<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q



                   Quarterly Report under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


For The Quarterly Period Ended September 30, 1997 Commission file number 0-18761



                           HANSEN NATURAL CORPORATION
             (Exact name of registrant as specified in its charter)


        Delaware                                             39-1679918
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           Identification No.)

2401 East Katella Avenue, Suite 650
    Anaheim, California                                       92806
(Address of principal executive offices)                   (Zip Code)


                                 (714) 634-4200
              (Registrant's telephone number, including area code)



 Indicate by check mark whether the registrant (1) has filed all reports
 required  to be filed by Section 13 or 15(d) of the  Securities  Exchange
 Act of 1934 during the  preceding 12 months (or for such  shorter  period
 that the  registrant  was required to file such reports) and (2) has been
 subject to such filing requirements for the past 90 days.


                               Yes X     No
                                  ----     ----



               The registrant has 9,122,868 shares of common stock
                       outstanding as of November 1, 1997




<PAGE>

                  HANSEN NATURAL CORPORATION AND SUBSIDIARIES
                               September 30, 1997

                                     INDEX



                                                                     Page No.
                                                                    ----------

Part I.     FINANCIAL INFORMATION


Item 1.     Consolidated Financial Statements

            Consolidated Balance Sheets as of September 30, 1997
            and December 31, 1996                                         3

            Consolidated Statements of Operations for the three
            and nine months ended September 30, 1997 and 1996             4

            Consolidated Statements of Cash Flows for the
            nine months ended September 30, 1997 and 1996                 5

            Notes to Consolidated Financial Statements                    6


Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                           8



Part II.    OTHER INFORMATION


Items 1-5.  Not Applicable                                               13


Item 6.     Exhibits and Reports on Form 8-K                             13

            Signature                                                    13



<PAGE>


HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                        September 30,     December 31,
                                                                            1997              1996
                                                                       --------------    --------------
<S>                                                                   <C>                <C>
ASSETS

CURRENT ASSETS:
Cash                                                                   $    514,569       $    186,931
Accounts receivable (net of allowance for doubtful
   accounts, sales returns and cash discounts of $323,040
   in 1997 and $234,749 in 1996 and promotional allowances
   of $1,302,766 in 1997 and $926,045 in 1996)                            2,100,124            944,227
Inventories                                                               3,432,690          3,111,124
Prepaid expenses and other current assets                                   478,316            331,869
                                                                       -------------      -------------
   Total current assets                                                   6,525,699          4,574,151

PLANT AND EQUIPMENT, net                                                    493,211            602,272

INTANGIBLE AND OTHER ASSETS:
Trademark license and trademarks (net of accumulated amortization
   of $2,310,140 in 1997 and $2,089,641 in 1996)                         10,319,201         10,459,144
Notes receivable from officers                                               67,857             70,153

Deposits and other assets                                                   485,879            403,353
                                                                       -------------      -------------
   Total intangible and other assets                                     10,872,937         10,932,650
                                                                       =============      =============
                                                                       $ 17,891,847       $ 16,109,073
                                                                       =============      =============

LIABILITIES & SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Short-term borrowings                                                  $    716,294       $    893,429
Accounts payable                                                          2,773,443          2,139,050
Accrued liabilities and deferred income taxes                               527,534            200,602
Current portion of long-term debt (net of unamortized
   premium of $48,541 in 1996)                                              462,584          4,048,541
                                                                       --------------     -------------
   Total current liabilities                                              4,479,855          7,281,622

LONG-TERM DEBT                                                            3,550,389

SHAREHOLDERS' EQUITY:
Common stock - $.005 par value; 30,000,000 shares
   authorized; 9,122,868 shares issued and outstanding                       45,614             45,614
Additional paid-in capital                                               10,847,355         10,847,355
Accumulated deficit                                                      (1,041,372)        (2,126,100)
Foreign currency translation adjustment                                      10,006             60,582
                                                                       --------------     -------------
   Total shareholders' equity                                             9,861,603          8,827,451
                                                                       --------------     -------------
                                                                       $ 17,891,847       $ 16,109,073
                                                                       ==============     =============
          See accompanying notes to consolidated financial statements.
</TABLE>


                                       3

<PAGE>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>


                                                      Three Months Ended                    Nine Months Ended
                                                         September 30,                        September 30,
                                                 ---------------------------------   -------------------------------
                                                       1997               1996            1997             1996
<S>                                             <C>                <C>              <C>              <C>
                                                 ---------------    --------------   --------------   --------------

NET SALES                                        $   13,438,895     $  10,805,021    $  32,054,709    $  28,574,757

COST OF SALES                                         7,924,398         6,507,371       18,952,135       17,367,924
                                                 ---------------    --------------   --------------   --------------

GROSS PROFIT                                          5,514,497         4,297,650       13,102,574       11,206,833

OPERATING EXPENSES:
Selling, general and administrative                   4,725,864         3,898,036       11,122,820        9,899,684
Amortization of trademark license and trademarks         73,500            73,200          220,500          323,329
Other expenses                                           36,704            74,292          183,839          222,873
                                                 ---------------    --------------   --------------   --------------

     Total operating expenses                         4,836,068         4,045,528       11,527,159       10,445,886
                                                 ---------------    --------------   --------------   --------------

OPERATING INCOME                                        678,429           252,122        1,575,415          760,947

NONOPERATING EXPENSE:
Net interest and financing expense                      140,376           140,786          413,443          460,024
Other expense (income)                                   37,044                             37,044         (232,683)
                                                 ---------------    --------------   --------------   --------------

     Net nonoperating expense                           177,420           140,786          450,487          227,341

INCOME BEFORE PROVISION
     FOR INCOME TAXES                                   501,009           111,336        1,124,928          533,606

PROVISION FOR INCOME TAXES                                                                  40,200            2,400

                                                 ---------------    --------------   --------------   --------------

NET INCOME                                        $     501,009     $     111,336    $   1,084,728    $     531,206
                                                 ===============    ==============   ==============   ==============


NET INCOME PER COMMON SHARE:
     Primary                                      $        0.05     $        0.01    $        0.12    $        0.06
                                                 ===============    ==============   ==============   ==============
     Fully Diluted                                $        0.05     $        0.01    $        0.11    $        0.06
                                                 ===============    ==============   ==============   ==============


NUMBER OF COMMON SHARES USED
     IN PER SHARE COMPUTATIONS:
     Primary                                          9,325,098         9,522,188        9,202,929        9,400,050
                                                 ===============    ==============   ==============   ==============
     Fully Diluted                                    9,505,437         9,522,188        9,505,437        9,400,050
                                                 ===============    ==============   ==============   ==============
          See accompanying notes to consolidated financial statements.
</TABLE>



                                       4

<PAGE>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                          1997             1996
                                                                     --------------      ------------
<S>                                                                <C>                  <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                           $   1,084,728       $  531,206
Adjustments to reconcile net income to
   net cash provided by (used in) operating activities:
   Amortization of trademark license and trademarks                        220,500          323,329
   Depreciation and other amortization                                     188,022          143,167
   Loss on disposal of plant and equipment                                  37,044            4,613
   Effect on cash of changes in operating assets and liabilities:
     Accounts receivable                                                (1,155,897)         646,825
     Inventories                                                          (321,566)        (502,114)
     Prepaid expenses and other current assets                            (113,557)         235,495
     Accounts payable                                                      634,393         (361,193)
     Accrued liabilities and deferred income taxes                         326,932          210,183
                                                                     --------------      ------------
        Net cash provided by operating activities                          900,599        1,231,511

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment                                           (168,757)         (74,068)
Proceeds from sale of plant and equipment                                   21,320           70,665
Increase in trademark license and trademarks                               (80,556)         (42,631)
Decrease (increase) in notes receivable from officers                        2,296             (752)
Increase in deposits and other assets                                      (82,526)         (62,654)
                                                                     --------------      ------------
        Net cash used in investing activities                             (308,223)        (109,440)

CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term borrowings                                         (177,135)        (998,789)
Increase in long-term debt                                                  14,546
Principal payments on long-term debt                                       (51,573)         (36,966)
                                                                     --------------      ------------
        Net cash used for financing activities                            (214,162)      (1,035,755)

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                    (50,576)          19,208
                                                                     --------------      ------------
NET INCREASE IN CASH                                                       327,638          105,524

CASH, beginning of period                                                  186,931           87,916
                                                                     ==============      ============
CASH, end of period                                                  $     514,569       $  193,440
                                                                     ==============      ============

SUPPLEMENTAL INFORMATION :
Cash paid during the year for:
   Interest                                                          $     276,754       $  340,617
                                                                     ==============      =============
   Income taxes                                                      $       2,400       $    2,400
                                                                     ==============      =============

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
During  the fiscal  year 1997,  the  Company  reclassified  $32,890 of plant and
equipment to prepaid expenses and other current assets.

          See accompanying notes to consolidated financial statements.
</TABLE>



                                       5

<PAGE>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

1.    BASIS OF PRESENTATION

       Reference is made to the Notes to Consolidated  Financial Statements,  in
       the Company's  Form 10-K for the year ended  December 31, 1996,  which is
       incorporated by reference, for a summary of significant policies utilized
       by  Hansen   Natural   Corporation   ("Hansen"  or  "Company")   and  its
       subsidiaries,  Hansen  Beverage  Company  ("HBC") and CVI Ventures,  Inc.
       ("CVI"),  and its  indirect  subsidiary,  Hansen  Beverage  Company  (UK)
       Limited  ("HBC  (UK)").  The  information  set  forth  in  these  interim
       financial  statements is unaudited and may be subject to normal  year-end
       adjustments. The information reflects all adjustments, which include only
       normal  recurring  adjustments,  which in the opinion of  management  are
       necessary to make the financial  statements  not  misleading.  Results of
       operations  covered by this report may not  necessarily  be indicative of
       results of operations for the full fiscal year.

2.    LONG-TERM DEBT

       On June 30,  1997,  HBC entered into a  definitive  agreement  (the "Loan
       Agreement") with a bank (the "Bank") pursuant to which the Bank agreed to
       provide a credit facility to HBC consisting of a revolving line of credit
       (the "Revolver") of up to $3,000,000 in aggregate at any time outstanding
       and a term loan of $4,000,000  (the "Term Loan").  The credit facility is
       secured  by all of  the  assets  of the  Company  and  its  subsidiaries,
       including, but not limited to, accounts receivable,  inventory, machinery
       and equipment,  as well as all trademarks,  trademark licenses,  formulas
       and  recipes  and other  intellectual  property.  The credit  facility is
       guaranteed by the Company, CVI and HBC (UK).

       The initial  proceeds  received under the Revolver were used to refinance
       the  outstanding  balance  due on  HBC's  previous  line of  credit.  The
       Revolver  will expire on May 1, 1998.  The Company  anticipates  that the
       Revolver  will be renewed  on the  expiration  date,  but there can be no
       assurance  that it will,  in fact,  be renewed,  or if renewed,  that the
       terms  of  such  renewal  will  not be  disadvantageous  to HBC  and  its
       business.  The  interest  rate payable on amounts  outstanding  under the
       Revolver  is 1% above  the  Bank's  base  rate as set  from  time to time
       (currently 8.75% per annum).

       The  proceeds  of the  Term  Loan  were  used to  retire  the  $4,000,000
       principal  amount of the note payable to ERLY  Industries,  Inc. due July
       27, 1997 (the "ERLY Note").  The ERLY Note,  including  accrued  interest
       thereon,  was paid on  October  24,  1997.  The Term Loan will  mature in
       October  2002 and requires  monthly  payments of principal in set amounts
       which  escalate  over time plus  payments of a portion of HBC's  adjusted
       cash flow,  from year to year. The interest rate payable on the Term Loan
       is 1.5% above the Bank's base rate as set from time to time.

       In consequence of management's  intent to utilize the Term Loan to retire
       the ERLY Note, the Company reclassified a portion of the amount due under
       the ERLY Note from current  portion of long-term debt to long-term  debt.
       Accordingly,  as of September 30, 1997,  $458,337 of the amount due under
       the ERLY Note is  included  in current  portion of  long-term  debt.  The
       $458,337 included in current portion of long-term debt represents amounts
       due under the Term Loan through September 30, 1998.



                                       6

<PAGE>

HANSEN NATURAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------


3.    LEGAL PROCEEDINGS

       The second  stage of the trial in HBC's action  against ERLY  Industries,
       Inc. ("ERLY") in the Superior Court for the State of California, was held
       in July 1997 for the sole  purpose  of  determining  the  amount of HBC's
       damages,  if any, resulting from ERLY's breach of certain rights of first
       refusal provisions contained in the ERLY Note. In October 1997, the court
       ruled  that  HBC  was  not  entitled  to any  damages.  HBC is  currently
       evaluating whether to appeal that ruling.

4.    SUBSEQUENT EVENT

       As discussed  above in Note 2, the ERLY Note was paid on October 24, 1997
       with proceeds from the Term Loan.

5.    EARNINGS PER SHARE

       The Financial  Accounting  Standards Board recently  issued  Statement of
       Financial  Accounting  Standards No. 128  "Earnings Per Share",  which is
       effective for financial  statements  for both interim and annual  periods
       ending after  December 15, 1997.  Early  adoption of the statement is not
       permitted.  The Company has applied this statement to the results for the
       first, second and third quarters of 1997 and determined that the adoption
       of this  statement  would not have had a material  impact on the earnings
       per share calculations for these periods.


                                       7

<PAGE>

M
ANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------

GENERAL

         During the nine months  ended  September  30,  1997,  the  expansion of
distribution  of certain  of the  Company's  products  into  markets  outside of
California  continued  to  contribute  positively  to the  profitability  of the
Company.  However, both the Company's operations in the United Kingdom and route
distribution system in Southern California continued to incur losses,  albeit at
a lower rate than were  incurred  from these  activities  during the  comparable
nine-month  period ended  September  30, 1996.  During the second  quarter,  the
Company completed the discontinuation of the operation of its route distribution
system.

         During late April 1997,  the Company  introduced  a lightly  carbonated
Energy  drink  in an  8-ounce  slim  can  and  currently  intends  to  introduce
additional  flavors and other types of  beverages  to  complement  its  existing
product lines consistent with the overall image of the Hansen's(R) brand, during
1997.

         On  September  19,  1997,   the  Company   relocated   its   warehouse,
distribution and repacking operations to its facility in Corona, California.

RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
COMPARED TO THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 1996

         Net Sales.  For the  three-month  period ended  September 30, 1997, net
sales were  approximately  $13.4  million,  an increase of $2.6 million or 24.4%
over the $10.8 million net sales for the three-month  period ended September 30,
1996.  The  increase  in net  sales  was  attributable  to  increased  sales  of
Hansen's(R) fruit juice Smoothies and sales of Hansen's(R)  Energy drink,  which
was introduced  during the second quarter of 1997. The increase in net sales was
partially offset by a decrease in net sales of Hansen's(R) apple juice. Sales of
soda and iced teas,  lemonades and juice cocktails were about the same as in the
comparable period in 1996.

         Gross Profit.  Gross profit was $5.5 million for the three-month period
ended  September  30,  1997,  an increase of $1.2 million or 28.3% over the $4.3
million gross profit for the three-month  period ended September 30, 1996. Gross
profit as a  percentage  of net  sales  increased  to 41.0% for the  three-month
period  ended  September  30, 1997 from 39.8% for the  three-month  period ended
September  30, 1996.  The increase in gross profit as a percentage  of net sales
was primarily attributable to higher margins achieved as a result of a change in
the Company's product mix.

         Total Operating  Expenses.  Total operating  expenses were $4.8 million
for the three-month  period ended September 30, 1997, an increase of $791,000 or
19.5% over total operating  expenses of $4.0 million for the three-month  period
ended September 30, 1996.  However,  total operating expenses as a percentage of
net sales decreased to 36.0% for the three-month period ended September 30, 1997
from 37.4% for the three-month  period ended September 30, 1996. The increase in
total  operating  expenses was  primarily  attributable  to  increased  selling,
general and administrative  expenses which was partially offset by a decrease in
other expenses.  The decrease in total operating expenses as a percentage of net
sales  was  primarily  attributable  to  the  increase  in  net  sales  and  the
comparatively  smaller increase in operating expenses from the comparable period
in 1996.

                                       8

<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------

         Selling,  general and administrative expenses were $4.7 million for the
three-month  period ended  September  30, 1997, an increase of $828,000 or 21.2%
over  selling,  general  and  administrative  expenses  of $3.9  million for the
three-month  period ended  September  30, 1996.  However,  selling,  general and
administrative  expenses as a percentage of net sales decreased to 35.2% for the
three-month  period  ended  September  30,  1997 from 36.1% for the  three-month
period ended September 30, 1996. The increase in selling  expenses was primarily
attributable to increases in distribution costs,  advertising in general and, in
particular,  a radio campaign during the third quarter, and costs of promotional
materials primarily in connection with the launching of the Company's new Energy
drink.  The  increase  in general  and  administrative  expenses  was  primarily
attributable  to  increased  payroll  costs in  connection  with  the  Company's
expansion activities into additional states.

         Amortization  of trademark  license and  trademarks  was  approximately
$74,000 for the three- month periods ended September 30, 1997 and 1996.

         Other expenses were $37,000 for the three-month  period ended September
30, 1997, a decrease of $37,000 or 50.6% below other expenses of $74,000 for the
three-month  period ended  September  30,  1996.  This  decrease  was  primarily
attributable  to the  expiration of certain  consulting  agreements,  which were
entered  into in  connection  with the  purchase of the Hansen  Business and the
merger between the Company, CVI Ventures,  Inc. and Continental  Ventures,  Inc.
This decrease was partially  offset by a new consulting  agreement  entered into
with the former president of HBC.

         Operating  Income.  Operating  income was $678,000 for the  three-month
period ended September 30, 1997 compared to operating income of $252,000 for the
three-month  period ended September 30, 1996. The $426,000 increase in operating
income was  attributable  to a $1.2  million  increase in gross profit which was
partially offset by an increase of $791,000 in operating expenses.

         Net Nonoperating Expense. Net nonoperating expense was $177,000 for the
three-month  period ended September 30, 1997,  which was $36,000 higher than net
nonoperating  expense of $141,000 for the three-month period ended September 30,
1996. Net  nonoperating  expense for the three-month  period ended September 30,
1997  consists of net  interest and  financing  expense and other  expense.  Net
nonoperating  expense  for the  three-month  period  ended  September  30,  1996
consists of net  interest and  financing  expense.  Net  interest and  financing
expense  for the  three-month  period  ended  September  30,  1997 was  $140,000
compared to $141,000 for the three-month  period ended September 30, 1996. Other
expense for the third quarter of 1997 consists of a $37,000 loss on the disposal
of plant and equipment, primarily vehicles, following the discontinuation of the
Company's route distribution system.

         Net Income.  Net income was $501,000 for the  three-month  period ended
September 30, 1997 compared to net income of $111,000 for the three-month period
ended  September 30, 1996.  The $390,000  increase in net income for this period
consists of an  increase in  operating  income of $426,000  which was  partially
offset by an increase of $36,000 in net nonoperating expense.

RESULTS OF OPERATIONS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
COMPARED TO THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996

         Net Sales.  For the  nine-month  period ended  September 30, 1997,  net
sales were  approximately  $32.1  million,  an increase of $3.5 million or 12.2%
over the $28.6 million net sales for the nine-month  period ended  September 30,
1996.  The  increase  in net  sales  was  attributable  to  increased  sales  of
Hansen's(R)  fruit juice Smoothies,  increased sales of Hansen's(R)  apple juice
and sales of Hansen's(R)  Energy drink,  which was introduced  during the second
quarter of 1997. The increase in net sales was partially offset by a decrease in
net  sales  of  soda,   iced  teas,   lemonades  and  juice  cocktails  and  the
discontinuance of distribution of Equator(R) products in certain markets.

                                       9

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------

         Gross Profit.  Gross profit was $13.1 million for the nine-month period
ended  September  30, 1997,  an increase of $1.9 million or 16.9% over the $11.2
million gross profit for the nine-month  period ended September 30, 1996.  Gross
profit as a percentage of net sales increased to 40.9% for the nine-month period
ended  September 30, 1997 from 39.2% for the nine-month  period ended  September
30,  1996.  The  increase  in gross  profit  as a  percentage  of net  sales was
primarily attributable to higher margins achieved as a result of a change in the
Company's product mix.

         Total Operating  Expenses.  Total operating expenses were $11.5 million
for the nine-month  period ended September 30, 1997, an increase of $1.1 million
or 10.4% over total  operating  expenses  of $10.4  million  for the  nine-month
period  ended  September  30,  1996.  However,  total  operating  expenses  as a
percentage  of net sales  decreased  to 36.0% for the  nine-month  period  ended
September  30, 1997 from 36.6% for the  nine-month  period ended  September  30,
1996. The increase in total  operating  expenses was primarily  attributable  to
increased  selling,  general and  administrative  expenses  which was  partially
offset by decreases in  amortization  of trademark  license and  trademarks  and
other expenses.  The decrease in total operating expenses as a percentage of net
sales  was  primarily  attributable  to  the  increase  in  net  sales  and  the
comparatively  smaller increase in operating expenses from the comparable period
in 1996.

         Selling, general and administrative expenses were $11.1 million for the
nine-month period ended September 30, 1997, an increase of $1.2 million or 12.4%
over  selling,  general  and  administrative  expenses  of $9.9  million for the
nine-month period ended September 30, 1996. Selling,  general and administrative
expenses as a  percentage  of net sales  increased  to 34.7% for the  nine-month
period  ended  September  30, 1997 from 34.6% for the  nine-month  period  ended
September 30, 1996. The increase in selling expenses was primarily  attributable
to increases in distribution costs, advertising in general and, in particular, a
radio  campaign  during the third quarter,  and costs of  promotional  materials
primarily in  connection  with the  launching of the Company's new Energy drink.
The increase in general and administrative  expenses was primarily  attributable
to increased payroll costs in connection with the Company's expansion activities
into additional states.

         Amortization  of trademark  license and  trademarks  was  approximately
$220,000  for the  nine-month  period  ended  September  30, 1997, a decrease of
$103,000 from the $323,000 for the nine-month  period ended  September 30, 1996.
This decrease is attributable to the change in the  amortization  period from 25
years to 40 years as more fully  described in Note 1 in the Company's  Form 10-K
for the year ended December 31, 1996.

         Other expenses were $184,000 for the nine-month  period ended September
30,  1997,  a decrease of $39,000 or 17.5% below other  expenses of $223,000 for
the  nine-month  period ended  September  30, 1996.  This decrease was primarily
attributable  to the  expiration of certain  consulting  agreements,  which were
entered  into in  connection  with the  purchase of the Hansen  Business and the
merger between the Company, CVI Ventures,  Inc. and Continental  Ventures,  Inc.
This decrease was partially  offset by a new consulting  agreement  entered into
with the former president of HBC.

         Operating Income.  Operating income was $1.6 million for the nine-month
period ended September 30, 1997 compared to operating income of $761,000 for the
nine-month  period ended September 30, 1996. The $814,000  increase in operating
income was  attributable to a $1.9 million  increase in gross profit,  which was
partially offset by an increase of $1.2 million in operating expenses.

                                       10

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------

         Net Nonoperating Expense. Net nonoperating expense was $450,000 for the
nine-month  period ended September 30, 1997,  which was $223,000 higher than net
nonoperating  expense of $227,000 for the nine-month  period ended September 30,
1996.  Net  nonoperating  expense for the nine months ended  September  30, 1997
consists  of  net  interest  and  financing  expense  and  other  expense.   Net
nonoperating  expense for the nine months ended  September  30, 1996 consists of
net interest and financing expense and other income.  Net interest and financing
expense for the nine-month period ended September 30, 1997 was $413,000 compared
to $460,000 for the nine-month  period ended September 30, 1996. The decrease in
net  interest  and  financing  expense  was  attributable  to a decrease  in the
amortization of certain capitalized  financing costs incurred in connection with
the  securing  of HBC's  previous  revolving  line of  credit,  which were fully
amortized by the third quarter of 1996, and lower average short-term  borrowings
during the nine-month period ended September 30, 1997 than during the comparable
nine-month period in 1996. Other expense for the third quarter of 1997 consists
of a $37,000 loss on the disposal of plant and  equipment,  primarily  vehicles,
following the discontinuation of the Company's route distribution  system. Other
income for 1996  consisted  of $233,000 of income  from the  recovery  under the
Hawaiian  Water Partners note described in Note 3 in the Company's Form 10-K for
the year ended December 31, 1996.

         Net Income. Net income was $1.1 million for the nine-month period ended
September 30, 1997 compared to net income of $531,000 for the nine-month  period
ended  September 30, 1996.  The $553,000  increase in net income for this period
consists of an  increase in  operating  income of $814,000  which was  partially
offset by an increase of  $223,000 in net  nonoperating  expense and a provision
for income taxes of $38,000.

LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 1997, the Company had working capital of $2,045,844
compared to a working capital deficit of $2,707,471 as of December 31, 1996. The
increase in working capital was primarily  attributable to the  reclassification
of the amount due under the ERLY Note from current  portion of long-term debt to
long-term  debt,  as  explained  above  in  Note  2 to the  Company's  unaudited
financial  statements  for the period ended  September  30, 1997,  and partially
attributable  to net  income  earned,  after  adjustments  for  certain  noncash
expenses,   primarily   amortization   of  trademark   license  and  trademarks,
depreciation  and  other  amortization,   during  the  nine-month  period  ended
September 30, 1997.

         As explained in Note 2 to the Company's unaudited financial  statements
for the period ended September 30, 1997, HBC obtained a revolving line of credit
of up to $3 million in aggregate at any time  outstanding.  As of September  30,
1997,  $716,294 was outstanding  under the Revolver.  The Revolver is secured by
substantially all of HBC's assets,  including  accounts  receivable,  inventory,
trademarks,  trademark  licenses  and  certain  equipment.  The  initial  use of
proceeds  under  this line of credit was to  refinance  HBC's  previous  line of
credit.  The Revolver is subject to renewal on the maturity  date,  May 1, 1998.
The Company  anticipates  that the  Revolver  will be renewed on the  expiration
date, but there can be no assurance it will, in fact, be renewed, or if renewed,
that  the  terms of such  renewal  will  not be  disadvantageous  to HBC and its
business.

         During the first,  second and third  quarters of 1997,  HBC  utilized a
portion of its then  existing line of credit,  together with its own funds,  for
working capital,  to finance its expansion and development  plans, and to reduce
long-term debt. Purchases of inventory and financing of accounts receivable,  as
well  as  HBC's  expansion  and  development  plans,  have  been,  and  for  the
foreseeable  future,  are expected to remain,  HBC's principal  recurring use of
working capital funds.  Management believes that cash available from operations,
current cash  resources  and the Revolver,  will be  sufficient  for its working
capital needs, including purchase commitments for raw materials,  debt servicing
and expansion and development needs through September 30, 1998.

                                       11

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------

         Although the Company has no current plans to incur any material capital
expenditures,  management,  from  time to time,  considers  the  acquisition  of
capital equipment, businesses compatible with the image of the Hansen's(R) brand
and the  introduction of new product lines.  The Company may require  additional
capital resources in the event of any such transaction,  depending upon the cash
requirements  relating thereto. Any such transaction will also be subject to the
terms and restrictions of HBC's credit facility.

FORWARD LOOKING STATEMENTS

         Certain  statements made in this Report,  including certain  statements
made in this  Management's  Discussion and Analysis,  contain  "forward  looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended,
regarding   the   expectations   of   management   with   respect  to  revenues,
profitability,  adequacy of funds from  operations  and the  Company's  existing
credit facility, among other things.

         Management  cautions that these statements are qualified by their terms
and/or  important  factors,  many of which are  outside  of the  control  of the
Company,  that could cause actual results and events to differ  materially  from
the  statements  made  herein,  including,  but not limited  to, the  following:
changes in consumer  preferences,  changes in demand  that are weather  related,
particularly  in areas outside of  California,  competitive  pricing  pressures,
changes in the price of the raw materials for the Company's  beverage  products,
the marketing  efforts of the  distributors of the Company's  products,  most of
which distribute products that are competitive with the products of the Company,
as well as  unilateral  decisions  that  may be made by  grocery  chain  stores,
specialty chain stores and club stores to discontinue carrying all or any of the
Company's products that they are carrying at any time.  Management further notes
that the  Company's  plans  and  results  may be  affected  by the  terms of the
Company's credit facilities and the actions of its creditors.

INFLATION

         The Company does not believe that inflation has a significant impact on
the Company's results of operations for the periods presented.

                                       12

<PAGE>


 
                         PART II - OTHER INFORMATION



Items 1-5.                 Non Applicable


Item 6.                    Exhibits and Reports on Form 8-K

                    (a)    Exhibits - See Exhibit Index.

