SECURED PROMISSORY NOTE
$830,000.00 Phoenix, Arizona
June 8, 2000
FOR VALUE RECEIVED, the undersigned, POORE BROTHERS, INC., a Delaware
corporation ("Maker"), promises to pay BOULDER POTATO COMPANY, INC., a Colorado
corporation ("Lender"), at 1898 South Flatiron Court, Suite 120, Boulder,
Colorado 80301, or at such other place as Lender may from time to time designate
in writing, in lawful money of the United States of America, the principal sum
of Eight Hundred Thirty Thousand and No/100 Dollars ($830,000.00), together with
Interest ("Interest") accruing thereon commencing on the date of this Note at
the rate equal to Six and Four Tenths Percent (6.4%) per annum.
This Note is executed in connection with, and shall be governed by and
shall be construed under and pursuant to, that certain Agreement for Purchase
and Sale of Assets, of even date herewith, by and between Maker and Lender (the
"Purchase Agreement"). Capitalized terms used without definition herein shall
have the meanings ascribed to them in the Purchase Agreement. This Note is
secured by a security interest in certain Assets of Maker pursuant to that
certain Security Agreement, of even date herewith, by and between Maker and
Lender.
Interest payable from time to time, at any time, or in the aggregate during
the term of this Note shall in no event exceed the maximum contract rate
permitted under Arizona law (the "Applicable Usury Law"). Interest shall be
calculated on the basis of a three hundred sixty five (365) level day year,
actual days elapsed.
Absent default, this Note shall be payable in installments of equal monthly
Principal and Interest payments of Thirty Six Thousand Nine Hundred Twenty Nine
Dollars and Forty One Cents ($36,929.41), beginning on July 15, 2000, and
continuing on the fifteenth day of each successive calendar month thereafter
during the term of this Note. Notwithstanding anything to the contrary herein
contained; (a) the first payment due under this Note shall be adjusted by adding
in accrued but unpaid interest for the period from the date of this Note through
June 15, 2000, so as to maintain the aforesaid Amortization Schedule; and (b)
this Note shall be due and payable in full on June 15, 2002.
Notwithstanding the foregoing, prepayment in whole or in part of the unpaid
principal amount outstanding under this Note may be made at any time.
If Maker fails to perform any obligation of Maker under this Note (an
"Event of Default") and such Event of Default is not cured within ten (10) days
after Maker's receipt of written notice from Lender specifying in detail the
nature of such default, then Lender may, at Lender's option, without further
notice or demand, declare this Note immediately due and payable, whereupon this
Note shall become immediately due and payable and Maker shall immediately pay to
Lender the entire unpaid principal balance of this Note, all accrued and unpaid
Interest, and all other sums owing in connection with this Note.
Upon the occurrence of an Event of Default which is not timely cured as set
forth above, the Interest Rate due under this Note shall be deemed to increase
("Default Rate Interest") to nine percent (9%) per annum (or such lesser rate as
may be then the maximum permitted rate of interest under law).
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Payments received with respect to this Note shall be applied first to
Interest, and then to principal and other sums owing with respect to the
indebtedness evidenced by this Note.
Maker agrees to pay an effective rate of Interest equal to the Interest
Rate stated above plus any charges in the nature of Interest paid or to be paid
in connection with this Note (collectively, the "Additional Sums"), but in no
event to exceed the maximum contract rate permitted under the Applicable Usury
Law for the purpose of the Applicable Usury Laws. For the purpose of the
Applicable Usury Laws only, the agreed upon and "contracted for rate of
interest" to be paid in connection with this Note shall be deemed to be
increased by the rate of interest resulting from the Additional Sums.
If Maker is in default under this Note and Lender undertakes to collect
this Note, Maker will pay to Lender in addition to any indebtedness due and
unpaid, all costs and expenses of collection, including, without limitation,
Lender's reasonable attorneys' fees, whether or not legal proceedings shall be
instituted.
