UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 27, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ..........to..........
Commission file number: 1-14092
THE BOSTON BEER COMPANY, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3284048
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
75 ARLINGTON STREET, BOSTON, MASSACHUSETTS
(Address of principal executive offices)
02116
(Zip Code)
(617) 368-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No___
-----
Number of shares outstanding of each of the issuer's classes of common stock, as
of July 31, 1998:
CLASS A COMMON STOCK, $.01 PAR VALUE 16,385,789
CLASS B COMMON STOCK, $.01 PAR VALUE 4,107,355
(Title of each class) (Number of shares)
1
THE BOSTON BEER COMPANY, INC.
FORM 10-Q
QUARTERLY REPORT
JUNE 27, 1998
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
June 27, 1998 and December 27, 1997 3
Consolidated Statements of Operations for the
Three and Six Months Ended June 27, 1998 and
June 28, 1997 4
Consolidated Statements of Cash Flows for the
Six Months Ended June 27, 1998 and
June 28, 1997 5
Notes to Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of
Security Holders 13-14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15-18
SIGNATURES 19
2
THE BOSTON BEER COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
June 27, December 27,
1998 1997
-------------------- -----------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 4,259 $ 13
Short term investments 37,436 35,787
Accounts receivable, net of allowance for doubtful
accounts,
of $1,172 and $1,153 in 1998 and 1997, respectively 19,820 16,483
Inventories 14,575 13,675
Prepaid expenses 3,711 4,344
Deferred tax assets 2,266 2,266
Other current assets 1,538 1,308
--------------- ----------------
Total current assets 83,605 73,876
Equipment and leasehold improvements, net 30,305 28,781
Other assets 2,689 2,742
--------------- ----------------
Total assets $ 116,599 $ 105,399
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,190 $ 9,556
Accrued expenses 17,826 13,770
--------------- ----------------
Total current liabilities 25,016 23,326
Long-term debt, less current maturities 10,000 10,000
Long-term deferred taxes 789 789
Other long-term liabilities 2,382 -
Stockholders' Equity:
Class A Common Stock, $.01 par value;
22,700,000 shares authorized; 16,384,789 and
16,337,744
issued and outstanding as of June 27, 1998 and
December 27, 1997, respectively 164 163
Class B Common Stock, $.01 par value;
4,200,000 shares authorized; 4,107,355
issued and outstanding as of June 27, 1998
and December 27, 1997 41 41
Additional paid-in-capital 56,559 56,445
Unearned compensation (324) (423)
Unrealized loss on investments in a marketable - (2,223)
security
Unrealized loss on forward exchange contract (8) (290)
Retained earnings 21,980 17,571
--------------- ----------------
Total stockholders' equity 78,412 71,284
--------------- ----------------
Total liabilities and stockholders' equity $ 116,599 $ 105,399
=============== ================
The accompanying notes are an integral part of the financial statements
3
THE BOSTON BEER COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
----------------------------------- ------------------------------------
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
---------------- --------------- ---------------- ----------------
Sales $53,808 $57,158 $105,469 $103,957
Less excise taxes 7,278 7,320 13,690 12,264
---------------- --------------- ---------------- ----------------
Net sales 46,530 49,838 91,779 91,693
Cost of sales 22,231 24,671 43,658 46,578
---------------- --------------- ---------------- ----------------
Gross profit 24,299 25,167 48,121 45,115
Operating expenses:
Advertising, promotional and selling expenses 18,393 19,829 31,934 34,387
General and administrative expenses 3,214 3,097 6,438 6,027
---------------- --------------- ---------------- ----------------
Total operating expenses 21,607 22,926 38,372 40,414
---------------- --------------- ---------------- ----------------
Operating income 2,692 2,241 9,749 4,701
Other income (expense):
Interest income 486 438 951 889
Interest expense (157) (249) (327) (357)
Other income (expense), net 837 115 (1,718) 122
---------------- --------------- ---------------- ----------------
Total other income 1,166 304 (1,094) 654
Income before income taxes 3,858 2,545 8,655 5,355
Provision for income taxes 1,526 1,110 4,246 2,340
---------------- --------------- ---------------- ----------------
Net income $ 2,332 $ 1,435 $ 4,409 $ 3,015
================ =============== ================ ================
Earnings per share - basic $0.11 $0.07 $0.21 $0.15
================ =============== ================ ================
Earnings per share - diluted $0.11 $0.07 $0.21 $0.15
================ =============== ================ ================
Weighted average shares - basic 20,489 20,325 20,474 20,212
================ =============== ================ ================
Weighted average shares - diluted 20,612 20,475 20,582 20,416
================ =============== ================ ================
The accompanying notes are an integral part of the financial statements
4
THE BOSTON BEER COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six months ended
June 27, June 28,
1998 1997
--------------- ---------------
Cash flows from operating activities:
Net income $ 4,409 $ 3,015
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,524 1,886
Loss on disposition of marketable security 1,435 -
Bad debt expense 168 83
Amortization of unearned compensation 65 123
Changes in assets and liabilities:
Accounts receivable (3,505) (5,466)
Inventory (900) (3,190)
Prepaid expenses 633 (2,534)
Other current assets 52 767
Other assets 53 66
Accounts payable (2,366) (5,172)
Accrued expenses 4,056 2,506
Other long-term liabilities 2,382 -
--------------- ---------------
Net cash provided by (used in) operating activities 9,006 (7,916)
--------------- ---------------
Cash flows from investing activities:
Purchases of equipment (4,048) (10,012)
Proceeds from the sale of marketable security 2,851 -
Purchases of short-term investments (3,712) (802)
Purchases of restricted investments - (625)
Proceeds from maturities of restricted investments - 609
--------------- ---------------
Net cash used in investing activities (4,909) (10,830)
--------------- ---------------
Cash flows from financing activities:
Proceeds from exercise of management incentive options 37 602
Proceeds from sale of common stock under stock purchase plan 117 23
Repurchase of shares under employee investment and (5) -
incentive share plans
Net borrowings under line of credit - 13,061
--------------- ---------------
Net cash provided by financing activities 149 13,686
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 4,246 (5,060)
Cash and cash equivalents at beginning of period 13 5,060
--------------- ---------------
Cash and cash equivalents at end of period $ 4,259 $ -
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 357 $ 295
=============== ===============
Income taxes 1,617 4,535
=============== ===============
The accompanying notes are an integral part of the financial statements
5
THE BOSTON BEER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION:
The Boston Beer Company, Inc. (the "Company") is engaged in the business of
brewing and selling beer, ale and cider products throughout the United States
and select international markets. The accompanying consolidated balance sheet as
of June 27, 1998 and the results of its consolidated operations and consolidated
cash flows for the three and six months ended June 27, 1998 and June 28, 1997
have been prepared by the Company, without audit, in accordance with generally
accepted accounting principles for interim financial information and pursuant to
the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements
and should be read in conjunction with the audited financial statements included
in the Company's Annual Report on Form 10-K for the year ended December 27,
1997. In the opinion of the management of the Company, the Company's unaudited
consolidated financial position as of June 27, 1998 and the results of its
consolidated operations and consolidated cash flows for the interim periods
ended June 27, 1998 and June 28, 1997, reflect all adjustments (consisting only
of normal and recurring adjustments) necessary to present fairly the results of
the interim periods presented. The operating results for the interim periods
presented are not necessarily indicative of the results expected for the full
year.
B. SHORT TERM INVESTMENTS:
At June 27, 1998 short term investments consisted exclusively of money market
funds, treasury bills, treasury-backed repo's and securities backed by various
agencies of the U.S. Government. At December 27, 1997, short term investments
also includes a marketable equity security with a cost of $4,286,000 and a
market value of $2,063,000. During the first quarter of 1998, the Company
recorded a charge against earnings of $2,317,000 to reflect the other than
temporary decline in market value. The second quarter disposition of this
security resulted in a gain of $882,000.
The Company's money market funds, treasury bills, treasury-backed repo's and
securities backed by various agencies of the U.S. Government have a cost of
$37,436,000 and $33,724,000 at June 27, 1998 and December 27, 1997,
respectively, which approximate fair value.
C. INVENTORIES:
Inventories, which consist principally of hops, brewery materials and packaging,
are stated at the lower of cost, determined on a first-in, first-out (FIFO)
basis, or market.
Inventories consist of the following (in thousands):
June 27, December 27,
1998 1997
------------ -------------
Raw materials, principally hops $12,618 $12,481
Work in process 920 511
Finished goods 1,037 683
------------ ------------
$14,575 $13,675
============ ============
6
THE BOSTON BEER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
D. INCOME TAXES:
The Company's effective tax rate decreased to 39.6% for the three months ended
June 27, 1998 from 43.7% for the three months ended June 28, 1997 and increased
to 49.1% for the six months ended June 27, 1998 from 43.7% for the six months
ended June 28, 1997. The changes in the Company's effective tax rate for both
the three and six month periods were influenced primarily by the accounting for
the marketable equity security described in Note B, as the Company does not
expect that it will be able to fully realize the tax benefit associated with the
disposition of the security. The following table reconciles the Company's
federal statutory rate to the effective rate:
Three Months Six Months
Ended
------------------- ---------------------
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
---- ---- ---- ----
Statutory rate 35.0% 35.0% 35.0% 35.0%
State income tax, net
of federal benefit 8.1 8.7 8.1 8.7
Permanent differences (8.7) - 3.7 -
Other 5.2 - 2.3 -
---- ---- ---- ----
Effective tax rate 39.6% 43.7% 49.1% 43.7%
==== ==== ==== ====
E. COMPREHENSIVE INCOME:
The Company adopted SFAS No. 130 "Reporting Comprehensive Income" in the first
quarter of 1998. This standard requires disclosure of total nonowner changes in
stockholders' equity, which is defined as net income plus direct adjustments to
stockholders' equity such as foreign currency items and unrealized gains and
losses on certain investments. Comprehensive income for the three months ended
June 27, 1998 totaled $2,582,000 and for the three months ended June 28, 1997
totaled $1,849,000. For the six months ended June 27,1998 comprehensive income
totaled $6,914,000 and for the six months ended June 28, 1997 totaled
$2,539,000.