                    (b)    Reports on Form 8-K - None







                                   SIGNATURES

         Pursuant of the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                                    HANSEN NATURAL CORPORATION
                                                    Registrant

Date:  November 12, 1997

                                                    By: RODNEY SACKS
                                                    Rodney C. Sacks
                                                    Chairman of the Board
                                                    and Chief Executive Officer





                                                    By: HILTON SCHLOSBERG
                                                    Hilton H. Schlosberg
                                                    Vice Chairman
                                                    and Chief Financial Officer



                                       13

<PAGE>



                               INDEX TO EXHIBITS

         The following designated exhibits, as indicated below, are either filed
herewith  or have  hereto  fore been  filed  with the  Securities  and  Exchange
Commission  under the Securities  Act of 1933 or the Securities  Exchange Act of
1934 as indicated by footnote.

Exhibit No.                            Document Description
- ------------------          ------------------------------------------------

Exhibit 10 (ww)             Packaging Agreement dated April 14, 1997
                            between Hansen Beverage Company and
                            U.S. Continental Packaging, Inc.

Exhibit 10 (xx)             Revolving Credit Loan and Security Agreement dated
                            May 15, 1997 between Comerica Bank - California and
                            Hansen Beverage Company.

Exhibit 10 (yy)             Severance and Consulting Agreement dated as of
                            June 20, 1997 by and among Hansen Beverage Company,
                            Hansen Natural Corporation and Harold C. Taber, Jr.

Exhibit 10 (zz)             Stock Option Agreement made as of June 20, 1997
                            by and between Hansen Natural Corporation and
                            Harold C. Taber, Jr.

Exhibit 10 (aaa)            Variable Rate Installment Note dated October 14,
                            1997 between Comerica Bank - California and
                            Hansen Beverage Company.

Exhibit 27                  Financial Data Schedule


                                       14

<PAGE>





<PAGE>

April 14,1997

Mr. Hilton H. Schlosberg
Vice Chairman
Hansen Beverage Company
2401 East Katella Avenue
Suite 650
Anaheim, CA 92806

         Re:      Packaging Agreement between Hansen Beverage Company and
                  U.S. Continental Packaging, Inc.

Dear Mr. Schlosberg:

         U.S. Continental Packaging, Inc., a California corporation ("USCP"), is
pleased to provide  packaging,  bundle  wrapping and  distribution  services for
Hansen Beverage Company  ("Hansen")  beverage products pursuant to the terms and
conditions set forth herein.

1.       Primary Engagement

         a.       Hansen hereby engages USCP as its primary  distribution center
                  for Hansen beverage products for truck delivery other than for
                  products  shipped  directly  from  Hansen  Co-packers  in  the
                  "Territory"   as   described   on  Schedule  "1"  hereto  (the
                  "Territory").  As such,  USCP  shall have  responsibility  for
                  loading  trucks with Hansen  beverage  products  scheduled for
                  delivery.  USCP shall  manage  inventory  at the  distribution
                  center and  assemble  and load it, as  appropriate,  for truck
                  delivery  in  accordance  with  the  procedures  set  forth in
                  Schedule  "'2"  hereto.  USCP will provide all  personnel  and
                  equipment necessary to meet its obligations hereunder.

         b.       USCP will  provide  such dry  packaging  services  and  bundle

                  wrapping of Hansen  beverage  products as may be  requested by
                  Hansen  and in  accordance  with the  procedures  set forth in
                  Schedule "2" hereto.  The parties hereto acknowledge that USCP
                  is not responsible for filling any beverage  products in cans,
                  bottles or other containers.

         c.       USCP will case pack and hand load trucks with Hansen  beverage
                  products,  all such  loading to take place at the loading dock
                  of the "Facility" (as defined herein).

2.       Compensation

         a.       Hansen will  compensate  USCP in accordance with the terms set
                  forth in Schedule  "3" hereto for  services  rendered by USCP.
                  Prices charged to Hansen by USCP will not increase  during the
                  first year of this agreement. Thereafter, prices may increase,
                  but such  increases  shall be limited to actual  increases  in
                  direct costs incurred by USCP.  USCP shall provide  reasonable
                  support for any such increases to Hansen.

         b.       After six (6) months  from the  inception  of this  Agreement,
                  USCP  will,  in good  faith,  evaluate  its  costs  of  actual
                  operations as compared to its estimated costs of operations at
                  the  commencement  of this  agreement and in the event of such
                  actual costs being lower,  it shall pass an appropriate  price
                  reduction  onto Hansen.  Such costs shall be  determined on an
                  ongoing  basis and shall  exclude  costs  incurred  during the
                  start up phase of the business.

                                       1

<PAGE>

3.       Facility Lease and Related Expense

         a.       Hansen will lease such industrial facilities as are necessary
                  for USCP to discharge its services in accordance herewith. The
                  parties contemplate that Hansen will lease a facility (the
                  "Facility") of an appropriate size and which is estimated too
                  be approximately 50,000 square feet.  Hansen will be respon-
                  sible for and pay the rent for such facility; provided,
                  however, that if by agreement between the parties, a larger
                  facility is leased by Hansen with a view to an agreed portion
                  up to 10,000 square feet being utilized by USCP for its other
                  business activities, then USCP shall be responsible to reim-
                  burse Hanse for such excess area on the basis set out below
                  and to the extent necessary USCP will sign an appropriate
                  sublease on the same terms as the main lease mutatis mutandis,
                  but for a period of 2 years and on the basis that Hansen shall
                  be entitled to terminate such sublease on 60 days written
                  notice at any time, in the event that such excess area is
                  required for Hansen products.

         b.       In the event of any portion of the Facility being subleased to
                  USCP,  then Hansen and USCP shall be responsible  for the rent
                  as follows.  Hansen will make all payments due to the landlord
                  (or the  sublessor,  as the case may be) for its  lease of the
                  Facility. USCP shall reimburse Hansen, on a monthly basis, for
                  a portion of rent as follows:

                  Monthly Rent Reimbursement =

                  Monthly rent for the Facility x (area of the Facility occupied
                  by USCP for its own  business  divided  by  total  area of the
                  Facility)

         c.       All expenses  associated with said lease and occupation of the
                  facility including, but not limited to, utilities,  insurance,
                  repairs, maintenance and cleaning, will be paid by USCP. If so
                  paid, Hansen will reimburse USCP its agreed share on demand or
                  if paid by  Hansen,  USCP will  reimburse  Hansen on demand or
                  Hansen will deduct it from any amounts owing,  save and except
                  for the following which shall be paid for by Hansen.

                  (i)      Alarm service

                  (ii)     Insurance over Hansen Inventory,  but not relating to
                           the operations of USCP in the Facility

                  (iii)    Hansen's pro rata share of the utilities attributable
                           to that portion of the Facility  that is utilized for
                           storage of the products.  It is specifically recorded
                           that the electrical  costs of operating any equipment
                           for the  activities  of USCP  shall be borne and paid
                           for in full by USCP.  USCP  shall  procure  that such
                           electricity costs are separately monitored.

         d.       Hansen shall permit USCP to have exclusive use of the Facility
                  for the purpose of providing  services to Hansen in accordance
                  herewith  and  as  otherwise  permitted  under  Section  3 (b)
                  hereof,  except that approximately  7,000 square feet of space
                  will be set aside as office space for Hansen personnel.


                                       2

<PAGE>


4.   Obligations of USCP.  USCP shall be liable to Hansen on an annual basis for
     any  damage or loss of Hansen  products  in excess of  $25,200.00  while in
     possession  and  control  of USCP prior to  delivery  of such  products  to
     carriers (from and after which, USCP's responsibility for damage or loss of
     products  shall  cease),  except  to  the  extent  that  Hansen  employees,
     independent  contractors  acting on behalf of Hansen  (other  than USCP) or
     agents of Hansen are  responsible  for any such damage or loss.  USCP shall
     also be  responsible  for any other loss  suffered by Hansen as a result of
     USCP's breach of its obligations hereunder,  except to the extent that such
     loss is attributable to Hansen employees, independent contractors acting on
     behalf of Hansen  (other  than  USCP) or agents of  Hansen.  Damage or loss
     shall be monitored on a monthly basis.

5.  Representations, Warranties and Covenants of Parties

          5.1     Representations  and Warranties by Hansen.  Hansen  represents
                  and warrants to, and agrees with USCP as follows:

                  a.       Binding  Agreement.  This  Agreement  has  been  duly
                           executed and  delivered by Hansen and  constitutes  a
                           valid  and  legally  binding   agreement  of  Hansen,
                           enforceable in accordance  its terms  subject,  as to
                           enforcement,      to     bankruptcy,      insolvency,
                           reorganization    and   other    laws   of    general
                           applicability  relating  to or  affecting  creditors'
                           rights  and  provided  that the  remedy  of  specific
                           performance   and   injunctive  and  other  forms  of
                           equitable relief may be subject to equitable defenses
                           and to the  discretion  of the court before which any
                           proceeding therefor may be brought.

                  b.       Non-Contravention. The execution and delivery of this
                           Agreement  by  Hansen  and  the  consummation  of the
                           business  matters   contemplated   thereby  will  not
                           violate any provision of any mortgage,  lien,  lease,
                           agreement,  license or instrument to which Hansen (or
                           any affiliate thereof) is a party.

          5.2     Representations  and Warranties by USCP.  USCP  represents and
                  warrants to, and agrees with, Hansen as follows:

                  a.       Binding  Agreement.  This  Agreement  has  been  duly
                           executed  and  delivered  by USCP and  constitutes  a
                           valid  and   legally   binding   agreement   of  USCP
                           enforceable, in accordance with its terms subject, as
                           to    enforcement,    to   bankruptcy,    insolvency,
                           reorganization    and   other    laws   of    general
                           applicability  relating  to or  affecting  creditors'
                           rights  and  provided  that the  remedy  of  specific
                           performance   and   injunctive  and  other  forms  of
                           equitable relief may be subject to equitable defenses
                           and to the  discretion  of the court before which any
                           proceeding therefor may be brought.

                  b.       Non-Contravention. The execution and delivery of this
                           Agreement  by  USCP  and  the   consummation  of  the
                           business  matters   contemplated   thereby  will  not
                           violate any provision of any mortgage,  lien,  lease,
                           agreement,  license or  instrument  to which USCP (or
                           and affiliate thereof) is a party.


                                       3

<PAGE>

6.       Mutual Indemnification.

                  a.       USCP  shall be  indemnified  by  Hansen  for any loss
                           suffered by USCP due to product liability claims, any
                           negligence  or  reckless  conduct  of  Hansen  or its
                           agents and independent  contractors (other than USCP)
                           or  the  breach  of any  obligation,  representation,
                           warranty or covenant of Hansen as contained herein.

                  b.       Hansen  shall  be  indemnified  by USCP  for any loss
                           suffered by Hansen due to any  negligence or reckless
                           conduct of USCP or its  independent  contractors  and
                           agents   or   the    breach   of   any    obligation,
                           representation,  warranty  or  covenant  of  USCP  as
                           contained herein.

7.       Term; Termination Rights.

                  a.       The term of this agreement shall be co-terminous with
                           the initial period of the lease of the facility,  but
                           not  less  than  two  (2)  years   [("Term")].   This
                           agreement shall be renewed annually  thereafter (each
                           such annual renewal  constituting a "Renewal  Term"),
                           unless a party  hereto  gives the other not less than
                           sixty (60) days prior written notice of its intention
                           to  terminate  the  agreement  at the end of the then
                           current Term or Renewal Term, as the case may be.

                  b.       Notwithstanding Section 7(a), this Agreement may be
                           terminated by Hansen prior to expiration of the Term
                           in the vent that USCP fails to satisfy in material
                           respects its duties or obligations hereunder with
                           respect to Hansen beverage products on more than two
                           percent (2.0%) of the bills of lading executed in any
                           calendar month (a "Default" hereunder); provided,
                           however, that USCP shall not be deemed to be in
                           Default hereunder unless it is notified in writing by
                           Hansen of the facts constituting a Default and such
                           failure is not corrected with thirty (30) days of
                           USCP's receipt of such notice, except that in no
                           event shall Hansen be required to provide an oppor-
                           tunity to cure with respect to more than one (1)
                           Default in any consecutive twelve-month period.

                  c.       Notwithstanding  Section 7(a),  this Agreement may be
                           terminated by USCP prior to expiration of the Term in
                           the event  that  Hansen  fails to pay any  amount due
                           hereunder  within ten (10) days of being  notified by
                           USCP in writing of  Hansen's  failure to make  timely
                           payment.

8.       Obligations in the Event of Termination.

                  a.       In the event that this Agreement is terminated by
                           Hansen prior to the expiration of the Term or the
                           Renewal Term in accordance with the terms hereof,
                           then Hansen shall have the right, but not the obliga-
                           tion, to purchase and/or assume the lease of all (but
                           not less than all) equipment used by USCP at the
                           Facility for the purposes of repacking and handling
                           of Hansen product.  In the event that USCP owns
                           equipment subject to purchase by Hansen in accordance
                           herewith, the purchase price therefor shall be as
                           mutually agreed to between the parties; provided,
                           however, that if they do not agree, then the purchase
                           price shall be determined by appraisal by Rabin
                           Brothers Company.  Hansen may assume a lease for
                           equipment subject to acquisition by Hansen hereunder
                           by assuming all payment obligations thereunder and
                           indemnifying USCP for any claim of the lessor of such
                           equipment.

                                       4

<PAGE>

                  b.       In the event of any  termination  hereof,  each party
                           shall  promptly  return  property  belonging  to  the
                           other.

