VARIABLE RATE INSTALLMENT NOTE
- ------------------------------- --------------------------------
AMOUNT $4,000,000.00 (U.S.) NOTE DATE October 14, 1997
MATURITY DATE October 1, 2002 TAX IDENTIFICATION # 39-1679918
- ------------------------------- --------------------------------
For Value Received, the undersigned promise(s) to pay to the order of Comerica
Bank - California ("Bank"), at any office of the Bank in the State of
California, Four Million Dollars and No Cents ($4,000,000.00) (U.S.) in
installments in the amounts set forth in the next succeeding sentence, plus
interest on the unpaid balance from the date of this Note at a per annum rate
equal to the Bank's base rate from time to time in effect from time to time,
plus one- and-one-half percentage points (1.500%) per annum until maturity,
whether by acceleration or otherwise, or until Default, as later defined, and
after that at a default rate equal to the rate of interest otherwise prevailing
under this Note plus 3% per annum. (but in no event in excess of the maximum
rate permitted by law). Payments of principal on the Note shall be made in
monthly payments as follows: (i) $41,667.00 beginning on November 1, 1997 and on
the first day of each calendar month thereafter until October 1, 1998; (ii)
$50,000.00 beginning on November 1, 1998 and on the first day of each calendar
month thereafter until October 1, 1999; (iii) $58,333.00 beginning on November
1, 1999 and on the first day of each calendar month thereafter until October 1,
2000; (iv) $66,667.00 beginning on November 1, 2000 and on the first day of each
calendar month thereafter until October 1, 2001; and (v) $116,666 beginning on
November 1, 2001 and on the first day of each calendar month thereafter until
September 1, 2002 (each of the payment dates described in clauses (i) through
(v), a "Payment Date"); and (vi) a final payment of all remaining principal on
October 1, 2002, or such earlier Payment Date as all of the principal on the
Note shall have been paid in full (the "Maturity Date"). Each such payment of
principal on the Note shall be accompanied by a payment of accrued interest
thereon, and all accrued but unpaid interest, fees and costs shall be due on the
Maturity Date. Interest shall be calculated for the actual number of days the
principal is outstanding on the basis of a 360 day year if this Note evidences a
business or commercial loan or a 365 day year if a consumer loan. The Bank's
"base rate" is that annual rate of interest so designated by the Bank and which
is changed by the Bank from time to time. Interest rate changes will be
effective for interest computation purposes as and when the Bank's base rate
changes. If the frequency of principal and interest installments is not
otherwise specified, installments of principal and interest due under this Note
shall be payable monthly on the first day of each month.
In addition to the payments of principal set forth above, the undersigned agrees
to make additional mandatory prepayments of principal as follows:
(a) on April 1, 1999, on each anniversary date thereafter in 2000 and 2001,
and on the Maturity Date, equal on each such date to thirty-five percent (35%)
of Adjusted Cash Flow during the immediately preceding fiscal year of the
Borrower (each such payment, a "Profit Recapture Payment"). As used in this
Note, the term Adjusted Cash Flow for such fiscal year means Cash Flow, as
defined below, for such fiscal year less the aggregate sum of all scheduled
payments during such fiscal year of principal of this Note (which, for the
avoidance of doubt, shall not include the Profit Recapture Payment described in
this paragraph (a) or the Mandatory Principal Repayments described in paragraphs
(b), (c) and (d) below). As used in this Note, the term Cash Flow means Net
Income (after deduction for income taxes and other taxes of such person
determined by reference to income or profits of such person) for such period,
plus, to the extent deducted in computation of such Net Income, the amount of
depreciation and amortization expense and the amount of deferred tax liability
during such period, all as determined in accordance with GAAP and Net Income
means the net income (or loss) of a person for any period determined in
accordance with GAAP but excluding in any event (i)any gains or losses on the
sale or other disposition, not in the ordinary course of business, of
investments or fixed or capital assets, and any taxes on the excluded gains and
any tax deductions or credits on account on any excluded losses; and (ii) net
earnings of any Person in which Borrower has an ownership interest, unless such
net earnings shall have actually been received by Borrower in the form of cash
distributions; and
(b) within five business days of repayment of the indebtedness of the
undersigned to ERLY Industries, Inc., 100 percent of the amount by which the
amount advanced under this Note exceeds the amount paid to ERLY Industries, Inc.
in settlement of such indebtedness minus the reasonable legal fees and expenses
of the undersigned incurred in any litigation to determine the amount of such
repayment; and
1
(c) within five business days of any sale or other transfer of any capital
assets of the undersigned, 100 percent of the proceeds thereof, net of
reasonable transaction costs of such transaction provided, however, that the
foregoing shall not be deemed a waiver by the Bank of the requirement that the
undersigned obtain the prior written consent of the Bank in connection with any
such sale; and
(d) within five business days of any sale of equity securities of the
undersigned, 100 percent of the proceeds of such sale net of reasonable costs of
such transaction.
