CONVERTIBLE PROMISSORY NOTE
THIS CONVERTIBLE PROMISSORY NOTE (THIS "CONVERTIBLE NOTE") HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT
AND LAWS OR AN OPINION OF COUNSEL REASONABLE ACCEPTABLE TO BORROWER THAT SUCH
REGISTRATION IS NOT REQUIRED.
$2,750,000 January 30, 1997
FOR VALUE RECEIVED, NOR'WESTER BREWING COMPANY, an Oregon corporation
("BORROWER") hereby promises to pay to the order of UNITED BREWERIES OF AMERICA,
INC., a Delaware corporation, or its successors or assigns ("PURCHASER"), the
principal sum of TWO MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($2,750,000)
or, if less, the aggregate unpaid principal amount of all Advances (including
the Existing Advance) made by Purchaser to Borrower pursuant to the Credit
Agreement (as hereinafter defined), and interest accrued thereon as described in
Section 3 below all in accordance with the terms and conditions set forth
herein. This Convertible Note is the Convertible Note referred to in that
certain Credit Agreement, dated as of January 30, 1997, by and between Borrower
and Purchaser (the "CREDIT AGREEMENT") and is subject to the terms and
conditions of the Credit Agreement, including the rights of prepayment and the
rights of acceleration of maturity set forth therein. Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.
1. ADVANCES. Advances made to Borrower under this Convertible Note shall
be made in accordance with the terms and conditions set forth in the Credit
Agreement. Borrower hereby authorizes Purchaser to record on the schedule(s) to
be annexed to this Convertible Note the date and amount of each Advance
(including the Existing Advance) and agrees that all such notations shall
constitute prima facie evidence of the matters noted.
2. PRINCIPAL PAYMENT. All outstanding principal under this Convertible
NOTE shall be due and payable in one lump sum on the earliest to occur of (i)
August 29, 1997, (ii) sixty (60) days after the termination of the Investment
Agreement or (iii) acceleration of this Convertible Note by Purchaser
pursuant to an Event of Default (and, if applicable, the expiration of the
sixty (60) day period as provided in the Credit Agreement) (each a "PAYMENT
EVENT"). Subject to the automatic conversion of this Convertible Note
described in in Section 5 below, all payments of principal under this
Convertible Note are payable in lawful money of the United States to
Purchaser sent to Purchaser's address as indicated in the Credit Agreement,
or to such other place as Purchaser may designate in writing, in same day or
immediately available funds not later than 12:00 noon on the date when due.
Any
amounts not paid when due hereunder shall ear interest at a rate per annum equal
to the Interest Rate (as hereinafter defined) plus three percent (3.00%).
3. INTEREST. Interest shall accrue on the unpaid principal balance of
this Convertible Note outstanding from time to time at a rate per annum equal to
Eleven and One-Quarter percent (11.25%) (the "INTEREST RATE"). All computations
of interest under this Convertible Note shall be based on a year of 365 or 366
days, as applicable, for the actual number of days elapsed. All accrued
interest under this Convertible Note shall be due in payable in on lump sum on
the occurrence of a Payment Event.
4. PREPAYMENTS. This Convertible Note may not be prepaid.
5. AUTOMATIC CONVERSION. Notwithstanding the payment provisions set
forth in Section 2 above, upon the Closing, the outstanding principal under this
Convertible Note shall automatically convert into Two Million Four Hundred
Ninety-Nine Thousand Six Hundred Sixty-Four (2,497,184) shares of Common Stock
of UCB. On and after such automatic conversion and payment by Borrower of all
accrued interest in accordance with Section 3 above, this Convertible Note shall
be deemed to be no longer outstanding, and all rights with respect hereto shall
forthwith cease and terminate, except the right of Purchaser to receive the
Common Stock of UCB to which it shall be entitled upon conversion hereof. Any
such conversion shall be deemed to have been made immediately prior to the close
of business on the date of conversion, and Purchaser upon such conversion shall
be treated for all purposes as the record holder of such Common Stock upon such
date.
6. MAXIMUM AMOUNT. Notwithstanding anything in this Convertible Note,
the Credit Agreement or any other Credit Document to the contrary, nothing
contained in this Convertible Note, the Credit Agreement or any other Credit
Document shall be deemed to require the payment by Borrower of interest on the
indebtedness evidenced by this Convertible Note in excess of the amount which
Purchaser may lawfully contract to charge under applicable usury and other laws
(the "MAXIMUM LEGAL RATE"). All agreements between Borrower and Purchaser are
expressly limited so that in no contingency or event shall the amount paid or
agreed to be paid by Borrower hereunder exceed the Maximum Legal Rate. If,
under any circumstances whatsoever, the fulfillment of any obligation under this
Convertible Note, the Credit Agreement or any other Credit Document shall
involve exceeding the Maximum Legal Rate, the obligation to be fulfilled by
Borrower shall be reduced to the minimum amount required so that such obligation
shall not exceed the Maximum Legal Rate. This Section 6 shall control every
other provision of this Convertible Note, the Credit Agreement and any other
Credit Document.
7. GOVERNING LAW. This Convertible Note shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Convertible Note as of the date first above written.
NOR'WESTER BREWING COMPANY,
an Oregon corporation
/s/ James W. Bernau
-----------------------------------
Name: James W. Bernau
Title: President
ACCEPTED AND AGREED TO:
UNITED BREWERIES OF AMERICA, INC.
a Delaware corporation
/s/ Vijay Mallya
- -----------------------------------
Name: Vijay Mallya
Title: Chairman and Chief Executive Officer