Every person or entity at any time liable for the payment of the
indebtedness evidenced by this Note (including, but not by way of limitation,
Maker, endorsers, guarantors or sureties under this Note) severally waives:
notice or presentment for payment, protest, and demand; notice of protest,
demand, dishonor and nonpayment of this Note and any and all lack of diligence
or delays in collection which may occur; and each and every other notice of any
kind respecting this Note except as provided in this Note. Every such person or
entity further consents that Lender may renew or extend the time of payment of
any or the whole of the indebtedness evidenced by this Note and may amend or
modify this Note and the Deed of Trust, release or substitute collateral,
release any guarantor, surety or Maker of this Note, at any time and from time
to time, without limit as to the number or aggregate period of such renewals,
extensions, amendments, modifications, releases or substitutions, at the request
of any other person or entity liable therefor. Any such renewals, extensions,
amendments, modifications, releases or substitutions may be made without notice
to any person or entity liable for the payment of the indebtedness evidenced by
this Note. If more than one person or other entity has executed this Note as
Maker, the obligations of such persons and entities shall be joint and several.
Time is of the essence with respect to all of Maker's obligations and
agreements under this Note.
This Note and all its provisions, conditions, promises and covenants shall
be binding in accordance with their respective terms upon Maker and Maker's
respective successors, transferees and assigns; and the same shall inure to the
benefit of Lender and Lender's successors and assigns. No modification,
variation, termination, discharge or abandonment of this Note and no waiver of
any of the provisions or conditions of this Note shall be valid unless in
writing and signed by duly authorized representatives of Maker and Lender or
their restive successors, transferees or assigns, as the case may be; and a
waiver on one occasion shall not be construed as continuing or as a bar to or
waiver of such right or remedy on any other occasion. No remedy in this Note
conferred on or reserved to Lender is intended to be exclusive of any other
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Note or now or hereafter
existing at law or in equity. No delay or omission to exercise any right or
power shall be construed to be a waiver of any default or acquiescence therein
or a waiver of any right or power; and every such right and power may be
exercised from time to time and as often as may be deemed expedient. Lender's
acceptance of any performance due under this Note which does not comply strictly
with the terms of this Note shall not be deemed to be a waiver of any right of
Lender to strict performance by Maker. Acceptance of past due amounts or partial
payments shall not constitute a waiver of full and timely payment of the
obligations under this Note.
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This Note has been delivered in Phoenix, Arizona. This Note shall be
governed by the internal substantive laws of the State of Arizona (without
reference to choice of law principles) and, to the extent they preempt the laws
of such state, the laws of the United States. This Note is given and accepted as
evidence of indebtedness only and not in payment or satisfaction of any
indebtedness or obligation.
Any notice required or permitted to be given under this Note shall be in
writing, and shall be: (a) personally delivered or delivered by courier service
to the party being notified if an individual or to an officer or general partner
of the party if a corporation or partnership; or (b) transmitted by postage
prepaid, certified or registered mail to the party at its address set forth in
this Note or such other address as the party being notified may have otherwise
designated in a notice given as provided in this paragraph. Such notice shall be
deemed to be effective upon: (x) the date of receipt, or (y) the date three (3)
days after posting if transmitted by mail, whichever shall first occur. The
address for notice purposes for Maker shall be c/o Mr. Thomas W. Freeze, Poore
Brothers, Inc., 3500 South La Cometa, Goodyear, Arizona 85338.
MAKER: POORE BROTHERS, INC.,
a Delaware corporation
By
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Its
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement"), dated effective as of
June 8, 2000 (the "Effective Date") is by and between BOULDER NATURAL FOODS,
INC., an Arizona corporation ("Obligor"), and BOULDER POTATO CORPORATION, a
Colorado corporation ("Secured Party").
R E C I T A L S:
A. Pursuant to the transactions contemplated in that certain Agreement for
the Purchase and Sale of Assets, dated June 8, 2000, by and among Obligor's
parent corporation, Poore Brothers, Inc., a Delaware corporation ("Poore
Brothers"), and Secured Party (the "Sale Agreement"), Obligor has issued, as a
co-maker with Poore Brothers, to Secured Party a Secured Promissory Note of even
date with this Agreement in the original principal amount of Eight Hundred
Thirty Thousand and No/100 Dollars ($830,000.00), (the "Note"). All capitalized
terms not defined in this Agreement shall have the meanings given to them in the
Sale Agreement.
