EXHIBIT 10.33
TO
REGISTRATION STATEMENT ON FORM SB-2
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$2,700,000 NOTE IN FAVOR OF THE SAVINGS BANK OF MENDOCINO COUNTY
PROMISSORY NOTE
Borrower: Mendocino Brewing Company, a California Corporation PO Box 400
Hopland, CA 95449
Lender: SAVINGS BANK OF MENDOCINO COUNTY MAIN OFFICE PO Box 3600 200 N. School
Street Ukiah, CA 95482
Principal Amount: $2,700,000.00 Initial Rate: 10.250% Date of Note: September
25, 1996
PROMISE TO PAY. Mendocino Brewing Company, a California corporation ("Borrower")
promises to pay to SAVINGS BANK OF MENDOCINO COUNTY ("Lender"), or order, In
lawful money of the United States of America, the principal amount of Two
Million Seven Hundred Thousand & 00/100 Dollars ($2,700,000.00) or so much as
may be outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of each
advance until repayment of each advance.
PAYMENT. Borrower will pay this loan In one payment of ail outstanding principal
plus all accrued unpaid Interest on February 2,1997. In addition, Borrower will
pay regular monthly payments of accrued unpaid Interest beginning October
1,1996, and ail subsequent interest payments are due on the same day of each
month after that. Interest on this Note is computed on a 365/365 simple interest
basis; that is, by applying the ratio of the annual interest rate over the
number of days in a year (366 during leap years), multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the Savings Bank of Mendocino
County's Base Commercial Rate (the "Index"). The Index is not necessarily the
lowest rate charged by Lender on its loans and is set by Lender in its sole
discretion. If the Index becomes unavailable during the term of this loan,
Lender may designate a substitute index after notifying Borrower. Lender will
tell Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each first and fifteenth of
each month. The Index currently is 8.250% per annum. The Interest rate to be
applied to the unpaid principal balance of this Note will be at a rate of 2.000
percentage points over the Index, resulting In an Initial rate of 10.250% per
annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that
EXHIBIT 10.33
Lender is entitled to a minimum Interest charge of $100.00. Other than
Borrower's obligation to pay any minimum interest charge, Borrower may pay
without penalty all or a portion of the amount owed earlier than it is due.
Early payments will not, unless agreed to by Lender in writing, relieve Borrower
of Borrower's obligation to continue to make payments of accrued unpaid
interest. Rather, they will reduce the principal balance due.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired.
If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within one (1) days; or (b) if the
cure requires more than one (1) days, immediately initiates steps which Lender
deems in Lender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due without
notice, and then Borrower will pay that amount. Lender may hire or pay someone
else to help collect this Note if Borrower does not pay. Borrower also will pay
Lender that amount. This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-Judgment collection services. Borrower also
will pay any court costs, in addition to all other
EXHIBIT 10.33
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sums provided by law. This Note has been delivered to Lender and accepted by
Lender In the State of California. It there Is a lawsuit, Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of Mendocino
County, the State of California This Note shall be governed by and construed In
accordance with the laws of the State of California
DISHONORED ITEM FEE. Borrower wilt pay a fee to Lender of $10.00 if Borrower
makes a payment on Borrower's loan and the check or pre-authorized charge with
which Borrower pays is later dishonored.
COLLATERAL. Borrower acknowledges this Note is secured by, in addition to any
other collateral, a Deed of Trust dated September 25, 1996, to a trustee in
favor of Lender on real property located in Mendocino County, State of
California. That agreement contains the following due on sale provision: Lender
may, at its option, declare immediately due and payable all sums secured by this
Deed of Trust upon the sale or transfer, without the Lender's prior written
consent, of all or any part of the Real Property, or any interest in the Real
Property. A "sale or transfer" means the conveyance of Real Property or any
right, title or interest therein; whether legal, beneficial or equitable;
whether voluntary or involuntary; whether by outright sale, deed, installment
sale contract, land contract, contract for deed, leasehold interest with a term
greater than three (3) years, lease-option contract, or by sale, assignment, or
transfer of any beneficial interest in or to any land trust holding title to the
Real Property, or by any other method of conveyance of Real Property interest.
If any trustor is a corporation, partnership or limited liability company,
transfer also includes any change in ownership of more than twenty-five percent
(25%) of the voting stock, partnership interests or limited liability company
interests, as the case may be, of Trustor. However, this option shall not be
exercised by Lender if such exercise is prohibited by applicable law.
LINE OF CREDIT. This Note evidences a straight line of credit. Once the total
amount of principal has been advanced, Borrower is not entitled to further loan
advances. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs.
ADDITIONAL PROVISIONS. THIS NOTE IS SECURED BY A DEED OF TRUST OF EVEN DATE
HEREWITH, A SECURITY AGREEMENT OF EVEN DATE HEREWITH AND AN ASSIGNMENT OF
DEPOSIT OF EVEN DATE HEREWITH.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive any
applicable statute of limitations, presentment, demand for payment, protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral; and take any other action deemed necessary by Lender
EXHIBIT 10.33
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without the consent of or notice to anyone. All such parties also agree that
Lender may modify this loan without the consent of or notice to anyone other
than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
Mendocino Brewing Company, a California corporation
By: /s/ Norman Franks
Norman Franks, Chief Financial Officer
By: /s/ Michael Laybourn
Michael Laybourn, Chief Executive Officer
EXHIBIT 10.33
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