FOR THREE MONTHS ENDED FOR THREE MONTHS ENDED
JUNE 27, 1998 JUNE 28, 1997
------------------------------ ----------------------------
FOREIGN UNREALIZED FOREIGN UNREALIZED
CURRENCY LOSS CURRENCY LOSS
ITEMS ON SECURITY ITEMS ON SECURITY
----- ----------- ----- -----------
Beginning balance $(258,000) $ - $(78,000) $(1,223,000)
Current-period change $ 250,000 $ 882,000 $ 41,000 $ 373,000
Plus: reclassification adjustment for capital
gain realized in net income $ - $(882,000) - -
---------- ------------- --------- ------------
Ending balance $ (8,000) $ - $(37,000) $ (850,000)
========== ============= ========= ============
7
THE BOSTON BEER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
E. COMPREHENSIVE INCOME: (Continued):
FOR THREE MONTHS ENDED FOR THREE MONTHS ENDED
JUNE 27, 1998 JUNE 28, 1997
--------------------------- --------------------------
Net income $ 2,332,000 $1,435,000
------------ ----------
Other comprehensive income, net of tax:
Foreign currency translation adjustments $ 250,000 $ 41,000
Unrealized losses on security:
Unrealized holding gain (loss) arising during period $ 882,000 $ 373,000
Plus: reclassification adjustments for capital
(gains) included in net income $ (882,000) $ - $ - $ 373,000
---------- ----------- --------- ----------
Other comprehensive income $ 250,000 $ 414,000
----------- ----------
Comprehensive income $ 2,582,000 $1,849,000
=========== ==========
FOR SIX MONTHS ENDED FOR SIX MONTHS ENDED
JUNE 27, 1998 JUNE 28, 1997
---------------------------- ------------------------
FOREIGN UNREALIZED FOREIGN UNREALIZED
CURRENCY LOSS CURRENCY LOSS
ITEMS ON SECURITY ITEMS ON SECURITY
----- ----------- ----- -----------
Beginning balance $ (290,000) $(2,223,000) $ 31,000 $ (442,000)
Current-period change $ 282,000 $ 788,000 $ (68,000) $ (408,000)
Plus: reclassification adjustment for capital
gain realized in net income $ - $ 1,435,000 - -
----------- ------------ ---------- -----------
Ending balance $ (8,000) $ - $ (37,000) $ (850,000)
=========== ============ ========== ===========
FOR SIX MONTHS ENDED FOR SIX MONTHS ENDED
JUNE 27, 1998 JUNE 28, 1997
------------------------ ------------------------
Net income $ 4,409,000 $3,015,000
----------- ----------
Other comprehensive income, net of tax:
Foreign currency translation adjustments $ 282,000 $ (68,000)
Unrealized losses on security:
Unrealized holding gain (loss) arising during period $ 788,000 $(408,000)
Plus: reclassification adjustments for capital
losses included in net income $1,435,000 $ 2,223,000 $ - $ (408,000)
---------- ----------- ---------- -----------
Other comprehensive income $ 2,505,000 $ (476,000)
----------- -----------
Comprehensive income $ 6,914,000 $2,539,000
=========== ===========
8
THE BOSTON BEER COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
F. NET INCOME PER SHARE:
The following table sets forth the computation of basic and diluted earnings per
share:
(in thousands)
Three months ended Six months ended
------------------ -----------------
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
-------- -------- -------- --------
Net income..................................................... $ 2,332 $ 1,435 $ 4,409 $ 3,015
------- ------- ------- -------
Shares used in net income per common share - basic............. 20,489 20,325 20,474 20,212
Dilutive effect on potential common shares .................. 123 150 108 204
------- ------- ------- -------
Shares used in net income per common share - diluted........... 20,612 20,475 20,582 20,416
Net income per common share - basic............................ $ 0.11 $ 0.07 $ 0.21 $ 0.15
======= ======= ======= =======
Net income per common share - diluted.......................... $ 0.11 $ 0.07 $ 0.21 $ 0.15
======= ======= ======= =======
9
THE BOSTON BEER COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of
operations of the Company for the three and six-month periods ended June 27,
1998 as compared to the three and six-month period ended June 28, 1997. It
should be read in conjunction with the "Consolidated Financial Statements" of
the Company and related "Notes to the Financial Statements" included in this
Form 10-Q.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 27, 1998 COMPARED TO THREE MONTHS ENDED JUNE 28, 1997
SALES. Volume decreased by 16.3% to 324,000 barrels in the three months ended
June 27, 1998 from 387,000 barrels in the three months ended June 28, 1997. This
decrease is mainly due to discontinued and decreased contract brewing
arrangements with other companies the Company had in its Cincinnati brewery.
This reduced volume accounted for approximately 53,000 barrels. Net sales
decreased by 6.6% to $46,530,000 in the three-month period ended June 27, 1998
from $49,838,000 in the three-month period ended June 28, 1997. The decrease in
net sales was attributable in part by increased spending in discounts and
allowances and in part by the Company's reduced volume.
GROSS PROFIT. Gross profit decreased by 3.4% to $24,299,000 in the three months
ended June 27, 1998 from $25,167,000 in the three months ended June 28, 1997.
Offsetting the volume decline was a reduction in cost of sales to 47.8% of net
sales in the three months ended June 27, 1998 from 49.5% in the three months
ended June 28, 1997. This decrease is due to a favorable trend in raw material
and packaging costs.
ADVERTISING, PROMOTIONAL AND SELLING. Advertising, promotional and selling
expenses decreased by 7.2% to $18,393,000 in the three months ended June 27,
1998 from $19,829,000 in the three months ended June 28, 1997. This decrease was
primarily attributable to a reduction in employee-related expenses, a reduction
in POS-related expenses and a decrease in promotional spending. Partially
offsetting this decrease was an increase in advertising expense. As a percentage
of net sales, total advertising, promotional and selling expenses decreased to
39.5% in the three months ended June 27, 1998 from 39.8% in the three months
ended June 28, 1997.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased by
3.8% to $3,214,000 in the three months ended June 27, 1998 from $3,097,000 in
the three months ended June 28, 1997. This increase was primarily due to an
increase in depreciation, which reflects an increase in leasehold improvements,
legal and bad debt expense. Partially offsetting these increases were cost
savings in employee and insurance related charges. As a percentage of net sales,
general and administrative expenses increased to 6.9% for the three months ended
June 27, 1998 from 6.2% for the three months ended June 28, 1997.
OPERATING INCOME. Operating income increased by 20.1% to $2,692,000 in the
three months ended June 27, 1998 from $2,241,000 in the three months ended June
28, 1997. This increase was due mainly to reduced spending in promotional and
selling expenses.
OTHER INCOME (EXPENSE), NET: Other income (expense) net, was $1,166,000 for the
three months ended June 27, 1998, versus $304,000 for the three months ended
June 28, 1997. This increase is due to the adjustment in the original write down
of the marketable security of $2,317,000 which took place in the first quarter
of 1998. Following the first quarter write down, the Company disposed of the
security in the second quarter and recorded a gain of $882,000.
NET INCOME. Net income increased by 62.5% to $2,332,000 in the three months
ended June 27, 1998 from $1,435,000 in the three months ended June 28, 1997. The
increase is primarily due to reductions in cost of sales, lower spending in
promotional and selling expenses and the $882,000 adjustment to offset the write
down of the marketable security. Income tax expense decreased to 39.6% of pretax
income or $1,526,000 for the three months ended June 27, 1998 from 43.7% of
pretax income or $1,110,000 for the three months ended June 28, 1997. This
decrease in the tax rate is caused primarily by the adjustment to the write down
of the marketable security.
10
THE BOSTON BEER COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JUNE 27, 1998 COMPARED TO SIX MONTHS ENDED JUNE 28, 1997
SALES. Sales volume decreased by 5.1% to 634,000 barrels in the first six
months of 1998 from 668,000 barrels in the first six months of 1997. This
decrease is due to discontinued and decreased contract brewing arrangements with
other companies which the Company had at its Cincinnati brewery. This reduced
volume accounted for approximately 47,000 barrels. Sales of the Company's core
products have increased 2.3% in the first six months of 1998, due in part to the
Company's introduction of White Ale in January of 1998. Despite the loss of
volume, net sales increased to $91,779,000 in the first six months of 1998 from
$91,693,000 in the first six months of 1997, as sales of products produced by
the Cincinnati brewery to others are made at prices much lower than those of the
Company's core products.
GROSS PROFIT. Gross profit increased by 6.7% to $48,121,000 in the first six
months of 1998 from $45,115,000 in the first six months of 1997. Cost of sales
decreased to 47.6% of net sales in the first six months of 1998 from 50.8% of
net sales in the first six months of 1997. This decrease is due to a favorable
trend in raw material and packaging costs.
ADVERTISING, PROMOTIONAL AND SELLING. Advertising, promotional, and selling
expenses decreased by 7.1% to $31,934,000 in the first six months of 1998 from
$34,387,000 in the first six months of 1997. This decrease was primarily
attributable to a reduction in employee-related expenses, a reduction in POS-
related expenses, and a decrease in promotional spending. Partially offsetting
this decrease was an increase in advertising expense. As a percentage of net
sales, total advertising, promotional, and selling expenses decreased to 34.8%
in the first six months of 1998 from 37.5% in the first six months of 1997.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased by
6.8% to $6,438,000 in the first six months of 1998 from $6,027,000 in the first
six months of 1997. This increase is due mainly to the inclusion of G & A
expenses of the Company's brewery in Cincinnati. The Company purchased the
brewery on March 1,1997; therefore, only four months of brewing operations are
reflected in the expense for the comparable 1997 period. Also adding to the
increase in G & A are increases in depreciation and legal fees. As a percentage
of net sales, general and administrative expenses increased to 7.0% in the first
six months of 1998 from 6.6% in the first six months of 1997.
OPERATING INCOME. Operating income increased by 107% to $9,749,000 in the first
six months ended June 27,1998 from $4,701,000 in the first six months ended June
28, 1997. This increase was due to higher sales caused by the White Ale
introduction, savings in cost of sales and reduced spending in promotional and
selling expenses
OTHER INCOME (EXPENSE), NET: Other income (expense) net, was ($1,094,000) in
the first six months of 1998 vs. $654,000 for the first six months of 1997. This
change is due to the loss on the sale of a marketable security of $1,435,000
offset somewhat by interest income.
NET INCOME. Net income increased by 46.2% to $4,409,000 in the first six months
of 1998 compared to $3,015,000 in the first six months of 1997. The increase is
primarily due to increased sales volume, reductions in cost of sales, lower
spending in promotional and selling expenses offset by the loss on the sale of
the marketable security. Income tax expense increased to 49.1% of pretax income
or $4,246,000 for the six months ended June 27,1998 from 43.7% of pretax income
or $2,340,000 for the six months ended June 28, 1997. This increase in the tax
rate is caused by the loss on the sale of the marketable security which reduced
the profit before taxes for financial reporting but not for tax purposes, as the
Company does not expect that it will be able to fully realize the tax benefit
associated with the disposition of the security.
11
THE BOSTON BEER COMPANY, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1998, the Company recorded net income of
$4,409,000, while net cash generated by operating activities was $9,006,000.
This $4,597,000 difference is primarily due to the amortization of a long term
deferred contract incentive an increase in accrued expenses and depreciation and
the loss on the disposition of the marketable security, offset by an increase in
accounts receivable and reductions in accounts payable.
During the first six months of 1998, the Company used $4,909,000 in investing
activities. This reflects the purchase of $1,649,000 in government securities,
the purchase of $4,048,000 of fixed assets, consisting mainly of brewery and
packaging equipment at the Company's Cincinnati brewery and its contract
breweries, offset by the gain on the disposition of the marketable security of
$788,000.
During the first six months of 1998, the Company generated $149,000 from
financing activities, which primarily reflects proceeds from the sale of stock
under the employee purchase plan.
Assuming there is no significant change in the Company's business, the Company
believes that working capital of $58,589,000 as of June 27, 1998 (of which 71.2%
is in cash and equivalents and short term investments), in conjunction with
existing lines of credit, should be sufficient to meet the Company's operating,
capital and debt service requirements over the next few years.
YEAR 2000
Many computer systems experience problems handling dates beyond the year 1999.
Therefore, some computer hardware and software will need to be modified prior to
the year 2000 in order to remain functional. The Company is assessing both the
internal readiness of its systems as well the compliance of its vendors for the
handling of the year 2000. The Company expects to implement successfully the
systems and programming changes necessary to address year 2000 issues, and does
not believe that the cost of such actions will have a material effect on the
Company's results of operations or financial condition. There can be no
assurance, however, that there will not be a delay in, or increased costs
associated with, the implementation of such changes, and the Company's inability
to implement such changes could have an adverse effect on future results of
operations.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Form 10-Q filing contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are based on management's current
expectations and involve known and unknown risks, uncertainties, and other
factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements.
Factors which may cause actual future results to differ from forward-looking
statements include, among others, the following: changes in consumer
preferences; general economic and business conditions; increasing competition in
the craft-brewed and high-end beer segments; success of operating initiatives;
possible future increases in operating costs; advertising and promotional
efforts; changes in brand awareness; the existence or absence of adverse
publicity; changes in business strategy; quality of management; availability,
terms and deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs; change
in, or the failure to comply with, government regulations; and other factors.
12
THE BOSTON BEER COMPANY, INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is a party to certain claims and litigation in the
ordinary course of business. The Company does not believe any of
these proceedings will result, individually or in the aggregate,
in a material adverse effect upon its financial condition or
results of operations.
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Boston Beer Company, Inc. held its Annual Meeting of
Stockholders on June 2, 1998. The following items were voted upon
at that time.
