Exhibit 10.4


 


PROMISSORY
NOTE


(Facility
2 - Term  Loan)


 


	
  $756,602.56

  	
  August 19, 2005

  	
  Phoenix, Arizona

  



 


1.             Borrower’s
Promise To Pay.


 


FOR VALUE RECEIVED, POORE BROTHERS, INC., a Delaware
corporation (the “Borrower”), promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association (the “Bank”), at 101 N. First Avenue, Suite 1600, Phoenix,
Arizona  85003, Attention: 
Commercial Banking, or at such other place as the holder of this
Note may from time to time designate, the principal sum of Seven Hundred Fifty
Six Thousand Six Hundred and Two and 56/100 Dollars ($756,602.56) (“Loan Amount”), or such lesser amount as
may be advanced and outstanding under this promissory note (the “Note”), plus
interest as specified in this Note.  Bank
shall not be required to make any advance if that would cause the outstanding
principal of this Note to exceed the Loan Amount.  This Note evidences a term
loan (“Loan”) made by Bank to Borrower
pursuant to the terms of a loan agreement (the “Loan Agreement”) between Bank
and Borrower of even date herewith.  During the availability period described in the
Loan Agreement, Borrower may repay principal amounts and reborrow them upon the
terms and conditions set forth in the Loan Agreement.


 


This
Note is secured by a certain Security Agreement (Blanket - All Business Assets) being executed by Borrower in favor
of Bank dated of even date herewith (the “Security Agreement”) and may be
secured by other collateral.  This Note and the Loan Agreement,
together with all other documents which evidence, guaranty, secure, or
otherwise pertain to the Loan collectively constitute the “Loan Documents.”  Some or
all of the Loan Documents, including the Loan Agreement, contain provisions for
the acceleration of the maturity of this Note. 
This Note is subject to the terms and conditions of the Loan
Agreement.  Capitalized terms used but
not defined herein shall have the meanings set forth in the Loan Agreement.


 


2.             Maturity
Date.  All principal and all accrued and unpaid interest and other sums due
hereunder shall be due and payable on July 1, 2006 (the “Maturity Date”).


 


3.             Interest
Rate and Payment Terms.


 


3.1          Interest
Rate.  The unpaid principal
balance will bear interest at an annual rate equal to the prime rate announced by
Bank.  The interest rate hereunder will
be adjusted each time that the prime rate changes.


 


3.2          Payment
of Principal Plus Interest. 
Borrower shall make monthly payments of principal plus interest
on the first day of each month beginning on September 1, 2005.  The
principal portion of each monthly installment is Sixty Eight
Thousand Seven Hundred Eighty Two and 05/100 Dollars ($68,782.05)


 


3.3          Principal
Prepayments.  Borrower may prepay
some or all of the principal under this Note, from time to time, without
payment of any prepayment premium or fee.


 


4.             General
Interest and Payment Terms.


 


4.1          Note Rate.  The interest rate in effect from time to time
under this note is herein referred to as the “Note Rate.”


 


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4.2          Effective Contracted Rate.  Borrower
agrees to pay an effective contracted for rate of interest equal to the rate of
interest resulting from all interest payable as provided in this Note plus
the additional rate of interest resulting from (a) any loan fee(s) or other
similar fees described or defined in the Loan Documents, and (b) all Other
Sums.  For purposes hereof, the “Other
Sums” shall mean all fees, charges, goods, things in action, or any other sums
or things of value (other than interest payable as provided in this Note and
any loan fee) paid or payable by Borrower, whether pursuant to this Note, any
of the other Loan Documents, or any other document or instrument in any way
pertaining to this lending transaction, that may be deemed to be interest for
the purpose of any law of the State of Arizona, or any other applicable
law, that may limit the maximum amount of
interest to be charged with respect to this lending transaction.  The Other Sums shall be deemed to be interest
and part of the “contracted for rate of interest” for the purposes of any such
law only.


