<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1996
-------------
/ / Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
---------- ----------
Commission file number 0 - 25836
--------------------------------------------------
PORTLAND BREWING COMPANY
---------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Oregon 93-0865997
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2730 NW 31st Avenue, Portland, Oregon 97210
--------------------------------------------
(Address of Principal Executive Offices)
503/226-7623
--------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
--------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 2,069,397 shares of
---------------
common stock as of August 4, 1996.
--------------
Transitional Small Business Disclosure Format (check one):
Yes __X__ No ____
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PORTLAND BREWING COMPANY
Balance Sheet
ASSETS
June 30, December 31,
1996 1995
------------- ------------
(Unaudited)
CURRENT ASSETS
Cash $ 92,432 $ 156,466
Accounts receivable 951,427 710,145
Inventories 808,283 707,145
Prepaid and other current assets 560,672 436,282
------------- ------------
Total current assets 2,412,814 2,010,038
PLANT AND EQUIPMENT, Net 8,336,854 6,751,334
OTHER ASSETS, Net 243,656 144,699
------------- ------------
Total assets $10,993,324 $8,906,071
------------- ------------
------------- ------------
2
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PORTLAND BREWING COMPANY
Balance Sheet
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1996 1995
----------- ------------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $868,278 $582,750
Other accrued liabilities 511,327 349,997
Notes Payable 320,458 61,733
------------- ------------
Total current liabilities 1,700,063 994,480
DEFERRED INCOME TAXES 189,252 189,452
LONG- TERM DEBT, net of current 1,853,321 537,712
STOCKHOLDERS' EQUITY:
Common stock, no par value, 5,000,000 shares
authorized, 2,069,397 shares issued
and outstanding at June 30, 1996 and
December 31, 1995 6,695,729 6,696,196
Stock notes receivable (10,222) (18,260)
Retained earnings 565,181 506,491
------------- ------------
Total stockholders' equity 7,250,688 7,184,427
------------- ------------
Total liabilities stockholders' equity $10,993,324 $8,906,071
------------- ------------
------------- ------------
3
<PAGE>
PORTLAND BREWING COMPANY
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
--------------------- ----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SALES $6,481,247 $4,782,745 $3,326,811 $2,820,033
EXCISE TAX 401,624 239,114 178,234 140,643
---------- ---------- ---------- ----------
Net Sales 6,079,623 4,543,631 3,148,577 2,679,390
COST OF SALES 3,938,900 2,842,151 1,985,235 1,648,251
---------- ---------- ---------- ----------
GROSS PROFIT 2,140,723 1,701,480 1,163,342 1,031,139
GENERAL AND ADMINISTRATIVE EXPENSES 897,214 615,985 470,606 339,019
SELLING EXPENSES 1,125,707 1,094,752 631,775 608,483
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) 117,802 (9,257) 60,961 83,637
OTHER INCOME (EXPENSES), net (21,312) (81,425) (3,396) (66,683)
---------- ---------- ---------- ----------
Net income (loss) before provision
for (benefit from) income taxes 96,490 (90,682) 57,565 16,954
PROVISION FOR (BENEFIT FROM) INCOME TAXES 37,800 (34,459) 22,000 6,443
---------- ---------- ---------- ----------
Net income (loss) $58,690 ($56,223) $35,565 $10,511
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
NET INCOME (LOSS) PER SHARE $0.03 ($0.03) $0.02 $0.01
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average shares outstanding 2,145,549 1,737,699 2,145,631 1,735,216
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
4
<PAGE>
PORTLAND BREWING COMPANY
Statements of Cash Flows
(Unaudited)
Six months ended
June 30,
--------------------------
1996 1995
----------- -----------
Cash flows from operating activities $445,584 $(108,659)
----------- -----------
Net cash used in investing activities (2,091,523) (2,583,011)
----------- -----------
Net cash provided by financing activities 1,581,905 2,163,012
----------- -----------
Increase (decrease) in cash (64,034) (528,658)
----------- -----------
Cash, beginning of period 156,466 566,464
----------- -----------
Cash, end of period $92,432 $37,806
----------- -----------
----------- -----------
5
<PAGE>
PORTLAND BREWING COMPANY
Notes to Financial Statements
(Unaudited)
1. The interim financial data is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results
for the interim periods. The financial statements included herein have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures included herein are adequate to make
the information presented not misleading.
2. The organization and business of the Company, accounting policies followed
by the Company and other information are contained in the notes to the
Company's financial statements filed as part of the Company's Annual Report
to Shareholders incorporated by reference in the Company's Annual Report on
Form 10-KSB for the fiscal year December 31, 1995. This quarterly report
should be read in conjunction with such annual report.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 COMPARISON AND THE BALANCE SHEET OF
DECEMBER 31, 1995. Shipments for the six months ended June 30, 1996 were 34,626
barrels up 33% over the same period in 1995. Correspondingly, gross sales were
up 36% and net sales up 34%. Cost of goods sold were up 39% due to plant
expansion costs, price increases in ingredients, product mix and freight
expenses. Gross profits were up 26%.
G&A expenses were 46% higher for the period in 1996 compared to 1995, due to
continued infrastructure improvements and organization development. There were
also substantial compliance, annual meeting and reporting expenses in the period
as a result of the Company becoming subject to Securities and Exchange
Commission reporting requirements. Selling and marketing expenses were 3%
higher for the six months ending June 30, 1996 compared to the same period in
1995.
Depreciation and amortization expenses for the six months ended June 30, 1996
totaled $426,338, compared to $351,416 in the same period previous year.
Operating income before depreciation and amortization totaled $544,140, a 59%
increase over the previous year. Operations for the six months ended June 30,
1996 resulted in a net income of $58,690 compared to a net loss of $56,223 for
the same period in 1995.
During the six months ended June 30, 1996 the Company invested over $2,000,000
in additional brewing equipment and tanks, as well as restaurant expansion.
These expenditures, together with working capital requirements, were funded by
bank borrowings of $1,600,000 during the period. In addition, due to payments
due on capital expenditure projects paid in July, the accounts payable balance
was $868,000 at June 30, 1996 compared to $583,000 at December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital principally to expand its production capacity,
increase the productivity of its manufacturing operations and fund its working
capital needs. To date, the Company has met its capital requirements through
cash flow from operations, bank borrowings, advances from certain stockholders
and the private and public sale of its Common Stock.
The Company has budgeted a total of $3.5 million for capital expenditures
through 1996 and into 1997, principally to improve product and process quality,
implement production efficiencies, provide cost savings and increase capacity.
Such expenditures, as well as working capital requirements, will be funded
through cash flow from
6
<PAGE>
operations, funds available under the Company's line of credit facilities,
additional equity offerings or a combination thereof.
The Company has arranged with Bank of America Oregon term debt of $1,400,000, a
$1,000,000 operating line and a $2,000,000 equipment line to support its capital
expenditure and working capital needs. As of August 5, 1996 the balance
outstanding in term debt was $1,393,000; on the operating line, $450,000; and,
$721,000 on the equipment line.
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) The annual meeting of the shareholders of the Company was held April 30,
1996 at which the following actions were taken:
(b) The shareholders elected the six nominees for director to the Board of
Directors of the Company. The six directors elected and the voting results
are as follows:
Name Votes In Favor Votes Withheld
----------------- -------------- ---------------
Charles A. Adams 1,145,638 20,528
Edwin Hunt 1,145,938 20,228
Robert M. MacTarnahan 1,146,088 20,078
R. Scott MacTarnahan 1,145,438 20,728
Simon C. Ostler 1,142,988 23,178
Howard M. Wall, Jr. 1,123,588 42,578
(c) The shareholders approved the appointment of Arthur Andersen LLP as the
independent accountants of the Company for the year ending December 31,
1996 (1,149,615 shares were voted in favor, 4,850 shares were voted against
and 11,701 shares abstained).
The shareholders approved an amendment to the Articles of Incorporation of
the Company to create 100,000 shares of Preferred Stock (1,036,892 shares
were voted in favor, 90,074 shares were voted against and 39,200 shares
abstained).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
INCORPORATION BY REFERENCE.
The following Exhibits are incorporated herein by this reference. The order of
incorporation and the numbering used is intended to match the order and
numbering of the Exhibit Table of Regulation S-B Item 601.
Pagination by
Sequential
Exhibit Numbering
Number Description of Document System
- ----------- --------------------------- -------------
Exhibit 3.1 Articles of Incorporation
Exhibit 3.2 Bylaws (1) --
Exhibit 3.2A Amendment to the Bylaws (2) --
Exhibit 4.1 Specimen Common Stock Certificate (1) --
Exhibit 10.1 Indenture of Lease between the Company and
Portland Brewing Building Partners dated
November 4, 1992, as amended (1) --
Exhibit 10.2 Sublease between the Company, Power Transmission
Products, Inc., and Pacific Realty Associates, L.P.,
7
<PAGE>
dated January 26, 1995 (1) --
Exhibit 10.3 Lease Agreement between the Company and
Leonard G. Johnson dated April 12, 1996
Exhibit 10.4 Warrant issued to Electra Partners, Inc.
dated March 25, 1996 (2) --
Exhibit 10.5 Warrant issued to MacTarnahan Limited Partnership
dated March 25, 1996 (2) --
Exhibit 10.6 License Agreement between the Company, R.M.
MacTarnahan, and Harmer Company dated July 1, 1994 (1) --
Exhibit 10.7 The Company 1992 Incentive Stock Option Plan and
Specimen Form Plan Documents (1) --
Exhibit 10.8 The Company's 1994 Nonqualified Stock Option Plan
and Specimen Form Plan Documents (1) --
Exhibit 10.9 Resolutions of the Board of Directors reserving
30,000 shares (now 45,000 shares as adjusted for the
three-for-two stock split effected on November 18, 1994)
under the Company's 1994 Nonqualified Stock Option Plan (1) --
Exhibit 10.10 Business Loan Agreement between the Company and
Bank of America-Oregon, dated December 15, 1995 (2) --
Exhibit 10.11 Distribution Agreement between the Company and
Columbia Distributing dated April 8, 1996
Exhibit 10.12 Restated Cash Incentive Plan, as amended (1) --
Exhibit 10.13 The Company's Stock Offering Purchase Plan for
Employees and Specimen Form Plan Documents (1) --
Exhibit 10.14 Option to Purchase and Agreement and Option to Lease between
the Company and L & L Land Co., dated December 1995 (2) --
Exhibit 10.15 Indenture of Lease between the Company and
Western Stations Co. dated May 1, 1995 (3) --
Exhibit 10.16 Manufacturing Services Agreement between the Company
and The Stroh Brewery Company dated January 31, 1996 (4) --
Exhibit 10.17 Purchase Agreement between the Company and Robert Edwards
doing business as Bogart's dated January 25, 1996
Exhibit 11.1 Calculations of Net Income per Share
1. Incorporated by reference to the Company's Form SB-1 (Commission File No.
33-90914-LA) as filed with the Securities and Exchange Commission on April
4, 1995.
2. Incorporated by reference to the Company's Form 10-KSB for the year ended
December 31, 1995 as filed with the Securities and Exchange Commission on
March 28, 1996.
3. Incorporated by reference to the Company's Form 10-QSB for the quarter
ended March 31, 1995 as filed with the Securities and Exchange Commission
on May 2, 1996.
4. Incorporated by reference to the Company's Form 10-QSB/A No. 1 for the
quarter ended March 31, 1996 as filed with the Securities and Exchange
Commission on July 31, 1996.
(B) REPORTS ON FORM 8-K.
None.
8
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
/s/ PORTLAND BREWING COMPANY
-------------------------------
(Registrant)
Date 8/8/96 /s/ CHARLES A. ADAMS
------------------ -------------------------------
(Signature)
Charles A. Adams, President and Chief
Executive Officer
Date 8/8/96 /s/ GLENMORE JAMES
------------------ -------------------------------
(Signature)
Glenmore James, Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
EXHIBIT 3.1
FILE NO. 172659
Submit one original and one true copy
**Filing Fee (831106) $ 10.00
**License Fee (831006) $ 10.00
One or more natural persons of the age of 18 years or more, a domestic or
foreign corporation, a partnership or an association may act as incorporators of
a corporation by signing and verifying Articles of Incorporation and delivering
one original and one true copy of the articles for the corporation to the
Corporation Commissioner. The procedure for the formation of business
corporations is set forth in ORS 57.030 through 57.331. See ORS 57.331 for the
content of the Articles of Incorporation.
ARTICLES OF INCORPORATION
The undersigned natural person(s) of the age of eighteen years or more, a
domestic or foreign corporation, a partnership or an association acting as
incorporators under the Oregon Business Corporation Act, adopt the following
Articles of Incorporation:
ARTICLE I The name of this corporation is PORTLAND BREWING COMPANY (The
corporate name must contain the word "Corporation", "Company'", "Incorporated"
or "Limited" or an abbreviation of one of such words) and its duration shall be
PERPETUITY
ARTICLE II The purpose or purposes for which the corporation is organized are:
THE CORPORATION MAY ENGAGE IN ANY LAWFUL ACTIVITY FOR WHICH CORPORATIONS MAY BE
ORGANIZED UNDER ORS CHAPTER 57. IN ADDITION THIS CORPORATION WILL BREW
DISTRIBUTE AND SELL BEER AND ALE.
