EXHIBIT 6.11
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT (this "Agreement") is made as of the 18th
day of November, 1998, by PORTLAND BREWING COMPANY, an Oregon corporation
("Borrower"), to and for the benefit of XXXXXX MILL & LOGGING SUPPLY CO., an
Oregon corporation ("Guarantor").
RECITALS
A. By a Commercial Guarantee dated September 2, 1998 (the
"Guarantee"), given by Guarantor to the Bank of the Northwest (the "Bank"),
Guarantor has agreed to act as a primary guarantor on a $600,000 revolving
credit line (the "Credit Line") made available by the Bank to Borrower, as
more particularly set forth in the Guarantee and in that certain $600,000
note and Credit Agreement dated September 2, 1998, and given by Borrower to
the Bank (the "Bank Loan Documents"). The Guarantee is secured by that
certain $600,000 Certificate of Deposit # 0109006895 issued by Bank in the
name of Guarantor (the "CD") and pledged by Guarantor to the Bank under that
certain Assignment of Deposit Account dated September 2, 1998 (the "Pledge
Agreement"). Upon a default by Borrower in its obligations to the Bank under
the Bank Loan Documents, the Bank is entitled to redeem the CD and apply sums
payable upon such redemption to cure any default by Borrower in its
obligations under the Bank Loan Documents, which application will be in
discharge, in whole or in part, of Guarantor's obligations under the
Guarantee.
B. Guarantor's willingness to give and continue in effect the
Guarantee and the pledge of the CD that secures the Guarantee, as set forth
in that certain Loan Restructuring Agreement of even date herewith among
Borrower, Guarantor and MacTarnahan Limited Partnership (the "Loan
Restructuring Agreement"), is conditioned upon Borrower's execution and
delivery of this Agreement, whereby Borrower undertakes to pay the standby
fee described at Section 2.1 hereof, and Borrower undertakes to reimburse
Guarantor in connection with any advance that Guarantor makes on the
Guarantee, including by and through the Bank's redemption of the CD and
application of the proceeds thereof.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, Borrower agrees:
1. TERM. This Agreement shall remain in effect until (a) Guarantor is
released and discharged from all of its obligations under the Guarantee and
the Pledge Agreement, and (b) if applicable, Borrower has paid and discharged
to Guarantor all of its obligations hereunder.
2. STANDBY FEES AND INTEREST.
2.1 STANDBY FEE. Monthly, on or before the 15th day of each
month, Borrower shall pay Guarantor a standby fee equal to one percent (1%)
per annum of the average daily balance outstanding under the Credit Line
during the preceding month, as such outstanding balance is calculated by the
Bank in connection with fees charged to Borrower on the Credit Line.
2.2 INTEREST. Any amount that Guarantor is required to advance to
the Bank in respect of a call on the Guarantee (including all amounts payable
upon the Bank's redemption of the CD) shall, from the date of such advance
(or, if applicable, redemption), bear interest until paid at the CD Rate
(defined below) plus one percent (1%) per annum. "CD Rate" means (a) before
August 27, 1999 (the expiration date of the CD) the maximum rate of interest
payable on the face amount of the CD assuming that the same is held for, and
redeemed only upon expiration of, its term, or (b) following such date, the
greater of the rate determined under clause (a) or the maximum rate of
interest that would be available, as of August 27, 1999, on a
replacement certificate of deposit, with a one-year term, and assuming that
the replacement certificate were held for, and redeemed only on expiration
of, such term.
3. REIMBURSEMENT. Any amount that Guarantor is required to advance to
the Bank in respect of a call on the Guarantee (including all amounts applied
by the Bank upon the Bank's redemption of the CD) shall be due and payable,
together with interest thereon calculated in accordance with Section 2.2, by
Borrower to Guarantor on Guarantor's demand therefor. Borrower shall be
entitled to prepay all or any portion of the amount payable to Guarantor
under this Section 3, provided, that all payments made to Guarantor hereunder
shall first be applied to interest accrued to the date of such payment, and
the balance shall be applied to the principal obligation.