 


4.3          Usury Savings Clause.  It is expressly stipulated and agreed to be
the intent of Borrower and Bank at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits Bank
to contract for, charge, take, reserve, or receive greater amount of interest
than under state law) and that this Section shall control every other covenant
and agreement in this Note and the other Loan Documents.  If applicable state or federal law should at
any time be judicially interpreted so as to render usurious any amount charged,
taken, reserved, or received with respect to the Loan, or if Bank’s exercise of
the option to accelerate the Maturity Date, or if any prepayment by Borrower,
results in Borrower having paid any interest in excess of that permitted by
applicable law, then it is Bank’s express intent that all such excess amounts
theretofore collected by Bank shall be credited to the principal balance of
this Note and all other indebtedness, and that the provisions of this Note and
the other Loan Documents shall immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new documents, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder or thereunder.  All sums paid
or agreed to be paid to Bank for the use, forbearance, or detention of the Loan
shall, to the extent not prohibited by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the maximum lawful rate from time to time in effect and applicable to
the Loan for so long as the Loan is outstanding.


 


4.4          Calculation of Interest.  Interest will be computed for the actual days
elapsed on the basis of a three hundred sixty (360) day year, which results in
more interest than if a three hundred sixty-five (365) day year method were
used.


 


4.5          Payments.  Except as otherwise provided herein, all amounts payable under this Note are payable in
lawful money of the United States during normal business hours on a Banking
Day.  For purposes hereof, “Banking Day”
means a day, other than a Saturday or Sunday, on which Bank is open for
business for all banking functions in Phoenix,
Arizona.  Checks and drafts constitute
payment only when collected.  All payments
made under this Note shall be made without offset, demand, counter-claim,
deduction or recoupment (each of which is hereby waived), and acceptance by
Bank of any payment in an amount less than the amount then due shall be deemed
an acceptance on account only, notwithstanding any notation on or accompanying
such partial payment to the contrary, and shall not constitute a waiver by Bank
of any Event of Default.  Except as
otherwise set forth herein or in any other Loan Document, payments shall be
applied in such order and manner as Bank may determine in its sole and absolute
discretion.


 


5.             Late
Payments; Default Rate


 


5.1          Late
Charge for Overdue Payments. If Bank has not received the full amount
of any payment scheduled to be made under
this Note, other than the final principal payment, by the end of ten
(10) calendar days after the date it is due, Borrower shall pay a late charge
to Bank in the amount of five percent (5%) of the overdue payment; provided,
however, in no event shall any late charge be payable hereunder without
Bank first having provided Borrower with any notice required by applicable
law.  Borrower shall pay this late charge
only once on any late payment.  This late
charge shall not be construed as in any way extending the due date of any payment,
and is in addition to, and not in lieu of, any other remedy Bank may have.


 


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5.2          Default
Rate. Upon the occurrence of any
Event of Default (subject to any applicable notice and cure periods),
the unpaid balance of the Loan shall bear interest at the rate which is five
percent (5%) above the then applicable Note Rate as it may thereafter change
pursuant to the terms of this Note (the “Default Rate”).  Additionally, from and after the Maturity
Date, or such earlier date as all sums owing on this Note become due and
payable by acceleration or otherwise, the Loan shall bear interest at the
Default Rate.  Accrued interest, at the
Note Rate, if not paid when due, shall accrue interest at the Default Rate, as hereinabove
provided, which may result in compounding of interest.  Except as
otherwise set forth herein or in any other Loan Document, payments under
this Note or under any other Loan Document that are due on demand, shall bear
interest at the Default Rate (i) from the date costs or expenses are incurred
by Bank that give rise to the demand or (ii) if there is no such date, then
from the date of demand, until Borrower pays the full amount of such payment,
including interest.