(It is not necessary to set forth in the Articles any of the corporate powers
enumerated in ORS 57.030 and 573035. It is sufficient to state, either alone or
with other purposes, "That the corporation may engage in any lawful activity for
which corporations may be organized under ORS Chapter 57"; however, it is
desirable to state the primary purpose of the corporation in conjunction with
such statement.)
ARTICLE III The aggregate number of shares which the corporation shall have
authority to issue is
30 SHARES OF STOCK. COMMON STOCK VALUE AT $50.00 PER SHARE WITH TOTAL
AUTHORIZED OF $1,500.00.
(Insert statement as to par value of such shares or a statement that all of such
shares are to be without par value. If there is more than one class of stock,
insert a statement as to the preference, limitations and relative rights of each
class)
ARTICLE IV The address of the initial registered office of the corporation is
5019 SW LOWELL PORTLAND, OR 97221
and the name of its initial registered agent at such address is ARTHUR E.
LARRANCE
ARTICLE V The number of directors constituting the initial board of directors
of the corporation is THREE and the names and addresses of the persons who are
to serve as directors until the first annual meeting of shareholders or until
their successors are elected and shall qualify are:
Name Address
- ---------------------- -------------------------------------------
FREDERICK L. BOWMAN 9965 SW 96TH BEAVERTON, OR 97005
JIM GOODWIN 2534 N. PORTLAND BLVD PORTLAND, OR 97227
ARTHUR E. LARRANCE 5019 SW LOWELL PORTLAND, OR 97221
<PAGE>
ARTICLE VI The name and address of each incorporator is:
Name Address
- -------------------- ------------------------------------------
FREDERICK L. BOWMAN 9965 SW 96TH BEAVERTON, OR 97005
JIM GOODWIN 2534 N. PORTLAND BLVD PORTLAND, OR 97227
ARTHUR E. LARRANCE 5019 SW LOWELL PORTLAND, OR 97221
ARTICLE VII (Provisions for regulation of internal affairs of the corporation
as may be appropriate.)
THE PROVISIONS FOR REGULATION OF INTERNAL AFFAIRS HAVE NOT BEEN DETERMINED.
We, the undersigned incorporators, declare under penalties of perjury that
we have examined the foregoing and to the best of our knowledge and belief, it
is true, correct and complete.
/s/ Arthur E. Larrance /s/ Jim Goodwin
- ---------------------------------- --------------------------------------
/s/ Frederick L. Bowman
- ----------------------------------
Dated November 9, 1983.
**Submit one original and one true copy of articles with filing and license
fees as listed below. One original means one copy MUST have original
signatures-the true copy may be a Xerox copy.
If authorized
shares exceed But do not exceed Filing Fee License Fee Total Fees
$ 0 $ 5,000 $ 10 $ 10 $ 20
5,000 10,000 15 15 30
10,000 25,000 20 20 40
25,000 50,000 30 30 60
50,000 100,000 50 50 100
100,000 250,000 75 75 150
250,000 500,000 100 100 200
500,000 1,000,000 125 125 250
If the authorized shares exceed $1,000,000, a $200 license fee and a $200 filing
fee-totaling $400.
To determine the amount of organization fee payable by a corporation having
stock without par value, but for no other purpose, such shares of stock shall be
deemed equivalent to shares having a par value of $10 each.
File with Corporation Commissioner, Commerce Bldg., 158 12th St., E., Salem,
Oregon 97310
<PAGE>
ARTICLES OF AMENDMENT
OF
PORTLAND BREWING COMPANY
Pursuant to ORS 57.360 (1), the undersigned corporation executes the following
Articles of Amendment to its Articles of Incorporation:
I
The name of the corporation is Portland Brewing Company.
II
The following amendment of the Articles of Incorporation was adopted by the
shareholders on December 18, 1984:
"RESOLVED, that Article III of the Articles of Incorporation is amended to read
as follows:
"ARTICLE III
The aggregate number of shares which the corporation shall have the authority to
issue is 20,000 shares of common stock, with a par value of $.25 per share.'"
III
The total number of shares outstanding at the time of the adoption of this
amendment was 16 and the number of shares entitled to vote thereon was 16. The
number of shares voted for such amendment was 16 and the number of shares voted
against such amendment was zero.
IV
Each outstanding share with no par value is split up and converted into 200
shares with a par value of $.25 per share.
V
Such amendment effects no change in the amount of stated capital.
Page 1 - ARTICLES OF AMENDMENT
WE, THE UNDERSIGNED, declare under the penalties of perjury that we have
examined the foregoing Articles of Amendment and, to the best of our knowledge
and belief, it is true, correct and complete.
Dated December 18, 1984.
PORTLAND BREWING COMPANY
By /s/ Frederick L. Bowman
-------------------------
Frederick L. Bowman, President
By /s/ Arthur E. Larrance
-------------------------
Arthur E. Larrance, Secretary<PAGE>
<PAGE>
Submit the Original
And One True Copy
No Fee Required
STATE OF OREGON
CORPORATE DIVISION
158 12th Street NE
Salem, OR 97310
Registry Number:
172659-19
- ------------
(If known)
ARTICLES OF AMENDMENT
By Directors or Shareholders
PLEASE TYPE OR PRINT LEGIBLY IN BLACK INK
1. Name of the corporation prior to amendment:
PORTLAND BREWING COMPANY
2. State the article number(s) and set forth the article(s) as it is amended
to read. (Attach additional sheets, if necessary.)
Add new Article VII (see attached)
3. The amendment was adopted on October 11, 1988. (If more than one amendment
was adopted, identify the date of adoption of each amendment.)
Check the one appropriate statement:
/ / Shareholder action was not required to adopt the amendment(s). The
amendment was adopted by the board of directors without shareholder
action.
/ / Shareholder action was required to adopt the amendment(s). The
shareholder vote as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Class or Series of Number of Shares Number of Votes Number of Votes Number of Votes
Shares Outstanding Entitled to be Cast Cast For Cast Against
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common 11,000 11,000 8,400 0
- -------------------------------------------------------------------------------------------------------
</TABLE>
5. Other provisions, if applicable (Attach additional sheets, if necessary).
Execution: /s/ Arthur E. Larrance Arthur E. Larrance Secretary
-------------------------------------------------------
Signature Printed Name Title
Person to contact about this filing: Delbert A. Weaver 222-9981
--------------------------------------
Name Daytime Phone Number
Submit the original and a true copy to the Corporation Division, 158 12th Street
NE, Salem, Oregon 97310. There is no fee required. If you have question,
please call (503) 378-4166.
Article VII
"A Director of the Corporation shall not be liable to the corporation or
its stockholders for money damages for conduct as a Director except liability
arising from (1) any breach of the Directors' duty of loyalty to the Corporation
or its stockholders; (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law: (3) any unlawful
distribution under the Oregon Business Corporation Act, or (4) any transaction
in which the director derives any improper personal benefit."
<PAGE>
Submit the Original
And One True Copy
No Fee Required
STATE OF OREGON
CORPORATE DIVISION
158 12th Street NE
Salem, OR 97310
Registry Number:
172659-19
- ----------
(If known)
ARTICLES OF AMENDMENT
By Directors or Shareholders
PLEASE TYPE OR PRINT LEGIBLY IN BLACK INK
1. Name of the corporation prior to amendment:
PORTLAND BREWING COMPANY
2. State the article number(s) and set forth the article(s) as it is amended
to read. (Attach additional sheets, if necessary.)
Add new Article VII (see attached)
3. The amendment was adopted on March 11, 1992. (If more than one
amendment was adopted, identify the date of adoption of each amendment.)
4. Shareholder action WAS required to adopt the amendment(s). The shareholder
vote was as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Class or Series of Number of Shares Number of Votes Number of Votes Number of Votes
Shares Outstanding Entitled to be Cast Cast For Cast Against
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common 26,000 26,000 21,496 0
- ----------------------------------------------------------------------------------------------------
</TABLE>
5. / / Shareholder action WAS NOT required to adopt the amendment(s). The
amendment(s) was adopted by the board of directors without shareholder action.
Execution: /s/ Charles A. Adams Charles A. Adams President
------------------------------------------------------------------
Signature Printed Name Title
Person to contact about this filing: Mark A. Stayer (503) 222-9981
-----------------------------------------
Name Daytime Phone Number
Make checks payable to the Corporation Division. Submit the completed form and
fee to: Corporation Division, Business Registry, 158 12th Street NE, Salem,
Oregon 97310-0210.
EXHIBIT A
1. Article III of the Articles of Incorporation is amended to read as follows:
ARTICLE III
The aggregate number of shares which the Corporation shall have authority
to issue is 2,000,000 shares of common stock, without par value.
2. Article VIII is added to the Articles of Incorporation and reads as follows:
ARTICLE VIII
The Corporation elects to waive preemptive rights and the shareholders of
the Corporation shall not have a preemptive right to acquire the
corporation's unissued shares.
<PAGE>
REGISTRY NO. 172659-19
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
PORTLAND BREWING COMPANY
Pursuant to ORS 60.437, PORLAND BREWING COMPANY hereby submits for filing
the following Articles of Amendment to its Articles of Incorporation:
1. The name of the corporation is PORTLAND BREWING COMPANY.
2. The Articles of Incorporation are amended by amending ARTICLE III so
that said article, as amended, reads in its entirety:
"ARTICLE III
The aggregate number of shares which the corporation shall have
authority to issue is five million (5,000,000) shares of common stock,
without par value."
3. Shareholder action was required to adopt the amendment. The
corporation's only class of outstanding stock is common stock. The total number
of shares outstanding and votes entitled to be cast by the voting group of the
corporation are 1,101,680. The total number of votes cast for this amendment
was 629,568; the total number of votes cast against this amendment was 44,649.
4. The amendment was adopted on November 8, 1994.
PORTLAND BREWING COMPANY
By: /s/ Charles A. Adams
-----------------------------------
Charles A. Adams, President
Person to contact about this filing:
Brendan R. McDonnell, Esq.
Daytime Phone: (503) 778-2182
<PAGE>
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
PORTLAND BREWING COMPANY
Pursuant to ORS 60.437, PORTLAND BREWING COMPANY hereby submits for filing
the following Articles of Amendment to its Articles of Incorporation:
1. The name of the corporation is PORTLAND BREWING COMPANY (the
"Corporation").
2. The Articles of Incorporation are amended by amending ARTICLE III so
that said Article, as amended, is in the form attached hereto as Exhibit A.
3. Shareholder action was required to adopt the Amendment. The
Corporation's only class of outstanding stock is common stock. The total number
of shares outstanding and votes entitled to be cast by the voting group of the
Corporation are 2,069,397. The total number of votes cast for this Amendment
was 1,036,892; the total number of votes cast against this Amendment was 90,074;
and the total number of votes abstaining on this Amendment was 39,200.
4. The Amendment was adopted on April 30,1996.
PORTLAND BREWING COMPANY
By: /s/ Charles A. Adams
-------------------------------------
Charles A. Adams, President
Person to contact about this filing:
Brendan R. McDonnell, Esq.
Daytime Phone: (503) 778-2182
<PAGE>
EXHIBIT A
ARTICLE III
AUTHORIZED SHARES
3.01 COMMON AND PREFERRED STOCK
A. The aggregate number of shares that the Corporation shall have
authority to issue is Five Million (5,000,000) shares of common stock and One
Hundred Thousand (100,000) shares of preferred stock.
B. The preferred stock may be issued in one or more series at such time
or times and for such consideration or considerations as the board of directors
may determine. Each series shall be so designated to distinguish its shares from
the shares of all other series and classes. All shares of a series of preferred
stock shall have preferences, limitations and relative rights identical with
those of other shares of the same series and, except to the extent otherwise
provided in the articles of amendment adopted by the board of directors creating
the series, of those of other series of the same class. Except as otherwise
provided in these articles of incorporation, different series of preferred stock
shall not be construed to constitute different classes of shares for the purpose
of voting by classes.
C. Subject to the foregoing, the board of directors is expressly
authorized to provide for the issuance of all or any shares of the preferred
stock in one or more series, each with such preferences, limitations and
relative rights as shall be stated in the articles of amendment adopted by the
board of directors to create such series and filed with the Oregon Secretary of
State in accordance with the Oregon Business Corporation Act. The authority of
the board of directors with respect to each such series shall include, without
limitation of the foregoing, the right to provide that the shares of each such
series may (1) have special, conditional, or limited voting rights, or no voting
rights; (2) be redeemable or convertible (a) at the option of the Corporation,
the shareholder, or another person on the occurrence of a designated event, (b)
for cash, indebtedness, securities, or other property, or (c) in a designated
amount or in an amount determined in accordance with a designated formula or by
reference to extrinsic data or events; (3) entitle the holders to distributions
calculated in any manner, including dividends that may be cumulative,
noncumulative, or partially cumulative; and (4) have preference over any other
classes or series of shares with respect to distributions, including dividends
and distributions upon the dissolution of the Corporation; all as the board of
directors may deem advisable and as are not inconsistent with the Oregon
Business Corporation Act and the provisions of these articles of incorporation.