9.   Notices.  Any notice,  direction or instrument  required or permitted to be
     given  hereunder   shall  be  given  in  writing  by  telegram,   facsimile
     transmission or similar method if confirmed by mail as herein provided,  by
     mail,  if  mailed  postage  prepaid,  by  certified  mail,  return  receipt
     requested, or by hand delivery to any party at the address set forth below;
     and, if by telegram or  facsimile  transmission  or similar  method or hand
     delivery, shall be deemed to have been given or made on the day on which it
     is given, and if mailed,  shall be deemed to have been given or made on the
     day the fifth business day following the day after which it was mailed. Any
     party, may, from time to time by like notice,  give notice of any change of
     address,  and in such event, the address of such parties shall be deemed to
     be changed accordingly. The address for each party is:

                  (a.)     If to Hansen:
                                            Mr. Hilton H. Schlosberg
                                            Vice Chairman
                                            Hansen Beverage Company
                                            2401 East Katella Avenue
                                            Anaheim, CA 92806

                           with a copy to:
                                            Mr. Tom Kelly
                                            Hansen Beverage Company
                                            2401 East Katella Avenue
                                            Anaheim, CA 92806


                  (b.)     If to USCP:
                                            Mr. David Williams
                                            President
                                            U.S. Continental Packaging
                                            1450 North Daly Street
                                            Anaheim, CA 92806

                           with a copy to:
                                            Daniel S. Latter
                                            2029 Century Park East
                                            Suite 400
                                            Los Angeles, CA 90067

10.  Severability. In the event any provision of this Agreement shall be void or
     unenforceable  for any  reason  whatsoever,  then such  provision  shall be
     stricken  and of no force and  effect.  The  remaining  provisions  of this
     Agreement,  however,  shall  continue in full force and effect,  and to the
     extent required, shall be modified to preserve their validity.

                                       5

<PAGE>

11.  Remedies Not  Exclusive.  Except as  otherwise  specifically  provided,  no
     remedy  conferred by any of the specific  provisions  of this  Agreement is
     intended to be  exclusive  of any other  remedy,  and each and every remedy
     shall be  cumulative  and shall be in addition to every other  remedy given
     hereunder or now or hereafter existing at law or in equity or by statute or
     otherwise.  The election by a party of any one or more  remedies  shall not
     constitute a waiver of the right to pursue other available remedies.

12.  Compliance with Laws. The consummation of the transactions  hereunder shall
     be subject to compliance with all applicable laws.

13.  Expenses.  Each party shall be responsible for its own expenses,  including
     legal and  accounting  fees,  in  connection  with this  Agreement  and any
     subsequent matters pertaining to the transactions contemplated hereby.

14.  Governing Law. This Agreement shall be interpreted in accordance  with, and
     governed  by, the  internal  substantive  laws of the State of  California,
     without regard to the choice of law rules thereof.

15.  Attorney's  Fees. If any action,  arbitration  or proceeding in contract or
     tort arising out of or relating to this Agreement is commenced by any party
     to this Agreement,  the prevailing  party shall be entitled to receive from
     the other party,  in addition to any other relief that may be granted,  the
     reasonable  attorney's  fees,  costs  (including  court costs) and expenses
     incurred in the action or proceeding by the  prevailing  party,  along with
     any reasonable  attorneys'  fees, costs (including court cost) and expenses
     incurred to collect any amount  awarded in connection  with any such action
     or proceeding.

16.  Arbitration.  Any  controversy  or claim arising out of or relating to this
     Agreement,  or the making,  performance,  breach or interpretation thereof,
     shall be settled by binding  arbitration  in Orange  County,  California in
     accordance   with  the  Commercial   Arbitration   Rules  of  the  American
     Arbitration Association ("AAA") then existing. Any claim concerning whether
     a  particular  matter or issue is  subject  to  arbitration  in  accordance
     herewith shall also be so determined by arbitration.  The arbitration shall
     be held before a single arbitrator. Any award by the AAA shall be final and
     binding between the parties;  and judgment on the arbitration  award may be
     entered in any court  having  jurisdiction  over the subject  matter of the
     controversy. All parties may pursue discovery in accordance with California
     Code of Civil  Procedure  Section  1283.05,  the  provisions  of which  are
     incorporated herein by reference,  with the following  exceptions:  (i) the
     parties  hereto  may  conduct  all  discovery,  including  depositions  for
     discovery purposes, without leave of the arbitrator; and (ii) all discovery
     shall be  completed  no  later  than the  commencement  of the  arbitration
     hearing or one hundred  twenty  (120)  calendar  days after the date that a
     proper demand for arbitration is served,  whichever occurs earlier,  unless
     upon a showing of good  cause,  the  arbitrator  extends or  shortens  that
     period.  Any disputes  relating to such  discovery  will be resolved by the
     arbitrator.  The parties agree that in rendering an award,  the  arbitrator
     shall have no jurisdiction to consider  evidence with respect to, or render
     any award or  judgment  for,  punitive  or  exemplary  damages or any other
     amount  awarded  for the  purposes  of  imposing  a  penalty.  The  parties
     specifically  waive any claims for  punitive  or  exemplary  damages or any
     other amount  awarded for the purposes of imposing a penalty that arise out
     of or are related to this Agreement or the breach  thereof,  or the conduct
     of the parties in connection with this Agreement. The arbitrator shall have
     the power to award reasonable  attorneys' fees and costs.  Either party may
     submit the controversy or claim to arbitration.

                                       6

<PAGE>

17.  No Assignment. USCP may not assign any of its rights or delegate any of its
     duties  hereunder,  without  the prior  written  consent of  Hansen,  which
     consent  may be withheld  irrespective  of the reason  therefor;  provided,
     however,  that USCP may assign its duties and rights  hereunder to a wholly
     owned subsidiary of USCP.

18.  Entire Agreement;  Amendment. This Agreement, including Exhibits, Schedules
     and other documents delivered pursuant to the terms hereof, constitutes the
     entire  agreement  between the  parties  pertaining  to the subject  matter
     contained  herein  and such  agreements  supersede  any and all  prior  and
     contemporaneous  agreements,  representations  and  understandings  of  the
     parties.  No supplement,  modification or amendment of this Agreement shall
     be  binding  unless  executed  in  writing  by both  parties  hereto.  This
     Agreement  may not be  altered,  modified,  amended,  canceled,  rescinded,
     discharged or terminated,  except by an instrument in writing signed by all
     parties hereto.

19.  Multiple Counterparts;  Facsimile Signature. This Agreement may be executed
     in one or more counterparts, each of which shall be deemed an original, but
     all of which  together  shall  constitute  one and the same  instrument.  A
     signed copy of this Agreement delivered by facsimile  transmission shall be
     deemed to have the same legal effect as delivery of an original signed copy
     of this Agreement.

20.  Headings.  The  headings of this  Agreement  are  included  for purposes of
     convenience  only, do not constitute a part hereof and shall not affect the
     construction or interpretation of any of the provisions hereof.

21.  All Terms Material. The parties hereby expressly acknowledge and agree that
     each and every term and  condition  of this  Agreement is of the essence of
     this   Agreement,   constitutes  a  material  part  of  the   bargained-for
     consideration without which this Agreement would not have been executed and
     is a material part of this Agreement.

Thank you for your execution and return to USCP of this binding Agreement.  USCP
looks forward to a long mutually beneficial relationship with Hansen.

                                            U.S. Continental Packaging, Inc.
                                            a California Corporation

                                            By: ______________________________
                                                David L. Williams, President

ACCEPTED AND AGREED TO THIS
_______ DAY OF APRIL, 1997


By: ______________________________
Hilton H. Schlosberg, Vice Chairman
Hansen Beverage Company

                                       7

<PAGE>




                                   SCHEDULE 1
                                  "TERRITORY"

The "TERRITORY" consists of the following areas:

A. State of California - If during the term of this Agreement, Hansen requires a
primary repacking and bundling  facility in North  California,  it shall grant a
right of first refusal to USCP to establish and manage such facility in Northern
California  and perform the  necessary  services  contemplated  with  respect to
Hansen  Beverage  products;  provided  that its prices are at least as low as or
lower than and its terms of business are at least as or more favorable to Hansen
than,  those offered by any competitor and are consistent with the terms of this
Agreement.  USCP  shall be given  fourteen  (14) days  within  which to match or
better any competitor's offer.

B.       The State of Arizona

C.       The State of Nevada



                                       8

<PAGE>



<PAGE>

                   REVOLVING CREDIT LOAN & SECURITY AGREEMENT
                            (ACCOUNTS AND INVENTORY)

- --------------  ------------ ------------------------------------------

OBLIGOR #           NOTE #              AGREEMENT DATE:  MAY 15, 1997

- --------------  ------------ ------------------------------------------

CREDIT LIMIT  $3,000,000     INTEREST RATE       OFFICER NO./INITIALS

- ---------------------------- ------------------------------------------


     THIS  AGREEMENT is entered into on May 15, 1997,  between  Comerica  Bank -
California  ("Bank") as secured  party,  whose  Headquarters  Office is 333 West
Santa Clara Street, San Jose,  California 95113 and Hansen Beverage  Corporation
("Borrower"),  a Delaware corporation whose chief executive office is located at
2401 East Katella Avenue,  Suite 650,  Anaheim,  California  92806.  The parties
agree as follows:


1.   DEFINITIONS

     1.1 "account",  unless the context otherwise  requires,  means any right to
payment for goods sold or leased or for services rendered which is not evidenced
by an  instrument  or chattel  paper (each as defined in the Uniform  Commercial
Code) whether or not it has been earned by performance.

     1.2 "Agreement" as used in this Agreement means and includes this Revolving
Credit Loan & Security  Agreement  (Accounts and  Inventory),  any concurrent or
subsequent  rider to this Revolving Credit Loan & Security  Agreement  (Accounts
and Inventory) and any extensions,  supplements,  amendments or modifications to
this Revolving Credit Loan & Security Agreement  (Accounts
 and Inventory) and to
any such rider.

     1.3 "Bank Expenses" as used in this Agreement means and includes: all costs
or expenses  required to be paid by Borrower under this Agreement which are paid
or advanced by Bank;  taxes and  insurance  premiums of every nature and kind of
Borrower paid by Bank; filing, recording, publication and search fees, appraiser
fees,  auditor fees and costs, and title insurance  premiums paid or incurred by
Bank in connection with Bank's  transactions  with Borrower;  costs and expenses
incurred by Bank in collecting the Receivables (with or without suit) to correct
any default or enforce any provision of this Agreement, or in gaining possession
of, maintaining, handling, preserving, storing, shipping, selling, disposing of,
preparing for sale and/or  advertising to sell the Collateral,  whether or not a
sale is consummated; costs and expenses of suit incurred by Bank in enforcing or
defending this Agreement or any portion hereof,  including,  but not limited to,
expenses  incurred  by Bank in  attempting  to  obtain  relief  from  any  stay,
restraining  order,  injunction  or similar  process which  prohibits  Bank from
exercising any of its rights or remedies;  attorneys' fees and expenses incurred
by Bank in advising,  structuring,  drafting, reviewing, amending,  terminating,
enforcing,  defending or concerning this Agreement, or any portion hereof or any
agreement related hereto, whether or not suit is brought; and costs and expenses
of  reviews  and audits of the  affairs of the  Borrower.  Bank  Expenses  shall
include Bank's in-house legal charges at reasonable rates.

     1.4 "Base  Rate" as used in this  Agreement  means  that  variable  rate of
interest so announced by Bank at its headquarters office in San Jose, California
as its "Base  Rate"  from time to time and which  serves as the basis upon which
effective  rates of interest are  calculated  for those loans  making  reference
thereto.

     1.5 "Borrower's  Books" as used in this Agreement means and includes all of
the  Borrower's  books and records  including  but not limited to: minute books;
ledgers;  records  indicating,  summarizing  or  evidencing  Borrower's  assets,
liabilities,  Receivables,  business operations or financial condition,  and all
information  relating thereto,  computer programs;  computer disk or tape files;
computer printouts;  computer runs; and other computer prepared  information and
equipment of any kind.

     1.6 "Borrowing Base" as used in this Agreement means the sum of: (1) eighty
percent  (80.00%) of the net amount of Net  Eligible  Accounts  after  deducting
therefrom all payments,  adjustments and credits  applicable  thereto ("Accounts
Receivable Borrowing Base"); and (2) the amount, if any, of the advances against
Inventory  agreed  to be  made  pursuant  to  any  Inventory  Rider  ("Inventory
Borrowing Base"),  or other rider,  amendment or modification to this Agreement,
that may now or hereafter be entered into by Bank and Borrower.

                                       1

<PAGE>

     1.7 "Cash Flow" as used in this Agreement means, for any applicable  period
of  determination,  the Net Income  (after  deduction for income taxes and other
taxes of such  person  determined  by  reference  to income or  profits  of such
person) for such period, plus, to the extent deducted in computation of such Net
Income,  the amount of depreciation and  amortization  expense and the amount of
deferred tax liability during such period,  all as determined in accordance with
GAAP. The applicable period of determination will be on a rolling,  four-quarter
basis, retrospectively,  beginning with the period from July 1, 1996 to June 30,
1997 and each calendar quarter thereafter.

     1.8  "Collateral" as used in this Agreement means and includes each and all
of the following: the Receivables;  the Intangibles;  the negotiable collateral,
the Inventory;  all money,  deposit accounts and all other assets of Borrower in
which  Bank  receives  a  security  interest  or which  hereafter  come into the
possession,  custody  or  control  of  Bank;  and  the  proceeds  of  any of the
foregoing,  including,  but not limited to,  proceeds of insurance  covering the
collateral  and any and all  Receivables,  Intangibles,  negotiable  collateral,
Inventory,  equipment,  money, deposit accounts or other tangible and intangible
property  of  borrower  resulting  from  the sale or  other  disposition  of the
collateral,  and the proceeds thereof.  Notwithstanding anything to the contrary
contained  herein,  collateral  shall not include  any waste or other  materials
which have been or may be designated as toxic or hazardous by Bank.

     1.9 "Credit" as used in this Agreement means all Obligations,  except those
obligations arising pursuant to any other separate contract,  instrument,  note,
or other  separate  agreement  which,  by its terms,  provides  for a  specified
interest rate and term.

     1.10 "Current Assets" as used in this Agreement means, as of any applicable
date of determination,  all cash,  nonaffiliated  customer  receivables,  United
States  government  securities,  claims  against the United  States  government,
inventories  and prepaid  expenses which are classified as current in accordance
with GAAP.

     1.11  "Current  Liabilities"  as used in this  Agreement  means,  as of any
applicable date of determination, (i) all liabilities of a person that should be
classified as current in accordance with GAAP,  including without limitation any
portion of the principal of the Indebtedness classified as current, plus (ii) to
the extent not otherwise included, all liabilities of the Borrower to any of its
affiliates whether or not classified as current in accordance with GAAP.

     1.12  "Current  Maturities  on  Long  Term  Debt"  shall  mean,  as of  any
applicable date of determination,  current  maturities and sinking fund payments
required to be made within one year after the applicable  date of  determination
on long-term debt in accordance with GAAP, provided,  however,  that in the case
of the ERLY Note,  with respect to the  applicable  period through and including
June 30,  1997,  such current  maturity  shall be deemed to be the lesser of the
unpaid principal amount of the ERLY Note and $500,000. The applicable periods of
determination  will  be  on  a  rolling,  four-quarter  basis,  retrospectively,
beginning  with the period from July 1, 1996 to June 30, 1997 and each  calendar
quarter thereafter.