"RESOLVED: That the amendment to Article IV, Section 1, of the
Restated Articles of Organization and to Sections 4.1 and 4.8 of
the By-Laws of the Corporation, each as amended and currently in
effect, such that the number of Directors of the Corporation
shall be such number as fixed annually by the Board of Directors,
but not fewer than seven (7) nor more than eleven (11),
consisting of not fewer than two (2) nor more than four (4)
Directors elected by the holders of the Corporation's Class A
Common Stock and not fewer than five (5) nor more than seven (7)
Directors elected by the holders of the Corporation's Class B
Common Stock, and subject to the further requirement that no
Class B Directors in excess of five (5) shall be elected unless a
like number of Class A Directors is, or has previously been,
elected."
The results of the vote were, as follows:
AMENDMENT TO THE BY-LAWS AND ARTICLES OF ORGANIZATION, AS
AFORESAID:
FOR AGAINST WITHHELD
--- ------- --------
12,762,163 581,217 54,728
"RESOLVED: That Pearson C. Cummin, III, Robert N. Hiatt and
James C. Kautz be, and they hereby are, elected Class A Directors
of the Corporation, to serve for a term of one year, ending on
the date of the 1999 Annual Meeting of Stockholders in accordance
with the By-Laws and until their respective successors are duly
chosen and qualified."
The results of the vote were, as follows:
ELECTION OF CLASS A DIRECTORS:
FOR WITHHELD
--- --------
Pearson C. Cummin, III 12,988,697 409,521
Robert N. Hiatt 12,988,203 410,015
James C. Kautz 12,989,636 408,582
13
THE BOSTON BEER COMPANY, INC.
PART II. OTHER INFORMATION (CONTINUED)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (CONTINUED)
Mr. C. James Koch, as the sole holder of the Corporation's Class
B Common Stock, voted on the election of five (5) Class B
Directors: C. James Koch, Alfred W. Rossow, Jr., Rhonda L.
Kallman, Charles Joseph Koch and John B. Wing.
"RESOLVED: That C. James Koch, Alfred W. Rossow, Jr., Rhonda L.
Kallman, Charles Joseph Koch and John B. Wing be, and they hereby
are, elected Class B Directors of the Corporation to serve for a
term of one year ending on the date of the 1999 Annual Meeting of
Stockholders in accordance with the By-Laws and until their
respective successors are duly chosen and qualified."
The results of the vote were, as follows:
ELECTION OF CLASS B DIRECTORS:
FOR WITHHELD
--- --------
C. James Koch 4,107,355 0
Alfred W. Rossow, Jr. 4,107,355 0
Rhonda L. Kallman 4,107,355 0
Charles Joseph Koch 4,107,355 0
John B. Wing 4,107,355 0
Mr. C. James Koch, as the sole holder of the Corporation's Class
B Common Stock, voted on a proposed further amendment to the
Company's Restated Articles of Organization, to increase the
number of authorized shares of the Company's Class A Common Stock
from 20,300,000 shares to 22,700,000 shares of Class A Common
Stock.
"RESOLVED: That the Corporation's Restated Articles of
Organization be, and they hereby are, amended to increase the
number of authorized shares of the Corporation's Class A Common
Stock, $0.01 par value, from 20,300,000 shares to 22,700,000
shares of Class A Common Stock."
The results of the vote were, as follows:
AMENDMENT TO RESTATED ARTICLES OF ORGANIZATION TO INCREASE THE
NUMBER OF SHARES OF THE CORPORATION'S CLASS A COMMON STOCK:
FOR AGAINST WITHHELD
--- ------- --------
4,107,355 0 0
14
THE BOSTON BEER COMPANY, INC.
PART II. OTHER INFORMATION (CONTINUED)
ITEM 5. OTHER INFORMATION
In accordance with the provisions of Rule 14a-4 (c) promulgated
under the Securities Exchange Act of 1934, if the company does
not receive notice of a shareholder proposal to be raised at its
1999 Annual Meeting on or before February 26, 1999, then in such
event, the management proxies shall be allowed to use their
discretionary voting authority when the proposal is raised at the
1999 Annual Meeting of Stockholders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT INDEX
EXHIBIT NO. TITLE
---------- -----
3.1 Articles of Organization (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement No. 33-96162).
3.2 By-Laws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement No. 33-96162).
3.3 Restated Articles of Organization of the Company (incorporated
by reference to Exhibit 3.3 to the Company's Form 10-K filed on
April 1, 1996).
3.4 Amended and Restated By-Laws of the Company (incorporated by
reference to Exhibit 3.4 to the Company's Form 10-K filed on
April 1, 1996).
*3.5 Amended and Restated By-Laws of the Company (as amended through
June 2, 1998).
*3.6 Restated Articles of Organization of the Company, dated July
21, 1998.
4.1 Form of Class A Common Stock Certificate (incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement No. 33-96164).
10.1 Revolving Credit Agreement between Fleet Bank of Massachusetts,
N.A. and Boston Beer Company Limited Partnership (the
"Partnership"), dated as of May 2,1995 (incorporated by
reference to Exhibit 10.1 to the Company's Registration
Statement No. 33-96162).
10.2 Loan Security and Trust Agreement, dated October 1, 1987, among
Massachusetts Industrial Finance Agency, the Partnership and
The First National Bank of Boston, as Trustee, as amended
(incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement No. 33-96164).
10.3 Deferred Compensation Agreement between the Partnership and
Alfred W. Rossow, Jr., effective December 1, 1992 (incorporated
by reference to Exhibit 10.3 to the Company's Registration
Statement No. 33-96162).
15
THE BOSTON BEER COMPANY, INC.
PART II. OTHER INFORMATION (CONTINUED)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
EXHIBIT INDEX (CONTINUED)
EXHIBIT NO. TITLE
----------- -----
10.4 The Boston Beer Company, Inc. Employee Equity Incentive Plan,
as adopted effective November 20, 1995 and amended effective
February 23, 1996 (incorporated by reference to Exhibit 4.1 to
the Company's Registration Statement No. 333-1798).
10.5 Form of Employment Agreement between the Partnership and
employees (incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement No. 33-96162).
10.6 Services Agreement between The Boston Beer Company, Inc. and
Chemical Mellon Shareholder Services, dated as of October 27,
1995 (incorporated by reference to the Company's Form 10-K,
filed on April 1, 1996).
10.7 Form of Indemnification Agreement between the Partnership and
certain employees and Advisory Committee members (incorporated
by reference to Exhibit 10.7 to the Company's Registration
Statement No. 33-96162).
10.8 Stockholder Rights Agreement, dated as of December, 1995, among
The Boston Beer Company, Inc. and the initial Stockholders
(incorporated by reference to the Company's Form 10-K, filed on
April 1, 1996).
+10.10 Agreement between Boston Brewing Company, Inc. and The Stroh
Brewery Company, dated as of January 31, 1994 (incorporated by
reference to Exhibit 10.9 to the Company's Registration
Statement No. 33-96164).
+10.11 Agreement between Boston Brewing Company, Inc. and the Genesee
Brewing Company, dated as of July 25, 1995 (incorporated by
reference to Exhibit 10.10 to the Company's Registration
Statement No. 33-96164).
+10.12 Amended and Restated Agreement between Pittsburgh Brewing
Company and Boston Brewing Company, Inc. dated as of February
28, 1989 (incorporated by reference to Exhibit 10.11 to the
Company's Registration Statement No. 33-96164).
10.13 Amendment to Amended and Restated Agreement between Pittsburgh
Brewing Company, Boston Brewing Company, Inc., and G. Heileman
Brewing Company, Inc., dated December 13, 1989 (incorporated by
reference to Exhibit 10.12 to the Company's Registration
Statement No. 33-96162).
+10.14 Second Amendment to Amended and Restated Agreement between
Pittsburgh Brewing Company and Boston Brewing Company, Inc.
dated as of August 3, 1992 (incorporated by reference to
Exhibit 10.13 to the Company's Registration Statement No.
33-96164).
+10.15 Third Amendment to Amended and Restated Agreement between
Pittsburgh Brewing Company and Boston Brewing Company, Inc.
dated December 1,1994 (incorporated by reference to Exhibit
10.14 to the Company's Registration Statement No. 33-96164).
16
THE BOSTON BEER COMPANY, INC.
PART II. OTHER INFORMATION (CONTINUED)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
Exhibit Index (Continued)
EXHIBIT NO. TITLE
----------- -----
10.16 Fourth Amendment to Amended and Restated Agreement between
Pittsburgh Brewing Company and Boston Brewing Company, Inc.
dated as of April 7, 1995 (incorporated by reference to Exhibit
10.16 to the Company's Registration Statement No. 33-96162).
+10.17 Letter Agreement between Boston Beer Company Limited
Partnership and Joseph E. Seagram & Sons, Inc. (incorporated by
reference to Exhibit 10.17 to the Company's Registration
Statement No. 33-96162).
10.18 Services Agreement and Fee Schedule of Mellon Bank, N.A. Escrow
Agent Services for The Boston Beer Company, Inc. dated as of
October 27, 1995 (incorporated by reference to the Company's
Registration Statement No. 33-96162).
10.19 Amendment to Revolving Credit Agreement between Fleet Bank of
Massachusetts, N.A. and the Partnership (incorporated by
reference to Exhibit 10.18 to the Company's Registration
Statement No. 33-96164).
10.20 1996 Stock Option Plan for Non-Employee Directors (incorporated
by reference to the Company's Form 10-K, filed on March 28,
1997).
+10.21 Production Agreement between The Stroh Brewery Company and
Boston Beer Company Limited Partnership, dated January 14, 1997
(incorporated by reference to the Company's Form 10-K, filed on
March 28, 1997).
+10.22 Letter Agreement between The Stroh Brewery Company and Boston
Beer Company Limited Partnership, dated January 14, 1997
(incorporated by reference to the Company's Form 10-K, filed on
March 28, 1997).
+10.23 Agreement between Boston Beer Company Limited Partnership and
The Schoenling Brewing Company, dated May 22, 1996
(incorporated by reference to the Company's Form 10-K, filed on
March 28, 1997).
10.24 Revolving Credit Agreement between Fleet Bank of Massachusetts,
N.A. and The Boston Beer Company, Inc., dated as of March 21,
1997 (incorporated by reference to the Company's Form 10-Q,
filed on May 12, 1997).
+10.25 Amended and Restated Agreement between Boston Brewing Company,
Inc. and the Genesee Brewing Company, Inc. dated April 30, 1997
(incorporated by reference to the Company's Form 10-Q, filed on
August 11, 1997).
+10.26 Fifth Amendment, dated December 31, 1997, to Amended and
Restated Agreement between Pittsburgh Brewing Company and
Boston Brewing Company, Inc. (incorporated by reference to the
Company's Form 10-K, filed on March 27, 1998).
17
THE BOSTON BEER COMPANY, INC.
PART II. OTHER INFORMATION (CONTINUED)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
Exhibit Index (Continued)
EXHIBIT NO. TITLE
----------- -----
+10.27 Extension letters, dated August 19, 1997, November 19, 1997,
December 19, 1997, January 22, 1998, February 25, 1998, and
March 11, 1998 between The Stroh Brewery Company and Boston
Brewing Company, Inc. (incorporated by reference to the
Company's Form 10-K, filed on March 27, 1998).
+10.28 Employee Equity Incentive Plan, as amended and effective on
December 19, 1997 (incorporated by reference to the Company's
Form 10-K, filed on March 27, 1998).
+10.29 1996 Stock Option Plan for Non-Employee Directors, as amended
and effective on December 19, 1997 (incorporated by reference
to the Company's Form 10-K, filed on March 27, 1998).
*+10.30 Glass Supply Agreement between The Boston Beer Company and
Owens' Brockway Glass Container Inc., dated April 30, 1998.
*+10.31 Extension letters, dated April 13, 1998, April 27, 1998, June
11, 1998, June 25, 1998 and July 20,1998 between The Stroh
Brewery Company and Boston Brewing Company, Inc.
11 The information required by exhibit 11 has been included in
Note F of the notes to the consolidated financial statements.
21.1 List of subsidiaries of The Boston Beer Company, Inc.
(incorporated by reference to the Company's Form 10-K, filed on
March 28, 1997).