3.02 RIGHTS OF COMMON STOCK. Subject to provisions governing preferred
stock that may from time to time come into existence, the holders of the common
stock shall have unlimited voting rights and the unlimited right to receive the
net assets of the Corporation upon dissolution.
3.03 VOTING OF COMMON STOCK. Except as otherwise required by law, each
outstanding share of common stock is entitled to one vote on each matter voted
on at a shareholders' meeting, and each outstanding share of preferred stock is
entitled to such vote or votes, if any, as fixed by the board of directors in
the articles of amendment filed pursuant to paragraph B of provision 3.01 above.
<PAGE>
EXHIBIT 10.3
THIS INDENTURE OF LEASE, entered into this 12TH day of APRIL, 1996,
between LEONARD G. JOHNSON, hereinafter called the lessor, and PORTLAND BREWING
COMPANY, hereinafter called the lessee,
WITNESSETH: In consideration of the covenants herein, the lessor hereby
leases unto the lessee those certain premises, as is, situated in the City of
PORTLAND, County of MULTNOMAH and State of OREGON, hereinafter called the
premises, described as follows:
406 NW 14TH & FLANDERS. ALSO KNOWN AS LOT 2, BLOCK 89
COUCH'S ADDITION TO THE CITY OF PORTLAND.
To Have and to Hold the premises commencing with the 15TH day of APRIL,
1996, and ending at midnight on the 30TH day of APRIL, 1999, for a rental of $
SEE BELOW for the whole term, which lessee agrees to pay, at 30303 SE LUSTED RD
City of GRESHAM, State of OR 97080, at the following times and in the following
amounts, to-wit:
THREE YEAR LEASE WITH THREE "THREE-YEAR CONSECUTIVE OPTIONS". INITIAL
MONTHLY RENT TO BE $4,950 PAYABLE ON THE FIRST DAY OF EACH AND EVERY MONTH.
SEE "ADDENDUM A" FOR ADDITIONAL TERMS.
In consideration of the leasing of the premises and of the mutual
agreements herein contained, the parties agree as follows:
LESSEE'S ACCEPTANCE OF LEASE (1) The lessee accepts this letting and agrees to
pay to the order of the lessor the monthly rentals above stated for the full
term of this lease, in advance, at the times and in the manner aforesaid.
USE OF PREMISES (2a) The lessee shall use the premises during the term of
this lease for the conduct of the following business: BREWERY & RESTAURANT
and for no other purpose whatsoever without lessor's written consent.
(2b) The lessee will not make any unlawful, improper or offensive use of
the premises; the lessee will not suffer any strip or waste thereof; the lessee
will not permit any objectionable noise or odor to escape or to be emitted from
the premises or do anything or permit anything to be done upon or about the
premises in any way tending to create a nuisance; the lessee will not sell or
permit to be sold any product, substance or service upon or about the premises,
excepting such as lessee may be licensed by law to sell and as may be herein
expressly permitted. NORMAL RESTAURANT-PUB ODOR AND NOISES PERMITTED.
(2c) The lessee will not allow the premises at any time to fall into such a
state of repair or disorder as to increase the fire hazard thereon; the lessee
will not install any power machinery on the premises except under the
supervision and with written consent of the lessor; the lessee will not store
gasoline or other highly combustible materials on the premises at any time; the
lessee will not use the premises in such a way or for such a purpose that the
fire insurance rate on the improvements on the premises is thereby increased or
that would prevent the lessor from taking advantage of any rulings of any agency
of the state in which the premises are situated, or which would allow the lessor
to obtain reduced premium rates for long term fire insurance policies.
(2d) The lessee shall comply at lessee's own expense with all laws and
regulations of any municipal, county, state, federal or other public authority
respecting the use of the premises. These include, without limitation, all
laws, regulations and ordinances pertaining to air and water quality, Hazardous
Materials as herein defined, waste disposal, air emissions, and other
environmental matters. As used herein Hazardous Material means any hazardous or
toxic substance, material, or waste, including but not limited to those
substances, materials, and waste listed in the U.S. Department of Transportation
Hazardous Materials Table or by the U.S. Environmental Protection Agency as
hazardous substances and amendments thereto, petroleum products, or such other
substances, materials, and waste that are or become regulated under any
applicable local, state, or federal law. SEE ITEM (20) BELOW.
<PAGE>
(2e) The lessee shall regularly occupy and use the premises for the conduct
of lessee's business, and shall not abandon or vacate the premises for more than
ten days without written approval of lessor. APPROVAL SHALL NOT BE UNREASONABLY
WITHHELD.
(2f) Tenant shall not cause or permit any Hazardous Material to be brought
upon, kept or used in or about the premises by Tenant, its agents, employees,
contractors, or invitees without the prior written consent of Landlord, which
consent will not be unreasonably withheld so long as Tenant demonstrates to
Landlord's reasonable satisfaction that such Hazardous Material is necessary or
useful to Tenant's business and will be used, kept, and stored in a manner that
will comply at all times with all laws regulating any such Hazardous Material so
brought upon or used or kept in or about the premises.
UTILITIES (3) The lessee shall pay for all heat, light, water, power, and other
services or utilities used in the premises during the term of this lease.
REPAIRS AND IMPROVEMENTS (4a) The lessor shall not be required to make any
repairs, alterations, additions or improvements to or upon the premises during
the term of this lease, except only those hereinafter specifically provided for;
the lessee hereby agrees to maintain and keep the premises, including all
interior and exterior walls and doors, heating, ventilating and cooling
systems, interior wiring, plumbing and drain pipes to sewers or septic tank, in
good order and repair during the entire term of this lease, at lessee's own cost
and expense, and to replace all glass which may be broken or damaged during the
term hereof in the windows and doors of the premises with glass of as good or
better quality as that now in use; it is further agreed that the lessee will
make no alterations, additions or improvements to or upon the premises without
the written consent of the lessor first being obtained.
(4b) The lessor agrees to make all necessary structural repairs to the
building, including exterior walls, foundation, roof, gutters and downspouts,
and the abutting sidewalks. The lessor reserves and at any and all times shall
have the right to repair the building of which the premises are a part, and for
that purpose at any time may erect scaffolding and all other necessary
structures about and upon the premises and lessor and lessor's representatives,
contractors and workers for that purpose may enter in or about the premises with
such materials as lessor may deem necessary therefor, and lessee waives any
claim to damages, including loss of business resulting therefrom.
LESSOR'S RIGHT OF ENTRY (5) It shall be lawful for the lessor, the lessor's
agents and representatives, at any reasonable time to enter into or upon the
premises for the purpose of examining into the condition thereof, or for any
other lawful purpose.
RIGHT OF ASSIGNMENT (6) The lessee will not assign, transfer, pledge,
hypothecate, surrender or dispose of this lease, or any interest herein, sublet,
or permit any other person or persons whomsoever to occupy the premises without
the written consent of the lessor being first obtained in writing; this lease is
personal to lessee; lessee's interests, in whole or in part, cannot be sold,
assigned, transferred, seized or taken by operation at law, or under or by
virtue of any execution or legal process, attachment or proceedings instituted
against the lessee, or under or by virtue of any bankruptcy or insolvency
proceedings had in regard to the lessee, or in any other manner, except as above
mentioned. CONSENT WILL NOT BE UNREASONABLY WITHHELD.
ICE, SNOW, DEBRIS (8) If the premises are located at street level, then at all
times lessee shall keep the sidewalks in front of the premises free and clear of
ice, snow, rubbish, debris and obstruction; and if the lessee occupies the
entire building, the lessee will not permit rubbish, debris, ice or snow to
accumulate on the roof of the building so as to stop up or obstruct gutters or
downspouts or cause damage to the roof, and will save harmless and protect the
lessor against any injury whether to lessor or to lessor's property or to any
other person or property caused by lessee's failure in that regard.
OVERLOADING OF FLOORS (9) The lessee will not overload the floors of the
premises in such a way as to cause any undue or serious stress or strain upon
the building in which the premises are located, or any part thereof, and the
lessor shall have the right, at any time, to call upon any competent engineer or
architect whom the lessor
<PAGE>
may choose, to decide whether or not the floors of the premises, or any part
thereof, are being overloaded so as to cause any undue or serious stress or
strain on the building, or any part thereof, and the decision of the engineer
or architect shall be final and binding upon the lessee; and in the event
that it is the opinion of the engineer or architect that the stress or strain
is such as to endanger or injure the building, or any part thereof, then and
in that event the lessee agrees immediately to relieve the stress or strain,
either by reinforcing the building or by lightening the load which causes
such stress or strain, in a manner satisfactory to the lessor.
ADVERTISING SIGNS (10) The lessee will not use the outside walls of the
premises, or allow signs or devices of any kind to be attached thereto or
suspended therefrom, for advertising or displaying the name or business of the
lessee or for any purpose whatsoever without the written consent of the lessor;
however, the lessee may make use of the windows of the premises to display
lessee's name and business when the workmanship of such signs shall be of good
quality and permanent nature; provided further that the lessee may not suspend
or place within said windows or paint thereon any banners, signs, sign-boards or
other devices in violation of the intent and meaning of this section.
LIABILITY INSURANCE (11) At all times during the term hereof, the lessee will,
at the lessee's own expense, keep in effect and deliver to the lessor liability
insurance policies in form, and with an insurer, satisfactory to the lessor.
Such policies shall insure both the lessor and the lessee against all liability
for damage to persons or property in, upon, or about the premises. The amount
of such insurance shall be not less than $1,000,000 for injury to one person,
not less than $1,000,000 for injuries to all persons arising out of any single
incident, and not less than $1,000,000 for damage to property, or a combined
single limit of not less than $1,000,000 . It shall be the responsibility of
lessor to purchase casualty insurance with extended coverage so as to insure any
structure on the premises against damage caused by fire or the effects of fire
(smoke, heat, means of extinguishment, etc.), or any other means of loss. It
shall be the responsibility of the lessee to insure all of the lessee's
belongings upon the premises, of whatsoever nature, against the same. With
respect to these policies, lessee shall cause the lessor to be named as an
additional insured party. Lessee agrees to and shall indemnify and hold lessor
harmless against any and all claims and demands arising from the negligence of
the lessee, lessee's officers, agents, invitees and /or employees, as well as
those arising from lessee's failure to comply the with any covenant of this
lease on lessee's part to be performed, and shall at lessee's own expense defend
the lessor against any and all suits or actions arising out of such negligence,
actual or alleged, and all appeals therefrom and shall satisfy and discharge any
judgment which may be awarded against lessor in any such suit or action.
FIXTURES (12) All partitions, plumbing, electrical wiring, additions to or
improvements upon the premises, whether installed by the lessor or lessee, shall
be and become a part of the building in which the premises are located as soon
as installed and the property of the lessor unless otherwise herein provided.
LIGHT AND AIR (13) This lease does not grant any rights of access to light and
air over the premises or any adjacent property.
DAMAGE BY CASUALTY, FIRE AND DUTY TO REPAIR (14) In the event of the
destruction of the improvements in which the premises are located by fire
or other casualty, either party hereto may terminate this lease as of the date
of fire or casualty, provided, however, that in the event of damage to the
improvements by fire or other casualty to the extent of 40 per cent or more of
the sound value thereof, the lessor may or may not elect to repair the same;
written notice of lessor's election shall be given lessee within fifteen days
after the occurrence of the damage; if notice is not so given, lessor
conclusively shall be deemed to have elected not to repair; in the event lessor
elects not to repair, then and in that event this lease shall terminate with the
date of the damage; but if the improvements in which the premises are located be
but partially destroyed and the damage so occasioned shall not amount to the
extent indicated above, or if greater than said extent and lessor elects to
repair, as aforesaid, then the lessor shall repair the same with all convenient
speed and shall have the right to take possession of and occupy, to the
exclusion of the lessee, all or any part thereof in order to make the necessary
repairs, and the lessee hereby agrees to vacate upon request, all or any part
thereof which the lessor may require for the purpose of making necessary
repairs, and for the period of time between the day of such damage and until
such repairs have been substantially completed there shall be such an abatement
of rent as the nature of the injury or damage and its interference with the
occupancy of the premises by the lessee shall warrant; however, if the premises
be but slightly
<PAGE>
injured and the damage so occasioned shall not cause any material
interference with the occupation of the premises by lessee, then there shall
be no abatement of rent and the lessor shall repair the damage with all
convenient speed.
WAIVER OF SUBROGATION RIGHTS (15) Neither the lessor nor the lessee shall be
liable to the other for loss arising out of damage to or destruction of the
premises, or the building or improvement of which the premises are a part or
with which they are connected, or the contents of any thereof, when such loss is
caused by any of the perils which are or could be included within or insured
against by a standard form of fire insurance with extended coverage, including
sprinkler leakage insurance, if any. All such claims for any and all loss,
however caused, hereby are waived. Such absence of liability shall exist
whether or not the damage or destruction is caused by the negligence of either
lessor or lessee or by any of their respective agents, servants or employees.
It is the intention and agreement of the lessor and the lessee that the rentals
reserved by this lease have been fixed in contemplation that both parties shall
fully provide their own insurance protection at their own expense, and that both
parties shall look to their respective insurance carriers for reimbursement of
any such loss, and further, that the insurance carriers involved shall not be
entitled to subrogation under any circumstances against any party to this lease.