 


6.             Events
of Default.  If any of the
following “Events of Default” occur, any obligation of the holder to make
advances under this Note terminates and, at the holder’s option, exercisable in
its sole and absolute discretion, all sums of principal and interest under this
note immediately become due and payable without notice of default, presentment,
demand for payment, protest, or notice of nonpayment or dishonor, or other
notices or demands of any kind or character:


 


6.1          Borrower
fails to perform any obligation under this Note to pay principal or interest
when due; or


 


6.2          Borrower
fails to perform any other obligation under this Note to pay money when due; or


 


6.3          Under
any of the Loan Documents, a default or Event of Default occurs, except as
provided in Section 7 below.


 


7.             Insolvency.  It is an “Event of Default” under this Note
if Borrower becomes the subject of any bankruptcy or other voluntary or
involuntary proceeding, in or out of court, for the adjustment of
debtor-creditor relationships (“Insolvency Proceeding”), and as to any involuntary
Insolvency Proceeding, it either: (i) is consented to or (ii) has not been
dismissed within ninety (90) days.  Upon
such an Event of Default, all sums of principal and interest under this Note
automatically become immediately due and payable without notice of default,
presentment or demand for payment, protest or notice of nonpayment or dishonor,
or other notices or demands of any kind or character.  If Borrower becomes the subject of any
Insolvency Proceeding, any obligation of the holder to make advances under this
Note shall automatically terminate, and in the case of an involuntary
Insolvency Proceeding which is dismissed within ninety (90) days, the holder’s
obligation to make advances under this Note shall resume upon the dismissal
thereof.


 


8.             Waiver
of Jury Trial.  TO THE EXTENT NOT
PROHIBITED BY APPLICABLE LAW, BORROWER WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH BORROWER AND BANK MAY BE PARTIES, ARISING OUT OF, IN
CONNECTION WITH OR IN ANY WAY PERTAINING TO, THIS NOTE, THE LOAN AGREEMENT, OR
ANY OF THE OTHER LOAN DOCUMENTS.  IT IS
AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF
ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTION OR PROCEEDINGS, INCLUDING CLAIMS
AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE.  THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY BORROWER, AND BORROWER HEREBY REPRESENTS THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT.  BORROWER FURTHER REPRESENTS AND
WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY
TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL,
AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.


 


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9.             Miscellaneous.


 


9.1          Waivers.  Borrower hereby waives presentment, demand,
notice of dishonor, notice of default or delinquency, notice of acceleration,
notice of nonpayment, notice of costs, expenses, or losses and interest
thereon; and notice of interest on interest and late charges.


 


9.2          Delay
In Enforcement.  If Bank delays
in exercising or fails to exercise any of its rights under this Note, that
delay or failure does not constitute a waiver of any of Bank’s rights, or of
any breach, default or failure of condition of or under this Note.  No waiver by Bank of any of its rights, or of
any breach, default or failure of condition is effective, unless the waiver is
expressly stated in writing by Bank.


 


9.3          Joint
and Several Liability.  If more
than one person or entity is signing this Note as Borrower, their obligations
under this Note shall be joint and several.  
As to any Borrower that is a partnership, the obligations of Borrower
under this Note are the joint and several obligations of each general partner
thereof.  Any married person signing this
Note agrees that recourse may be had against community property assets and
against his or her separate property for the satisfaction of all obligations
contained herein.


 


9.4          Heirs,
Successors, and Assigns; Participations.  This Note inures to and binds the heirs,
legal representatives, successors and assigns of Borrower and Bank; provided,
however, Borrower may not assign this Note or any Loan funds, or assign
or delegate any of its rights or obligations, without the prior written consent
of Bank in each instance, which consent is at the sole and absolute discretion
of Bank.  Bank, in its sole and absolute
discretion, may transfer this Note, and may sell or assign participations or
other interests in all or part of the Loan, on the terms and subject to the
conditions of the Loan Documents, all without notice to or the consent of
Borrower.  Without notice to or the
consent of Borrower, Bank may disclose to any actual or prospective purchaser
of any securities issued or to be issued by Bank or its affiliates, and to any
actual or prospective purchaser or assignee of any participation or other
interest in this Note, the Loan, or any other loans made by Bank to Borrower
(whether evidenced by this Note or otherwise), any financial or other
information, data or material in Bank’s possession relating to Borrower, or the
Loan.  If Bank so requests, Borrower
shall sign and deliver a new note, in the form and substance of this Note, to
be issued in exchange for this Note.


