii) Tangible Net Worth $
----------------
(iii) Actual Ratio of Total Liabilities to Tangible Net Worth _____:1.00
(b) Maximum Ratio of Total Liabilities to Tangible Net Worth
permitted 1.00:1.00
3. TOTAL FUNDED DEBT/EBITDA RATIO (Section 5.1(c))
(rolling four-quarter test)
(a) Actual Ratio of Total Funded Debt to EBITDA:
(i) Actual Total Funded Debt (as of last day of period) $
----------------
(ii) EBITDA for four fiscal quarters ended [ ]:
(1) Net Income $
----------------
(2) plus taxes in respect of income and profits $
----------------
(3) plus Interest Expense $
----------------
(4) plus depreciation, amortization
and other non-cash charges $
----------------
EBITDA Total $
----------------
(iii) Actual Ratio of Total Funded Debt to
EBITDA _____:1.00
(b) Maximum Ratio of Total Funded Debt to EBITDA permitted 2.50:1.00
4. PROFITABILITY (Section 5.1(d)) (rolling four-quarter test)
(a) Actual Net Income for four fiscal quarters ended [ ] $
----------------
(b) Minimum required Net Income for such period $1.00
</TABLE>
-2-
<PAGE>
SCHEDULE 6.4
NOTICE OF FORMATION OF NEW SUBSIDIARY
Fleet National Bank
100 Federal Street Date:
--------------
Boston, Massachusetts 02110
Attention: Thomas F. Brennan, Senior Vice President
Re: Second Amended and Restated Credit Agreement dated as of July
1, 2002 (as amended from time to time, the "Agreement")
between Fleet National Bank, as the "Bank", and The Boston
Beer Company, Inc. and Boston Beer Corporation (collectively,
the "Borrowers")
Dear Mr. Brennan:
The purpose of this letter is to notify the Bank that a new Subsidiary
will be formed on _________, 20__ [must be at least 10 days following Bank's
receipt of this notice] as follows:
1. The legal name of the new Subsidiary is _________________ (the
"Subsidiary").
2. The Subsidiary is a [corporation/limited partnership/limited
liability company] formed or organized in the [State/Commonwealth] of
_________________ and is qualified to do business as a foreign entity in
_______________ and _______________.
3. After giving effect to the formation of the Subsidiary on the date
hereof, (a) the representations and warranties contained in the Agreement will
be true and accurate on and as of such date as though made at and as of such
date (except to the extent that such representations and warranties expressly
relate to an earlier date), (b) no Default will exist and (c) no Default can
reasonably be expected to result therefrom.
4. The proposed ownership structure of the Subsidiary is described
below: ______________.
5. As of the date the Subsidiary is formed it [will/will not]
constitute a Material Subsidiary. (Please attach a detailed calculation of the
Subsidiary's contribution to Tangible Net Worth for the most recently ended
fiscal quarter.)
<PAGE>
6. If a Material Subsidiary as of the date of its formation, the
Subsidiary will execute and deliver a Subsidiary Guaranty, as required under
Sections 1.12 and 6.4 of the Agreement.
The undersigned represents and warrants that he or she is authorized to
execute and deliver this Notice on behalf of the Borrowers.
THE BOSTON BEER COMPANY, INC. and
BOSTON BEER CORPORATION
By:
--------------------------------------
Duly authorized signatory as to both