     1.13 "Daily Balance" as used in this Agreement means the amount  determined
by taking the amount of the Credit owed at the beginning of a given day,  adding
any new Credit  advanced or incurred on such date, and  subtracting any payments
or collections  which are deemed to be paid and are applied by Bank in reduction
of the Credit on that date under the provisions of this Agreement.

                                       2

<PAGE>

     1.14 "Eligible Accounts" as used In this Agreement means and includes those
accounts of Borrower which are due and payable within ninety (90) days, or less,
from the date of invoice, have been validly assigned to Bank and strictly comply
with all of Borrower's  warranties  and  representations  to Bank;  but Eligible
Accounts shall not include the following: (a) accounts with respect to which the
account  debtor is an officer,  employee,  partner,  joint  venturer or agent of
Borrower;  (b) accounts  with respect to which goods are placed on  consignment,
guaranteed  sale or other  terms by reason of which the  payment by the  account
debtor may be conditional; (c) accounts with respect to which the account debtor
is not a resident of the United States unless  otherwise  approved by Bank;  (d)
accounts  with respect to which the account  debtor is the United  States or any
department,  agency or  instrumentality  of the United States; (e) accounts with
respect to which the  account  debtor is any State of the  United  States or any
city, county, town,  municipality or division thereof; (f) accounts with respect
to which the account debtor is a subsidiary  of,  related to,  affiliated or has
common  shareholders,  officers or directors  with  Borrower;  (g) accounts with
respect to which  Borrower  is or may become  liable to the  account  debtor for
goods sold or services rendered by the account debtor to Borrower; except to the
extent such account exceeds such liability (h) unpaid balances  outstanding more
than 90 days on accounts not paid by an account  debtor  within ninety (90) days
from the date of the invoice,  unless  otherwise  approved by Bank; (i) accounts
with respect to which account  debtors  dispute  liability or make any claim, or
have any  defense,  cross claim,  counterclaim,  or offset;  (j)  accounts  with
respect to which any  Insolvency  Proceeding  is filed by or against the account
debtor,  or if an  account  debtor  becomes  insolvent,  fails  or  goes  out of
business;  (k) accounts  owed by any single  account  debtor which exceed twenty
percent (20%) of all of the Eligible Accounts, except for the accounts listed in
Exhibit  1.14k,  as amended  from time to time with the  approval  of Bank;  (l)
accounts with a particular account debtor on which over twenty-five  percent (25
%) of the aggregate  amount owing is greater than ninety (90) days from the date
of the invoice;  and (m) accounts  generated or serviced by the Hansen  Beverage
Company  route trucks from time to time, or accounts  which,  in the judgment of
the Bank, are similar in nature.

     1.15 "Eligible  Inventory" as used in this Agreement shall have the meaning
attributed to it in the Inventory Rider.

     1.16  "ERLY  Note"  means the note of  Borrower  initially  payable to ERLY
Industries, Inc. in the original principal amount of $4,000,000.

     1.17  "Event of  Default"  as used in this  Agreement  means  those  events
described In Section 7 contained herein below.

     1.18 "GAAP" as used in this Agreement  means as of any  applicable  period,
generally accepted accounting principles in effect during such period.

     1.19 "Hansen Natural" means Hansen Natural Corporation, a Delaware
corporation.

     1.20  "Insolvency  Proceeding" as used in this Agreement means and includes
any proceeding or case commenced by or against the Borrower, or any guarantor of
Borrower's  Obligations,  or  any  of  borrower's  account  debtors,  under  any
provisions  of the  Bankruptcy  Code,  as amended,  or any other  bankruptcy  or
insolvency  law,  including  but not limited to  assignments  for the benefit of
creditors,  formal or informal moratoriums,  composition or extensions with some
or all creditors,  any proceeding  seeking a reorganization,  arrangement or any
other relief tinder the Bankruptcy code, as amended,  or any other bankruptcy or
insolvency law.

     1.21  "Intangibles"  as used in this  Agreement  means and  includes all of
Borrower's  present and future general  Intangibles and other personal  property
(including,  without  limitation,  any and all rights in any legal  proceedings,
goodwill,  patents,  trade names,  copyrights,  trademarks,  trademark licensing
agreements,  including  the  Trademark  Rights,  as defined  below,  blueprints,
drawings,  purchase orders,  computer programs,  computer disks, computer tapes,
literature,  reports,  catalogs  and  deposit  accounts)  other  than  goods and
Receivables, as well as Borrower's Books relating to any of the foregoing.

     1.22  "Inventory" as used in this Agreement  means and includes all present
and future  inventory in which  Borrower has any  interest,  including,  but not
limited to, goods held by Borrower for sale or lease or to be furnished  under a
contract of service and all of Borrower's present and future raw materials, work
in process,  finished  goods,  advertising  materials,  and packing and shipping
materials,  wherever located and any documents of title  representing any of the
above,  and any  equipment,  fixtures  or other  property  used in the  storing,
moving,  preserving,  identifying,  accounting for and shipping or preparing for
the shipping of  inventory,  and any and all other items  hereafter  acquired by
Borrower by way of substitution, replacement, return, repossession or otherwise,
and all additions and accessions thereto, and the resulting product or mass, and
any documents of title respecting any of the above.

                                       3

<PAGE>

     1.23  "Judicial  Officer or Assignee" as used in this  Agreement  means and
includes any trustee, receiver, controller,  custodian, assignee for the benefit
of  creditors  or any other  person or entity  having  powers or duties  like or
similar to the powers and duties of trustee, receiver, controller,  custodian or
assignee for the benefit of creditors.

     1.24  "Marketing  Development  Fund" as used in this  Agreement  means  the
aggregate dollar amount of liabilities of the Borrower's  marketing  development
fund,  which  consists of discounts and other  promotional  accommodations  made
available or to be made available from time to time to customers.

     1.25 "Net  Eligible  Accounts"  as used in this  Agreement  means  Eligible
Accounts,  less  the  Marketing  Development  Fund to the  extent  not  excluded
pursuant to Section 1.14 in determining Eligible Accounts.

     1.26 "Net Income" as used in this Agreement  means the net income (or loss)
of a person for any period  determined in accordance with GAAP before payment of
any Profit Recapture  Payments paid by the Borrower under the Term Loan Note but
excluding in any event:


             (a) any gains or losses  on the sale or other  disposition,  not in
             the ordinary course of business, of investments or fixed or capital
             assets,  and any taxes on the excluded gains and any tax deductions
             or credits on account on any excluded losses;

             (b) in the case of the  Borrower,  net  earnings  of any  Person in
             which Borrower has an ownership  interest other than a consolidated
             subsidiary of Hansen  Natural,  unless such net earnings shall have
             actually   been   received   by   Borrower  in  the  form  of  cash
             distributions.


      1.27 " Net Worth" as used in this Agreement  means, as of any applicable
date of determination, the excess of

             (a)  the net  book  value  of all  assets  of a  person  after  all
             appropriate deductions in accordance with GAAP (including,  without
             limitation,   reserves  for  doubtful  receivables,   obsolescence,
             depreciation and amortization), over

             (b)      Total Liabilities of such person.

     1.28 "Obligations" as used in this Agreement means and includes any and all
loans, advances,  overdrafts, debts, liabilities (including, without limitation,
any and all amounts  charged to  Borrower's  account  pursuant to any  agreement
authorizing Bank to charge  Borrower's  account),  obligations,  lease payments,
guaranties,  covenants  and  duties  owing by  Borrower  to Bank of any kind and
description, as determined in accordance with GAAP, whether advanced pursuant to
or evidenced by this Agreement; by any note or other instrument; or by any other
agreement between Bank and Borrower and whether or not for the payment of money,
whether direct or indirect,  absolute or  contingent,  due or to become due, now
existing or hereafter  arising,  and including,  without  limitation,  any debt,
liability  or  obligation  owing  from  Borrower  to others  which Bank may have
obtained  by  assignment,  participation,  purchase  or  otherwise,  and further
including,  without  limitation,  all  interest  not paid  when due and all Bank
Expenses  which Borrower is required to pay or reimburse by this  Agreement,  by
law, or otherwise.  For the avoidance of doubt, the Obligations shall explicitly
include the obligations of the Borrower under the Term Loan.

     1.29 "Person" or "person" as used in this Agreement  means and includes any
individual,   corporation,   partnership,  joint  venture,  association,  trust,
unincorporated  association,  joint  stock  company,  government,  municipality,
political subdivision or agency, or other entity.

     1.30 "Profit Recapture  Payments" shall have the meaning attributed to them
in the Term Loan Note.

                                       4

<PAGE>

     1.31  "Receivables"  as used in  this  Agreement  means  and  includes  all
presently  existing and  hereafter  arising  accounts,  instruments,  documents,
chattel paper,  general  intangibles,  all other forms of  obligations  owing to
Borrower,  all of  Borrower's  rights  in,  to and  under  all  purchase  orders
heretofore or hereafter received, all moneys due to Borrower under all contracts
or agreements (whether or not yet earned or due), all merchandise returned to or
reclaimed by Borrower and the Borrower's books (except minute books) relating to
any of the foregoing.

     1.32  "Revolving  Loan"  means the loan or loans  made from time to time by
Bank to Borrower pursuant to Section 2.1.

     1.33 "Standby L/C" as used in this Agreement shall have the meaning 
attributed to it in Section 2.2.

     1.34 "Term Loan" shall mean the term loan in the initial  principal  amount
of $4,000,000.00 represented by the Term Loan Note.

     1.35 "Term Loan Note" shall mean the  promissory  note of Borrower in favor
of Bank of even date herewith in the initial principal amount of $4,000,000.00.

     1.36 "Total  Liabilities"  as used in this Agreement means the total of all
items of  indebtedness,  obligation or liability  which, in accordance with GAAP
consistently applied,  would be included in determining the total liabilities of
the Borrower as of the date Total  Liabilities  is to be  determined,  including
without limitation (a) all obligations secured by any mortgage, pledge, security
interest  or other  lien on  property  owned  or  acquired,  whether  or not the
obligations  secured thereby shall have been assumed;  (b) all obligations which
are capitalized lease obligations; and (c) all guaranties, endorsements or other
contingent or surety  obligations  with respect to the  indebtedness  of others,
whether or not reflected on the balance  sheets of the  Borrower,  including any
obligation  to furnish  funds,  directly or  indirectly  through the purchase of
goods,  supplies,  services, or by way of stock purchase,  capital contribution,
advance  or loan or any  obligation  to  enter  into a  contract  for any of the
foregoing.

     1.37  "Trademark  Rights" as used in this  Agreement  shall mean all of the
Borrower's  rights under a Carbonated  Beverage License Agreement dated July 27,
1992,  an Other  Beverage  License  Agreement  dated July 27, 1992 and a Royalty
Sharing  Agreement  dated July 27, 1992,  and all  amendments,  supplements  and
modifications  of each or any of the foregoing,  such rights to include  without
limitation (a) all of the Borrower's rights in and to the following  trademarks:
(i) Hansen's; U. S. Trademark Registration No. 1,258,780;  (ii) Hansen's Natural
Soda; U.S.  Trademark  Registration No.  1,258,779;  (iii)  Grapefruit  Hansen's
Natural Soda; U. S. Trademark  Registration  No.  1,253,907;  (iv) Mandarin Lime
Hansen's  Natural Soda; U. S.  Trademark  Registration  No.  1,243,037;  and (v)
Lemon-Lime  Hansen's Natural Soda; U. S. Trademark  Registration No. (none) (the
"Specified  Trademarks"),  including  such rights (but not  obligations)  as may
arise under the Lanham Act,  common law, by contract or  otherwise to sue in the
name of the Borrower or the Bank for past, present or future infringements;  (b)
all goodwill associated with the Borrower's rights in the Specified  Trademarks;
(c)  all  of  the  Borrower's  rights  relating  to  the  manufacture,  sale  or
distribution  of products  utilizing  the Specified  Trademarks;  (d) all right,
title  and  interest  of  Borrower  as  grantor  in and to the Trust and (e) all
products  and  proceeds  of any of the  foregoing  whether now or  hereafter  in
existence.

     1.38 "Trust" as used in this Agreement  shall mean the trust created
by the Agreement of Trust of the Hansen's Trust dated July 27, 1992.

     1.39  "Working  Capital"  as  used  in  this  Agreement  means,  as of  any
applicable date of determination, Current Assets less Current Liabilities.

     1.40  Compliance with all financial  covenants  contained in this Agreement
shall be  determined  based  upon the  financial  condition  of  Hansen  Natural
Corporation, a Delaware corporation, on a consolidated basis, and all references
to financial  statements and financial  information  shall be deemed to refer to
the financial  statements and financial  information of Hansen Natural Corp. and
its consolidated subsidiaries.

     1.41  Any and all  terms  used in this  Agreement  shall be  construed  and
defined in  accordance  with the meaning and  definition of such terms under and
pursuant to the California Uniform  Commercial Code (hereinafter  referred to as
the "Code") as amended.

2.   LOAN AND TERMS OF PAYMENT

For value received,  Borrower  promises to pay to the order of Bank such amount,
as provided for below, together with interest, as provided for below.

                                       5

<PAGE>

     2.1 Upon the  request of  Borrower,  made at any time and from time to time
during the term hereof,  and so long as no Event of Default has  occurred,  Bank
shall lend to Borrower an amount equal to the Borrowing Base; provided, however,
that in no event shall Bank be obligated to make advances to Borrower under this
Section  2.1  whenever  the  Daily  Balance  exceeds,  at any time,  either  the
Borrowing Base or the sum of Three Million Dollars and No Cents ($3,000,000.00),
such amount being referred to herein as an "Overadvance."

     2.2 As a sub-facility  under the Revolving  Loan,  Bank shall issue for the
benefit of Borrower (a) one or more irrevocable  standby letters of credit (each
a "Standby L/C", and collectively the "Standby L/Cs"), under which the aggregate
of all amounts  available to be drawn and all unpaid  reimbursement  obligations
shall not exceed $500,000, it being understood that in no event shall the sum of
(i) the face amount of all outstanding letters of credit plus (ii) the amount of
all  outstanding  letter  of credit  reimbursement  obligations  plus  (iii) the
outstanding  Revolving Loan advances exceed the Borrowing Base. All Standby L/Cs
shall be drawn on such terms and  conditions as are  acceptable  to Bank,  shall
have an expiry date not later than 365 days after the date of issuance  thereof,
and shall be  governed  by the terms of Bank's  standard  form  letter of credit
applications and reimbursement  agreements for commercial and standby letters of
credit,  respectively,  which applications and reimbursement agreements Borrower
hereby  covenants  and agrees to  execute  and  deliver  to Bank.  Bank shall be
entitled to receive a fee of 2.0% of the maximum amount available to be drawn on
each Standby L/C it issues pursuant to this Section 2.2.