*27 Financial Data Schedule (electronic filing only).
* Filed with this report.
+ Portions of this Exhibit have been omitted pursuant to an
application for an order declaring confidential treatment filed
with the Securities and Exchange Commission.
(B) REPORTS ON FORM 8-K.
The Company filed a Form 8-K on June 18, 1998 with the
Securities and Exchange Commission. The filing was regarding a
change in the Company's independent accountants effective
fiscal year 1998.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Form 10-Q to be signed on its
behalf by the undersigned thereunto duly authorized.
THE BOSTON BEER COMPANY, INC.
(Registrant)
Date: Aug 7, 1998 By: /s/: C. JAMES KOCH
--------------- --------------------------------
C. James Koch
President, Chief Executive Officer,
Clerk and Director (principal executive
officer)
Date: Aug 7, 1998 By: /s/: ALFRED W. ROSSOW, JR.
--------------- --------------------------------
Alfred W. Rossow, Jr.
Executive Vice President,
Chief Financial Officer (principal
financial and accounting officer)
Treasurer and Director
19
EXHIBIT 3.5
As amended through June 2, 1998
BY-LAWS
OF
THE BOSTON BEER COMPANY, INC.
-----------------------------
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1 Articles of Organization 4
ARTICLE 2 Accounting Method and
Fiscal Year 4
ARTICLE 3 Stockholders 5
Section 3.1 Annual Meeting 5
Section 3.2 Special Meetings 5
Section 3.3 Place of Meetings 6
Section 3.4 Notice of Meetings 6
Section 3.5 Quorum 7
Section 3.6 Action without Meeting 7
Section 3.7 Proxies and Voting 8
ARTICLE 4 Directors 8
Section 4.1 Enumeration, Election and
Term of Office 8
Section 4.2 Powers 9
Section 4.3 Meetings of Directors 9
Section 4.4 Quorum of Directors 10
Section 4.5 Consent in Lieu of Meeting
and Participation in Meetings
by Communications Equipment 10
Section 4.6 Committees 11
Section 4.7 Access to Books and Records 11
Section 4.8 Class Rights 11
Section 4.9 Vote for Non-Staggered Terms 12
ARTICLE 5 Officers 13
Section 5.1 Enumeration, Election and
Term of Office 13
Section 5.2 President and Chairman of
the Board 13
Section 5.3 Treasurer and Assistant
Treasurer 14
Section 5.4 Clerk and Assistant Clerk 14
Section 5.5 Secretary of the Board and
Assistant Secretary 15
Section 5.6 Temporary Clerk and Temporary
Secretary 15
Section 5.7 Other Powers and Duties 15
ARTICLE 6 Resignations, Removals and Vacancies 16
Section 6.1 Resignations 16
Section 6.2 Removals 16
ARTICLE 7 Indemnification of Directors
and Others 17
Section 7.1 Definitions 17
Section 7.2 Right to Indemnification 17
Section 7.3 Indemnification Not Available 18
Section 7.4 Compromise or Settlement 18
Section 7.5 Advances 18
Section 7.6 Not Exclusive 19
Section 7.7 Insurance 19
ARTICLE 8 Stock 19
Section 8.1 Stock Authorized 19
Section 8.2 Issue of Authorized Unissued
Capital Stock 19
Section 8.3 Certificates of Stock 20
Section 8.4 Replacement Certificate 21
Section 8.5 Transfers 21
Section 8.6 Record Date 21
ARTICLE 9 Miscellaneous Provisions 22
Section 9.1 Execution of Papers 22
Section 9.2 Voting of Securities 22
2
Section 9.3 Corporate Seal 23
Section 9.4 Corporate Records 23
ARTICLE 10 Amendments 23
3
BY-LAWS
of
THE BOSTON BEER COMPANY, INC.
-----------------------------
ARTICLE 1
---------
Articles of Organization
------------------------
The name and purposes of the Corporation shall be as set forth in the
Articles of Organization. These By-Laws, the powers of the Corporation and its
Directors and stockholders, and all matters concerning the conduct and
regulation of the business of the Corporation, shall be subject to such
provisions in regard thereto, if any, as are set forth in the Articles of
Organization. All references in these By-Laws to the Articles of Organization
shall be construed to mean the Articles of Organization of the Corporation as
from time to time amended or restated.
ARTICLE 2
---------
Accounting Method and Fiscal Year
---------------------------------
The Corporation's books of account shall be maintained on the cash
method or on such other method of accounting as the Board of Directors may from
time to time determine, and shall be closed and balanced at the end of each
fiscal year of the Corporation. The fiscal year of the Corporation shall be
such twelve month period as the Board of Directors may from time to time select.
The initial fiscal year shall be the twelve month period ending on December 31
in each year.
4
ARTICLE 3
---------
Stockholders
------------
Section 3.1 Annual Meeting
---------------------------
The Annual Meeting of the Stockholders shall be held at 10 o'clock
A.M., Eastern Daylight Time, on the third Tuesday of April in each year, if not
a legal holiday, and, if a legal holiday, then on the next secular day
following, or at such other date and time within six months after the end of the
Corporation's fiscal year as shall be designated from time to time by the Board
of Directors, the Chairman of the Board of Directors or the President and stated
in the notice of the meeting. Purposes for which an Annual Meeting is to be
held, additional to those prescribed by law and these By-Laws, may be specified
by the President or by the Directors.
If such Annual Meeting has not been held as herein provided, a Special
Meeting of the Stockholders in lieu of the Annual Meeting may be held, and any
business transacted or elections held at such Special Meeting shall have the
same effect as if transacted or held at the Annual Meeting, and in such case all
references to these By-Laws, except in this Section 3.1, to the Annual Meeting
of the Stockholders shall be deemed to refer to such Special Meeting. Any such
Special Meeting shall be called, and the purposes thereof shall be specified in
the Call, as provided in Section 3.2 of this Article 3.
Section 3.2 Special Meetings
-----------------------------
A Special Meeting of the Stockholders may be called at any time by the
President, or by a majority of the Directors acting by vote or by written
instrument or instruments signed by them. A Special Meeting of Stockholders
shall be called by the Clerk, or in the case of the death, absence, incapacity
or refusal of the Clerk, by any other officer,
5
upon written application of one or more stockholders who hold at least one-tenth
part in interest of the stock entitled to vote at the meeting. Such Call shall
state the time, place, and purposes of the meeting.
Section 3.3 Place of Meetings
------------------------------
All meetings of the stockholders shall be held at the principal office
of the Corporation in Massachusetts, unless a different place within
Massachusetts or, if permitted by the Articles of Organization, elsewhere within
the United States is designated by the Chairman of the Board of Directors, the
President, or by a majority of the Directors acting by vote or by written
instrument or instruments signed by them. Any adjourned session of any meeting
of the stockholders shall be held at such place within Massachusetts or, if
permitted by the Articles of Organization, elsewhere within the United States as
is designated in the vote of adjournment.
Section 3.4 Notice of Meetings
-------------------------------
A written Notice of the place, date and hour of all meetings of
stockholders stating the purposes of the meeting shall be given at least seven
(7) calendar days before the meeting to each stockholder of the Corporation,
whether or not such stockholder is entitled to vote thereat, by leaving such
Notice with him or at his residence or usual place of business, or by mailing,
postage prepaid, and addressed to such stockholder at his address as it appears
in the records of the Corporation. Such Notice shall be given by the Clerk, or
in the case of the death, absence, incapacity or refusal of the Clerk, by any
other officer or by a person designated either by the Clerk, the person or
persons calling the meeting or by the Board of Directors. Whenever Notice of a
meeting is required to be given a stockholder under any provision of law, of the
Articles of Organization, or of these By-Laws, a written Waiver
6
thereof, executed before or after the meeting by such stockholder or his
attorney thereunto authorized, and filed with the records of the meeting, shall
be deemed equivalent to such Notice.
Section 3.5 Quorum
-------------------
At any meeting of the stockholders, a quorum for the election of any
Director or for the consideration of any question shall consist of a majority in
interest of all stock issued, outstanding and entitled to vote at such election
or upon such question, respectively, except that if two or more classes of stock
are entitled to vote as separate classes for the election of any Director or
upon any question, then in the case of each such class a quorum for the election
of any Director or for the consideration of such question shall consist of a
majority in interest of all stock of that class issued, outstanding and entitled
to vote thereon. Stock owned by the Corporation, if any, except stock held
directly or indirectly by it in a fiduciary capacity, shall be disregarded in
determining any quorum. Whether or not a quorum is present, any meeting may be
adjourned from time to time by a majority of the votes properly cast upon the
question, and the meeting may be held as adjourned without further notice.
When a quorum for an election is present at any meeting, a plurality of
the votes properly cast for any office shall elect such office. When a quorum
for the consideration of a question is present at any meeting, a majority of the
votes properly cast upon the question shall decide the question; except that if
two or more classes of stock are entitled to vote as separate classes upon such
question, then in the case of each such class a majority of the votes of such
class properly cast upon the question shall decide the vote of that class upon
the question; and except in any case where a larger vote is required by law or
by the Articles of Organization.
Section 3.6 Action without Meeting
-----------------------------------
Any action required or permitted to be taken at any meeting of the
stockholders may be taken without a meeting if all stockholders entitled to vote
on the matter consent to the
7
action in writing and the written Consents are filed with the records of the
meetings of stockholders. Such consents shall be treated for all purposes,
including without limitation for the purposes of Section 4.8 hereof as a vote at
a meeting.
Section 3.7 Proxies and Voting
-------------------------------
Except as may otherwise be provided in the Articles of Organization,
stockholders entitled to vote shall have one vote for each share of stock
entitled to vote owned by them. Stockholders entitled to vote may vote in
person or by proxy. Except as otherwise provided by law, no proxy dated more
than six (6) months before the meeting named therein shall be valid and no proxy
shall be valid after the final adjournment of such meeting. A proxy with
respect to stock held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to the exercise of the proxy the
Corporation receives specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a stockholder shall
be deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. Proxies shall be filed with
the Clerk, or person performing the duties of the Clerk, at the meeting, or any
adjournment thereof, before being voted.
The Corporation shall not, directly or indirectly, vote upon any share
of its own stock; but nothing herein shall be construed as limiting the right of
the Corporation to vote shares of stock held directly or indirectly by it in a
fiduciary capacity.
ARTICLE 4
---------
Directors
---------
Section 4.1 Enumeration, Election and Term of Office
-----------------------------------------------------
There shall be a Board of Directors of the Corporation. The number of
Directors of the Corporation shall be such number as fixed annually by the Board
of Directors, but not fewer than seven (7) nor more than eleven (11), consisting
of not fewer than two (2) nor more
8
than four (4) Directors elected by the holders of the Corporation's Class A
Common Stock (the "Class A Directors") and not fewer than five (5) nor more than
seven (7) Directors elected by the Corporation's Class B Common Stock (the
"Class B Directors"), and subject to the further requirement that no Class B
Directors in excess of five (5) Class B Directors shall be elected unless a like
number of Class A Directors is then, or previously, elected. The Directors shall
be chosen at the Annual Meeting of the Stockholders by such stockholders as have
the right to vote thereon, in accordance with Section 4.8 of these By-Laws. Each
Director shall hold office until the next annual election of Directors and until
his successor is chosen and qualified or until he sooner dies, resigns, is
removed or becomes disqualified. Any election of Directors by stockholders shall
be by ballot if so requested by any stockholder entitled to vote thereon. No
Director need be a stockholder.
Section 4.2 Powers
-------------------
The business of the Corporation shall be managed by the Board of
Directors, which shall exercise all the powers of the Corporation except as
otherwise required by law, by the Articles of Organization or by these By-Laws.
Section 4.3 Meetings of Directors
----------------------------------
Regular meetings of the Directors may be held without notice at such
places and at such times as may be fixed from time to time by the Directors.
The Board shall establish a regular meeting schedule that shall provide for
meetings to be duly called not less often than quarterly. A regular meeting of
the Directors may be held without notice immediately following the Annual
Meeting of Stockholders or any Special Meeting held in lieu thereof.