Neither the lessor nor the lessee shall have any interest or claim in the
other's insurance policy or policies, or the proceeds thereof, unless
specifically covered therein as a joint assured.
EMINENT DOMAIN (16) In case of the condemnation or purchase of all or any
substantial part of the premises by any public or private corporation with the
power of condemnation this lease may be terminated, effective on the date
possession is taken, by either party hereto on written notice to the other and
in that case the lessee shall not be liable for any rent after the termination
date. Lessee shall not be entitled to and hereby expressly waives any right to
any part of the condemnation award or purchase price.
FOR SALE AND FOR RENT SIGNS (17) During the period of 90 days prior to the
date above fixed for the termination of this lease, the lessor herein may post
on the premises or in the windows thereof signs of moderate size notifying the
public that the premises are "for sale" or "for lease."
DELIVERING UP PREMISES ON TERMINATION (18) At the expiration of the lease
term or upon any sooner termination thereof, the lessee will quit and deliver up
the premises and all future erections or additions to or upon the same, broom-
clean, to the lessor or those having lessor's estate in the premises, peaceably,
quietly, and in as good order and condition, reasonable use and wear thereof,
damage by fire, unavoidable casualty and the elements alone excepted, as the
same are now in or hereafter may be put in by the lessor.
ADDITIONAL COVENANTS OR EXCEPTIONS (19) See "Addendum A" attached and made a
part of this lease.
(20) Lessee shall be responsible for and pay for only violations of
environmental laws committed due to the operation by Lessee.
ATTACHMENT BANKRUPT DEFAULT PROVIDED, ALWAYS, and these presents are upon
these conditions, that (1) if the lessee shall be in arrears in the payment of
rent for a period of ten days after WRITTEN NOTICE THAT RENT IS DUE BUT UNPAID,
or (2) if the lessee shall fail or neglect to perform or observe any of the
covenants and agreements contained herein on lessee's part to be done, kept,
performed and observed and such default shall continue for ten days or more
after written notice of such failure or neglect shall be given to lessee, or (3)
if the lessee shall be declared bankrupt or insolvent according to law, or (4)
if any assignment of lessee's property shall be made for the benefit o
creditors, or (5) if on the expiration of this lease lessee fails to surrender
possession of the premises, the lessor or those having lessor's estate in the
premises, may terminate this lease and, lawfully, at lessor's option immediately
or at any time thereafter, without demand or notice, enter into and upon the
premises and every part thereof and repossess the same, and expel lessee and
those claiming by, through and under lessee and remove lessee's effects at
lessee's expense, forcibly if necessary and store the same, all without being
deemed guilty of trespass and without prejudice to any remedy which otherwise
might be used for arrears of rent or preceding breach of covenant.
Neither the termination of this lease by forfeiture nor the taking or
recovery of possession of the premises shall deprive lessor of any other action,
right, or remedy against lessee for possession, rent or damages, nor shall
<PAGE>
any omission by lessor to enforce any forfeiture, right or remedy to which
lessor may be entitled be deemed a waiver by lessor of the right to enforce
the performance of all terms and conditions of this lease by lessee.
In the event of any re-entry by lessor, lessor may lease or relet the
premises in whole or in part to any tenant or tenants who may be satisfactory to
lessor, for any duration, and for the best rent, terms and conditions as lessor
may reasonably obtain. Lessor shall apply the rent received from any such
tenant first to the cost of retaking and reletting the premises, including
remodeling required to obtain any such tenant, and then to any arrears of rent
and future rent payable under this lease and any other damages to which lessor
may be entitled hereunder.
Any property which lessee leaves on the premises after abandonment or
expiration of the lease, or for more than ten days after any termination of the
lease by landlord, shall be deemed to have been abandoned, and lessor may remove
and sell the property at public or private sale as lessor sees fit, without
being liable for any prosecution therefor or for damages by reason thereof, and
the net proceeds of any such sale shall be applied toward the expenses of
landlord and rent as aforesaid, and the balance of such amounts, if any, shall
be held for and paid to the lessee.
HOLDING OVER In the event the lessee for any reason shall hold over after the
expiration of this lease, such holding over shall not be deemed to operate as a
renewal or extension of this lease, but shall only create a tenancy from month
to month which may be terminated at will at any time by the lessor.
ATTORNEY FEES AND COURT COSTS In case suit or action is instituted to
enforce compliance with any of the terms, covenants or conditions of this lease,
or to collect the rental which may become due hereunder, or any portion thereof,
the losing party agrees to pay the prevailing party's reasonable attorney fees
incurred throughout such proceeding, including at trial, on appeal, and for
post-judgment collection. The lessee agrees to pay and discharge all lessor's
costs and expenses, including lessor's reasonable attorney's fees that shall
arise from enforcing any provision or covenants of this lease even though no
suit or action is instituted.
WAIVER Any waiver by the lessor of any breach of any covenant herein
contained to be kept and performed by the lessee shall not be deemed or
considered as a continuing waiver, and shall not operate to bar or prevent the
lessor from declaring a forfeiture for any succeeding breach, either of the same
condition or covenant or otherwise.
NOTICES Any notice required by the terms of this lease to be given by one
party hereto to the other or desired so to be given, shall be sufficient if in
writing, contained in a sealed envelope, and sent first class mail, with postage
fully prepaid, and if intended for the lessor herein, then if addressed to the
lessor at 30303 SE LUSTED ROAD, GRESHAM, OR 97080 and if intended for the
lessee, then if addressed to the lessee at 2730 NW 31ST AVE., PORTLAND, OR
97210. Any such notice shall be deemed conclusively to have been delivered to
the addressee forty-eight hours after the deposit thereof in the U.S. Mail.
HEIRS AND ASSIGNS All rights, remedies and liabilities herein given to or
imposed upon either of the parties hereto shall extend to, inure to the benefit
of and bind, as the circumstances may require, the heirs, successors, personal
representatives and so far as this lease is assignable by the terms hereof, to
the assigns of such parties.
In construing this lease, it is understood that the lessor or the lessee
may be more than one person; that if the context so requires, the singular
pronoun shall be taken to mean and include the plural, and that generally all
grammatical changes shall be made, assumed and implied to make the provisions
hereof apply equally to corporations and to individuals.
IN WITNESS WHEREOF, the parties have executed this lease on the day and
year first herein above written, any corporation signature being by authority of
its Board of Directors.
Leonard G. Johnson Portland Brewing Company
/s/ Leonard G. Johnson By: /s/ C. A. Adams, President
- ----------------------- -----------------------------
<PAGE>
ADDENDUM A
TO THE LEASE DATED APRIL 12, 1996 BETWEEN
LEONARD G. JOHNSON, LESSOR & PORTLAND BREWERY CO. LESSEE
1. PROPERTY TAXES AND INSURANCE In addition to the Rent provided in this
Lease, Lessee shall pay all real property taxes, insurance premiums provided by
Lessor, and assessments levied assessed or imposed upon the property during the
Term of the lease. Lessee shall pay to the Lessor an amount each month which is
equal to one twelfth of the estimated annual real property taxes, assessments
and insurance. Lessor shall notify Lessee of the estimated monthly amount to be
paid and of any changes in the estimated amount to be paid, and Lessee shall pay
Lessor such estimated amount at the same time as and together with Lessee's Base
Rent. When the actual taxes, assessments, and insurance are determined each
year, Lessor shall furnish to the Lessee a statement showing in reasonable
detail the computation of such taxes, assessments, and insurance, and the charge
or credit to the Lessee for any difference between the actual amount and the
estimated amount previously paid by Lessee. Any deficiency shall be reimbursed
by Lessee within ten days after Lessor notice thereof and any credit shall be
applied to Lessee's next succeeding payment of rent or other charges under the
Lease. Should there be in effect during the Term any law, statue, or ordinance
which levies, assesses, or imposes any tax (other than federal or state income
tax) upon rents, Lessee shall pay such taxes as may be attributed to the Rents
under this Lease or shall reimburse Lessor for any such taxes paid by Lessor
within ten days after Lessor bills Lessee for the same. The Assessment shall be
deemed paid over the maximum installment period allowed by law and only the
current installment will be included in the periodic reimbursements by Lessee to
Lessor.
2. OPTION Lessee shall have the option to renew this lease for three
consecutive terms of three years each by giving lessor one year advance notice
for each of three options. There will be an adjustment in the monthly rent at
the commencement of each of the three year options. The adjustment in the
monthly rent shall be in keeping with the fair-market rental value of the
premises, but not to be less than the previous rent. If lessor and lessees do
not agree on the fair-market rental, for each of the three options, at least
ninety days prior to the commencement of each of the option terms, then within
fifteen days Lessor and Lessee will put into a hat the names of the top 6
Commercial Real Estate Firms in the Portland area as per the most recent copy of
the Business Journal's "Top 25 Commercial Real Estate Firms" list. Lessor and
Lessee will draw four Commercial real Estate Firms names out of the hat and each
of the forms managers will choose one of their agents with the most experience
in leasing similar space, to the subject property, and the four Agents shall
state in writing what they feel the fair-market rental value of for the subject
property at least 10 days prior to commencement of the renewal term. The high
and the low rental values will be discarded, and the remaining two rental values
will be averaged, and the averaged rental amount shall be the rent payable
during the three-year renewal term. Each party shall pay one half of any fee
charged by the 4 Brokerage Firms.
3. REPAIRS AND IMPROVEMENTS (4a) Plan approval is required in writing prior
to start of any improvement, including Engineering plans for any structural
changes, portions of walls removed or the likes. Owner will not be unreasonable
in approval as long as structural changed in no way effect the integrity of the
building. Lessor will not be responsible for the cost of any changes or
improvement to the building required by any law, statue or ordinance due to
particular uses, activities, remodeling or improvements undertaken by Lessee.
Lessor has approved the plan (copy received at meeting 3/29/69) for the
remodeling. Lessee will be responsible for painting exterior of building.
4. FIXTURES (12) Upon the expiration of this lease, the lessee shall, subject
to any debts due to the lessor, be entitles to remove it's brewing production
equipment from that portion of the building address being 1339 NW Flanders,
provided that in so doing lessee shall promptly, at it's own expense, repair any
injury, damage to the premises as nearly as possible to their original condition
at the time of commencement hereof, subject only to reasonable wear and tear.
5. LIABILITY INSURANCE (11) Lessee shall have copies of insurance policies in
form delivered to lessor, such policies shall insure lessee and lessor. All
copies of insurance delivered to lessor must contain provisions that company
<PAGE>
writing said policies will give lessor thirty days notice in writing in advance
of any cancellation or lapse or any changes in coverage. Lessee shall be
insured for loss of business. Lessor shall have no liability regarding, and
Lessee shall defend and indemnify Lessor from, any claim made by a third party
based upon the service or consumption of alcohol at the premises leased.
6. SALE OF PROPERTY BY OWNER Should the owner during the term of this lease,
offer for sale the building and property to anyone other than a relative to the
owner, The owner will include in the earnest the money agreement a clause
stating Portland Brewing Company has 30 days to notify owner that they choose to
purchase building at the same price, terms and condition. Promptly upon
execution of such agreement, Lessor shall deliver a copy of the same to Lessee
and allow Lessee a period of 30 days within which to agree to acquire the
premises from Lessor on the terms set forth in such earnest money agreement.
7. EXPIRATION OF PREVIOUS LEASE Portland Brewing Company has previously leaded
a portion of such building under a lease dated April 28, 1994, and Robert W.
Edwards has previously leased the balance of building under a lease dated August
12, 1995. This lease supersedes and replaces both of such earlier leases, as
Portland Brewing Company will continue to occupy its previous premises and will
also take occupancy of the remainder of the building, pursuant to this lease.
Upon execution of this lease, prepaid rents shall be transferred for the benefit
of Lessee under this lease and the old leases shall be treated as expired
8. AGREEMENT All parties to the above leases agree to sign document, agreeable
to all parties, stating there willingness to cancel the present two leases in
favor of this new lease and to treat them as expired.
9. ESTOPPELS Within 10 days of request by one party, the other party shall
execute and estoppel certificate in reasonable form confirming the existence,
terms and effectiveness of this Lease and whether the Lessee is or is not in
default.
Lessor:
/s/ Leonard G. Johnson
-------------------------
Leonard G. Johnson
Lessee: PORTLAND BREWING COMPANY,
an Oregon corporation
By: /s/ Charles A. Adams
--------------------
Its: President
--------------------
<PAGE>
EXHIBIT 10.11
OREGON
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made between PORTLAND BREWING COMPANY, an Oregon
corporation, whose address is 2730 NW 31st Avenue, Portland, Oregon 97210, and
whose phone number is (503) 226-7623 (hereinafter referred to as "Supplier"),
and COLUMBIA DISTRIBUTING COMPANY, an Oregon corporation, whose address is 6840
N. Cutter Circle, Portland, Oregon 97217, whose phone number is (503)289-9600,
and whose Oregon state license number is R00191A (hereinafter referred to
as "Distributor").
RECITALS
A. Supplier manufactures various malt beverages and sells the same, in
Oregon, to licensed wholesalers who are assigned exclusive resale territories.
