Promissory Note - Pyramid Breweries Inc. and Martin Kelly
PROMISSORY NOTE
$786,818 Seattle, Washington
June 19, 2001
FOR VALUE RECEIVED, Martin Kelly ("Maker") promises to pay to the order of
Pyramid Breweries, Inc. (the "Holder"), the principal sum of Seven Hundred
Eighty Six Thousand Eight Hundred Eighteen and no/100 Dollars ($786,818) upon
the terms and conditions set forth below.
1. PAYMENT OF PRINCIPAL AND INTEREST. If not sooner paid, the
outstanding principal balance of this Note (the "Outstanding Principal Balance")
and any accrued interest thereon shall be due and payable on June 30, 2011 (the
"Maturity Date"), unless the Maturity Date is accelerated pursuant to Section 4
hereof. This Note may be prepaid, in whole or in part, without payment of any
penalty or premium.
Interest shall accrue on the Outstanding Principal Balance from the date
hereof until the date the Note is paid in full, at the rate of 5.6%per annum
simple interest (365 day basis). Payments of accrued interest shall be paid
quarterly on January 31, April 30, July 31, and October 31 of each year that the
principal balance of the Note remains unpaid. All cash payments received by
Holder in respect of this Note shall be applied first to accrued interest and
thereafter to the repayment of principal.
2. SECURITY. This Note is secured by the pledge of 387,400 shares of
common stock of the Holder and is subject to the terms of that Stock Purchase
and Restriction Agreement dated June 19, 2001 between Maker and Holder ("Stock
Restriction Agreement"). In the event that Maker defaults under this Note and
Holder exercises its rights with respect to the collateral, Maker shall remain
personally liable for any deficiency in the payment of the principal balance and
accrued interest on this Note.
3. ACCELERATION OF MATURITY DATE. Holder may, upon written notice to
Maker, declare all outstanding principal and interest on this Note to be
immediately due and payable in the event that:
a. Maker's employment with the Company is terminated for Cause
as defined in the Stock Restriction Agreement, or
b. an Event of Default occurs.
4. DEFAULT. An Event of Default shall occur if:
a. Maker fails to make a payment of interest or principal due
hereunder in a timely manner and such failure continues for fifteen calendar
days following the date written notice of such breach is first given by Holder
to Maker, or
b. Maker commits a breach of the provisions of Section 9 of the
Stock Restriction Agreement and such breach is not cured within fifteen calendar
days following the date written notice of such breach is first given by Holder
to Maker.
5. GOVERNING LAW. This Note shall be governed by and construed in
accordance with, and all actions arising therefrom shall be governed by, the
laws of the State of Washington.
<PAGE>
6. WAIVER AND AMENDMENT. The provisions of this Note may be amended,
waived or modified only upon the written consent of the Holder and Maker.
7. NOTICES. All notices provided for in this Note shall be in writing
and deemed to be duly given upon (i) personal delivery or delivery by courier,
or (ii) five (5) days after deposit in the United States mail, certified or
registered, postage prepaid. Notices shall be addressed (i) if to the Maker, at
his address in the Stock Restriction Agreement or (ii) if to the Holder, to the
address of its principal corporate offices (attn: Chief Financial Officer), or
to such other address as such party may designate by ten (10) days advance
written notice to the other party.
8. USURY. In the event any interest is paid on this Note which is
deemed to be in excess of the then legal maximum rate, then that portion of the
interest payment representing an amount in excess of the then legal maximum rate
shall be deemed a payment of principal and applied against the principal of this
Note.
9. HEADINGS. Headings used in this Note have been included for
convenience and ease of reference only, and will not in any manner influence the
construction or interpretation of any provision of this Note.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM FORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
Issued as of the date first written above.
----------------------------------------
Martin Kelly