Special Meetings of Directors may be called by the Chairman of the
Board, the President, the Treasurer or any two (2) or more Directors, and shall
be held at such time and place as specified in the Call. Reasonable notice of
each special meeting of the Directors shall be given to each Director. Such
notice may be given by the Secretary or Assistant Secretary of the Board, the
Clerk or any Assistant Clerk or by the officer or one of the Directors calling
the meeting. Notice to a Director shall in any case be sufficient if sent by
telegram at least
9
forty-eight (48) hours or by mail at least ninety-six (96) hours before the
meeting addressed to him at his usual or last known business or residence
address, or if given to him at least forty-eight (48) hours before the meeting
in person or by telephone or by handing him a written Notice. Notice of a
meeting need not be given to any Director if a written Waiver of Notice,
executed by him before or after the meeting, is filed with the records of the
meeting, or to any Director who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him. A Notice or Waiver of
Notice need not specify the purposes of the meeting.
Section 4.4 Quorum of Directors
--------------------------------
At any meeting of the Directors, a quorum for any election or for the
consideration of any question shall consist of a majority of the entire Board
(including vacancies). Whether or not a quorum is present any meeting may be
adjourned from time to time by a majority of the votes properly cast upon the
question, and the meeting may be held as adjourned without further Notice. When
a quorum is present at any meeting, the votes of a majority of the Directors
present shall be requisite and sufficient for election to any office and shall
decide any question brought before such meeting, except in any case where a
larger vote is required by law, by the Articles of Organization or by these By-
Laws.
Section 4.5 Consent in Lieu of Meeting and Participation in Meetings
------------------------------------------- -------------------------
by Communications Equipment
---------------------------
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting if all the Directors consent
to the action in writing and the written Consents are filed with the records of
the meetings of the Directors. Such Consents shall be treated for all purposes
as a vote of the Directors at a meeting.
Members of the Board of Directors or any Committee designated thereby
may participate in a meeting of such Board or Committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting
10
can hear each other at the same time and participation by such means shall
constitute presence in person at a meeting.
Section 4.6 Committees
-----------------------
By unanimous vote of the Directors then in office, the Directors may
elect from their own number an Executive Committee or other Committees and may
by like vote delegate to any such Committee some or all of their powers except
those which by law may not be delegated.
Section 4.7 Access to Books and Records
----------------------------------------
All members of the Board shall have access to the Corporation's books
and records for purposes of carrying out their duties hereunder.
Section 4.8 Class Rights
-------------------------
(a) Class A Common Stock. At every Annual Meeting or Special Meeting
--------------------
called for the purpose of the election of Directors, the holders of shares of
Class A Common Stock shall be entitled to vote for the election to the Board of,
and thereafter to continue in office, that number of Class A Directors nominated
by the Nominating Committee, consisting of the Class A Directors (or the Class A
Director, if there is only one) then in office. The number of Class A Directors
to be nominated shall not be fewer than two (2) nor more than four (4) and as
otherwise set forth in Section 4.1 of these By-Laws.
(b) Class B Common Stock. At every Annual Meeting or Special Meeting
--------------------
called for the purpose of the election of Directors, the holders of shares of
Class B Common Stock shall be entitled to vote for the election to the Board of,
and thereafter to continue in office, not fewer than five (5) nor more than
seven (7) Directors elected by the holders of the Corporation's Class B Common
Stock, and subject to the further requirement that no Class B Directors in
excess of five (5) Class B Directors shall be elected unless a like number of
Class A Directors is also then, or previously, elected. Nominees for election
as Class B Directors shall be selected by the Board.
11
(c) Removal; Vacancy. A Director may be removed from office only by
----------------
the vote of the holders of that class of stock by which he or she was elected
and any vacancy on the Board may be filled only by vote of the holders of that
class of stock by which the Director last elected to the vacant seat was
elected; provided that the Nominating Committee may fill a Class A Director
vacancy and the Board, acting by the affirmative vote of a majority of the
entire Board may fill any Class B Director vacancy, subject in either case to
approval by the applicable class of stockholders at the next Annual Meeting or
Special Meeting held in lieu thereof.
(d) Termination of Class Rights. The terms of this Section 4.8 will
---------------------------
continue until such time as the separate class voting rights of the Class A
Common Stock and the Class B Common Stock terminate, as provided in the Articles
of Organization.
Section 4.9 Vote for Non-Staggered Terms. As soon as possible
-----------------------------------------
following the incorporation of the Corporation, the Incorporator and the holders
of the Class B Common Stock shall (i) cause a meeting to be duly called for the
purpose of a vote providing that the Corporation elects to be exempt from the
provisions of Section 50A(a) of Chapter 156B of the Massachusetts General Laws,
or any similar or successor provision, (ii) vote (or cause to be voted) all
shares of Class B Common Stock in favor of a resolution that the Corporation
elects to be exempt from such provisions and (iii) thereafter use their best
efforts to maintain (or, if necessary, repeat) such vote and to prevent the
division of Directors into classes with staggered terms, pursuant to Section
50A(b) of Chapter 156B of the Massachusetts General Laws, or any similar or
successor provision. The terms of this Section 4.9 will continue until such
time as the separate class voting rights of the Class A Common Stock and the
Class B Common Stock terminate, as provided in the Articles of Organization.
12
ARTICLE 5
---------
Officers
--------
Section 5.1 Enumeration, Election and Term of Office
-----------------------------------------------------
The officers of the Corporation shall include a President, a Treasurer
and a Clerk, who shall be chosen by the Directors at their first meeting
following the Annual Meeting of the Stockholders. Each of them shall hold his
office until the next annual election to the office which he holds and until his
successor is chosen and qualified or until he sooner dies, resigns, is removed
or becomes disqualified.
The Directors may choose one of their number to be Chairman of the
Board and determine his powers, duties and term of office. The Directors may at
any time appoint such other officers, including one or more Vice Presidents,
Assistant Treasurers, Assistant Clerks, Secretary of the Board and an Assistant
Secretary of the Board as they deem wise, and may determine their respective
powers, duties and terms of office.
No officer need be a stockholder or a Director except that the Chairman
of the Board shall be a Director. The same person may hold more than one office,
except that no person shall be both President and Clerk.
Section 5.2 President and Chairman of the Board
------------------------------------------------
The President shall be the Chief Executive Officer of the Corporation
and, subject to the control and direction of the Directors, shall have general
supervision and control of the business of the Corporation. He shall preside at
all meetings of the stockholders at which he is present, and, if he is a
Director, at all meetings of the Directors if there shall be no Chairman of the
Board or in the absence of the Chairman of the Board.
If there shall be a Chairman of the Board, he shall make his counsel
available to the other officers of the Corporation, and shall have such other
duties and powers as may from time to time be conferred on him by the Directors.
He shall preside at all meetings of the
13
Directors at which he is present, and, in the absence of the President, at all
meetings of stockholders.
Section 5.3 Treasurer and Assistant Treasurer
----------------------------------------------
The Treasurer shall have the custody of the funds and valuable books
and papers of the Corporation, including, without limitation, copies of the
Corporation's federal, state and local income tax returns and reports, if any,
for the three most recent years, copies of any then effective written agreements
to which the Corporation is a party, as well as any financial statements of the
Corporation for the three most recent years, with quarterly financial statements
for each of such years, except such books and papers as are directed by these
By-Laws to be kept by the Clerk or by the Secretary of the Board. He shall
perform all other duties usually incident to his office, and shall be at all
times subject to the control and direction of the Directors. If required by the
Directors, he shall give bond in such form and amount and with such sureties as
shall be determined by the Directors.
If the Treasurer is absent or unavailable, any Assistant Treasurer
shall have the duties and powers of Treasurer and shall have such further duties
and powers as the Directors shall from time to time determine.
Section 5.4 Clerk and Assistant Clerk
--------------------------------------
If the Corporation shall not have a resident agent appointed pursuant
to law, the Clerk shall be a resident of the Commonwealth of Massachusetts. The
Clerk shall record all proceedings of the stockholders in a book to be kept
therefor. In case a Secretary of the Board is not elected, the Clerk shall also
record all proceedings of the Directors in a book to be kept therefor. The
Clerk shall keep a copy of the Stockholders' Agreement when it is executed.
If the Corporation shall not have a transfer agent, the Clerk shall
also keep or cause to be kept the stock and transfer records of the Corporation,
which shall contain the names of all stockholders and the record address and the
amount of stock held by each.
14
If the Clerk if absent or unavailable, any Assistant Clerk shall have
the duties and powers of the Clerk and shall have such further duties and powers
as the Directors shall from time to time determine.
Section 5.5 Secretary of the Board and Assistant Secretary
-----------------------------------------------------------
If a Secretary of the Board is elected, he shall record all proceedings
of the Directors in a book to be kept therefor.
If the Secretary of the Board is absent or unavailable, any Assistant
Secretary shall have the duties and powers of the Secretary and shall have such
further duties and powers as the Directors shall from time to time determine.
If no Secretary or Assistant Secretary has been elected, or if, having
been elected, no Secretary or Assistant Secretary is present at a meeting of the
Directors, the Clerk or an Assistant Clerk shall record the proceedings of the
Directors.
Section 5.6 Temporary Clerk and Temporary Secretary
----------------------------------------------------
If no Clerk or Assistant Clerk shall be present at any meeting of the
stockholders, or if no Secretary, Assistant Secretary, Clerk or Assistant Clerk
shall be present at any meeting of the Directors, the person presiding at the
meeting shall designate a Temporary Clerk or Temporary Secretary to perform the
duties of Clerk or Secretary.
Section 5.7 Other Powers and Duties
------------------------------------
Each officer shall, subject to these By-Laws and to the control and
direction of the Directors, have in addition to the duties and powers
specifically set forth in these By-Laws, such duties and powers as are
customarily incident to his office and such additional duties and powers as the
Directors may from time to time determine.
15
ARTICLE 6
---------
Resignations, Removals and Vacancies
------------------------------------
Section 6.1 Resignations
-------------------------
Any Director or officer may resign at any time by delivering his
resignation in writing to the President or the Clerk or to a meeting of the
Directors. Such resignations shall take effect at such time as is so specified
therein, or if no such time is so specified, then upon delivery thereof to the
President or the Clerk or to a meeting of the Directors.
Section 6.2 Removals
---------------------
Directors may be removed with or without assignment of cause by vote of
a majority of the shares held by the stockholders that are entitled to vote on
the election of such Director.
The Directors may terminate or modify the authority of any agent or
employee. The Directors may remove any officer from office with or without
assignment of cause by vote of a majority of the Directors then in office.
If cause is assigned for removal of any Director or officer, such
Director or officer may be removed only after a reasonable notice and
opportunity to be heard before the body proposing to remove him.
No Director or officer who resigns or is removed shall have any right
to any compensation as such Director or officer for any period following his
resignation or removal, or any right to damages on account of such removal
whether his compensation be by the month or by the year or otherwise; provided,
however, that the foregoing provision shall not prevent such Director or officer
from obtaining damages for breach of any contract of employment legally binding
upon the Corporation.
16
ARTICLE 7
---------
Indemnification of Directors and Others
---------------------------------------
Section 7.1 Definitions
------------------------
For purposes of this Article 7:
(a) "Director - or - Officer" means any person who is serving or has
served as a Director, officer or employee of the Corporation appointed or
elected by the Board of Directors or the stockholders of the Corporation, or any
Director, officer or employee of the Corporation who is serving or has served at
the request of the Corporation as a Director, officer, trustee, principal,
partner, member of a committee, employee or other agent of any other
organization, or in any capacity with respect to any employee benefit plan of
the Corporation or any of its subsidiaries.
(b) "Proceeding" means any action, suit or proceeding, whether civil,
criminal, administrative or investigative, brought or threatened in or before
any court, tribunal, administrative or legislative body or agency, and any claim
which could be the subject of a Proceeding.