     2.3 Except as hereinbelow provided,  the Credit shall bear interest, on the
Daily Balance owing,  at a rate of one (1.00)  percentage  point per annum above
the Base Rate (the "Rate").  The Credit shall bear interest,  from and after the
occurrence of an Event of Default and without  constituting a waiver of any such
Event of Default,  on the Daily Balance  owing,  at a rate three (3)  percentage
points per annum above the Rate.  All interest  chargeable  under this Agreement
that is based upon a per annum  calculation  shall be computed on the basis of a
three hundred sixty (360) day year for actual days elapsed.

     The  Base  Rate as of the date of this  Agreement  is  eight  and  one-half
percent  (8.500%) per annum.  In the event that the Base Rate announced is, from
time to time hereafter  changed,  adjustment in the Rate shall be made and based
on the Base Rate in effect on the date of such  change.  The Rate,  as adjusted,
shall  apply to the Credit  until the Base Rate is adjusted  again.  The minimum
interest  payable by the Borrower under this Agreement shall in no event be less
than $500.00 per month.  All interest payable by Borrower under the Credit shall
be due and payable on the first day of each  calendar  month  during the term of
this Agreement and Bank may, at its option, elect to treat such interest and any
and all Bank  Expenses  as  advances  under  the  Credit,  which  amounts  shall
thereupon  constitute  Obligations and shall  thereafter  accrue interest at the
rate applicable to the Credit under the terms of the Agreement.

     2.4  Without  affecting  Borrower's  obligation  to repay  immediately  any
Overadvance in accordance with Section 2.1 hereof,  all Overadvances  shall bear
additional  interest  on the  amount  thereof  at a rate  equal to three  (3.00)
percentage points per month in excess of the Rate set forth in Section 2.3, from
the date incurred and for each month thereafter, until repaid in full.

3.   TERM.

     3.1 This Agreement shall remain in full force and effect until May 1, 1998,
or until  terminated  by  notice by  Borrower.  Notice  of such  termination  by
Borrower shall be effectuated by mailing of a registered or certified letter not
less than  thirty  (30) days prior to the  effective  date of such  termination,
addressed to the Bank at the address set forth herein and the termination  shall
be  effective  as of the  date so  fixed  in such  notice.  Notwithstanding  the
foregoing,  should  Borrower be in default of one or more of the  provisions  of
this  Agreement,  Bank may terminate this Agreement at any time without  notice.
Notwithstanding  the foregoing,  should either Bank or Borrower become insolvent
or unable  to meet its  debts as they  mature,  or fail,  suspend,  or go out of
business,  the other party shall have the right to terminate  this  Agreement at
any time without notice. On the date of termination all Obligations shall become
immediately due and payable  without notice or demand;  no notice of termination
by Borrower shall be effective until Borrower shall have paid all Obligations to
Bank in full. Notwithstanding termination, until all Obligations have been fully
satisfied,  Bank shall retain its security  interest in all existing  Collateral
and Collateral arising thereafter, and Borrower shall continue to perform all of
its Obligations.

     3.2  After  termination  and when  Bank  has  received  payment  in full of
Borrower's  Obligations to Bank,  Bank shall reassign to Borrower all Collateral
held by Bank,  and shall execute a termination  of all security  agreements  and
security interests given by Borrower to Bank, upon the execution and delivery of
mutual general releases.

                                      6

<PAGE>

4.   CREATION OF SECURITY INTEREST.

     4.1 Borrower  hereby grants to Bank a continuing  security  interest in all
presently  existing and hereafter  arising  Collateral in order to secure prompt
repayment  of any and all  Obligations  owed by Borrower to Bank and in order to
secure  prompt  performance  by  Borrower of each and all of its  covenants  and
Obligations under this Agreement and otherwise created. Bank's security interest
in the Collateral shall attach to all Collateral without further act on the part
of Bank or Borrower.  In the event that any Collateral,  including proceeds,  is
evidenced  by or consists of a letter of credit,  advice of credit,  instrument,
money,  negotiable documents,  chattel paper or similar property  (collectively,
"Negotiable  Collateral"),  Borrower shall,  immediately  upon receipt  thereof,
endorse and assign such  Negotiable  Collateral  over to Bank and deliver actual
physical possession of the Negotiable Collateral to Bank.

     4.2 Bank's security interest in Receivables shall attach to all Receivables
without  further act on the part of Bank or  Borrower.  Upon  request  from Bank
(which  request  may be made no more than  once in any  30-day  period  unless a
default  hereunder has occurred and is continuing in which case such request may
be made as  often  as Bank in its  sole  and  absolute  discretion  determines),
Borrower shall provide Bank with schedules describing all Receivables created or
acquired by Borrower  (including without limitation agings listing the names and
addresses of, and amounts owing by date by account  debtors),  and, if a default
has occurred and is continuing, shall execute and deliver written assignments of
all  Receivables to Bank all in a form  acceptable to Bank,  provided,  however,
Borrower's  failure to execute and deliver  such  schedules  and/or  assignments
shall not affect or limit  Bank's  security  interest and other rights in and to
the Receivables.  Together with each schedule,  Borrower shall furnish Bank with
copies  of  Borrower's  customers'  invoices  or the  equivalent,  and  original
shipping or delivery receipts, if a default has occurred and is continuing,  for
all merchandise  sold, and Borrower warrants the genuineness  thereof.  Upon the
occurrence and during the continuousness of a default hereunder,  Bank or Bank's
designee  may notify  customers  or  account  debtors  of  collection  costs and
expenses  to  Borrower's  account  but,  unless  and until Bank does so or gives
Borrower other written instructions,  Borrower shall collect all Receivables for
Bank,  receive in trust all  payments  thereon  as Bank's  trustee,  and,  if so
requested to do so from Bank,  Borrower shall immediately  deliver said payments
to Bank in their  original  form as  received  from the  account  debtor and all
letters of credit, advices of credit, instruments,  documents,  chattel paper or
any similar  property  evidencing or  constituting  Collateral.  Notwithstanding
anything to the contrary  contained  herein,  if sales of Inventory are made for
cash,  upon the occurrence and during the  continuation  of a default  hereunder
Borrower shall  immediately  deliver to Bank, in identical  form, all such cash,
checks,  or other forms of payment which Borrower  receives.  The receipt of any
check or other  item of payment  by Bank  shall not be  considered  a payment on
account until such check or other item of payment is honored when  presented for
payment,  in which event, said check or other item of payment shall be deemed to
have been paid to Bank on the date Bank  actually  receives  such check or other
item of payment.

     4.3 Bank's  security  interest in Inventory  shall attach to all  Inventory
without  further act on the part of Bank or Borrower.  Upon the  occurrence  and
during the continuation of a default  hereunder,  upon Bank's request,  Borrower
will from time to time at Borrower's  expense pledge,  assemble and deliver such
Inventory  to Bank or to a third  party as  Bank's  bailee;  or hold the same in
trust for Bank's  account or store the same in a warehouse  in Bank's  name;  or
deliver to Bank documents of title  representing said Inventory;  or evidence of
Bank's  security  interest  in some other  manner  acceptable  to Bank.  Until a
default by Borrower under this Agreement or any other Agreement between Borrower
and  Bank,  Borrower  may,  subject  to the  provisions  hereof  and  consistent
herewith,  sell the  Inventory,  but only in the ordinary  course of  Borrower's
business.  A sale of Inventory in  Borrower's  ordinary  course of business does
not.  include an exchange or a transfer  in partial or total  satisfaction  of a
debt owing by Borrower.

     4.4 Borrower shall execute and deliver to Bank concurrently with Borrower's
execution of this  Agreement,  and at any time or times hereafter at the request
of Bank, all financing statements,  continuation financing statements,  security
agreements, mortgages, assignments,  certificates of title, affidavits, reports,
notices,  schedules of accounts,  letters of authority  and all other  documents
that Bank may request,  in form  satisfactory  to Bank,  to perfect and maintain
perfected  Bank's  security  interest  in the  Collateral  and in order to fully
consummate all of the transactions  contemplated under this Agreement.  Borrower
hereby  irrevocably  makes,  constitutes  and  appoints  Bank (and any of Bank's
officers,  employees or agents designated by Bank) as Borrower's true and lawful
attorney-in-fact  with  power  to sign  the name of  Borrower  on any  financing
statements,  continuation  financing statements,  security agreement,  mortgage,
assignment,  certificate  of title,  affidavit,  letter of authority,  notice of
other similar  documents which must be executed and/or filed in order to perfect
or continue perfected Bank's security interest in the Collateral created by this
Agreement.

                                       7

<PAGE>

     Borrower  shall make  appropriate  entries in Borrower's  Books  disclosing
Bank's security interest in the Receivables.  Bank (through any of its officers,
employees or agents) shall have the right at any time or times hereafter  during
Borrower's usual business hours, or during the usual business hours of any third
party  having  control  over the  records of  Borrower,  to  inspect  and verify
Borrower's  Books in order to verify  the amount or  condition  of, or any other
matter, relating to, said Collateral and Borrower's financial condition.

     4.5 Borrower  appoints  Bank or any other person whom Bank may designate as
Borrower's  attorney-in-fact,  with  power  to  endorse  Borrower's  name on any
checks,  notes,  acceptances,  money order,  drafts or other forms of payment or
security that may come into Bank's  possession;  to sign  Borrower's name on any
invoice or bill of lading relating to any Receivables, on drafts against account
debtors,  on schedules and  assignments  of  Receivables,  on  verifications  of
Receivables  and on  notices  to  account  debtors;  to  establish  a  lock  box
arrangement  and/or to notify the post office  authorities to change the address
for delivery of Borrower's  mail addressed to Borrower to an address  designated
by Bank, to receive and open all mail  addressed to Borrower,  and to retain all
mail relating to the Collateral and forward all other mail to Borrower; to send,
whether in writing or by telephone,  requests for  verification  of Receivables;
and to do all things  necessary to carry out this Agreement.  Borrower  ratifies
and   approves  all  acts  of  the   attorney-in-fact.   Neither  Bank  nor  its
attorney-in-fact  will be liable for any acts or  omissions  or for any error of
judgement or mistake of fact or law.  This power being coupled with an interest,
is irrevocable so long as any Receivables in which Bank has a security  interest
remain unpaid and until the Obligations have been fully satisfied.

     4.6 In order to protect  or perfect  any  security  interest  which Bank is
granted  hereunder,  Bank may,  in its sole  discretion,  discharge  any lien or
encumbrance or bond the same, pay any insurance,  maintain guards, warehousemen,
or any personnel to protect the Collateral,  pay any service bureau,  or, obtain
any records,  and all costs for the same shall be added to the  Obligations  and
shall be payable on demand.

     4.7  Borrower  agrees  that Bank may provide  information  relating to this
Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and
service providers.

5.   CONDITIONS PRECEDENT.

     5.1 As  conditions  precedent to the making of the Credit and the extension
of the financial accommodations  hereunder,  Borrower shall execute, or cause to
be executed, and deliver to Bank, in form and substance satisfactory to Bank and
its counsel, the following:

             a. This Agreement, together with an Inventory Rider, an Equipment
             Rider and an Environmental Rider;

             b.  Guarantees,  in form and  substance  acceptable to the Bank, of
             Hansen  Natural,  Hansen  Beverage  Company  (UK)  Limited  and CVI
             Ventures, Inc.

             c. A  Security  Agreement  (All  Assets),  in  form  and  substance
             acceptable  to the  Bank,  together  with an  Environmental  Rider,
             executed by Hansen Natural.

             d. Financing  statements (Form UCC-1) in form  satisfactory to Bank
             for  filing  and  recording  with  the   appropriate   governmental
             authorities in such jurisdictions as the Bank shall determine;

             e. One or more security  interests in trademark  rights and related
             goodwill, in form and substance  satisfactory to the Bank, executed
             by the Borrower;

             f. Certified  extracts from the minutes of the meeting of its board
             of directors,  authorizing  the  borrowings and the granting of the
             security  interest  provided  for herein and  authorizing  specific
             officers to execute and deliver the agreements provided for herein;

             g. A certificate of good standing  showing that Borrower is in good
             standing  under  the  laws of the  state of its  incorporation  and
             certificates  indicating  that  Borrower is  qualified  to transact
             business  and is in good  standing  in any other  state in which it
             conducts business;

             h.  UCC  searches,  tax lien and  litigation  searches,  fictitious
             business  statement  filings,  insurance  certificates,  notices or
             other similar  documents which Bank may require and in such form as
             Bank may require,  in order to reflect,  perfect or protect  Bank's
             first priority  security interest in the Collateral and in order to
             fully  consummate all of the transactions  contemplated  under this
             Agreement;

                                       8

<PAGE>

             i.  Evidence that Borrower has obtained insurance and acceptable
             endorsements;

             j.  Waivers  executed  by  landlords  and  mortgagees  of any  real
             property on which Collateral with an aggregate value of $100,000 or
             more is located;

             k.  Waivers and consents  with  respect to liens and setoff  rights
             satisfactory  in form and  substance  to the Bank  executed by each
             warehouseman,   repacker,   copacker   or   subcontractor   holding
             Collateral with an aggregate value of $100,000 or more.

             l. Such  documentation  from the  Trustees of the Trust as the Bank
             shall  require  confirming  title to,  and  certain  other  matters
             relating to all Trademark  Rights and other  intellectual  property
             comprising the Collateral;

             m. One or more  certificates  of  officers  of the  Borrower to the
             effect that the  representations and warranties of the Borrower are
             true and correct as of the date thereof;

             n.  Subordination  agreements  satisfactory to the Bank executed by
             ERLY  Industries,  Inc.  and the  State  Treasurer  of the State of
             Michigan,  Custodian  of the Public  School  Employees'  Retirement
             System; State Employees'  Retirement System;  Michigan State Police
             Retirement  System;  and Michigan  Judges'  Retirement  System,  as
             successor  to the Judges'  Retirement  System and  Probate  Judges'
             Retirement System.

             o.   Termination   statements  on  Form  UCC-2,   terminations   of
             assignments of trademarks and releases of indebtedness or liability
             executed by Greyrock Business Credit and such other evidence of the
             termination  of such  security  interest  and the  release  of such
             collateral as the Bank shall require; and

             p.   Such other documents and instruments as the Bank shall
             reasonably require.

