PROMISSORY NOTE
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Principal Loan Date Maturity Loan No. Call Collateral Account Officer Initials
$600,000.00 12-01-1997 05-31-1998 203-00549
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References in the shaded area are for Lender's use only and do not limit the applicability of this
document to any particular loan or item.
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Borrower: MENDOCINO BREWING COMPANY,INC. Lender: WESTAMERICA BANK
P.O. BOX 400 SONOMA CREDIT ADM.
HOPLAND CA 95449 00 X XX. 2ND. FLOOR
SANTA ROSA, CA 95404
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Principal Amount: $600,000.00 Date of Note: December 1, 1997
Initial Rate: 10.000%
PROMISE TO PAY. MENDOCINO BREWING COMPANY, INC. ("Borrower") promises to pay to
WESTAMERICA BANK ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Six Hundred Thousand & 00/100 Dollars
($600,000.00) 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 on demand, or if no demand is made, in one
payment of all outstanding principal plus all accrued unpaid interest on May 31,
1998. In addition, Xxxxxxxx will pay regular monthly payments of accrued unpaid
interest beginning December 31, 1997, and all subsequent interest payments are
due on the last day of each month after that. The annual interest rate for this
Note is computed on a 365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Xxxxxx'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 Westamerica Bank Index
Rate (the "Index"). THE BANK'S INDEX RATE IS ESTABLISHED BY BANK IN ITS SAN
XXXXXX HEADQUARTERS OFFICE AS OF THE DATE OF THIS NOTE, AND AS OF EACH DATE THAT
BANK MAY ADJUST SUCH INDEX RATE. LOANS MAY BE MADE BY BANK AT, ABOVE OR BELOW
THE INDEX RATE. Lender will tell Borrower the current Index rate upon Xxxxxxxx'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 Day. The
Index currently is 8.500%. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 1.500 percentage points over
the Index, resulting in an initial rate of 10.000%. 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. Xxxxxxxx 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 Lender is entitled to a
minimum interest charge of $50.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Xxxxxx in
writing, relieve Xxxxxxxx of Xxxxxxxx's obligation to continue to make payments
under the payment schedule. Rather, they will reduce the principal balance due
and may result in Borrower's making fewer payments.
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
Xxxxxxxx's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Xxxxxxxx becomes insolvent, a receiver is
appointed for any part of Xxxxxxxx's property, Xxxxxxxx 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 Xxxxxxxx's property on or in which Xxxxxx has a lien or security
interest. This includes a garnishment of any of Xxxxxxxx's accounts with Xxxxxx.
(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 Xxxxxx believes the
prospect of payment or performance of the indebtedness is impaired.
LENDER'S RIGHTS. Upon default, Xxxxxx 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. Upon Xxxxxxxx's failure to pay
all amounts declared due pursuant to this section, including failure to pay upon
final maturity, Lender, at its option, may also, if permitted under applicable
law, increase the variable interest rate on this Note to 5.500 percentage points
over the Index. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Xxxxxxxx also will pay Lender that amount. This includes,
subject to any limits under applicable law, Xxxxxx's attorneys' fees and
Xxxxxx'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. Xxxxxxxx also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Lender in the State of California. If there is a lawsuit,
Xxxxxxxx agrees upon Xxxxxx's request to submit to the jurisdiction of the
courts of MARIN County, the State of California. Xxxxxx and Xxxxxxxx hereby
waive the right to any jury trial in any action, proceeding, or counterclaim
brought by either Xxxxxx or Borrower against the other. This Note shall be
governed by and construed in accordance with the laws of the State of
California.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
COLLATERAL. This Note is secured by THAT CERTAIN COMMERCIAL SECURITY AGREEMENT
DATED MAY 17, 1996.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may he requested orally by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing. All
communications, instructions, or directions by telephone or otherwise to Lender
are to be directed to Xxxxxx's office shown above. The following party or
parties are authorized to request advances under the line of credit until Xxxxxx
receives from Borrower at Xxxxxx's address shown above written notice of
revocation of their authority: X. XXXXXXX XXXXXXXX, PRESIDENT; and XXXXXXX
XXXXX, CHIEF OPERATING OFFICER. Xxxxxxxx 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 Xxxxxxxx's accounts with Xxxxxx. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on this
Note or by Xxxxxx's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if: (a) Borrower
or any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (b) Borrower or any guarantor ceases
doing business or is insolvent; (c) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; or (d) Borrower has applied funds provided pursuant
to this Note for purposes other than those authorized by Lender.
12-01-1997 PROMISSORY NOTE
Loan No 203-00549 (Continued) Page 2
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GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Xxxxxx's right to
declare payment of this Note on its demand. 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 Xxxxxx's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Xxxxxx 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, XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. XXXXXXXX AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
BORROWER:
MENDOCINO BREWING COMPANY, INC.
COPY
BY: /s/ X. XXXXXXX XXXXXXXX, PRESIDENT By: /s/ XXXXXXX XXXXX
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X. XXXXXXX XXXXXXXX, PRESIDENT XXXXXXX XXXXX, CHIEF OPERATING OFFICER
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