(c) "Expense" means any fine or penalty, and any liability fixed by a
judgment, order, decree or award in a Proceeding, any amount reasonably paid in
settlement of a Proceeding and any professional fees and other disbursements
reasonably incurred in connection with a Proceeding. The term "Expense" shall
include any taxes or penalties imposed on a Director or Officer with respect to
any employee benefit plan of the Corporation or any of its subsidiaries.
Section 7.2 Right to Indemnification
-------------------------------------
Except as limited by law or as provided in Sections 7.3 and 7.4 of this
Article 7, each Director or Officer (and his heirs and personal representatives)
shall be indemnified by the Corporation against any Expense incurred by him in
connection with each Proceeding in which he is involved as a result of his
serving or having served as a Director or Officer.
17
Section 7.3 Indemnification not Available
------------------------------------------
No indemnification shall be provided to a Director or Officer with
respect to a Proceeding as to which it shall have been adjudicated that he did
not act in good faith in the reasonable belief that his action was in the best
interests of the Corporation, or, to the extent that such Proceeding relates to
service with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan.
Section 7.4 Compromise or Settlement
-------------------------------------
In the event that a Proceeding is disposed of by settlement or in the
event of any adjudication which, in the opinion of a majority of the
disinterested Directors (who may consult or defer to the opinion of the General
Counsel or outside counsel to be employed by the Corporation) or, if there are
no disinterested Directors, the General Counsel (who may consult or defer to the
opinion of outside counsel to be employed by the Corporation), does not make a
sufficient determination of conduct which could preclude or permit
indemnification in accordance with this section 7, the Director or Officer shall
be entitled to indemnification unless, as determined by a majority of the
disinterested Directors (who may consult or defer to the opinion of the General
Counsel or outside counsel to be employed by the Corporation) or, if there are
no disinterested directors, the General Counsel (who may consult or defer to the
opinion of outside counsel to be employed by the Corporation), such Director or
Officer's conduct was such as precludes indemnification under this Section 7.
Section 7.5 Advances
---------------------
The Corporation shall pay sums on account of indemnification in advance
of a final disposition of a Proceeding upon receipt of an undertaking by the
Director or Officer to repay such sums if it is subsequently established that he
is not entitled to indemnification pursuant to Sections 7.3 and 7.4 hereof,
which undertaking may be accepted without reference to the financial ability of
such person to make repayment.
18
Section 7.6 Not Exclusive
--------------------------
Nothing in this Article 7 shall limit any lawful rights to
indemnification existing independently of this Article 7.
Section 7.7 Insurance
----------------------
The provisions of this Article 7 shall not limit the power of the Board
of Directors to authorize the purchase and maintenance of insurance on behalf of
any Director or Officer against any liability incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under this Article
7.
ARTICLE 8
---------
Stock
-----
Section 8.1 Stock Authorized
-----------------------------
The total number of shares and the par value, if any, of each class of
stock which the Corporation is authorized to issue, and, if more than one class
is authorized, the descriptions, preferences, voting powers, qualifications and
special and relative rights and privileges as to each class and any series
thereof, shall be as stated in the Articles of Organization.
Section 8.2 Issue of Authorized Unissued Capital Stock
-------------------------------------------------------
Any unissued capital stock from time to time authorized under the
Articles of Organization and Amendments thereto may be issued, and any shares of
capital stock restored to the status of authorized but unissued stock may be
reissued, by vote of the Directors. No stock shall be issued unless the cash,
so far as due, or the property, services or expenses for which it was authorized
to be issued, has been actually received or incurred by, or conveyed or rendered
to, the Corporation, or is in its possession as surplus.
19
Section 8.3 Certificates of Stock
----------------------------------
Each stockholder shall be entitled to a certificate in such form as may
be prescribed from time to time by the Directors or stockholders, stating the
number and the class and the designation of the series, if any, of the shares
held by him. Such certificates shall be signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer. Such signatures may
be facsimiles if the certificate is signed by a duly appointed transfer agent or
registrar, other than a Director, officer or employee of the Corporation. In
case any officer who has signed or whose facsimile signature has been placed on
such certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the time of its issue.
Every certificate issued by the Corporation for shares of stock at a
time when such shares are subject to any restriction on transfer pursuant to the
Articles of Organization, the By-Laws, the Stockholder Rights Agreement dated
November __, 1995, entered into among the Corporation and all of the then
holders of Class A Common Stock and Class B Common Stock (the "Stockholder
Rights Agreement") or any other agreement to which the Corporation is a party
shall have the restriction noted conspicuously on the certificate and shall also
set forth on the face or back of the certificate either the full text of the
restriction, or a statement of the existence of such restriction and a statement
that the Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge. Every stock certificate
issued by the Corporation at a time when it is authorized to issue more than one
class or series of stock shall set forth upon the face or back of the
certificate either the full text of the preferences, voting powers,
qualifications and special and relative rights of the shares of each class and
series, if any, authorized to be issued, as set forth in the Articles of
Organization or, where applicable, any agreement, or a statement of the
existence of such preferences, powers, qualifications and rights and a statement
that the Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
20
Section 8.4 Replacement Certificate
------------------------------------
In case of the alleged loss or destruction or the mutilation of a
certificate of stock, a new certificate may be issued in place thereof, upon
such conditions as the Directors may reasonably determine.
Section 8.5 Transfers
----------------------
Subject to the restrictions, if any, imposed by the Articles of
Organization, the By-Laws, the Stockholder Rights Agreement or any other
agreement to which the Corporation is a party, shares of stock shall be
transferred on the books of the Corporation only by the surrender to the
Corporation or its transfer agent of the certificate representing such shares
properly endorsed or accompanied by a written assignment of such shares or by a
written power of attorney to sell, assign or transfer such shares, properly
executed, with necessary transfer stamps affixed, and with such proof that the
endorsement, assignment or power of attorney is genuine and effective as the
Corporation or its transfer agent may reasonably require. Except as may
otherwise be required by law, the Corporation shall be entitled to treat the
record holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
thereto, regardless of any transfer, pledge or other disposition of such stock,
until the shares have been transferred on the books of the Corporation in
accordance with the requirements of these By-Laws. It shall be the duty of each
stockholder to notify the Corporation of his post office address.
Section 8.6 Record Date
------------------------
The Directors may fix in advance a time, which shall be not more than
sixty (60) calendar days before the date of any meeting of stockholders or the
date for the payment of any dividend or the making of any distribution to
stockholders or the last day on which the consent or dissent of stockholders may
be effectively expressed for any purpose, as the record date for determining the
stockholders having the right to notice of and to vote at such meeting and any
adjournment thereof or the right to receive such dividend or distribution or the
right to give such consent or dissent, and in such case only stockholders of
record on such date shall
21
have such right, notwithstanding any transfer of stock on the books of the
Corporation after the record date; or without fixing such record date the
Directors may for any such purposes close the transfer books for all or any part
of such period.
If no record date is fixed and the transfer books are not closed:
(1) The record date for determining stockholders having the
right to notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given.
(2) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors acts with respect thereto.
ARTICLE 9
---------
Miscellaneous Provisions
------------------------
Section 9.1 Execution of Papers
--------------------------------
All deeds, leases, transfers, contracts, bonds, notes, releases,
checks, drafts and other obligations authorized to be executed on behalf of the
Corporation shall be signed by the President or the Treasurer except as the
Directors may generally or in particular cases otherwise determine.
Section 9.2 Voting of Securities
---------------------------------
Except as the Directors may generally or in particular cases otherwise
determine, the President or the Treasurer may, on behalf of the Corporation (i)
waive Notice of any meeting of stockholders or shareholders of any other
corporation, or of any association, trust or firm, of which any securities are
held by this Corporation; (ii) appoint any person or persons to act as proxy or
attorney-in-fact for the Corporation, with or without substitution, at any such
meeting; and (iii) execute instruments of Consent to stockholder or shareholder
action taken without a meeting.
22
Section 9.3 Corporate Seal
---------------------------
The seal of the Corporation shall be a circular die with the name of
the Corporation, the word "Massachusetts" and the year of its incorporation cut
or engraved thereon, or shall be in such other form as the Board of Directors or
the stockholders may from time to time determine.
Section 9.4 Corporate Records
------------------------------
The original, or attested copies, of the Articles of Organization, the
By-Laws, the Stockholder Rights Agreement, and the records of all meetings of
the Incorporator and the stockholders, and the stock and transfer records, which
shall contain the names of all stockholders and the record address and the
amount of stock held by each, shall be kept in Massachusetts for inspection by
the stockholders at the principal office of the Corporation or at an office of
the Clerk, or if the Corporation shall have a transfer agent or a resident
agent, at an office of either of them. Said copies and records need not all be
kept in the same office.
The stockholders shall, upon reasonable request and notice, have the
right to inspect and copy, at such stockholder's expense, during ordinary
business hours, copies of the Corporation's federal, state and local income tax
returns and reports, if any, for the three most recent years, copies of the
Articles of Organization and these By-Laws, as well as any financial statements
of the Corporation for the three most recent years, with quarterly financial
statements for each of such years.
ARTICLE 10
----------
Amendments
----------
These By-Laws may be amended, modified or repealed only by the
affirmative vote of seventy-five percent (75%) in interest of the holders of the
Class A Common Stock and the Class B Common Stock, voting as separate classes.
23
Notice of the substance of any proposed amendment, modification or
repeal shall be stated in the Notice of any meeting of the stockholders called
for the purpose of proposing such amendment or repeal.
24
EXHIBIT 3.6
FEDERAL IDENTIFICATION
NO.04-3284048
-------------------
THE COMMONWEALTH OF MASSACHUSETTS
__________
Examiner
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
ARTICLES OF AMENDMENT
(GENERAL LAWS, CHAPTER 156B, SECTION 72)
__________
Name
Approved
We, Alfred W. Rossow, Jr. *Executive/Vice President, and Clare A.
--------------------- --------
Dever, * Assistant Clerk, of The Boston Beer Company, Inc., located at
----- -----------------------------
(Exact name of corporation)
75 Arlington Street, Boston MA 02116,
-------------------------------------------------------------------
(Street address of corporation in Massachusetts)
certify that these Articles of Amendment affecting articles numbered:
Articles III and Article IV, Section 1
-------------------------------------------------------------------
(Number those articles 1,2,3,4,5 and/or 6 being amended)
of the Articles of Organization were duly adopted at a meeting held on
June 2, 1998, by vote of:
------ --
Article III:
4,107,355 shares of Class B Common Stock of 4,107,355 shares
--------- ---------------------------- ---------
(type, class & series, if any)
outstanding, Article IV, Section 1:
12,762,163 shares of Class A Common Stock of 16,377,829 shares
---------- --------------------------- ----------
(type, class & series, if any)
outstanding, and
__________ shares of ___________________________ of __________ shares
(type, class & series, if any)
C - outstanding,
-
P - /1/**
- /2/** being at least two-thirds of each type, class or series
M - outstanding and entitled to vote thereon and of each type, class or
- series of stock whose rights are adversely affected thereby:
-
R.A. -
* Delete the inapplicable words. ** Delete the inapplicable clause.
/1/ For amendments adopted pursuant to Chapter 156B, Section 70.
= For amendments adopted pursuant to Chapter 156B, Section 71.
NOTE: IF THE SPACE PROVIDED UNDER ANY ARTICLE OR ITEM ON THIS FORM
IS INSUFFICIENT, ADDITIONS SHALL BE SET FORTH ON ONE SIDE ONLY OF
SEPARATE 8 1/2 X 11 SHEETS OF PAPER WITH A LEFT MARGIN OF AT LEAST 1
INCH. ADDITIONS TO MORE THAN ONE ARTICLE MAY BE MADE ON A SINGLE
__________ SHEET SO LONG AS EACH ARTICLE REQUIRING EACH ADDITION IS CLEARLY
P.C. INDICATED.