Supplier is one such licensed wholesaler.
B. Supplier and Distributor are parties to that certain Distribution
Agreement dated August 14, 1984, as amended (the "1984 Agreement"), originally
executed by Supplier and Portland Distributing Company; Distributor has been
assigned the rights and duties of the wholesaler under the 1984 Agreement.
C. The parties desire to replace the 1984 Agreement with the following
provisions.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, it is agreed as follows.
1. DISTRIBUTORSHIP. Supplier appoints Distributor as its exclusive
distributor in the designated territory for, and Distributor agrees to exert its
best efforts in distributing and selling in the designated territory, only the
following designated brands of products of Supplier:
Products:
- All existing brands of beer
- All new brands of beer
- All brand extensions
- All package types of the foregoing
Supplier shall have the right, in its sole discretion, to discontinue
the production at any time and without notice to Distributor of any or all of
the aforesaid brands of products if it deems such discontinuance to be in its
interests. Distributor shall have the exclusive right to distribute the
foregoing products within the territory described in Section 2 except that,
during any period of time that Distributor is prevented from doing so (such as
by strike or other labor unrest), Supplier shall have the right to self-
distribute such products or to use a third-party distributor, but only during
the period in which Distributor is prevented from performing hereunder.
2. TERRITORY. The territory covered by this Agreement, as to which
Distributor shall have the exclusive distribution rights, is the following: The
Oregon counties of Multnomah, Clackamas, Yamhill, Washington, Marion, Polk,
Lane, Deschutes, Crook, Jackson, Josephine, and Jefferson, and the North Klamath
County territory, which is described on attached Exhibit A.
3. DUTIES OF DISTRIBUTOR. Distributor agrees to perform the
following duties.
(a) Distributor shall maintain the financial and competitive
capability necessary to achieve efficient and effective distribution of
Supplier's products.
(b) Distributor shall maintain the quality and integrity of
Supplier's products in the manner set forth by Supplier from time to time,
including by rotating inventory appropriately.
<PAGE>
(c) Distributor shall use its best efforts to sell the products
of Supplier at the highest volume of such products. Distributor shall
merchandise such products in the premises of its retail customers.
Distributor shall participate fully in the promotions, sales campaigns and
other programs of Supplier. Distributor shall call upon accounts
regularly. Supplier recognizes that Distributor also distributes competing
products.
(d) Distributor shall not sell any brand of malt beverage in
Oregon produced by Supplier except in the territory described in this
Agreement.
(e) Distributor shall comply with all laws and legal
requirements with respect to the products of Supplier and the distribution
thereof, and shall indemnify Supplier for any loss (and shall reimburse
such loss) resulting from any noncompliance.
(f) Distributor shall provide reports of sales and other
activities of the same type and frequency as are being provided at this
time.
4. TERMS OF SALE. Supplier shall not be liable to Distributor for
any failure to fill orders in a timely fashion if such is occasioned by strike,
war, insurrection, an act of God, weather, inability to secure raw material,
governmental intervention, lack of capacity, or any circumstances whatsoever
beyond Supplier's control. Supplier's price for all products delivered under
each order will be Supplier's F.O.B. Portland price for the product effective at
the time of Supplier's acceptance of said order. Supplier shall notify
Distributor in writing at least thirty (30) days prior to the effective date of
any price increase of any products covered by this Agreement. Payment in full
for each order will be made no later than twenty (20) days after pick-up by
Distributor or any carrier. Supplier may cease sales of product to Distributor
at any time that Distributor is in violation of such payment terms and such
violation has continued for ten or more days following written notice of such
violation from Supplier to Distributor. Title to all products sold hereunder,
and risk of loss, shall pass to Distributor from the time that said products are
picked up by Distributor or any carrier, unless clearly specified otherwise by
the Oregon Uniform Commercial Code. The foregoing shall not be deemed a waiver
of any rights Supplier may have under ORS Chapter 72.
5. TERM. The term of this Agreement shall be from the date hereof
until this Agreement is terminated; however, this Agreement may be terminated
only as follows:
(a) Distributor may terminate this Agreement upon reasonable
advance written notice, which will generally be at least thirty (30) days
unless circumstances warrant a shorter notice period. During the pendency
of anysuch notice period, Distributor shall continue to perform its duties
hereunder.
(b) Supplier may terminate, cancel, or fail to renew this
Agreement, or refuse to continue under this Agreement, with good cause. A
termination under this item (b) shall be accomplished by a written notice
alerting Distributor of a failure to comply with this Agreement, the
intention of Supplier to terminate this Agreement and the reasons for such
termination, and the date the termination shall occur, which date shall be
not less than ninety (90) days after Distributor's receipt of the notice.
Distributor shall be allowed, in such notice, thirty (30) days in which to
submit a plan of corrective action to comply with this Agreement, and an
additional sixty (60) days to correct the noncompliance. It is mutually
agreed and acknowledged that each provision set forth in this Agreement is
both reasonable and of material significance to the business relationship
between Supplier and Distributor.
(c) Supplier shall have the right to terminate, cancel, fail to
renew, or fail to continue under this Agreement for any the reasons set
forth in this item (c), which action by Supplier shall be effective upon
receipt by Distributor of written notice of such action. The grounds for
such action under this item (c) are: (i) the state or federal license of
Distributor has been revoked or suspended for a period of more than thirty-
one (31) days; (ii) Distributor is insolvent within the definition of
Section 101, Title 11, United States Code, or there has been liquidation,
dissolution or assignment for the benefit of creditors of
<PAGE>
substantially all of the assets of the Distributor's business, or an order
for relief under Chapter 7, Title 11, United States Code, has been entered
with respect to the Distributor; (iii) Distributor, or any individual who
holds or owns ten percent (10%) of the stock or value of Distributor,
has been convicted of, or pleads guilty to, a felony; (iv) Distributor has
committed a fraud in its dealings with Supplier or the Supplier's products;
(v) Distributor makes a substantial misrepresentation to Supplier which
Distributor knew to be false and which Supplier relied upon to its
detriment; (vi) an assignment of Distributor's rights under this
Agreement, or a change of a controlling ownership interest, other
than that caused by the death or legal incapacity of Distributor,
has been made without written notice as provided in this Agreement,
and the Supplier has given written notice to Distributor of Supplier's
intention to terminate on the grounds of transfer without notice unless
the transfer is reversed within thirty (30) days from receipt of the
notice; or (vii) an assignment of Distributor's rights is made despite
timely and proper notice of disapproval.
6. [Intentionally Omitted]
7. REPURCHASE UPON TERMINATION. In the event of a termination of
this Agreement, Supplier (or its designee) shall repurchase from Distributor, at
the laid-in cost to Distributor, the products of Supplier, including any taxes
paid on such by Distributor, together with a reasonable charge by Distributor
for handling the product then unsold by Distributor. Upon tender by Supplier of
the repurchase amount, Distributor shall deliver any such inventory and a
current list and schedule of customers. Distributor shall maintain its
inventory in a condition that such will be saleable by Supplier or by Supplier's
replacement distributor as fresh product within ten (10) days.
8. ADDITIONAL COMPENSATION.
8.1 DEFINED. In the event Supplier terminates this Agreement,
cancels this Agreement, or fails to renew this Agreement or to continue under
this Agreement, in any case doing so other than for good cause, then Distributor
shall be entitled to additional compensation from Supplier on account of such
action, but only in the amount set forth in this Section 8; no such additional
compensation shall be paid by reason of a termination, cancellation, or failure
to renew or to continue pursuant to Section 5(b) or 5(c). In the event
additional compensation is payable pursuant to this Section 8.1, such
compensation shall consist of two elements, which are (a) compensation for the
fair market value of any and all assets, including ancillary businesses of
Distributor, used in distributing the products of Supplier (the "Distribution
Assets"), and (b) compensation for the good will of the business. The total
compensation to be paid by Supplier to Distributor, if any, shall be reduced by
any net sum received by Distributor from the sale of Distribution Assets, as
well as by whatever value such Distribution Assets may have to Distributor that
is unrelated to Supplier's products.
8.2 DETERMINATION. During the 30-day period immediately
following the date upon which Supplier terminates this Agreement, cancels this
Agreement, or fails to renew this Agreement or continue under this Agreement,
the parties shall attempt to agree upon whether such action was for good cause.
If the parties are unable to reach agreement on this issue within the 30 days
allowed, then this issue shall be conclusively determined by binding arbitration
conducted by a third party arbitrator. The arbitrator shall be appointed by
agreement of the parties within 10 days after the expiration of the 30-day
period; otherwise, the arbitrator shall be appointed by the presiding judge of
the Circuit Court of Multnomah County upon request by either party. Each party
shall pay its own fees and expenses related to the arbitration and one-half of
the fee of the arbitrator; however, if the arbitrator determines that one party
"prevailed" at the arbitration, then the other party shall pay the entire fee of
the arbitrator. The decision of the arbitrator shall be rendered in writing and
shall be delivered to both parties. Until the decision of the arbitrator has
been rendered, this Agreement shall continue in full force and effect. If the
arbitrator determines that the action by Supplier was without good cause,
additional compensation shall be payable under this Section 8.
8.3 ADDITIONAL COMPENSATION PAYMENT. In the event the parties
agree that additional compensation is payable under this Section 8, or in the
event the arbitrator determines, pursuant to Section 8.2, that additional
compensation is payable (i.e., determines that the action of Supplier was
without good cause), then additional compensation shall be calculated and paid.
The parties shall first attempt to agree, for a period of 30
<PAGE>
days, as to the amount of additional compensation to be paid. The 30-day
period shall commence to run upon the date that the parties agree that
additional compensation is payable, or upon the date that the arbitrator
makes such determination and notice of the decision of the arbitration is
sent to the parties. If the parties are unable to agree upon the amount of
the additional compensation within such 30-day period, then the amount of
such additional compensation shall be determined by further arbitration. The
items to be agreed upon by the parties, or failing such agreement, to be
determined by the arbitrator, are (a) the fair market value of any and all
Distribution Assets, (b) the value of the "good will of the business", and
(c) the amount by which the foregoing items shall be reduced, which is equal
to the net sum received by Distributor from the sale of Distribution Assets,
as well as the value the Distribution Assets have to Distributor that is
unrelated to Supplier's products. The value of the "good will of the
business" shall be a sum equal to the fair market value of the exclusive
right to distribute Supplier's products in the designated territory, as
amended from time to time. Except as provided below, the value of the "good
will of the business" shall be equal to 12 months of gross profit (sales
minus cost of goods sold) of Distributor from the sale of the products of
Supplier, with monthly sales being deemed to be the monthly mean average of
sales by Distributor during the six calendar months immediately preceding the
date upon which the termination, cancellation, failure to renew, or failure
to continue occurs. However, if either party believes that 12 times such
monthly gross profit amount is more than or less than the fair market value
of the exclusive right to distribute Supplier's products in the designated
territory, then the arbitrator shall determine the then-current industry
standard for the sale of exclusive distribution rights for "premium micro"
brands expressed as a number of months times gross profit, which
determination shall be binding on the parties and shall be multiplied by
Distributor's gross profit to determine the "good will of the business" value.
If the parties are unable to agree upon the three compensation
issues within the 30-day period allowed for such agreement, then the issues (or
those which are not agreed, in writing, by the end of such 30-day period) shall
be conclusively determined by binding arbitration conducted by a third party
arbitrator to be appointed by agreement of the parties within 10 days after the
expiration of such 30-day period, otherwise to be appointed by the presiding
judge of the Circuit Court of Multnomah County. Each party shall pay its own
fees and expenses related to the arbitration and one-half of the fee of the
arbitrator; however, if the arbitrator determines that one party "prevailed" at
the arbitration, then the other party shall pay the entire fee of the
arbitrator.
8.4 SOLE AMOUNT. The amounts payable pursuant to this Section 8
shall be the sole and exclusive amounts payable to Distributor for the goodwill
of the business by reason of a termination, cancellation, or failure to renew or
to continue by Supplier other than for good cause. Distributor agrees to take
and to accept such amounts in lieu of any other amount for such goodwill. The
parties have considered the difficulty of determining and proving with certainty
the amount of any actual loss of such goodwill, and have agreed upon this
liquidated damages formula as a fair estimate of any such damages.
9. ASSIGNMENT. Subject to the provisions of ORS 474, if any are
applicable, this Agreement will not be assigned by Distributor without the prior
written consent of Supplier, which consent shall not be unreasonably withheld,
but which may be issued subject to reasonable conditions. A transfer of all or
substantially all of the assets of Distributor or of a controlling share in the
business shall be deemed an assignment for purposes of the foregoing, but the
parties shall honor the provisions of ORS 474 which relate to transfers of the
business or any share in the business, such provisions being incorporated herein
by reference. Distributor shall give reasonable prior notice of any proposed
assignment, and shall supply information requested by Supplier to evaluate the
proposed assignment.
10. APPLICABLE LAW. This Agreement shall be construed in accordance
with the laws of the State of Oregon. To the extent that any provision of this
Agreement conflicts with any mandatory provision of ORS Chapter 474, as now in
existence or from time-to-time in effect, the statutory mandate shall control.