4. SECURITY. This Agreement is made pursuant to the Loan
Restructuring Agreement and is secured by that certain Security Agreement
(Receivables, Inventory and Equipment) given by Borrower to Bank of America,
Oregon, dated December 15, 1995 (the "Security Agreement"), the secured
party's interest under which was transferred and assigned (a) in full to
MacTarnahan Limited Partnership by instrument dated August 17, 1998, and (b)
as to an undivided interest, to Guarantor by instrument of even date
herewith. The Security Agreement also secures Borrower's obligations under
the Loan Restructuring Agreement and the Term Note (as defined in the Loan
Restructuring Agreement).
5. DEFAULT.
5.1 EVENTS OF DEFAULT. If:
(a) for any payment due hereunder to Guarantor the entire
amount due (including principal, interest and any applicable premiums and
late charges) is not paid within five (5) days of the date upon which demand
for payment was made,
(b) whether or not the Bank has made a call on the Guarantee
and/or exercised its rights to redeem the CD, there exists an event of
default under the Bank Loan Documents, or any of them (determined after
giving effect to applicable notice and cure periods, if any), or
(c) there exists an event of default under the Revolving
Credit Agreement, the Term Note or the Security Agreement,
then an Event of Default shall exist hereunder. Upon the
occurrence of an Event of Default, or at any time thereafter, at the option
of Guarantor, (i) Guarantor shall be released and discharged from any further
obligations under Section 1, (ii) the whole of the principal sum (if any)
then remaining unpaid under Section 3, together with accrued interest
thereon, shall become immediately due and payable without notice, and (c)
Guarantor may exercise any remedy available to Guarantor under the Security
Agreement. Failure to exercise any right Guarantor may, in the Event of
Default, be entitled to, shall not constitute a waiver of the right to
exercise such option or any other right in the event of a continuing or
subsequent default.
5.2 DEFAULT CHARGES. At its option Guarantor may accept
delinquent payments. Following any Event of Default, due but unpaid interest
shall become a part of the principal and shall bear interest at the rate
provided at Section 2.2. In addition, Borrower shall pay, during the period
an Event of Default continues, default interest on the unpaid principal
balance (including the amount of any unpaid interest added thereto) at the
rate provided at Section 2.2 plus two percent (2%) per annum. Any such
default interest which has accrued, and late charges, if any, shall be paid
at the time of and as a condition precedent to the curing of an Event of
Default. Guarantor's acceptance of delinquent payments, and/or any default
interest thereon calculated pursuant to this Section 5 shall not constitute a
waiver of Guarantor's right to declare the whole principal sum and all
interest accrued thereon immediately due and payable upon or following the
occurrence of any subsequent Event of Default.
5.3 COSTS OF DEFAULT. Borrower shall pay all reasonable costs of
collection when incurred by Guarantor, including, but not limited to,
reasonable attorneys' fees. Guarantor is authorized to consult with, employ
and pay attorneys upon Borrower's default or upon institution of legal
proceedings by or against Guarantor in connection with this Agreement or any
related document, and Borrower shall reimburse Guarantor for all of
Guarantor's legal fees and costs in such amount as the court in any such
proceeding and on any appeals from any judgment or decree entered therein may
adjudge reasonable. Borrower shall pay all other reasonable costs incurred
by Guarantor in collecting or attempting to collect any sums due under this
Agreement or protecting or enforcing any rights of Guarantor under this
Agreement, including, without limitation, Guarantor's attorneys' fees and
costs in such amount as the court in any such proceeding and on any appeals
from any judgment or decree entered therein may adjudge reasonable.
5.4 WAIVERS. Borrower waives demand, protest and notice of
demand, protest and nonpayment and hereby consents to: (i) any and all
extensions in the time for making payments under this Agreement as Guarantor,
in its sole discretion, may grant from time to time, and (ii) the release of
any party liable for payment of the obligations hereunder. Borrower waives
exhaustion of legal remedies and the right to plead any and all statutes of
limitation as a defense to any demand on this Agreement, to any agreement to
pay the same. All of the obligations herein contained shall be binding upon
Borrower and Borrower's distributees, personal representatives, successors
and assigns. All obligations of Borrower shall inure to the benefit of the
distributees, personal representatives, successors and assigns of Guarantor.
In any action or proceeding to recover any sums herein provided for, no
defense of adequacy of security or that resort must first be had to security
or to any other person shall be asserted.
6. GOVERNING LAW. This Agreement is made and delivered in Oregon and
shall be governed by the laws of the state of Oregon. Time is of the essence
of this Agreement and of each and every provision hereof.
PORTLAND BREWING COMPANY,
an Oregon corporation
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President