To change the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
- ----------------------------------------------------------------------------------------------------------------
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- ----------------------------------------------------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ----------------------------------------------------------------------------------------------------------------
Common: Common: Class A: 20,300,000 $.01
- ----------------------------------------------------------------------------------------------------------------
Class B: 4,200,000 $.01
- ----------------------------------------------------------------------------------------------------------------
Preferred: Preferred:
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Change the total authorized to:
- ----------------------------------------------------------------------------------------------------------------
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- ----------------------------------------------------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ----------------------------------------------------------------------------------------------------------------
Common: Common: Class A: 22,700,000 $.01
- ----------------------------------------------------------------------------------------------------------------
Class B: 4,200,000 $.01
- ----------------------------------------------------------------------------------------------------------------
Preferred: Preferred:
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
ARTICLE IV, Section 1, is hereby amended by deletion thereof and substituting
the following in lieu thereof:
1. BOARD OF DIRECTORS. The number of Directors of the Corporation
shall be such number as fixed annually by the Board of Directors, but not
fewer than seven (7) nor more than eleven (11), consisting of not fewer
than two (2) nor more than four (4) Directors elected by the holders of the
Corporation's Class A Common Stock (the "Class A Directors") and not fewer
than five (5) nor more than seven (7) Directors elected by the holders of
the Corporation's Class B Common Stock (the "Class B Directors"), and
subject to the further requirement that no Class B Directors in excess of
five (5) Class B Directors shall be elected unless a like number of Class A
Directors is also then, or previously, elected."
The forgoing amendment(s) will become effective when these Articles of Amendment
are filed in accordance with General Laws, Chapter 156B, Section 6 unless these
articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date.
Later effective date: ______________________________
SIGNED UNDER THE PENALTIES OF PERJURY, this 23rd day of July, 1998.
/s/ Alfred W. Rossow, Jr. Executive/Vice President
- --------------------------------------
Alfred W. Rossow, Jr.
/s/ Clare A. Dever "Clerk/"Assistant Clerk
- --------------------------------------
Clare A. Dever
*Delete the inapplicable words.
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(GENERAL LAWS, CHAPTER 156B, SECTION 72)
================================================================================
I hereby approve the within Articles of Amendment and, the filing fee in the
amount of $_______ having been paid, said articles are deemed to have been filed
with me this ________ day of _______________ 19____.
Effective date:_______________________________________________
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF DOCUMENT TO BE SENT TO:
Clare A. Dever, Corporate Secretary
-----------------------------------
The Boston Beer Company, Inc.
75 Arlington Street
-----------------------------------
Boston, MA 02116
Telephone: 617 368 5139
-----------------------------------
EXHIBIT 10.30
(Expurgated Copy)
GLASS SUPPLY AGREEMENT
BETWEEN
THE BOSTON BEER COMPANY
AND
OWENS-BROCKWAY GLASS CONTAINER INC.
GLASS SUPPLY AGREEMENT
BETWEEN
THE BOSTON BEER COMPANY ("PURCHASER")
AND
OWERNS-BROCKWAY GLASS CONTAINER INC. ("SELLER")
1. AGREEMENT TERM
From the date of signing through December 31, ______.
2. PRICES
Prices and related terms (the "Prices") are detailed on Attachment 1 and
are subject to adjustment as provided below in Section 4.
3. VOLUME
Subject to Section 6 below, and in the absence of a Force Majeure Event as
described in Section 14 below, Seller agrees to sell and Purchaser agrees to
purchase, during the term of this Agreement, the following quantities of glass
containers.
(A) For 1998, ________________________________________________.
(B) For the remaining term of the Agreement, ______________________.
4. PRICE ADJUSTMENTS
(A) Except to the extent that price reductions result from Strategic
Initiatives contemplated by Section 12, prices are firm through December
31, ____.
(B) Price for calendar year _________________________________________
a) Price adjustment cap of _____annually. Price adjustments are calculated
from prior year prices.
b) Prices are effective January 1 of each year.
c) Price adjustments will be advised by December 1 of the preceding year.
5. _________________________________________________________
6. RESPONSIBILITY TO PURCHASE AND INVENTORIES
(A) Purchaser shall provide Seller with Purchaser's best estimates of
Purchaser's anticipated requirements for glass containers on an annual and
monthly basis, and Seller will provide on a monthly basis inventory levels
of Purchaser's glass containers, both of which are to be listed by
Purchaser's brewery to which glass containers are to be delivered.
Recognizing that from time to time considerable
variations will occur in the annual and monthly forecasts, Seller shall use
its commercially reasonable best efforts to accommodate such delivery
requirements, but Seller will not be responsible for any substantial
unanticipated variations in glass container requirements which it is unable
to accommodate. If Seller is ____________________________________. Supplier
shall be liable if forecasts, as reasonably provided, are not fulfilled.
Under such circumstances, The Boston Beer Company ________________________.
Additionally, the _____________________________. If an event of Force
Majeure, as described in Section 14 below, continues and prevents Seller
from producing and or delivering the glass, then, in such event,
_________________________ during the period of the event of Force Majeure,
without any breach of this Agreement by Purchaser. If such an event of
Force Majeure occurs, as aforesaid, then in such an event, Seller shall
______________________.
(B) Purchaser authorizes Seller on the basis of the above-noted forecast to
produce and maintain a reasonable inventory of glass containers (not to
exceed a current __ day inventory without the consent of both parties). In
the event of the expiration or termination of the Agreement for any reason,
Purchaser shall (upon delivery of such inventory), in addition to any other
obligations it may have to Seller, ______________ glass containers produced
to as aforesaid date of termination.
(C) ___storage for a period of __ days from the date of manufacture or want
date whichever is the later. When inventory has reached ___ months of age,
Purchaser will have the option of (a) having the glass shipped to a
specified location, (b) having the glass culleted and be invoiced
__________ such glass, or (c) being invoiced for the ________________..
(D) If Purchaser elects the option set forth in Section (C)(c) above, then, in
such event, Seller agrees to store Purchaser's property in a segregated
area, clearly labeled to designate that it contains Purchaser's products.
The warehouse where Purchaser's products shall be located will be
identified to The Boston Beer Company in writing prior to beginning such
storage. Seller hereby appoints Purchaser as its agent and grants to
Purchaser a power-of-attorney, for purposes of this paragraph only, which
power-of-attorney is irrevocable during the term of this Agreement, with
authority to sign and deliver such documents, endorsements and instruments,
including UCC-1 Financing Statements to reflect Purchaser's ownership of
all right, title and interest in and to Purchaser's property warehoused at
Seller's location shown above, or elsewhere as agreed to, and to take all
other such action in the name of Seller as Purchaser may deem necessary or
advisable to protect and preserve Purchaser's ownership and right to
possession of Purchaser's property; provided, however, that Purchaser shall
not have any obligation to do so and its not so doing shall not in any
manner affect Purchaser's title to Purchaser's property for which it has
rendered payment to Seller and which is stored, as aforesaid.
7. MOLD EQUIPMENT
(A) Seller shall ___________ molds used to produce bottles, including any
replacement parts. Seller shall ____________ during the term of the
Agreement. Seller shall use
any molds that produce designs proprietary to Purchaser exclusively for the
manufacture and production of bottles for Purchaser hereunder and for no
other purpose.
(B) If Purchaser requests Seller to produce new proprietary design molds during
the term of the Agreement, and Seller agrees to produce such molds, the
Parties agree to enter into a written agreement regarding the _________
such molds.
8. FREIGHT
All ________ based on current ship-to locations: _______________________.
Any change in current ship-to locations that exceeds Owens-Brockway's current
freight costs will be negotiated and mutually agreed upon.
9. PALLETS
Pallets are memo billed on the face of the glass invoice. Seller will
review and Purchaser will be advised of pallet activity on a monthly basis. A
monthly float of pallets outstanding will be permitted to the equivalent of
Purchaser's highest volume month pallet usage over a twelve month period. Pallet
balances exceeding the float limit will be invoiced at the current rate of $____
for 40" x 48" pallets and $___ for 56" x 44" bulk pallets if pallet balance is
not corrected within 30 days of notification.
10. TERMS
______________________
11. AGREEMENT _____ OPTION
The Purchaser shall have the option to ____________ this Agreement for an
additional ________ period, provided the Purchaser exercises such option by
notifying Seller no later than ____________. Selling prices in effect in
Agreement year ____ will be the prices to which the ____________ will be applied
during the first year of the extension. The _________ (Attachment 2) will be
________________ in Agreement year ______________________. All other terms for
the extension period will be negotiated in good faith.
12. STRATEGIC OBJECTIVES
The Boston Beer Company and Owens-Brockway mutually agree to establish
teams to develop and actively work on strategic objectives that will focus on
______ improvement initiatives, and _____________ accruing from such
initiatives.
13. OTHER TERMS AND CONDITIONS
(A) The parties agree to negotiate in good faith to resolve all other terms and
conditions which may materially affect their commercial relationship. If,
pending such further negotiations, any issues arise between the parties
which are not expressly dealt with in the Agreement or in any written
amendment to this Agreement, the parties agree to
resolve such issues in an equitable manner by mutual good faith
negotiations. The parties further agree that this procedure shall be the
exclusive mechanism for resolving open issues, which shall not be affected
or governed by any other statutory or documentary provision including any
set forth in purchase orders, order acknowledgment forms, invoices or
similar documents.
(B) Notwithstanding the above, if the parties are unable to resolve any issues
as described above, then, in such event, any controversy or claim arising
out of or relating to this Agreement, or the breach thereof, shall be
settled by arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. Each of Seller and Purchaser shall select one arbitrator, and the
two arbitrators so selected shall mutually agree to the selection of a
third arbitrator; or, failing such mutual agreement, the third arbitrator
shall be selected by the American Arbitration Association. The arbitration
shall occur in Boston, Massachusetts, or otherwise as mutually agreed to by
Seller and Purchaser.
(C) The Boston Beer Company shall __________________________.
14. FORCE MAJEURE
If either the Seller or the Purchaser is prevented, hindered, or delayed
from or in performing any of its obligations under this Agreement (other than an
obligation to make payment) by a Force Majeure Event then:
That parties' obligations under this Agreement shall be suspended for so
long as the Force Majeure Event continues and to the extent that the party
is so prevented, hindered or delayed;
As soon as reasonably possible after the commencement of the Force Majeure
Event that the party shall notify the other party in writing of the
occurrence of the Force Majeure Event, the date of commencement of the
Force Majeure Event, the effects of the Force Majeure Event on its ability
to perform its obligations under this Agreement, and the efforts being made
or proposed by that party to remove or avoid such Force Majeure Event;
That party shall use all reasonable efforts to mitigate the effects of the
Force Majeure Event upon the performance of its obligations under this
Agreement;
As soon as reasonably possible after the cessation of the Fore Majeure
Event that party shall notify the other party in writing of the cessation
of the Force Majeure Event and shall presume performance of its obligations
under this Agreement. Owens-Brockway will give _____ to The Boston Beer
Company for glass supply as soon as Seller has production capability, it
being understood that Seller will use all commercially reasonable efforts
to expedite attaining production capability.
For the purposes of this section, "Force Majeure Event" means any event
beyond the reasonable control of a party and which is unavoidable
notwithstanding the reasonable care of that party. A Force Majeure event at
one or more, but not all, of Seller's production facilities shall not
constitute a Force Majeure Event, unless more than ______________ of
Seller's aggregate production capacity is affected.
15. CONFIDENTIALITY
Both during and after the termination of this Agreement, Seller shall
maintain in strict confidence all confidential information disclosed to it by
Purchaser, including, but not limited to, all operational strategies and plans,
all information regarding contract-brewing arrangements of Purchaser, all price
and marketing information, customer data, technical information and data, and
other similar forms of confidential information relating to the Purchaser's
products and services and the production and distribution thereof, as well as
all other general strategic planning or proprietary business information
identified as such by Purchaser to Seller. Upon the expiration or termination
of this Agreement, Seller agrees to return to Purchaser all materials then in
the possession of Seller or of any employee or agent of Seller, which contains
confidential information of Purchaser.
16. QUALITY AND SERVICE
Seller agrees to produce glass containers meeting specifications as set
forth in Attachments 3.1 through 3.3, or as amended and mutually agreed upon
from time to time.
17. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with, the
laws of the Commonwealth of Massachusetts.
