Variable Rate Installment Note

AMENDED AND RESTATED
VARIABLE RATE INSTALLMENT NOTE


AMOUNT $4,000,000.00 NOTE DATE OCTOBER 14, 1997 MATURITY DATE OCTOBER 1, 2002 (AS AMENDED AND RESTATED ON APRIL 20, 2000) (U.S.) TAX IDENTIFICATION 39-1679918


For Value Received, the undersigned promise(s) to pay to the order of Comerica Bank California ("Bank"), at any office of the Bank in the State of California, Four Million Dollars and No Cents ($4,000,000.00) (U.S.) in installments in the amounts set forth in the next succeeding sentence, plus interest on the unpaid balance from the date of this Note at a per annum rate equal to the Bank's base rate from time to time in effect from time to time, plus one-half of a percentage point (0.500%) per annum until maturity, whether by acceleration or otherwise, or until Default, as later defined, and after that at a default rate equal to the rate of interest otherwise prevailing under this Note plus 3% per annum. (but in no event in excess of the maximum rate permitted by law). Payments of principal on the Note shall be made in monthly payments as follows: (i) $41,667.00 beginning on November 1, 1997 and on the first day of each calendar month thereafter until October 1, 1998; (ii) $50,000.00 beginning on November 1, 1998 and on the first day of each calendar month thereafter until October 1, 1999; (iii) $58,333.00 beginning on November 1, 1999 and on the first day of each calendar month thereafter until October 1, 2000; (iv) $66,667.00 beginning on November 1, 2000 and on the first day of each calendar month thereafter until October 1, 2001; and (v) $116,666 beginning on November 1, 2001 and on the first day of each calendar month thereafter until September 1, 2002 (each of the payment dates described in clauses (i) through (v), a "Payment Date"); and (vi) a final payment of all remaining principal on October 1, 2002, or such earlier Payment Date as all of the principal on the Note shall have been paid in full (the "Maturity Date") . Each such payment of principal on the Note shall be accompanied by a payment of accrued interest thereon, and all accrued but unpaid interest, fees and costs shall be due on the Maturity Date. Interest shall be calculated for the actual number of days the principal is outstanding on the basis of a 360 day year if this Note evidences a business or commercial loan or a 365 day year if a consumer loan. The Bank's "base rate" is that annual rate of interest so designated by the Bank and which is changed by the Bank from time to time. Interest rate changes will be effective for interest computation purposes as and when the Bank's base rate changes. If the frequency of principal and interest installments is not otherwise specified, installments of principal and interest due under this Note shall be payable monthly on the first day of each month.


In addition to the payments of principal set forth above, the undersigned agrees to make additional mandatory prepayments of principal as follows:


(a) within five business days of a full or partial repayment of the indebtedness of the undersigned to ERLY Industries, Inc., 100 percent of the amount by which the reduction of the outstanding balance of such indebtedness by virtue of such full or partial repayment exceeds the amount of the consideration paid to ERLY Industries, Inc. in connection with such full or partial repayment; and


(b) within five business days of any sale or other transfer of any assets of the undersigned, 100 percent of the proceeds thereof, net of reasonable transaction costs of such transaction provided, however, that the foregoing shall not be deemed a waiver by the Bank the requirement that the undersigned obtain the prior written consent of the Bank in connection with any such sale; and


(c) within five business days of any sale of equity securities of the undersigned, 100 percent of the proceeds of such sale net of reasonable costs of such transaction.


The additional mandatory principal prepayments described in subparagraphs (a), (b) and (c) of the preceding paragraph are referred to as Mandatory Principal Prepayments. Each Mandatory Principal Prepayment shall be applied to the payment of principal last coming due, and accordingly shall not reduce the amount of any scheduled prior payment of principal due on this Note.


If this Note or any installment under this Note shall become payable on a day other than a day on which the Bank is open for business, this payment may be extended to the next succeeding business day and interest shall be payable at the rate specified in this Note during this extension. Any payments of principal in excess of the installment payments required under this Note need not be accepted by the Bank (except as required under applicable law), but if accepted shall apply to the installments last falling due. A late installment charge equal to 5% of each late installment may be charged on any installment payment not received by the Bank within 10 calendar days after the installment due date, but acceptance of payment of this charge shall not waive any default under this Note.


This Note and any other indebtedness and liabilities of any kind of the undersigned (or any of them) to the Bank, an ...