 


9.5          Cumulative
Remedies.  All of Bank’s remedies
in connection with this Note or under applicable law are cumulative, and Bank’s
exercise of any one or more of those remedies shall not constitute an election
of remedies.


 


9.6          Governing
Law.  This Note shall be governed
by, and construed in accordance with, the laws of the State of Arizona, without
regard to the choice of law rules of that State, except to the extent that any
of such laws may now or hereafter be preempted by Federal law.  Borrower consents to the jurisdiction of any
Federal or State court within the State of Arizona, submits to venue in such
state, and also consents to service of process by any means authorized by
Federal law or the law of such state.  Without limiting the generality of the foregoing,
Borrower hereby waives and agrees
not to assert by way of motion, defense, or otherwise in such suit, action, or
proceeding, any claim that (i) Borrower is not subject to the jurisdiction of the courts of the
above-referenced state or the United States District Court for such state, or
(ii) such suit, action, or proceeding is brought in an inconvenient forum, or
(iii) the venue of such suit, action, or proceeding is improper.


 


9.7          Attorney’s
Fees and Costs.  In any lawsuit
or arbitration arising out of or relating to this Note, the Loan Documents or
the Loan, the prevailing party will be entitled to recover from each other
party such sums as the court or arbitrator adjudges to be reasonable attorneys’
fees in the action or arbitration, in addition to costs and expenses otherwise
allowed by law.  In all other actions or
proceedings, including any matter arising out of or relating to any Insolvency
Proceeding, Borrower agrees to pay all of Bank’s costs and expenses, including
reasonable attorneys’ fees, incurred in enforcing or protecting Bank’s rights
or interests.  From the time(s) incurred
until paid in full to Bank, all such sums shall bear interest at the Default
Rate.  Whenever
Borrower is obligated to pay or reimburse Bank for any attorneys’ fees, those
fees shall include the allocated costs for services of in-house counsel.


 


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9.8          Holder’s
Rights.  Borrower agrees that the holder of this Note may accept additional or
substitute security for this Note, or release any security or any party liable
for this Note, or extend or renew this Note, all without notice to Borrower and
without affecting the liability of Borrower.


 


9.9          Interpretation.  As used
in this Note, the terms “Bank,” “holder” and “holder of this Note” are
interchangeable.  As used in this Note,
the word “include(s)” means “include(s), without limitation,” and the word “including”
means “including, but not limited to.”


 


9.10        Time
of the Essence.  Time is of the essence with regard to all payment
obligations under this Note.


 


9.11        Amendments.  This Note may not be modified or amended except
by a written agreement signed by the parties.


 


9.12        Counterparts.  This Note may be executed in counterparts,
and all counterparts constitute but one and the same document.


 


IN WITNESS WHEREOF,
Borrower has duly executed and delivered this Note to Bank as of the date first
above written.


 


	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
  POORE
  BROTHERS, INC.,

  	
  Address
  for notices to Borrower:

  

  Poore Brothers, Inc.,

  3500 S La Cometa Drive

  Goodyear, Arizona  85338

  Attention:  Rick Finkbeiner

  

  Tax I.D. # 86-0786101

  
	
  a Delaware corporation

  
	
   

  
	
  By:

  	
  /s/ Rick Finkbeiner

  	
   

  
	
   

  	
  Rick Finkbeiner, Senior
  Vice President,

  Chief Financial Officer, Secretary, and

  Treasurer

  
				



 


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