B. Obligor agreed pursuant to the Sale Agreement, as an inducement to
Secured Party to accept the Note, to grant to Secured Party a secured lien and
security interest in certain assets of Obligor to secure its performance under
the Note.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and confessed by Obligor, Obligor
and Secured Party (collectively, the "Parties", each a "Party") agree as
follows:
1. GRANT OF SECURITY INTEREST; COLLATERAL. To secure the Obligations (as
defined below), Obligor hereby grants to Secured Party a security interest in
all of the personal property described on EXHIBIT "A" attached hereto (the
"Collateral"), together with all proceeds of the foregoing, including, but not
limited to, all proceeds of any insurance covering the Collateral.
2. OBLIGATIONS. The obligations secured by this Agreement (the
"Obligations") are the following: (a) the obligations, indebtedness and
liabilities of Obligor to Secured Party evidenced by the Note; (b) the
obligations, indebtedness and liabilities of Obligor to Secured Party evidenced
by this Security Agreement; and (c) all reasonable costs and expenses,
including, without limitation, all reasonable attorneys' fees and legal
expenses, incurred by Secured Party to preserve and maintain the Collateral,
collect the Obligations and enforce this Security Agreement.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Obligor represents, warrants
and agrees (and at all times prior to the payment and performance in full of the
Obligations shall be deemed to represent, warrant and agree) that:
a. Except as provided herein, Obligor shall defend the Collateral
against any and all claims of any person adverse to the claims of Secured Party
and claiming by or through Obligor and shall maintain and preserve such security
interest until the Obligations are fully satisfied.
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b. Obligor shall take such action and shall acknowledge, execute and
deliver to Secured Party such documents as may be appropriate to maintain a
perfected security interest on the part of Secured Party in the Collateral.
Without limiting the generality of the foregoing, Obligor shall execute the
appropriate financing statements for filing in the Office of the Secretary of
State of Arizona.
c. Obligor shall keep tangible personal property insured against loss
or damage by fire, theft, physical damage, collision and against other similar
risks, in an amount which is commercially reasonable under the circumstances,
and shall have Secured Party named as an additional insured under such insurance
policies.
4. EVENT OF DEFAULT. The occurrence of one or more of the following events
shall constitute an Event of Default (herein so called) under this Agreement:
a. Obligor fails to pay any amount to Secured Party under the Note or
this Agreement on the date such payment is due and thereafter Secured Party
gives written notice to Obligor of such late payment and such default continues
for fifteen (15) days after Obligor's receipt of such notice from Secured Party
in accordance with Section 9 below; or
b. Obligor fails to perform any other obligation of Obligor that is
set forth in the Note or this Agreement within sixty (60) days after Obligor's
receipt of written notice from Secured Party of Obligor's non-performance in
accordance with Section 10 below.
5. REMEDIES. Upon the occurrence of an Event of Default (after taking into
account of all applicable notice and cure periods) and during the continuation
of such an Event of Default, Secured Party shall have all the rights and
remedies afforded to a secured party under the Code and may otherwise pursue any
legal or equitable remedy available to collect all sums secured by this
Agreement and to enforce its title and right to possession of the Collateral.
6. HEADINGS. The Section headings in this Agreement are for the purpose of
reference only, and shall not limit or otherwise affect the meaning of this
Agreement.
7. INDULGENCES, NOT WAIVERS. Neither the failure nor the delay of any Party
to exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the Party asserted to have granted such waiver.
8. TERMINATION. This Agreement and the lien and security interest granted
hereby shall terminate upon the full satisfaction of all of the Obligations and
at that time Secured Party shall file and record all termination statements as
shall be necessary to give notice of such termination.
9. NOTICES. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received when personally delivered
against receipt, delivered by reputable overnight courier (e.g., Federal
Express) or three (3) days after mailing by registered or certified mail,
postage prepaid, return receipt requested, addressed as set forth below:
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If to Obligor: Boulder Natural Foods, Inc
Attn: Mr. Eric J. Kufel
3500 South La Cometa Dr.
Goodyear, Arizona 85338
With copy to: Mariscal, Weeks, McIntyre & Friedlander, P.A.
Attn: Fred C. Fathe, Esq.