THE BOSTON BEER COMPANY OWENS-BROCKWAY GLASS CONTAINER INC.
/s/ JIM KOCH /s/ WILLIAM M. GARRISON
Brewer Vice President, Industry Manager-Beer
4/30/98 4/29/1998
ATTACHMENT 1
Location Mold Desc. Cap Color Price
CORRUGATED COMPONENTS
Owens-Brockway may be asked to purchase some or all corrugated components.
Owens-Brockway's purchase price of corrugated components ______ to The Boston
Beer Company and ______________. Corrugated carton charges will be
___________________. Owens-Brockway's commercial best efforts will be used in
corrugated _________. The Boston Beer Company may also choose _______________
Owens-Brockway. Under this circumstance, the transactions would mirror the
handling of basket carriers.
SET UP CHARGES
Set up charges for the RSC cartons, partitions and basket carriers will be
____________.
BASKET CARRIERS
The ___________________ for the shipment of bottles by Owens-Brockway to
The ______________.
Additionally, The Boston Beer Company may choose
_____________________________________________.
NEW ITEMS
Any new items, or glass containers containing changes in design or
specifications that are developed for and shipped to The Boston Beer Company
during the Agreement Term shall be _____________________.
ATTACHMENT 2
ATTACHMENT 3.1
(Specifications for 12 oz. Longneck)
ATTACHMENT 3.2
(Specifications for 12 oz. Stock)
ATTACHMENT 3.3
(Specifications for 22 oz. Stock)
EXHIBIT 10.31
April 13, 1998
THE STROH BREWERY COMPANY
100 River Place
Detroit, MI 48207
Attention: Christopher T. Sortwell, Senior Vice President, Finance
RE: PRODUCTION AGREEMENT, DATED JANUARY 14, 1997, BETWEEN THE STROH
BREWERY COMPANY ("STROH") AND BOSTON BEER COMPANY LIMITED
PARTNERSHIP ("BOSTON BEER")(THE "PRODUCTION AGREEMENT"), LETTER
AGREEMENT, DATED JANUARY 14, 1997, BETWEEN STROH AND BOSTON BEER
("LETTER AGREEMENT") AND EXTENSION LETTERS, DATED AUGUST 19, 1997,
NOVEMBER 19, 1997, DECEMBER 19, 1997, JANUARY 22, 1998, FEBRUARY 25,
1998, AND MARCH 11, 1998 ("EXTENSION LETTERS")
Dear Chris:
The following is intended to set forth the agreement reached between Stroh and
Boston Beer with respect to a further extension of the Letter Agreement, as
previously extended by the Extension Letters:
1. All references in the Letter Agreement, as amended by the Extension
Letters, to "April 15, 1998" are hereby deleted and substituted with
"April 29, 1998".
2. All references in the Production Agreement to a termination date of
"October 15, 1998", including the reference contained in Section 6(a)
of the Production Agreement are hereby deleted and substituted with
"October 30, 1998".
If the above accurately sets forth your understanding of the agreement reached,
please sign and return the enclosed copy of this letter indicating your
acceptance.
Very truly yours,
BOSTON BEER COMPANY LIMITED PARTNERSHIP
By: Boston Brewing Company, Inc., its General Partner
By: /s/ MARTIN F. ROPER
Martin F. Roper, Vice President
ACCEPTED AND AGREED TO this 14th day of April, 1998.
THE STROH BREWERY COMPANY
By: /s/ CHRISTOPHER T. SORTWELL
Christopher T. Sortwell, Senior Vice President, Finance
April 27, 1998
THE STROH BREWERY COMPANY
100 River Place
Detroit, MI 48207
Attention: Christopher T. Sortwell, Senior Vice President, Finance
RE:PRODUCTION AGREEMENT, DATED JANUARY 14, 1997, BETWEEN THE STROH BREWERY
COMPANY ("STROH") AND BOSTON BEER COMPANY LIMITED PARTNERSHIP ("BOSTON
BEER")(THE "PRODUCTION AGREEMENT"), LETTER AGREEMENT DATED JANUARY 14,
1997, BETWEEN STROH AND BOSTON BEER ("LETTER AGREEMENT") AND EXTENSION
Letters, dated August 19, 1997, November 19, 1997, December 19, 1997,
JANUARY 22, 1998, FEBRUARY 25, 1998, MARCH 11, 1998 AND APRIL 13, 1998
("EXTENSION LETTERS")
Dear Chris:
The following is intended to set forth the agreement between Stroh and Boston
Beer with respect to a further extension of the Letter Agreement, as previously
extended by the Extension Letters:
1. All references in the Letter Agreement, as amended by the Extension
Letters to "April 29, 1998" are hereby deleted and substituted with
"June 12, 1998".
2. All references in the Production Agreement to a termination date of
"October 30, 1998", including the reference contained in Section 6(a)
of the Production Agreement are hereby deleted and substituted with
"December 11, 1998".
If you are in agreement with the above, please sign and return the enclosed copy
of this letter indicating your acceptance.
Very truly yours,
BOSTON BEER COMPANY LIMITED PARTNERSHIP
By: Boston Brewing Company, Inc., its General Partner
By: MARTIN F. ROPER
Martin F. Roper, Vice President
ACCEPTED AND AGREED TO this 29th day of April, 1998.
THE STROH BREWERY COMPANY
By: /s/ CHRISTOPHER T. SORTWELL
Christopher T. Sortwell, Senior Vice President, Finance
June 11, 1998
THE STROH BREWERY COMPANY
100 River Place
Detroit, MI 48207
Attention: Christopher T. Sortwell, Senior Vice President, Finance
RE:PRODUCTION AGREEMENT, DATED JANUARY 14, 1997, BETWEEN THE STROH BREWERY
COMPANY ("STROH") AND BOSTON BEER COMPANY LIMITED PARTNERSHIP ("BOSTON
BEER")(THE "PRODUCTION AGREEMENT"), LETTER AGREEMENT DATED JANUARY 14,
1997, BETWEEN STROH AND BOSTON BEER ("LETTER AGREEMENT") AND EXTENSION
LETTERS, DATED AUGUST 19, 1997, NOVEMBER 19, 1997, DECEMBER 19, 1997,
JANUARY 22, 1998, FEBRUARY 25, 1998, MARCH 11, 1998, APRIL 13, 1998
AND APRIL 27, 1998 ("EXTENSION LETTERS")
Dear Chris:
The following is intended to set forth the agreement between Stroh and Boston
Beer with respect to a further extension of the Letter Agreement, as previously
extended by the Extension Letters:
1. All references in the Letter Agreement, as amended by the Extension
Letters, to "June 12, 1998" are hereby deleted and substituted with
"June 26, 1998".
2. All references in the Production Agreement to a termination date of
"December 11, 1998", including the reference contained in Section 6(a)
of the Production Agreement are hereby deleted and substituted with
"December 28, 1998".
If you are in agreement with the above, please sign and return the enclosed copy
of this letter indicating your acceptance.
Very truly yours,
BOSTON BEER COMPANY LIMITED PARTNERSHIP
By: Boston Brewing Company, Inc., its General Partner
By: /s/ MARTIN F. ROPER
Martin F. Roper, Vice President
ACCEPTED AND AGREED TO this 12th day of June, 1998.
THE STROH BREWERY COMPANY
By: /s/ CHRISTOPHER T. SORTWELL
Christopher T. Sortwell, Senior Vice President, Finance
June 25, 1998
THE STROH BREWERY COMPANY
100 River Place
Detroit, MI 48207
Attention: Christopher T. Sortwell, Senior Vice President, Finance
RE:PRODUCTION AGREEMENT, DATED JANUARY 14, 1997, BETWEEN THE STROH BREWERY
COMPANY ("STROH") AND BOSTON BEER COMPANY LIMITED PARTNERSHIP ("BOSTON
BEER") (THE "PRODUCTION AGREEMENT"), LETTER AGREEMENT DATED JANUARY
14, 1997, BETWEEN STROH AND BOSTON BEER ("LETTER AGREEMENT") AND
EXTENSION LETTERS, DATED AUGUST 19, 1997, NOVEMBER 19, 1997, DECEMBER
19, 1997, JANUARY 22, 1998, FEBRUARY 25, 1998, MARCH 11, 1998, APRIL
13, 1998, APRIL 27, 1998 AND JUNE 11, 1998 ("EXTENSION LETTERS")
Dear Chris:
The following is intended to set forth the agreement between Stroh and Boston
Beer with respect to a further extension of the Letter Agreement, as previously
extended by the Extension Letters:
1. All references in the Letter Agreement, as amended by the Extension
Letters, to "June 26, 1998" are hereby deleted and substituted with
"July 20, 1998".
2. All references in the Production Agreement to a termination date of
"December 28, 1998", including the reference contained in Section 6(a)
of the Production Agreement are hereby deleted and substituted with
"January 22, 1999".
If you are in agreement with the above, please sign and return the enclosed copy
of this letter indicating your acceptance.
Very truly yours,
BOSTON BEER COMPANY LIMITED PARTNERSHIP
BY: BOSTON BREWING COMPANY, INC., ITS GENERAL PARTNER
By: /s/ MARTIN F. ROPER
Martin F. Roper, Vice President
ACCEPTED AND AGREED TO THIS 26TH DAY OF JUNE, 1998.
THE STROH BREWERY COMPANY
By: /s/ WILLIAM L. HENRY, PRESIDENT & CEO
Christopher T. Sortwell, Senior Vice President, Finance
July 20, 1998
THE STROH BREWERY COMPANY
100 River Place
Detroit, MI 48207
Attention: Christopher T. Sortwell, Senior Vice President, Finance
RE:PRODUCTION AGREEMENT, DATED JANUARY 14, 1997, BETWEEN THE STROH BREWERY
COMPANY ("STROH") AND BOSTON BEER COMPANY LIMITED PARTNERSHIP ("BOSTON
BEER") (THE "PRODUCTION AGREEMENT), LETTER AGREEMENT DATED JANUARY 14,
1997, BETWEEN STROH AND BOSTON BEER ("LETTER AGREEMENT") AND EXTENSION
LETTERS, DATED AUGUST 19, 1997, NOVEMBER 19, 1997, DECEMBER 19, 1997,
JANUARY 22, 1998, FEBRUARY 25, 1998, MARCH 11, 1998, APRIL 13, 1998,
APRIL 27, 1998, JUNE 11, 1998 AND JUNE 25, 1998 ("EXTENSION LETTERS")
Dear Chris:
The following is intended to set forth the agreement between Stroh and Boston
Beer with respect to a further extension of the Letter Agreement, as previously
extended by the Extension Letters:
1. All references in the Letter Agreement, as amended by the Extension
Letters, to "July 20, 1998" are hereby deleted and substituted with "August
3, 1998".
2. All references in the Production Agreement to a termination date of
"January 22, 1999", including the reference contained in Section 6(a) of
the Production Agreement are hereby deleted and substituted with "February
5, 1999".
If you are in agreement with the above, please sign and return the enclosed copy
of this letter indicating your acceptance.
Very truly yours,
BOSTON BEER COMPANY LIMITED PARTNERSHIP
BY: BOSTON BREWING COMPANY, INC., ITS GENERAL PARTNER
BY: /s/ MARTIN F. ROPER
Martin F. Roper, Vice President
ACCEPTED AND AGREED TO THIS 20TH DAY OF JULY, 1998.
THE STROH BREWERY COMPANY
BY: /s/ CHRISTOPHER T. SORTWELL
Christopher T. Sortwell, Senior Vice President, Finance
5
1,000
U.S. DOLLARS
6-MOS
DEC-26-1998
DEC-28-1997
JUN-27-1998
1
4,259
37,436
20,992
(1,172)
14,575
83,605
43,700
(13,395)
116,599
25,016
0
0
0
205
78,207
116,599
105,469
91,779
43,658
82,030
0
0
(327)
8,655
4,246
4,409
0
0
0
4,409
0.21
0.21
THIS NUMBER INCLUDES 16,384,789 SHARES OF CLASS A COMMON STOCK WITH A PAR VALUE
OF $164,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF $41,000.
