EXHIBIT 10.17
AMENDMENT NO. 3 TO BUSINESS LOAN AGREEMENT
This Amendment No. 3 (the "Amendment") dated as of March 28, 1997, is
between Bank of America NT & SA (the "Bank") and Portland Brewing Company (the
"Borrower").
RECITALS
A. The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of December 15, 1995, as previously amended (the
"Agreement").
B. The Bank and the Borrower desire to further amend the Agreement.
AGREEMENT
1. DEFINITIONS. Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
2.1 Article 1 of the Agreement is amended to read in its entirety as
follows:
1. DEFINITIONS
In addition to the terms which are defined elsewhere in this
Agreement, the following terms have the meanings indicated for
the purposes of this Agreement:
1.1 "BORROWING BASE" means the lesser of:
(a) One Million Dollars ($1,000,000); or
(b) the sum of:
(i) 75% of the balance due on Outstanding Trade
Receivables net of the allowance for doubtful
accounts; and
(ii) 50% of the value of Inventory consisting of finished
goods, work in process and raw materials (not
including packaging supplies).
In determining the value of Inventory to be included in the
Borrowing Base, the Bank will use the lowest of (i) the
Borrower's cost, (ii) the Borrower's estimated market value, or
(iii) the Bank's independent determination of the resale value
of such inventory in such quantities and on such terms as the
Bank deems appropriate.
1.2. FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS
1.3 LINE OF CREDIT AMOUNT.
(a) During the availability period described below, the Bank
will provide a line of credit to the Borrower. The amount
of the line of credit (the
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"Facility 1 Commitment") is equal to the amount of the Borrowing
Base.
(b) This is a revolving line of credit. During the
availability period, the Borrower may repay principal
amounts and reborrow them. If such outstandings exceed the
Facility 1 Commitment, the Borrower will immediately pay
the excess to the Bank upon the Bank's demand. The Bank
may apply payments received from the Borrower under this
Paragraph to the obligations of the Borrower to the Bank in
the order and manner as the Bank, in its discretion, may
determine.
(c) The Borrower agrees not to permit the outstanding principal
balance of the line of credit to exceed the Facility 1
Commitment.
1.4 AVAILABILITY PERIOD. The line of credit is available
between the date of this Agreement and May 1,1997 (the
"Expiration Date") unless the Borrower is in default.
1.5 INTEREST RATE.
(a) Unless the Borrower elects an Optional interest rate as
described below, the interest rate is the Reference Rate.
(b) The Reference Rate is the rate of interest publicly
announced from time to time by Bank of America National
Trust and Savings Association ("BofA California") in San
Francisco, California, as its Reference Rate. The
Reference Rate is set based on various factors, including
BofA California's costs and desired return,
general-economic conditions and other factors, and is used
as a reference point for pricing some loans. The Bank may
price loans to its customers at, above, or below the
Reference Rate. Any change in the Reference Rate shall
take effect at the opening of business on the day specified
in the public announcement of a change in the Reference
Rate.
1.6 REPAYMENT TERMS.
(a) The Borrower will pay interest on January 1, 1996, and then
monthly thereafter until payment in full of any principal
outstanding under this line of credit.
(b) The Borrower will repay in full all principal and any
unpaid interest or other charges outstanding under this
line of credit no later than the Expiration Date.
1.7 OPTIONAL INTEREST RATES. Instead of the interest rate
based on the Reference Rate, the Borrower may elect to have
all or portions of the line of credit (during the
availability period) bear interest at the rate(s) described
below during an interest period agreed to by the Bank and
the Borrower. Each interest rate is a rate per year.
Interest will be paid on the first day of every month and
on the last day of each interest period. At the end of any
interest period, the interest rate will revert to the rate
based on the Reference Rate, unless the Borrower has
designated another optional interest rate for the
portion.
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1.8 OFFSHORE RATE. The Borrower may elect to have all or
portions of the principal balance of the line of credit
bear interest at the Offshore Rate plus 2.00 percentage
points.
Designation of an Offshore Rate portion is subject to the
following requirements:
(a) The interest period during which the Offshore Rate will be
in effect will be no shorter than 30 days and no longer
than 180 days. The last day of the interest period will be
determined by the Bank using the practices of the offshore
dollar inter-bank market.
(b) Each Offshore Rate portion will be for an amount not less
than Five Hundred Thousand Dollars ($500,000).
(c) The "Offshore Rate" means the interest rate determined by
the following formula, rounded upward to the nearest 1/100
of one percent. (All amounts in the calculation will be
determined by the Bank as of the first day of the interest
period.)
Offshore Rate = Grand Cayman Rate
---------------------------
(1.00 - Reserve Percentage)
Where,
(i) "Grand Cayman Rate" means the interest rate (rounded
upward to the nearest 1/16th of one percent) at which
the BofA California's Grand Cayman Branch, Grand
Cayman, British West Indies, would offer U.S. dollar
deposits for the applicable interest period to other
major banks in the offshore dollar inter-bank market.
(ii) "Reserve Percentage" means the total of the maximum
reserve percentages for determining the reserves to be
maintained by member banks of the Federal Reserve
System for Eurocurrency Liabilities, as deemed in the
Federal Reserve Board Regulation D, rounded upward to
the nearest 1/100 of one percent. The percentage will
be expressed as a decimal, and will include, but not
be limited to, marginal, emergency, supplemental,
special, and other reserve percentages.