2901 North Central Avenue
Suite 200
Phoenix, Arizona 85012-2705
If to Secured Party: Boulder Potato Company
Attn: Mr. Mark C. Maggio
1898 South Flatiron Court, #120
Boulder, Colorado 80301
With copy to: Maggio & Fox
Attn: Frank P. Maggio, Esq.
501 Seventh Street
Suite 501, Amcore Financial Plaza
Rockford, Illinois 61104
Any Party may alter the address to which communications or copies are to be sent
by giving notice of that change of address in conformity with the provisions of
this Section 10 for the giving of notice.
10. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the Parties and their respective heirs, successors and assigns.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the Parties with respect to pledging the Collateral and
supersedes all other prior and contemporaneous agreements, notes,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to pledging the Collateral. The express
terms of this Agreement control and supersede any course of performance or usage
of the trade inconsistent with any of the terms hereof. This Agreement may not
be modified or amended other than by an agreement in writing between the
Parties.
12. PROVISIONS SEVERABLE; TIME OF ESSENCE. The provisions of this Agreement
are independent of and severable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part. Further, if a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable as written, the court
may interpret, construe, rewrite or revise such provision, to the fullest extent
allowed by law, so as to make it valid and enforceable consistent with the
intent of the parties. Time is of the essence with respect to every obligation
of Obligor under this Agreement. No representation, promise, inducement or
statement of intention has been made by any party hereto which is not embodied
in this Agreement, and no party hereto shall be bound by or liable for any
alleged misrepresentation, promise, inducement or statement of intention not so
set forth.
13. ATTORNEYS' FEES. Should any proceeding or litigation be commenced
between the Parties concerning the terms of this Agreement, or the rights and
duties of the Parties, the prevailing Party in such proceeding or litigation
shall be entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for the prevailing Party's attorneys' fees and expert
witness fees, along with all other costs of the action.
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14. RECITALS; EXHIBITS. The prefatory language, recitals and exhibits made
and stated in or attached to this Agreement are hereby incorporated by reference
into, and made a part of, this Agreement.
15. GOVERNING LAW; APPLICABLE JURISDICTION. THIS SECURITY AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA
AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ANY ACTION OR
PROCEEDING AGAINST OBLIGOR UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT
OR ANY OTHER INSTRUMENT OR AGREEMENT SECURING, EVIDENCING OR RELATING TO THE
OBLIGATIONS OR ANY PART THEREOF MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN
MARICOPA COUNTY, ARIZONA. OBLIGOR HEREBY IRREVOCABLY (I) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF SUCH COURTS, AND (II) WAIVES ANY OBJECTION IT MAY
NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT
IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. OBLIGOR AGREES THAT
SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 9 OF THIS SECURITY AGREEMENT. NOTHING IN THIS SECURITY
AGREEMENT OR ANY OTHER INSTRUMENT OR AGREEMENT SECURING, EVIDENCING OR RELATING
TO THE OBLIGATIONS OR ANY PART THEREOF SHALL AFFECT THE RIGHT OF SECURED PARTIES
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
OF SECURED PARTIES TO BRING ANY ACTION OR PROCEEDING AGAINST OBLIGOR OR WITH
RESPECT TO ANY OF THE COLLATERAL IN ANY STATE OR FEDERAL COURT IN ANY OTHER
JURISDICTION. ANY ACTION OR PROCEEDING BY OBLIGOR AGAINST SECURED PARTIES SHALL
BE BROUGHT ONLY IN A COURT LOCATED IN MARICOPA COUNTY, ARIZONA.
16. COUNTERPARTS. This Security Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument. The Parties agree that this Security
Agreement may be transmitted between the Parties via telecopy. The Parties
intend that any faxed signatures on this Security Agreement shall constitute
original signatures and that a faxed agreement containing the signatures
(original or faxed) of all the Parties is binding upon the Parties.
IN WITNESS WHEREOF, the undersigned have caused this Security Agreement to
be duly executed as of the date first above written.
OBLIGOR: BOULDER NATURAL FOODS, INC., an
Arizona corporation,
By:
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SECURED PARTY: BOULDER POTATO COMPANY, a
Colorado corporation
By:
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