     5.2 As conditions precedent to the making of the Term Loan, and in addition
to the  conditions  precedent  set forth in Section  5.1 above,  Borrower  shall
execute,  or cause to be executed,  and deliver to Bank,  in form and  substance
satisfactory to Bank and its counsel, the following

             a.   Termination   statements  on  Form  UCC-2,   terminations   of
             assignments of trademarks and releases of indebtedness or liability
             executed by ERLY Industries,  Inc., and, at the Bank's  discretion,
             the State  Treasurer  of the State of  Michigan,  Custodian  of the
             Public  School  Employees'   Retirement  System;  State  Employees'
             Retirement  System;  Michigan State Police Retirement  System;  and
             Michigan  Judges'  Retirement  System,  as successor to the Judges'
             Retirement  System and Probate  Judges'  Retirement  System and all
             other persons, as determined by the Bank in its discretion, who are
             asserting or claiming  rights in or ownership of, the  subordinated
             note in the initial  principal  amount of  $4,000,000  initially in
             favor  of ERLY  Industries,  Inc and  such  other  evidence  of the
             termination  of such  security  interest  and the  release  of such
             collateral as the Bank shall require; and

             b.  Such  other   documents  and  instruments  as  the  Bank  shall
             reasonably require.

6.   WARRANTIES, REPRESENTATIONS AND COVENANTS.

     6.1  Borrower  shall,  within  20 days of the end of each  calendar  month,
provide  to  the  Bank a  Borrowing  Base  Certificate  setting  forth  Eligible
Accounts,  Marketing  Development  Fund,  Net  Eligible  Accounts  and  Eligible
Inventory as defined in the Inventory Rider,  and a proposed  computation of the
Borrowing Base based thereon.  If so requested by Bank,  Borrower shall, at such
intervals  designated  by Bank,  during the term  hereof  execute  and deliver a
Report of Accounts  Receivable or similar report,  in form  customarily  used by
Bank.  Borrower's Borrowing Base at all times pertinent hereto shall not be less
than the  advances  made  hereunder.  Bank  shall  have the  right to  recompute
Borrower's Borrowing Base in conformity with this Agreement.

                                       9

<PAGE>

     6.2 If any  warranty is breached as to any  account,  or any account is not
paid in full by an  account  debtor  within  ninety  (90)  days from the date of
invoice, or an account debtor disputes liability or makes any claim with respect
thereto,  or a petition in bankruptcy or other  application for relief under the
Bankruptcy  Code or any other  insolvency  law is filed by or against an account
debtor,  or an account  debtor makes an assignment for the benefit of creditors,
becomes insolvent,  fails or goes out of business, then Bank may deem ineligible
any and all  accounts  owing  by that  account  debtor,  and  reduce  Borrower's
Borrowing Base by the amount thereof. Bank shall retain its security interest in
all  Receivables  and  accounts,  whether  eligible  or  ineligible,  until  all
Obligations have been fully paid and satisfied.  Returns and allowances, if any,
as  between  Borrower  and its  customers,  will  be on the  same  basis  and in
accordance with the usual customary practices of the Borrower,  as they exist at
this time.  Upon the  occurrence and during the  continuance  of a default,  any
merchandise which is returned by an account debtor or otherwise  recovered shall
be set aside, marked with Bank's name, and Bank shall retain a security interest
therein. After default,  Borrower shall promptly notify Bank of all disputes and
claims and settle or adjust  them on terms  approved by Bank.  After  default by
Borrower  hereunder,  no discount,  credit or allowance  shall be granted to any
account  debtor by Borrower  and no return of  merchandise  shall be accepted by
Borrower without Bank's consent. Bank may, after default by Borrower,  settle or
adjust  disputes and claims  directly with account  debtors for amounts and upon
terms which Bank considers reasonable in its sole and absolute  discretion,  and
in such cases Bank will  credit  Borrower's  account  with only the net  amounts
received by Bank in payment of the accounts,  after  deducting all Bank Expenses
in connection therewith.

     6.3     Borrower warrants, represents, covenants and agrees that:

             a. Borrower has good and marketable  title to the Collateral.  Bank
             has and shall continue to have a first priority  perfected security
             interest  in and to the  Collateral.  The  Collateral  shall at all
             times remain free and clear of all liens, encumbrances and security
             interests (except those in favor of Bank). Borrower is the sole and
             exclusive  owner or licensee,  as  applicable,  with respect to the
             Trademark  Rights,  fee  and  clear  of  any  liens,  charges,  and
             encumbrances.

             b. All accounts are and will,  at all times  pertinent  hereto,  be
             bona fide existing  obligations created by the sale and delivery of
             merchandise or the rendition of services to account  debtors in the
             ordinary course of business,  free of liens,  claims,  encumbrances
             and security interests (except as held by Bank and except as may be
             consented to, in writing, by Bank) and are unconditionally  owed to
             Borrower without defenses, disputes, offsets, counterclaims, rights
             of return or cancellation  other than those arising in the ordinary
             course of business,  and Borrower  shall have received no notice of
             actual or imminent  bankruptcy or insolvency of any account  debtor
             at the time an account due from such account  debtor is assigned to
             Bank.

             c. At the time each  account  is  assigned  to Bank,  all  property
             giving  rise to such  account  shall  have  been  delivered  to the
             account debtor or to the agent for the account debtor for immediate
             shipment to, and  unconditional  acceptance by, the account debtor.
             Borrower  shall  deliver  to Bank,  as Bank  may from  time to time
             require,  delivery receipts,  customer's purchase orders,  shipping
             instruction,  bills of lading and any other  evidence  of  shipping
             arrangements.  Absent  such a request  by Bank,  copies of all such
             documentation shall be held by Borrower as custodian for Bank.

             d. Hansen  Beverage  Company  (Services)  Limited,  a subsidiary of
             Hansen Natural,  conducts no business and has been  deregistered in
             the United  Kingdom.  If such  subsidiary  commences  business as a
             subsidiary of Hansen Natural or any affiliate, such subsidiary will
             execute and deliver to Bank a guaranty  substantially  identical to
             those delivered pursuant to Section 5.1(b).

     6.4 At the time  each  Eligible  Account  is  assigned  to  Bank,  all such
Eligible Accounts will be due and payable on terms set forth in Section 1.14, or
on such other terms  approved  in writing by Bank in advance of the  creation of
such  accounts and which are  expressly  set forth on the face of all  invoices,
copies of which  shall be held by Borrower as  custodian  for Bank,  and no such
eligible account will then be past due.

                                       10

<PAGE>

     6.5 Unless  Borrower has given Bank thirty (30) days advance  notice of its
intent  to change  the  location  of  Inventory  to a  location  other  than the
locations  hereinafter  listed  and  unless  Bank has  approved  such  change of
location,  Borrower shall keep Inventory (other than inventory with an aggregate
value of $20,000 or less) only at the following locations:  11251 Pacific Drive,
Fontana,  California  92335; 7 Nichols Court,  Dayton, NJ 08810; 7715 South 78th
Avenue,  Brideview,  IL 60455; 333 Johnson Road, Los Banos, CA 93635; 1701 South
Lee, Fort Gibson,  OK 74434;  11445 Pacific Avenue,  Fontana,  California 92337;
12100 S. E. Jennifer,  Clackamas,  OR 97015; 12300 N. W. 32nd Avenue,  Miami, FL
33168; 1200 Milik Street,  Carteret,  NJ 07008;  Bldg. 78 Hackensack  Boulevard,
South Kearny, NJ 07032; 11200 Edison Hwy.,  Edison,  California 93220; 27778 Ave
Hopkins, Valencia, CA 91355; 931 South Highland Ave., Tucson, AZ, 85716; 1450 N.
Daly, Anaheim,  CA 92806; 2401 E. Katella Avenue,  Suite 650, Anaheim, CA 92806;
801 Sentous Street, City of Industry, California 91748 and 2378 Railroad Street,
Corona, California 91720 and the owner or mortgagees of the respective locations
are:  Cliffstar-Crosby  Fruit Products,  PSS Warehouse;  LaGrou;  Kagome Packing
Company, Whitlock Packing Company,  Advanced Packaging,  Rudie Wilhelm, Carteret
Packaging,  Gateway Warehouse,  Giumarra Vineyards,  Health for Life,  Southwest
Canning, U.S. Continental and Hansen Beverage Company.

             a. Borrower,  immediately  upon demand by Bank therefor,  shall now
             and from time to time hereafter, at such intervals as are requested
             by Bank,  deliver to Bank,  designations  of  Inventory  specifying
             Borrower's  cost of Inventory,  the wholesale  market value thereof
             and such other matters and information relating to the Inventory as
             Bank may request;

             b. All of the  Inventory is and shall remain free from all purchase
             money or other security interests, liens or encumbrances, except as
             held by Bank and except for  warehouse  liens,  packer's  liens and
             copacker's liens arising in the ordinary course of business;

             c.  Borrower  does now keep and  hereafter  at all times shall keep
             correct and accurate  records  itemizing and  describing  the kind,
             type, quality and quantity of the Inventory,  its cost therefor and
             selling  price  thereof,  and the daily  withdrawals  therefrom and
             additions  thereto,  all of which records  shall be available  upon
             demand  to  any  of  Bank's  officers,  agents  and  employees  for
             inspection and copying;

             d. All  Inventory,  now and  hereafter  at all times,  shall be new
             Inventory of good and merchantable quality free from defects;

             e. No Inventory  having an aggregate  value in excess of $20,000 is
             now nor shall at any time or times  hereafter  be located or stored
             with  one or more  bailees,  warehousemen  or other  third  parties
             without Bank's prior written consent,  and, in such event, Borrower
             will concurrently therewith cause any such bailee,  warehouseman or
             other  third  party  to  issue  and  deliver  to  Bank,  in a  form
             acceptable to Bank,  warehouse  receipts in Bank's name  evidencing
             the storage of Inventory  or other  evidence of Bank's prior rights
             in the Inventory.  In any event,  Borrower shall instruct any third
             party to hold all such  Inventory  for  Bank's  account  subject to
             Bank's security interests and its instructions; and

             f. Bank shall  have the right  upon  demand now and/or at all times
             hereafter,  during  Borrower's usual business hours, to inspect and
             examine the Inventory and to check and test the same as to quality,
             quantity, value and condition and Borrower agrees to reimburse Bank
             for Bank's reasonable costs and expenses in so doing.

     6.6 Borrower  represents,  warrants and  covenants  with Bank that Borrower
will not, without Bank's prior written consent:

             a.  Grant  a  security  interest  in or  permit  a lien,  claim  or
             encumbrance upon any of the Collateral to any person,  association,
             firm, corporation, entity or governmental agency or instrumentality
             other than  warehouse  liens,  packer's  liens or copacker's  liens
             arising in the ordinary course of business;

             b.  Permit any levy, attachment or restraint to be made affecting
             any of Borrower's assets;

                                       11

<PAGE>

             c. Permit any  Judicial  Officer or Assignee to be  appointed or to
             take possession of any or all of Borrower's assets;

             d. Sublicense Trademark Rights other than contracts for the sale or
             distribution of finished products  utilizing  Specified  Trademarks
             entered  into in the  ordinary  course of its  business;  provided,
             however,  Borrower  may  sublicense  Specified  Trademarks  in  the
             ordinary  course of its  business  so long as within  ten (10) days
             after  entering  into each such  sublicense,  Borrower  shall  give
             notice to Bank of such  sublicense  and the name and address of the
             sublicensee and a copy of the sublicense;

             e.  Change its name,  business  structure,  corporate  identity  or
             structure;  add any  new  fictitious  names,  liquidate,  merge  or
             consolidate with or into any other business organization;

             f. Move or relocate any  Collateral,  except in the ordinary course
             of business and subject to Section 6.5;

             g. Acquire any other business organization;

             h. Enter into any transaction or series of transactions aggregating
             $100,000 or more which are not in the ordinary course of Borrower s
             business;

             i. Make any  investment in  securities of any person,  association,
             firm,  entity,  or  corporation  other than the  securities  of the
             United States of America; provided,  however, that the Borrower may
             invest in the securities of Hansen Beverage Company (UK) Limited in
             the maximum amount of $100,000.00;

             j. Make any change in Borrower's  financial  structure or in any of
             its  business  objectives,   purposes  or  operations  which  would
             adversely  effect  the  ability  of  Borrower  to repay  Borrower's
             Obligations;

             k.  Incur any  debts  outside  the  ordinary  course of  Borrower's
             business  except  renewals  or  extensions  of  existing  debts and
             interest thereon;

             l.  Make any  advance  or loan  except  in the  ordinary  course of
             Borrower's business as currently conducted;

             m. Make loans, advances or extensions of credit in excess of $5,000
             to any Person,  except for sales on open  account and  otherwise in
             the ordinary course of business;

             n. Guarantee or otherwise, directly or indirectly, in any way be or
             become responsible for obligations of any other Person,  whether by
             agreement  to  purchase  the  indebtedness  of  any  other  Person,
             agreement for the  furnishing of funds to any other Person  through
             the  furnishing  of goods,  supplies or  services,  by way of stock
             purchase, capital contribution, advance or loan, for the purpose of
             paying or discharging  (or causing the payment or discharge of) the
             indebtedness  of any other  Person,  or  otherwise,  except for the
             endorsement  of  negotiable  instruments  by  the  Borrower  in the
             ordinary course of business for deposit or collection.

             o. (a) Sell, lease, transfer or otherwise dispose of properties and
             assets in any 12-month  period  having an  aggregate  book value of
             more than One Hundred Thousand Dollars  ($100,000)  (whether in one
             transaction or in a series of  transactions)  except as to the sale
             of  inventory in the  ordinary  course of business;  (b) change its
             name, consolidate with or merge into any other corporation,  permit
             another  corporation to merge into it, acquire all or substantially
             all the  properties or assets of any other  Person,  enter into any
             reorganization or recapitalization or reclassify its capital stock,
             or (c) enter into any  sale-leaseback  transaction or  transactions
             involving $100,000 or more in the aggregate;

             p.  Subordinate  any  indebtedness  due  to it  from  a  person  to
             indebtedness of other creditors of such person;

                                       12

<PAGE>

             q. Purchase or hold  beneficially any stock or other securities of,
             or make any  investment or acquire any interest  whatsoever in, any
             other Person, except for the common stock of the Subsidiaries owned
             by the  Borrower  on the  date of this  Agreement  and  except  for
             certificates  of  deposit  with  maturities  of one year or less of
             United States commercial banks with capital,  surplus and undivided
             profits in excess of  $100,000,000  and direct  obligations  of the
             United States Government  maturing within one year from the date of
             acquisition thereof; or

             r.  Allow  any  fact,  condition  or event  to occur or exist  with
             respect to any employee pension or profit sharing plans established
             or maintained by it which might constitute  grounds for termination
             of any such  plan or for the  court  appointment  of a  trustee  to
             administer any such plan.