The additional mandatory principal prepayments described in subparagraphs
(a) through (d) of the preceding paragraph are referred to as Mandatory
Principal Prepayments. Each Mandatory Principal Prepayment shall be applied to
the payment of principal last coming due, and accordingly shall not reduce the
amount of any scheduled prior payment of principal due on this Note.
If this Note or any installment under this Note shall become payable on a day
other than a day on which the Bank is open for business, this payment may be
extended to the next succeeding business day and interest shall be payable at
the rate specified in this Note during this extension. Any payments of principal
in excess of the installment payments required under this Note need not be
accepted by the Bank (except as required under applicable law), but if accepted
shall apply to the installments last falling due. A late installment charge
equal to 5% of each late installment may be charged on any installment payment
not received by the Bank within 10 calendar days after the installment due date,
but acceptance of payment of this charge shall not waive any default under this
Note.
This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank, and any and all modifications,
renewals or extensions of it, whether joint or several, contingent or absolute,
now existing or later arising, and however evidenced (collectively
"Indebtedness") are secured by and the Bank is granted a security interest in
all items deposited in any account of any of the undersigned with the Bank and
by all proceeds of these items (cash or otherwise), all account balances of any
of the undersigned from time to time with the Bank, by all property of any of
the undersigned from time to time in the possession of the Bank and by any other
collateral, rights and properties described in each and every deed of trust,
mortgage, security agreement, pledge, assignment and other agreement which has
been, or will at any time(s) later be, executed by any (or all) of the
undersigned to or for the benefit of the Bank, specifically including that
certain Revolving Credit Loan and Security Agreement (Accounts and Inventory)
between the undersigned and the Bank of even date herewith (collectively
"Collateral"). Notwithstanding the above, (i) to the extent that any portion of
the Indebtedness is a consumer loan, that portion shall not be secured by any
deed of trust or mortgage on or other security interest in any of the
undersigned's principal dwelling or in any of the undersigned's real property
which is not a purchase money security interest as to that portion, unless
expressly provided to the contrary in another place, or (ii) if the undersigned
(or any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure this
Note or any other indebtedness of the undersigned (or any of them), unless
expressly provided to the contrary in another place.
2
If the undersigned (or any of them) or any guarantor under a guaranty of all or
part of the Indebtedness ("guarantor") (a) fail(s) to pay this Note or any of
the Indebtedness when due, by maturity, acceleration or otherwise, or fails to
pay any Indebtedness owing on a demand basis and such failure continues for
three (3) business days after written notice thereof or written demand therefor;
or (b) fail(s) to comply with any of the terms or provisions of any agreement
between the undersigned (or any of them) or any guarantor and the Bank; or (c)
become(s) insolvent or the subject of a voluntary or involuntary proceeding in
bankruptcy, or a reorganization, arrangement or creditor composition proceeding,
(if a business entity) cease(s) doing business as a going concern, (if a natural
person) die(s) or become(s) incompetent, (if a partnership) dissolve(s) or any
general partner of it dies, becomes incompetent or becomes the subject of a
bankruptcy proceeding or (if a corporation or a limited liability company) is
the subject of a dissolution, merger or consolidation: or (d) if any warranty or
representation made by any of the undersigned or any guarantor in connection
with this Note or any of the Indebtedness shall be discovered to be untrue or
incomplete; or (e) if there is any termination, notice of termination, or breach
of any guaranty, pledge, collateral assignment or subordination agreement
relating to all or any part of the Indebtedness; or (f) if there is any failure
by any of the undersigned or any guarantor to pay when due any of its
indebtedness (other than to the Bank) or in the observance or performance of any
term, covenant or condition in any document evidencing, securing or relating to
such indebtedness; or (g) If there is a material impairment of the prospect of
repayment of all or any portion of this Note or the Indebtedness, or a material
impairment of the value or priority of Bank's security interest in the
Collateral, including, without limitation, any action by any subcontractor or
warehouseman holding or asserting a lien in Collateral or asserting a setoff
right or (h) if there is filed or issued a levy or writ of attachment or
garnishment or other like judicial process upon the undersigned (or any of them)
or any guarantor or any of the Collateral, including without limit, any accounts
of the undersigned (or any of them) or any guarantor with the Bank, then the
Bank, upon the occurrence of any of these events (each a "Default"), may at its
option and without prior notice to the undersigned (or any of them), declare any
or all of the Indebtedness to be immediately due and payable (notwithstanding
any provisions contained in the evidence thereof to the contrary), sell or
liquidate all or any portion of the Collateral, set off against the Indebtedness
any amounts owing by the Bank to the undersigned (or any of them), charge
interest at the default rate provided in the document evidencing the relevant
Indebtedness and exercise any one or more of the rights and remedies granted to
the Bank by any agreement with the undersigned (or any of them) or given to it
under applicable law. In addition, if this Note is secured by a deed of trust or
mortgage covering real property, then the trustor or mortgagor shall not
mortgage or pledge the mortgaged premises as security for any other indebtedness
or obligations. This Note, together with all other indebtedness secured by said
deed of trust or mortgage, shall become due and payable immediately, without
notice, at the option of the Bank, (a) if said trustor or mortgagor shall
mortgage or pledge the mortgaged premises for any other indebtedness or
obligations or shall convey, assign or transfer the mortgaged premises by deed,
installment sale contact or other instrument, or (b) if the title to the
mortgaged premises shall become vested in any other person or party in any
manner whatsoever, or (c) if there is any disposition (through one or more
transactions) of legal or beneficial title to a controlling interest of said
trustor or mortgagor. All payments under this Note shall be in immediately
available United States funds, without setoff or counterclaim.