11. NOTICES. Notices to each party shall be sent to the address
specified above, or to such other address as either such party shall hereafter
specify in writing to the other. Notices shall be deemed given and received on
the fifth day following deposit in the U.S. mail, or upon the date hand
delivered to the address of the recipient.
<PAGE>
12. FILING. Supplier shall immediately file a copy of this Agreement
and all amendments thereto with the Oregon Liquor control commission as required
by ORS Chapter 474.
13. INTERPRETATION. Should any provision hereof be deemed illegal or
unenforceable as written, such provision shall be enforced to the fullest extent
allowed by law, and the remaining provisions shall remain in full force and
effect. This Agreement contains the entire agreement and understanding of
Supplier and Distributor regarding the distribution of the products of Supplier
by Distributor and supersedes the 1984 Agreement. This Agreement may be amended
only by a written document signed by both parties. No waiver shall be
established absent proof of a written document setting forth the waiver signed
by the waiving party. The foregoing shall not limit the effect of Supplier's
standard Terms and Conditions, as in effect from time to time, subject, however,
to the provisions of Section 4 above.
14. ATTORNEYS' FEES. In the event that litigation or arbitration is
instituted to enforce or to interpret any provisions of this Agreement, the
prevailing party in such litigation or arbitration shall be entitled to recover
(except as otherwise provided herein), in addition to all other sums and relief,
its reasonable costs and attorneys' fees incurred both at and in preparation for
arbitration, trial and any appeal or review, and also any proceedings in
bankruptcy court, such amounts to be set by the arbitrator(s) or court(s) before
which the matter is heard.
15. TRADEMARKS. All names, designations and designs by which
Supplier's products are known or identified are herein referred to as
"Trademarks." Distributor is granted a limited license to use the Trademarks
applicable to the products sold hereunder solely for the purpose of marketing
such products, subject to the following limitations: (a) this license is non-
transferable and terminates automatically upon termination of this Agreement;
(b) Distributor may not sublicense others; (c) the Trademarks shall be used
only as pre-approved by Supplier, in writing; (d) no Trademark shall be used in
combination with any name, mark, slogan or other designation of Distributor or
any third party; and (e) the Trademarks shall be used in the company of the
appropriate designation symbol and shall be attributed to Supplier. Distributor
acknowledges that the public associates the Trademarks with Supplier's goods.
Distributor shall have no rights regarding the Trademarks except the license
hereby granted, and waives any claim against Supplier's rights in the
Trademarks.
16. EFFECTIVE DATE. This Agreement shall be effective on the 8TH
day of APRIL, 1996.
DISTRIBUTOR:
COLUMBIA DISTRIBUTING COMPANY, a
corporation
By: /s/
----------------------------------
Its: Chief Financial Officer
Date: 4/8/96
SUPPLIER:
PORTLAND BREWING COMPANY, an Oregon
Corporation
By: /s/ C.A. Adams
----------------------------------
Its: President
Date: 4/8/96
DISTRIBUTION AGREEMENT
EXHIBIT A
NORTH KLAMATH COUNTY
The territory generally defined as the area running south from La Pine to
Diamond Lake Junction, and then west to Willamette Ski Pass. The territory will
include licensed establishments to the east and south of this line if they
adjoin the roadways defining this area and/or are within the cities surrounding
these roadways.
<PAGE>
EXHIBIT 10.17
AGREEMENT
THIS AGREEMENT is executed this 25th day of January, 1996, by and
between PORTLAND BREWING COMPANY, an Oregon corporation ("PBC"), and ROBERT
EDWARDS ("Seller").
RECITALS:
A. Seller is doing business at the corner of NW 14th and Flanders
Streets in Portland, Oregon under the name Bogart's. For the conduct of such
business, Seller leases premises owned by Johnnie Johnson ("Landlord") pursuant
to the Lease attached hereto as Exhibit "A" (the "Lease").
A. In the conduct of its business, Seller uses various items of
inventory and personal property, including the kitchen equipment which is
described on Exhibit "B" attached hereto ("Kitchen Equipment"). PBC is
acquiring the Kitchen Equipment, but none of the other personal property of
Seller and none of the inventory of Seller.
B. Seller desires to convey its interest in the Lease and to convey
the Kitchen Equipment to PBC, and PBC desires to acquire the same on the terms
set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are acknowledged by each of the parties hereto, it is agreed
as follows:
1. AGREEMENT OF PURCHASE AND SALE; PURCHASE PRICE.
1.1 AGREEMENT. Seller hereby agrees to convey to PBC, and PBC hereby
agrees to acquire from Seller, on the terms set forth herein, the Kitchen
Equipment and the lessee's interest in the Lease.
1.2 PURCHASE PRICE AND DEPOSIT. The total purchase price for the
Kitchen Equipment and the lessee's interest in the Lease is $65,000. As a
deposit, to be credited against the purchase price at closing, PBC shall pay to
Seller upon mutual execution and delivery of this Agreement, the sum of $1,000.
1.3 PAYMENT. The purchase price shall be paid by payment of $20,000
in cash at closing (the $1,000 deposit shall be credited against the cash down
payment). The balance of the purchase price shall be paid by execution and
delivery of a promissory note at closing which requires payment of $45,000,
together with interest thereon at the rate of 8 percent per annum, within 90
days of closing.
1.4 ALLOCATION. The total purchase price of $65,000 shall be
allocated $_______ to the purchase of the Kitchen Equipment and $______ as
consideration for assignment of the lessee's interest in the Lease.
1.5 LIABILITIES. PBC is not assuming any of the liabilities of
Seller.
2. CLOSING AND CONVEYANCE.
2.1 CLOSING. Closing of this transaction shall be conducted at
Transamerica Title Insurance Company at its downtown Portland offices on a date
selected by PBC, which date shall be no earlier than April 15, 1996 and no later
than April 30, 1996. The costs of the closing, such as the escrow fee, shall be
shared equally by the parties. All items of income and expense with respect to
the Lease shall be prorated, through escrow, at such closing. Any security
deposit maintained by the Landlord under the Lease shall be reimbursed by PBC to
Seller at closing.
2.2 CONVEYANCE. At closing, Seller shall execute and deliver to PBC
(a) a warranty bill of sale conveying the Kitchen Equipment to PBC, and (b) a
warranty assignment of the lessee's interest in the Lease (including an
assignment of any security deposit reimbursed by PBC) with the written consent
of the Landlord.
<PAGE>
2.3 TITLE INSURANCE. If desired, PBC shall have the right to acquire
title insurance regarding the lessee's interest in the Lease; if PBC is unable
to obtain such title insurance, PBC shall have the right to terminate this
transaction and receive a refund of its deposit.
3. CONDITIONS. The following are conditions to the obligations of
PBC hereunder. In the event of a failure of any of the following conditions,
PBC shall have the right to terminate this Agreement by written notice given to
Seller prior to closing, in which event the deposit shall be returned to PBC.
3.1 PERFORMANCE. Seller must perform all of its obligations
hereunder and the warranties of the Seller hereunder must be accurate.
3.2 DOCUMENTS. No later than February 15, 1996, Seller and PBC must
have agreed upon the exact form of the promissory note, bill of sale, and
assignment of leases to be executed at closing. Such documents shall be
prepared by PBC, subject to the reasonable review and approval of Seller.
3.3 INSPECTION. PBC shall have the right to inspect the leased
premises and the Kitchen Equipment and for this purpose shall have access to the
leased premises; Seller also gives PBC authorization to meet with and to
negotiate with the Landlord under the Lease. In the event PBC determines that
the Kitchen Equipment, the leased premises, or the Lease are not satisfactory to
PBC, in its discretion, PBC shall have the right to terminate this Agreement by
written notice.
3.4 APPROVALS. PBC shall have the right to terminate this Agreement
by written notice in the event PBC does not obtain all necessary regulatory
approvals in connection with its intended use of the leased premises, including
any and all approvals required from the Oregon Liquor Control Commission and/or
the Bureau of Alcohol, Tobacco, and Firearms.
3.5 BOARD APPROVAL. PBC shall have the right to terminate this
Agreement in the event its Board of Directors does not approve this transaction
and this Agreement.
3.6 SEARCHES. PBC shall have the right to terminate this Agreement
if PBC is not satisfied with the results of UCC searches, a preliminary title
report regarding the leased premises, and its negotiations with the Landlord.
Specifically, but without limiting the foregoing, PBC intends to obtain an
estoppel certificate from the Landlord under the Lease, a lease memorandum for
recording, and an amendment to the Lease to restate the Lease, to include the
adjoining premises already occupied by PBC, and to render the term and other
provisions of the Lease acceptable to PBC. In the event such estoppel
certificate, lease memorandum, and Lease amendment are not delivered by
Landlord, or in the event any such documents are not in form acceptable to PBC,
PBC may terminate this Agreement.
4. COVENANTS OF SELLER. Seller shall maintain the Kitchen Equipment
and leased premises in their current condition and repair, making all necessary
repairs and replacements. Seller shall perform all of its obligations under the
Lease and shall keep the same free from default. Seller shall pay all creditors
(including the Internal Revenue Service and the Oregon Department of Revenue) in
full for all debts related to its operations conducted at the leased premises.
5. REPRESENTATIONS. Seller makes the following warranties and
representations to PBC, as of the date of this Agreement and as of closing.
5.1 KITCHEN EQUIPMENT. Seller owns the Kitchen Equipment and no item
of the same is owned by Landlord, a leasing company, or any third party. Title
to the Kitchen Equipment is free and clear of all liens and encumbrances
whatsoever. The Kitchen Equipment is in good operating condition and repair.
5.2 LEASE. Attached hereto is a true copy of the Lease; the Lease
has not been amended and no right of Seller under the Lease has been waived,
except as set forth in writing attached hereto. The Lease is free from default,
and no act, event, omission, or condition has occurred or exists which, together
with notice and/or the passage of
<PAGE>
time, would constitute a default under the Lease. Seller is the owner and
holder of the entire lessee's interest in the Lease, and such lessee's
interest is free and clear of all liens and encumbrances whatsoever.
Landlord is the owner of the leased premises and of the lessor's interest in
the Lease. The Lease is a valid lease of the leased premises, enforceable
according to its terms.
5.3 NO OTHER CONTRACTS. In the event PBC acquires the lessee's
interest in the Lease, there will be no other contracts binding upon PBC in the
conduct of its operations at the premises following closing. Neither the
execution nor performance of this Agreement by Seller is in conflict with or
will be a breach under any contract binding upon Seller for the Kitchen
Equipment.
5.4 NOTICES. Seller has not received notice from any governmental
authority of any violation of law or code at the leased premises.
6. INDEMNIFICATION. Seller shall defend, indemnify, and hold PBC
harmless from any claim or cause of action (and all associated costs and
attorney fees) arising out of or related to (a) any act, event, omission, or
occurrence at the leased premises occurring or existing prior to closing, (b)
any breach of this Agreement by Seller, including the breach of any warranty or
representation, and/or (c) nonpayment by Seller of any of its creditors.
7. MISCELLANEOUS PROVISIONS.
7.1 DEPOSIT. In the event PBC fails to close this transaction and
such failure is a default, then the sole and exclusive remedy of Seller for such
default shall be the right of Seller to retain the deposit as liquidated
damages. Seller and PBC agree that the exact amount of damages which Seller
would suffer from such a default would be difficult or impossible to ascertain
and to prove with certainty and that $1,000 is a good faith estimate of such
damages. The acceptance of the deposit as liquidated damages is the exclusive
remedy of the Seller, and the Seller hereby waives all other remedies.
7.2 FEES. In the event of litigation with respect to this Agreement,
the prevailing party shall be entitled to recover, in addition to all other sums
and relief, its reasonable costs and attorney fees incurred at and in
preparation for arbitration and any trial, appeal, or review. This provision
shall cover all litigation, including claims for rescission and any litigation
or other proceedings in Bankruptcy Court.
7.3 INTERPRETATION. The provisions of this Agreement (including, but
not limited to, the representations of Seller, the indemnity obligations of
Seller, and the attorney fees provisions) shall survive closing and shall remain
fully enforceable thereafter. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter of this Agreement and
supersedes all prior negotiations and writings. This Agreement may be amended
only by a written amendment signed by both Seller and PBC. This Agreement shall
be binding upon and shall benefit the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
and year first above written.
PBC: PORTLAND BREWING COMPANY, an Oregon
corporation
By: /s/ C.A. Adams
----------------------------------
Its: President
----------------------------------
SELLER:
/s/ Robert Edwards
----------------------------------
Robert Edwards 1/25/96
Doing Business as Bogart's
<PAGE>
Exhibit "A"
THIS INDENTURE OF LEASE, entered into this 12TH day of AUGUST, 1995,
between LEONARD G. JOHNSON, hereinafter called the lessor, and ROBERT W.