(d) The Borrower may not elect an Offshore Rate with respect to
any portion of the principal balance of the line of credit
which is scheduled to be repaid before the last day of the
applicable interest period.
(e) Any portion of the principal balance of the line of credit
already bearing interest at the Offshore Rate will not be
converted to a different rate during its interest period.
(f) Each prepayment of an Offshore Rate portion, whether
voluntary, by reason of acceleration or otherwise, will be
accompanied by the amount of accrued interest on the amount
prepaid, and a prepayment fee equal to the amount (if any)
by which
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(i) the additional interest which would have
been payable on the amount prepaid had it not been paid
until the last day of the interest period, exceeds
(ii) the interest which would have been recoverable by the
Bank by placing the amount prepaid on deposit in the
offshore dollar market for a period starting on the
date on which it was prepaid and ending on the last
day of the interest period for such portion.
(g) The Bank will have no obligation to accept an election for
an Offshore Rate portion if any of the following described
events has occurred and is continuing:
(i) Dollar deposits in the principal amount, and for
periods equal to the interest period, of an Offshore
Rate portion are not available in the offshore Dollar
inter-bank market; or
(ii) the Offshore Rate does not accurately reflect the cost
of an Offshore Rate portion.
2.2 Paragraph 9.2 of the Agreement, is amended to read in its
entirety as follows:
9.2 FINANCIAL INFORMATION. To provide the following financial
information and statements and such additional information
as requested by the Bank from time to time:
(a) Within 120 days of the Borrower's fiscal year end, the
Borrower's annual financial statements. These financial
statements must be audited by a Certified Public Accountant
("CPA") acceptable to the Bank.
(b) Within 30 days of the period's end, the Borrower's monthly
financial statements. These financial statements may be
Borrower prepared.
(c) Within 30 days of the period's end, the Borrower's
quarterly compliance certificate.
(d) A borrowing certificate setting forth the respective
amounts of Outstanding Trade Receivables and Inventory as
of the last day of each month within twenty (20) days after
month end.
(e) Statements showing an aging of the Borrower's receivables
within twenty (20) days after the end of each month.
(f) A statement showing an aging of accounts payable within
twenty (20) days after the end of each month.
(g) A summary inventory listing within twenty (20) days after
the end of each month; the listing must include a valuation
of inventory by category. Categories to include raw
materials (net of packaging supplies), finished goods and
work in process.
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2.3 Paragraph 9.3 of the Agreement, is amended to read in its
entirety as follows:
9.3 CURRENT RATIO. To maintain at the end of each quarterly
accounting period a ratio of current assets to current
liabilities of at least the amounts indicated for each
period specified below:
Period Ratio
------ -----
March 31, 1997,
and June 30, 1997 0.80:1.0
September 30, 1997 0.90:1.0
December 31, 1997,
and quarterly thereafter 1.00:1.0
2.4 Paragraph 9.4 of the Agreement, is amended to read in its
entirety as follows:
9.4 TOTAL LIABILITIES TO TANGIBLE NET WORTH. To maintain at
the end of each quarterly accounting period a ratio of
total liabilities to tangible net worth not exceeding
1.0:1.0.
"Tangible net worth" means the gross book value of the
Borrower's assets (excluding goodwill, patents, trademarks,
trade names, organization expense, treasury stock, unamortized
debt discount and expense, deferred research and development
costs, deferred marketing expenses, and other like intangibles)
less total liabilities, including but not limited to accrued and
deferred income taxes, and any reserves against assets.
2.5 Paragraph 9.5 of the Agreement, is amended to read in its
entirety as follows:
9.5 CASH FLOW RATIO. To maintain a cash flow ratio of at least
the amounts indicated for each period specified below:
Period Ratio
------ -----
June 30, 1997, and
September 30, 1997 1.35:1.0
December 31, 1997,
and quarterly thereafter 1.50:1.0
"Cash flow ratio" means the ratio of cash flow to current
portion of long term debt. "Cash flow" is defined as net
income after taxes, plus depreciation and amortization, less
unfunded capex. "Unfunded capex" is defined as capital
expenditures not funded by either bank debt or equity
proceeds. This ratio will be calculated at the end of each
fiscal quarter, using the results of that quarter and each of
the 3 immediately preceding quarters. The current portion of
long term debt will be measured as of the last day of the
most recent quarter end.
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2.6 Paragraph 9.20 is added to the Agreement, to read in its
entirety as follows:
9.20 OPERATING INCOME. Borrower will not allow cumulative
operating income to be less than the amounts indicated for
each period specified below:
Period Amount
------ ------
March 31, 1997 -$200,000
June 30, 1997 -$50,000
September 30, 1997,
and December 31, 1997 $0
3. EFFECT OF AMENDMENT. Except as provided in this Amendment, all of
the terms and conditions of the Agreement shall remain in full force and
effect.
This Amendment is executed as of the date stated at the beginning of this
Amendment.
BANK OF AMERICA NT & SA PORTLAND BREWING COMPANY
/s/ x Xx Xxxxx /s/ Xxxxxxx Xxxxx
---------------------------- ---------------------------------
By: Xx Xxxxx By: Xxxxxxx Xxxxx
Title: Vice President Title: President
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