Notwithstanding anything contained in this paragraph to the contrary, Bank shall
refrain from exercising its rights and remedies and Default shall thereafter not
be deemed to have occurred by reason of the occurrence of any of the events set
forth in clause (c) (as it relates to a person or entity other than a natural
person) or clause (h) of this paragraph if, within ten (10) days from the date
thereof, the same is released, discharged, dismissed, bonded against or
satisfied; provided, however, if the event is the institution of insolvency,
bankruptcy or similar proceedings against Borrower, Bank shall not be obligated
to make advances to Borrower during such cure period.
If this Note is signed by two or more parties (whether by all as makers or by
one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns.
3
The undersigned waive(s) presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release, substitution or nonenforcement
of any security, or release or substitution of any of the undersigned, any
guarantor or any other party, whether with or without notice, shall affect the
obligations of any of the undersigned. The undersigned waive(s) all defenses or
right to discharge available under Section 3-605 of the California Uniform
Commercial Code and waive(s) all other suretyship defenses or right to
discharge. The undersigned agree(s) that the Bank has the right to sell, assign,
or grant participations, or any interest, in any or all of the Indebtedness, and
that, in connection with this right, but without limiting its ability to make
other disclosures to the full extent allowable, the Bank may disclose all
documents and information which the Bank now or later has relating to the
undersigned or the Indebtedness. The undersigned agree(s) that the Bank may
provide information relating to this Note or to the undersigned to the Bank's
parent, affiliates, subsidiaries and service providers.
The undersigned agree(s) to reimburse the holder or owner of this Note for any
and all costs and expenses (including without limit, court costs, legal expenses
and reasonable attorney fees, whether inside or outside counsel is used, whether
or not suit is instituted and, if suit is instituted, whether at the trial court
level, appellate level, in a bankruptcy, probate or administrative proceeding or
otherwise) incurred in collecting or attempting to collect this Note or incurred
in any other matter or proceeding relating to this Note.
The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by an officer of the Bank expressly stating that the
writing constitutes an amendment, waiver or modification of the terms of this
Note. As used in this Note, the word "undersigned" means, individually and
collectively, each maker, accommodation party, indorser and other party signing
this Note in a similar capacity. If any provision of this Note is unenforceable
in whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE IS MADE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
THE MAXIMUM INTEREST RATE SHALL NOT EXCEED THE HIGHEST APPLICABLE USURY CEILING.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
For Corporations, Partnerships, Trusts, or Estates
HANSEN BEVERAGE COMPANY By:______________________ Its:_______________________
OBLIGOR NAME TYPED/PRINTED SIGNATURE OF TITLE
___________________________By:_______________________Its:_______________________
STREET ADDRESS SIGNATURE OF TITLE
___________________________By:_______________________Its:_______________________
CITY SIGNATURE OF TITLE
__________________________ By:_______________________Its:_______________________
STATE ZIP CODE SIGNATURE OF TITLE
For Bank Use Only CCAR #
- ---------------------------------- ---------------------------------------------
Loan Officer Initials Loan Group Name Obligor(s) Name
- ---------------------- -------------------- ---------------------- ---------
Loan Officer I.D. No. Loan Group No. Obligor # Note # Amount
- ---------------------- -------------- ------------ ---------- ---------
4