EDWARDS, hereinafter called the lessee,
WITNESSETH: In consideration of the covenants herein, the lessor hereby
leases unto the lessee those certain premises, as is, situated in the City of
PORTLAND, County of MULTNOMAH and State of OREGON, hereinafter called the
premises, described as follows:
406 NW 14TH AVE., PORTLAND, OR
FRONT PORTION OF BLDG. (APPROX ONE HALF)
To Have and to Hold the premises commencing with the 12TH day of AUGUST,
1995, and ending at midnight on the 11TH day of AUGUST, 1998, for a rental of $
SEE BELOW for the whole term, which lessee agrees to pay, at 30303 SE LUSTED RD
CITY OF GRESHAM, STATE OF OR 97080, at the following times and in the following
amounts, to-wit:
THREE YEAR LEASE; THE MONTHLY RENT WILL BE $2,750 PAYABLE ON THE FIRST DAY
OF EACH AND EVERY MONTH. THERE WILL BE A 5% INCREASE IN THE MONTHLY RENT
COMMENCING ON THE 12TH DAY OF AUGUST OF EACH NEW YEAR, COMMENCING AUGUST
12TH 1996. THERE WILL BE A $50 LATE CHARGE FOR ANY RENAL PAYMENT RECEIVED
MORE THAN 15 DAYS FROM DUE DATE.
In consideration of the leasing of the premises and of the mutual
agreements herein contained, the parties agree as follows:
SIGNED 11-16-95
LESSEE'S ACCEPTANCE OF LEASE (1) The lessee accepts this letting and agrees to
pay to the order of the lessor the monthly rentals above stated for the full
term of this lease, in advance, at the times and in the manner aforesaid.
USE OF PREMISES (2a) The lessee shall use the premises during the term of
this lease for the conduct of the following business: BOGART'S JOINT and for no
other purpose whatsoever without lessor's written consent.
(2b) The lessee will not make any unlawful, improper or offensive use of
the premises; the lessee will not suffer any strip or waste thereof; the lessee
will not permit any objectionable noise or odor to escape or to be emitted from
the premises or do anything or permit anything to be done upon or about the
premises in any way tending to create a nuisance; the lessee will not sell or
permit to be sold any product, substance or service upon or about the premises,
excepting such as lessee may be licensed by law to sell and as may be herein
expressly permitted. Normal restaurant-pub odor and noises permitted.
(2c) The lessee will not allow the premises at any time to fall into such a
state of repair or disorder as to increase the fire hazard thereon; the lessee
will not install any power machinery on the premises except under the
supervision and with written consent of the lessor; the lessee will not store
gasoline or other highly combustible materials on the premises at any time; the
lessee will not use the premises in such a way or for such a purpose that the
fire insurance rate on the improvements on the premises is thereby increased or
that would prevent the lessor from taking advantage of any rulings of any agency
of the state in which the premises are situated, or which would allow the lessor
to obtain reduced premium rates for long term fire insurance policies.
(2d) The lessee shall comply at lessee's own expense with all laws and
regulations of any municipal, county, state, federal or other public authority
respecting the use of the premises. These include, without limitation, all
laws, regulations and ordinances pertaining to air and water quality, Hazardous
Materials as herein defined, waste disposal, air emissions, and other
environmental matters. As used herein Hazardous Material means any hazardous or
toxic substance, material, or waste, including but not limited to those
substances, materials, and waste listed in the U.S. Department of Transportation
Hazardous Materials Table or by the U.S. Environmental Protection Agency as
hazardous substances and amendments thereto, petroleum products, or such other
substances, materials, and waste that are or become regulated under any
applicable local, state, or federal law. See item (2c) below.
<PAGE>
(2e) The lessee shall regularly occupy and use the premises for the conduct
of lessee's business, and shall not abandon or vacate the premises for more than
ten days without written approval of lessor. Approval shall not be unreasonably
withheld.
(2f) Tenant shall not cause or permit any Hazardous Material to be brought
upon, kept or used in or about the premises by Tenant, its agents, employees,
contractors, or invitees without the prior written consent of Landlord, which
consent will not be unreasonably withheld so long as Tenant demonstrates to
Landlord's reasonable satisfaction that such Hazardous Material is necessary or
useful to Tenant's business and will be used, kept, and stored in a manner that
will comply at all times with all laws regulating any such Hazardous Material so
brought upon or used or kept in or about the premises.
UTILITIES (3) The lessee shall pay for all heat, light, water, power, and other
services or utilities used in the premises during the term of this lease.
REPAIRS AND IMPROVEMENTS (4a) The lessor shall not be required to make any
repairs, alterations, additions or improvements to or upon the premises during
the term of this lease, except only those hereinafter specifically provided for;
the lessee hereby agrees to maintain and keep the premises, including all
interior and exterior walls and doors, heating, ventilating and cooling
systems, interior wiring, plumbing and drain pipes to sewers or septic tank, in
good order and repair during the entire term of this lease, at lessee's own cost
and expense, and to replace all glass which may be broken or damaged during the
term hereof in the windows and doors of the premises with glass of as good or
better quality as that now in use; it is further agreed that the lessee will
make no alterations, additions or improvements to or upon the premises without
the written consent of the lessor first being obtained.
(4b) The lessor agrees to make all necessary structural repairs to the
building, including exterior walls, foundation, roof, gutters and downspouts,
and the abutting sidewalks. The lessor reserves and at any and all times shall
have the right to repair the building of which the premises are a part, and for
that purpose at any time may erect scaffolding and all other necessary
structures about and upon the premises and lessor and lessor's representatives,
contractors and workers for that purpose may enter in or about the premises with
such materials as lessor may deem necessary therefor, and lessee waives any
claim to damages, including loss of business resulting therefrom.
LESSOR'S RIGHT OF ENTRY (5) It shall be lawful for the lessor, the lessor's
agents and representatives, at any reasonable time to enter into or upon the
premises for the purpose of examining into the condition thereof, or for any
other lawful purpose.
RIGHT OF ASSIGNMENT (6) The lessee will not assign, transfer, pledge,
hypothecate, surrender or dispose of this lease, or any interest herein, sublet,
or permit any other person or persons whomsoever to occupy the premises without
the written consent of the lessor being first obtained in writing; this lease is
personal to lessee; lessee's interests, in whole or in part, cannot be sold,
assigned, transferred, seized or taken by operation at law, or under or by
virtue of any execution or legal process, attachment or proceedings instituted
against the lessee, or under or by virtue of any bankruptcy or insolvency
proceedings had in regard to the lessee, or in any other manner, except as above
mentioned. Consent will not be unreasonably withheld.
ICE, SNOW, DEBRIS (8) If the premises are located at street level, then at all
times lessee shall keep the sidewalks in front of the premises free and clear of
ice, snow, rubbish, debris and obstruction; and if the lessee occupies the
entire building, the lessee will not permit rubbish, debris, ice or snow to
accumulate on the roof of the building so as to stop up or obstruct gutters or
downspouts or cause damage to the roof, and will save harmless and protect the
lessor against any injury whether to lessor or to lessor's property or to any
other person or property caused by lessee's failure in that regard.
OVERLOADING OF FLOORS (9) The lessee will not overload the floors of the
premises in such a way as to cause any undue or serious stress or strain upon
the building in which the premises are located, or any part thereof, and the
lessor shall have the right, at any time, to call upon any competent engineer or
architect whom the lessor
<PAGE>
may choose, to decide whether or not the floors of the premises, or any part
thereof, are being overloaded so as to cause any undue or serious stress or
strain on the building, or any part thereof, and the decision of the engineer
or architect shall be final and binding upon the lessee; and in the event
that it is the opinion of the engineer or architect that the stress or strain
is such as to endanger or injure the building, or any part thereof, then and
in that event the lessee agrees immediately to relieve the stress or strain,
either by reinforcing the building or by lightening the load which causes
such stress or strain, in a manner satisfactory to the lessor.
ADVERTISING SIGNS (10) The lessee will not use the outside walls of the
premises, or allow signs or devices of any kind to be attached thereto or
suspended therefrom, for advertising or displaying the name or business of the
lessee or for any purpose whatsoever without the written consent of the lessor;
however, the lessee may make use of the windows of the premises to display
lessee's name and business when the workmanship of such signs shall be of good
quality and permanent nature; provided further that the lessee may not suspend
or place within said windows or paint thereon any banners, signs, sign-boards or
other devices in violation of the intent and meaning of this section.
LIABILITY INSURANCE (11) At all times during the term hereof, the lessee will,
at the lessee's own expense, keep in effect and deliver to the lessor liability
insurance policies in form, and with an insurer, satisfactory to the lessor.
Such policies shall insure both the lessor and the lessee against all liability
for damage to persons or property in, upon, or about the premises. The amount
of such insurance shall be not less than $1,000,000 for injury to one person,
not less than $1,000,000 for injuries to all persons arising out of any single
incident, and not less than $500,000 for damage to property, or a combined
single limit of not less than $500,000 . It shall be the responsibility of
lessor to purchase casualty insurance with extended coverage so as to insure any
structure on the premises against damage caused by fire or the effects of fire
(smoke, heat, means of extinguishment, etc.), or any other means of loss. It
shall be the responsibility of the lessee to insure all of the lessee's
belongings upon the premises, of whatsoever nature, against the same. With
respect to these policies, lessee shall cause the lessor to be named as an
additional insured party. Lessee agrees to and shall indemnify and hold lessor
harmless against any and all claims and demands arising from the negligence of
the lessee, lessee's officers, agents, invitees and /or employees, as well as
those arising from lessee's failure to comply the with any covenant of this
lease on lessee's part to be performed, and shall at lessee's own expense defend
the lessor against any and all suits or actions arising out of such negligence,
actual or alleged, and all appeals therefrom and shall satisfy and discharge any
judgment which may be awarded against lessor in any such suit or action.
FIXTURES (12) All partitions, plumbing, electrical wiring, additions to or
improvements upon the premises, whether installed by the lessor or lessee, shall
be and become a part of the building in which the premises are located as soon
as installed and the property of the lessor unless otherwise herein provided.
LIGHT AND AIR (13) This lease does not grant any rights of access to light and
air over the premises or any adjacent property.
DAMAGE BY CASUALTY, FIRE AND DUTY TO REPAIR (14) In the event of the
destruction of the improvements in which the premises are located by fire
or other casualty, either party hereto may terminate this lease as of the date
of fire or casualty, provided, however, that in the event of damage to the
improvements by fire or other casualty to the extent of 40 per cent or more of
the sound value thereof, the lessor may or may not elect to repair the same;
written notice of lessor's election shall be given lessee within fifteen days
after the occurrence of the damage; if notice is not so given, lessor
conclusively shall be deemed to have elected not to repair; in the event lessor
elects not to repair, then and in that event this lease shall terminate with the
date of the damage; but if the improvements in which the premises are located be
but partially destroyed and the damage so occasioned shall not amount to the
extent indicated above, or if greater than said extent and lessor elects to
repair, as aforesaid, then the lessor shall repair the same with all convenient
speed and shall have the right to take possession of and occupy, to the
exclusion of the lessee, all or any part thereof in order to make the necessary
repairs, and the lessee hereby agrees to vacate upon request, all or any part
thereof which the lessor may require for the purpose of making necessary
repairs, and for the period of time between the day of such damage and until
such repairs have been substantially completed there shall be such an abatement
of rent as the nature of the injury or damage and its interference with the
occupancy of the premises by the lessee shall warrant; however, if the premises
be but slightly
<PAGE>
injured and the damage so occasioned shall not cause any material
interference with the occupation of the premises by lessee, then there shall
be no abatement of rent and the lessor shall repair the damage with all
convenient speed.
WAIVER OF SUBROGATION RIGHTS (15) Neither the lessor nor the lessee shall be
liable to the other for loss arising out of damage to or destruction of the
premises, or the building or improvement of which the premises are a part or
with which they are connected, or the contents of any thereof, when such loss is
caused by any of the perils which are or could be included within or insured
against by a standard form of fire insurance with extended coverage, including
sprinkler leakage insurance, if any. All such claims for any and all loss,
however caused, hereby are waived. Such absence of liability shall exist
whether or not the damage or destruction is caused by the negligence of either
lessor or lessee or by any of their respective agents, servants or employees.
It is the intention and agreement of the lessor and the lessee that the rentals
reserved by this lease have been fixed in contemplation that both parties shall
fully provide their own insurance protection at their own expense, and that both
parties shall look to their respective insurance carriers for reimbursement of
any such loss, and further, that the insurance carriers involved shall not be
entitled to subrogation under any circumstances against any party to this lease.
Neither the lessor nor the lessee shall have any interest or claim in the
other's insurance policy or policies, or the proceeds thereof, unless
specifically covered therein as a joint assured.
EMINENT DOMAIN (16) In case of the condemnation or purchase of all or any
substantial part of the premises by any public or private corporation with the
power of condemnation this lease may be terminated, effective on the date
possession is taken, by either party hereto on written notice to the other and
in that case the lessee shall not be liable for any rent after the termination
date. Lessee shall not be entitled to and hereby expressly waives any right to
any part of the condemnation award or purchase price.
FOR SALE AND FOR RENT SIGNS (17) During the period of 90 days prior to the
date above fixed for the termination of this lease, the lessor herein may post
on the premises or in the windows thereof signs of moderate size notifying the
public that the premises are "for sale" or "for lease."
DELIVERING UP PREMISES ON TERMINATION (18) At the expiration of the lease
term or upon any sooner termination thereof, the lessee will quit and deliver up
the premises and all future erections or additions to or upon the same, broom-
clean, to the lessor or those having lessor's estate in the premises, peaceably,
quietly, and in as good order and condition, reasonable use and wear thereof,
damage by fire, unavoidable casualty and the elements alone excepted, as the
same are now in or hereafter may be put in by the lessor.
ADDITIONAL COVENANTS OR EXCEPTIONS (19) Lessee will replace any and all windows
when or in need of replacement. Doors to be maintained by lessee and kept
painted.
(20) All insurance companies will provide lessor a copy of policy showing
lessor and lessee as joint coverage protecting both lessee and lessor. Executed
copies of such policies of insurance shall be delivered within (10) ten days of
execution containing in writing that lessor will be notified 30 days in advance
of any changes or cancellation or lapse of policy or reduction in amount of
coverage.
(21) Lessee has the to enter this lease for an additional two years by
notifying the lessor 90 days prior to the inauguration of the 3 year lease
dating August 12th 1995.
ATTACHMENT BANKRUPT DEFAULT PROVIDED, ALWAYS, and these presents are upon
these conditions, that (1) if the lessee shall be in arrears in the payment of
rent for a period of ten days after written notice that rent is due but unpaid,
or (2) if the lessee shall fail or neglect to perform or observe any of the
covenants and agreements contained herein on lessee's part to be done, kept,
performed and observed and such default shall continue for ten days or more
after written notice of such failure or neglect shall be given to lessee, or (3)
if the lessee shall be declared bankrupt or insolvent according to law, or (4)
if any assignment of lessee's property shall be made for the benefit o
creditors, or (5) if on the expiration of this lease lessee fails to surrender
possession of the premises, the lessor or those having lessor's estate in the
premises, may terminate this lease and, lawfully, at lessor's option immediately
or at any time thereafter, without demand or notice, enter into and upon the
premises and every part thereof and repossess the same, and expel lessee and
those claiming by, through and under lessee and remove
<PAGE>
lessee's effects at lessee's expense, forcibly if necessary and store the
same, all without being deemed guilty of trespass and without prejudice to
any remedy which otherwise might be used for arrears of rent or preceding
breach of covenant.
Neither the termination of this lease by forfeiture nor the taking or
recovery of possession of the premises shall deprive lessor of any other action,
right, or remedy against lessee for possession, rent or damages, nor shall any
omission by lessor to enforce any forfeiture, right or remedy to which lessor
may be entitled be deemed a waiver by lessor of the right to enforce the
performance of all terms and conditions of this lease by lessee.
In the event of any re-entry by lessor, lessor may lease or relet the
premises in whole or in part to any tenant or tenants who may be satisfactory to
lessor, for any duration, and for the best rent, terms and conditions as lessor
may reasonably obtain. Lessor shall apply the rent received from any such
tenant first to the cost of retaking and reletting the premises, including
remodeling required to obtain any such tenant, and then to any arrears of rent
and future rent payable under this lease and any other damages to which lessor
may be entitled hereunder.
Any property which lessee leaves on the premises after abandonment or
expiration of the lease, or for more than ten days after any termination of the
lease by landlord, shall be deemed to have been abandoned, and lessor may remove
and sell the property at public or private sale as lessor sees fit, without
being liable for any prosecution therefor or for damages by reason thereof, and
the net proceeds of any such sale shall be applied toward the expenses of
landlord and rent as aforesaid, and the balance of such amounts, if any, shall
be held for and paid to the lessee.
HOLDING OVER In the event the lessee for any reason shall hold over after the
expiration of this lease, such holding over shall not be deemed to operate as a
renewal or extension of this lease, but shall only create a tenancy from month
to month which may be terminated at will at any time by the lessor.
ATTORNEY FEES AND COURT COSTS In case suit or action is instituted to
enforce compliance with any of the terms, covenants or conditions of this lease,
or to collect the rental which may become due hereunder, or any portion thereof,
the losing party agrees to pay the prevailing party's reasonable attorney fees
incurred throughout such proceeding, including at trial, on appeal, and for
post-judgment collection. The lessee agrees to pay and discharge all lessor's
costs and expenses, including lessor's reasonable attorney's fees that shall
arise from enforcing any provision or covenants of this lease even though no
suit or action is instituted.
WAIVER Any waiver by the lessor of any breach of any covenant herein
contained to be kept and performed by the lessee shall not be deemed or
considered as a continuing waiver, and shall not operate to bar or prevent the
lessor from declaring a forfeiture for any succeeding breach, either of the same
condition or covenant or otherwise.
NOTICES Any notice required by the terms of this lease to be given by one
party hereto to the other or desired so to be given, shall be sufficient if in
writing, contained in a sealed envelope, and sent first class mail, with postage
fully prepaid, and if intended for the lessor herein, then if addressed to the
lessor at 30303 SE LUSTED ROAD, GRESHAM, OR 97080 and if intended for the
lessee, then if addressed to the lessee at 406 NW 14TH, PORTLAND, OR. Any such
notice shall be deemed conclusively to have been delivered to the addressee
forty-eight hours after the deposit thereof in the U.S. Mail.
HEIRS AND ASSIGNS All rights, remedies and liabilities herein given to or
imposed upon either of the parties hereto shall extend to, inure to the benefit
of and bind, as the circumstances may require, the heirs, successors, personal
representatives and so far as this lease is assignable by the terms hereof, to
the assigns of such parties.
In construing this lease, it is understood that the lessor or the lessee
may be more than one person; that if the context so requires, the singular
pronoun shall be taken to mean and include the plural, and that generally all
grammatical changes shall be made, assumed and implied to make the provisions
hereof apply equally to corporations and to individuals.
IN WITNESS WHEREOF, the parties have executed this lease on the day and
year first herein above written, any corporation signature being by authority of
its Board of Directors.
/s/ Leonard G. Johnson /s/ Robert W. Edwards
- ----------------------------- -------------------------
Lessor Lessee
---------- ----------
<PAGE>
BILL OF SALE
Robert Edwards, Grantor, hereby grants, bargains, sells, transfers, conveys
and delivers to Portland Brewing Company, an Oregon corporation, Grantee, the
various items of kitchen equipment described on Exhibit "A" which is attached
hereto previously used in the operation of the business of Grantor known as
"Bogart's". No inventory or other personal property of Grantor is transferred
to Grantee by this Bill of Sale.
Grantor warrants and covenants to Grantee and its successors and assigns as
follows:
1. Upon execution of this Bill of Sale, Grantor shall deliver the kitchen
equipment to Grantee.
2. Grantor warrants that it owns the kitchen equipment and has good right
to convey the same. Grantor further warrants that the kitchen equipment is free
of encumbrances and security interests of any kind and that none of the kitchen
equipment is leased from a third party. Grantor shall defend title to the
kitchen equipment against all persons.
3. Grantor further warrants that the kitchen equipment is in good operating
condition and repair.
This Bill of Sale is given pursuant to that certain Agreement dated
____________, 1996 regarding the acquisition of the kitchen equipment and
related matters, and all representations, covenants and obligations of Grantor
set forth in such Agreement are incorporated herein by this reference and shall
survive execution and delivery of this Bill of Sale.
DATED this 12TH day of APRIL, 1996.
Grantor:
/s/ Robert Edwards
------------------------
Robert Edwards
EXHIBIT "A"
APRIL 1996
Bogart's
406 NW 14th
Portland, OR 97209
Equipment list
- --------------
Gas stove w/ 4 burners & oven
Deep fryer (gas)
Gas grill, approx. 30 x 36
Hood / vent system for stove / grill / fryer, with fire extinguisher system
Slicer table
Chopping block table
All sinks cabinets, cupboards, drainboards in kitchen, bar area
All restroom fixtures
Steel, heavy-duty shelving (approx. 24')
Metro shelving (approx. 8') /s/ R.E. C.A.A.
Freezer (free standing) /s/ R.E. C.A.A.
Ice maker
Walk-in refrigerator / compressors
Back-bar refrigerator unit / compressor
Small refrigerator (free-standing)
Ceiling fans
Misc. cabinets / shelving
Honeywell alarm system
Air conditioner units (4)
Gas heating unit
Emergency lighting units (2)
Reach-in refrigerator w/ 12 inserts
/s/ Robert Edwards /s/ C. A. Adams
- ------------------------------ ------------------------------
Seller Buyer
<PAGE>
PROMISSORY NOTE
$45,000.00 APRIL 15, 1996
FOR VALUE RECEIVED, the undersigned maker (herein "Maker") promises to pay
to Robert Edwards (herein "Holder"), at the address of 3008 SW SUNSET
BLVD PORTLAND, OR 97201 , or at such other place as Holder may
designate, on or before the ninetieth (90th) day after the above date, the
principal sum of FORTY-FIVE THOUSAND AND NO/100 DOLLARS ($45,000.00), together
with interest thereon as provided herein.
1. INTEREST AND PAYMENT.
1.1 INTEREST RATE. The principal balance hereof shall bear interest from
and including the date hereof until paid at the rate of eight percent (8%) per
annum.
1.2 PAYMENT. The entire unpaid principal balance hereof, and all accrued
interest thereon, shall be entirely due and payable on the ninetieth (90th) day
following the date of this Promissory Note. Maker shall have the right to
prepay all or any portion of the debt evidenced hereby.
2. DEFAULT.
A default shall occur if Maker fails to make any payment under this
Promissory Note within fifteen (15) days after notice from Holder that the same
is due but unpaid or if Maker fails to perform any other obligation contained in
this Promissory Note within fifteen (15) days after notice from Holder
specifying the nature of the default.
3. REMEDIES.
In the event of a default, Holder may take any one or more of the following
steps:
3.1 ACCELERATION. Declare the entire unpaid principal balance of the debt
evidenced hereby, and all interest, to be immediately due and payable.
3.2 OTHER REMEDIES. Pursue any other right or remedy provided herein or
otherwise allowed by law.
4. ATTORNEY FEES.
In the event litigation is commenced by a party hereto to enforce or to
interpret any provision of this Promissory Note, or to collect any amount due
hereunder, the prevailing party in such litigation shall be entitled to receive,
in addition to all other sums and relief, its reasonable costs and attorney fees
incurred both at and in preparation for trial and any appeal or review, such
amount to be set by the court(s) before which the matter is heard.
5. INTERPRETATION.
This Promissory Note shall be construed and enforced in accordance with the
laws of the State of Oregon. This Promissory Note may not be amended, modified,
or changed, nor shall any provision hereof be deemed waived, except only by an
instrument in writing signed by the party against whom enforcement of any such
waiver, amendment, change, or modification is sought. This Promissory Note
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
6. AGREEMENT.
This Promissory Note is given pursuant to an Agreement dated 1/25/96 ,
1996. Maker shall have the right to offset against this Promissory Note any
amounts owed to Maker under such Agreement.
IN WITNESS WHEREOF, this Promissory Note has been executed as of the date
and year first above written.
PORTLAND BREWING COMPANY, an Oregon corporation
By: /s/ C.A. Adams
---------------------------------
Its: President
---------------------------------
<PAGE>
LEASE TERMINATION
The undersigned is the Lessee under Lease dated August 12, 1995 for the
premises known as 406 NW 14th Avenue, Portland, Oregon. The undersigned is
selling certain kitchen equipment at this location to Portland Brewing Company
and has also agreed to transfer lease rights to Portland Brewing Company. As
Portland Brewing Company is now entering into a new Lease for the 406 NW 14th
Avenue premises and also for the balance of the building which contains these
premises, the undersigned hereby acknowledges the new leasing arrangement and
hereby agrees that the new leasing arrangement between Portland Brewing Company
and Leonard Johnson supersedes the August 12, 1995 Lease and that the August 12
1995 Lease is terminated upon execution of the new Lease between Portland
Brewing Company and Leonard Johnson.
Date: APRIL 12, 1996 /s/ Robert W. Edwards
---------------------------
Robert W. Edwards
<PAGE>
EXHIBIT 11
PORTLAND BREWING COMPANY
Calculations of Net Income per Share
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Actual weighted average shares
outstanding for the period 2,069,397 1,659,860 2,069,397 1,663,500
Dilutive Common Stock options
using the treasure stock method 76,152 77,839 76,234 71,716
---------- ---------- ---------- ----------
Total shares used in per share calculations 2,145,549 1,737,699 2,145,631 1,735,216
Net income $58,690 ($56,223) $35,565 $10,511
Net income per share (1) $0.03 ($0.03) $0.02 $0.01
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 92,432
<SECURITIES> 0
<RECEIVABLES> 999,677
<ALLOWANCES> 48,250
<INVENTORY> 808,283
<CURRENT-ASSETS> 2,412,814
<PP&E> 9,872,130
<DEPRECIATION> 1,535,276
<TOTAL-ASSETS> 10,993,324
<CURRENT-LIABILITIES> 1,700,063
<BONDS> 1,853,321
0
0
<COMMON> 6,695,729
<OTHER-SE> 554,959
<TOTAL-LIABILITY-AND-EQUITY> 10,993,324
<SALES> 3,148,577
<TOTAL-REVENUES> 3,148,577
<CGS> 1,985,235
<TOTAL-COSTS> 3,087,616
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,601
<INCOME-PRETAX> 57,565
<INCOME-TAX> 22,000
<INCOME-CONTINUING> 35,565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,565
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