     6.7  Borrower's  sole  place of  business  or  chief  executive  office  or
residence is located at the address  indicated above and Borrower  covenants and
agrees  that it will  not,  during  the term of this  Agreement,  without  prior
written  notification  to Bank,  relocate  said sole place of  business or chief
executive office or residence.

     6.8      Borrower represents, warrants and covenants as follows:

             a.  Borrower will not make any  distribution  or declare or pay any
             dividend (in stock or in cash) to any  shareholder or on any of its
             capital stock, of any class, whether now or hereafter  outstanding,
             or purchase, acquire, repurchase, redeem or retire any such capital
             stock;  provided however,  that Borrower may declare and pay a cash
             dividend  in cash or in stock in an amount not in excess of current
             retained  earnings in any  calendar  year in which the Borrower has
             made Profit Recapture Payments under the Term Loan Note;

             b.  Borrower is and shall at all times  hereafter be a  corporation
             duly  organized and existing in good standing under the laws of the
             state  of  its  incorporation  and  qualified  and  licensed  to do
             business in  California or any other state in which it conducts its
             business;

             c. Borrower has the right and power and is duly authorized to enter
             into this Agreement; and

             d. The execution by Borrower of this Agreement shall not constitute
             a breach of any  provision  contained  in  Borrower's  articles  of
             incorporation or bylaws.

     6.9 The  execution of and  performance  by Borrower of all of the terms and
provisions  contained  in this  Agreement  shall  not  result  in a breach of or
constitute an event of default  under any agreement to which  Borrower is now or
hereafter becomes a party.

     6.10 Borrower shall promptly  notify Bank in writing of its  acquisition by
purchase, lease or otherwise of any after acquired property of the type included
in the  Collateral  having an aggregate  value in excess of  $100,000,  with the
exception of purchases of Inventory in the ordinary course of business.

     6.11 All assessments and taxes, whether real, personal or otherwise, due or
payable  by, or  imposed,  levied or  assessed  against,  Borrower or any of its
property  have  been  paid,  and  shall  hereafter  be  paid  in  full,   before
delinquency.  Borrower  shall  make due and  timely  payment  or  deposit of all
federal,  state and local taxes,  assessments or contributions required of it by
law, and will execute and deliver to Bank, on demand,  appropriate  certificates
attesting to the payment or deposit  thereof.  Borrower will make timely payment
or deposit of all F.I.C.A.  payments  and  withholding  taxes  required of it by
applicable  laws, and will upon request furnish Bank with proof  satisfactory to
it that Borrower has made such payments or deposit. If Borrower fails to pay any
such  assessment,  tax,  contribution,  or make such  deposit,  or  furnish  the
required proof, Bank may, in its sole and absolute discretion and without notice
to Borrower,

             (i) make  payment of the same or any part  thereof;  or (ii) set up
             such  reserves in  Borrower's  account as Bank deems  necessary  to
             satisfy the liability therefor, or both. Bank may conclusively rely
             on the  usual  statements  of the  amount  owing or other  official
             statements  issued by the  appropriate  governmental  agency.  Each
             amount so paid or deposited by Bank shall constitute a Bank Expense
             and an additional advance to Borrower.

                                       13

<PAGE>

     6.12 There are no actions or proceedings  pending by or against Borrower or
any guarantor of Borrower before any court or administrative agency and Borrower
has no knowledge of any pending, threatened or imminent litigation, governmental
investigations or claims, complaints, actions or prosecutions involving Borrower
or any  guarantor of Borrower,  except as heretofore  specifically  disclosed in
writing to Bank. If any of the foregoing arise during the term of the Agreement,
Borrower shall immediately notify Bank in writing.

     6.13    a.  Borrower,  at its  expense,  shall keep and maintain its assets
             insured  against  loss  or  damage  by  fire,   theft,   explosion,
             sprinklers  and all  other  hazards  and risks  ordinarily  insured
             against  by  other  owners  who  use  such  properties  in  similar
             businesses  for the full insurable  value  thereof.  Borrower shall
             also keep and maintain business  interruption  insurance and public
             liability  and property  damage  insurance  relating to  Borrower's
             ownership and use of the Collateral and its other assets.  All such
             policies of insurance  shall be in such form,  with such companies,
             and in such amounts as may be satisfactory to Bank.  Borrower shall
             deliver to Bank certified  copies of such policies of insurance and
             evidence  of  the  payments  of all  premiums  therefor.  All  such
             policies  of  insurance  (except  those  of  public  liability  and
             property   damage)   shall  contain  an   endorsement   in  a  form
             satisfactory  to Bank showing Bank as a loss payee thereof,  with a
             waiver of  warranties  (Form  438-BFU),  and all  proceeds  payable
             thereunder  shall be  payable  to Bank and,  upon  receipt by Bank,
             shall be applied on account of the  Obligations  owing to Bank.  To
             secure  the  payment of the  Obligations,  Borrower  grants  Bank a
             security  interest in and to all such policies of insurance (except
             those of public  liability  and  property  damage) and the proceeds
             thereof, and Borrower shall direct all insurers under such policies
             of insurance to pay all proceeds thereof directly to Bank.

             b.  Borrower  hereby  irrevocably  appoints Bank (and any of Bank's
             officers,  employees or agents  designated  by Bank) as  Borrower's
             attorney for the purpose of making,  selling and  adjusting  claims
             under such policies of insurance, endorsing the name of Borrower on
             any check,  draft,  instrument  or other  item of  payment  for the
             proceeds  of  such   policies  of  insurance  and  for  making  all
             determinations  and  decisions  with  respect to such  policies  of
             insurance.  Borrower will not cancel any of such  policies  without
             Bank's prior  written  consent.  Each such  insurer  shall agree by
             endorsement  upon the policy or policies of insurance  issued by it
             to  Borrower  as  required  above,  or by  independent  instruments
             furnished  to Bank,  that it will  give Bank at least ten (10) days
             written  notice  before any such policy or  policies  of  insurance
             shall  be  altered  or  canceled,  and  that no act or  default  of
             Borrower,  or any other  person,  shall affect the right of Bank to
             recover under such policy or policies of insurance  required  above
             or to pay any premium in whole or in part relating  thereto.  Bank,
             without  waiving  or  releasing  any  Obligations  or any  Event of
             Default,  may, but shall have no  obligation  to do so,  obtain and
             maintain  such policies of insurance and pay such premiums and take
             any other  action with  respect to such  policies  which Bank deems
             advisable.  All sums so  disbursed by Bank,  as well as  reasonable
             attorneys' fees,  court costs,  expenses and other charges relating
             thereto, shall constitute Bank Expenses and are payable on demand.

             c.  Borrower  grants to the Bank  power of  attorney,  having  full
             authority in the place of the Borrower and in the name of Borrower,
             from time to time after the  occurrence of an Event of Default,  to
             take any action and to execute any instrument  which the Bank deems
             necessary  or  advisable  to   accomplish   the  purposes  of  this
             Agreement,  including without  limitation to transfer the Trademark
             Rights and the right,  title and interest of the Borrower in and to
             the Specified Trademarks.

     6.14 All  financial  statements  and  information  relating to Borrower and
Hansen Natural which have been or may hereafter be delivered by Borrower to Bank
are true and correct and have been prepared in accordance with GAAP consistently
applied and there has been no material adverse change in the financial condition
of Borrower or Hansen Natural since the submission of such financial information
to Bank.

                                       14

<PAGE>

     6.15    a. Borrower at all times hereafter shall maintain a standard system
             of  accounting  in accordance  with GAAP  consistently  applied and
             customarily  used in Borrower's  industry,  with ledger and account
             cards and/or computer tapes and computer disks,  computer printouts
             and computer  records  pertaining to the  Collateral  which contain
             information  as may from  time to time be  requested  by Bank,  not
             modify or change its method of accounting or enter into,  modify or
             terminate  any  agreement  presently  existing,   or  at  any  time
             hereafter  entered into with any third party accounting firm and/or
             service  bureau for the  preparation  and/or  storage of Borrower's
             accounting  records  without  the  written  consent  of Bank  first
             obtained and without said  accounting  firm and/or  service  bureau
             agreeing  to provide  information  regarding  the  Receivables  and
             Inventory and Borrower's  financial  condition to Bank; permit Bank
             and any of its employees,  officers or agents, upon demand,  during
             Borrower's  usual  business  hours,  or the usual  business hour of
             third persons having control thereof, to have access to and examine
             all of the Borrower's Books relating to the Collateral,  Borrower's
             Obligations to Bank, Borrower's financial condition and the results
             of Borrower's operations and in connection  therewith,  permit Bank
             or any of its  agents,  employees  or  officers  to copy  and  make
             extracts  therefrom.  The costs and expenses of Bank in  performing
             two such  examinations  each  calendar  year shall be Bank Expenses
             provided that upon the occurrence and during the continuance of any
             default,  all costs and expenses of any such  examination  shall be
             Bank Expenses.

             b. Borrower shall deliver to Bank (i) within thirty (30) days after
             the end of each  calendar  month,  a  Borrower  prepared  unaudited
             balance  sheet and profit and loss  statement  covering  Borrower's
             operations,  certified  as true and correct by the chief  financial
             officer of the Borrower; (ii) within ninety (90) days after the end
             of each of Borrower's fiscal years audited  financial  statement of
             the Borrower for each such fiscal year,  including  but not limited
             to,  a  balance  sheet  and  profit  and  loss  statement,  with an
             unqualified   opinion  thereon  from  the  Borrower's   independent
             accountant;  (iii) within ninety (90) days after the end of each of
             Borrower's  fiscal years the Borrower's  Annual Report on Form 10-K
             as filed with the U. S  Securities  and Exchange  Commission;  (iv)
             within  sixty  (60)  days  of the  end of each  fiscal  quarter  of
             Borrower the Borrower's Quarterly Report on Form 10-Q as filed with
             the U. S.  Securities and Exchange  Commission and any other report
             requested  by Bank  relating to the  Collateral  and the  financial
             condition of Borrower, and (v) at the time of delivery of the items
             described in clauses (i) and (ii) of this paragraph,  a certificate
             signed by an authorized employee of Borrower to the effect that all
             reports,   statements,   computer  disk  or  tape  files,  computer
             printouts, computer runs, or other computer prepared information of
             any kind or nature relating to the foregoing or documents delivered
             or caused to be  delivered  to Bank  under  this  subparagraph  are
             complete,  correct and fairly  present the  financial  condition of
             borrower and (vi) within 60 days of each quarter end of Borrower, a
             certificate  signed by the Chief  Executive  Officer  and the Chief
             Financial  Officer of the  Borrower  that the  representations  and
             warranties  of the  Borrower  are true and  correct  as of the date
             thereof,  that the Borrower has complied  with all covenants of the
             Borrower and that no condition or event which  constitutes a breach
             or Event of Default  under this  Agreement  is in  existence on the
             date thereof.

             c. In addition to the financial  statements  requested  above,  the
             Borrower  agrees  to  provide  Bank with the  following  schedules,
             within 20 days of the end of the applicable month:

             Accounts Receivable Agings                  on a monthly basis:

             Accounts Payable Agings                     on a monthly basis;

             Listing of all Inventory                    on a monthly basis

                                       15

<PAGE>

     6.16 Hansen  Natural  shall  maintain the  following  financial  ratios and
covenants on a consolidated basis:

             a. Working Capital in an amount not less than $700,000.00 as of the
             date of this Agreement; $800,000 as of June 30, 1997; $1,000,000 as
             of September 30, 1997;  $1,000,000 as of December 31, 1997;  and in
             an amount  mutually  determined by the Bank and the Borrower on the
             basis of good  faith  negotiations  commenced  upon and  after  the
             delivery  by  Borrower  of its 1998  projections  with  respect  to
             quarters ending March 31, 1998 and each quarter thereafter.

             b. Net Worth in an amount  (i) not less  than  $8,400,000  for each
             fiscal  quarter  ending  in  calendar  year  1997;  not  less  than
             $8,400,000  plus Net  Income  (to the  extent  such Net Income is a
             positive  amount) for  calendar  year 1997 for each fiscal  quarter
             ending in calendar year 1998, and not less than $8,400,000 plus Net
             Income (to the extent such Net Income is a positive amount) for all
             calendar  years  preceding  the  date of  determination  but  after
             January  1,  1997,  for each  fiscal  quarters  ending  in 1998 and
             subsequent years.

             c. a ratio of Total Liabilities to Net Worth of less than 1.25:1.0.

             d. a ratio of Cash Flow to Current  Maturities of Long Term Debt of
             not less than 1.25:1.0.

             e. Borrower shall not without Bank's prior written  consent acquire
             or expend  for or  commit  itself to  acquire  or expend  for fixed
             assets by lease, purchase or otherwise, or incur new long-term debt
             in an  aggregate  amount  that  exceeds One Hundred and Twenty Five
             Thousand Dollars and No Cents ($125,000.00) in any fiscal year; and

     All  financial   covenants  shall  be  computed  in  accordance  with  GAAP
consistently  applied  except  as  otherwise  specifically  set  forth  in  this
Agreement.  All monies due from affiliates  (including  officers,  directors and
shareholders)  shall  be  excluded  from  Borrower's  assets  for  all  purposes
hereunder.

     In  the  event  that  Borrower   reasonably  expects  that  it  may  be  in
noncompliance  with one or more of the  financial  covenants  set  forth in this
Section 6.16 in the following period of determination by virtue of the operation
of SFAS  123 or any  other  accounting  changes  hereinafter  adopted  as  GAAP,
Borrower  shall so notify the Bank and  thereafter,  to the extent  permitted by
law,  such  compliance  shall be determined  without  regard to SFAS 123 or such
changes to GAAP.

     6.17 Borrower shall promptly supply Bank (and cause any guarantor to supply
Bank)  with such  other  information  (including  tax  returns)  concerning  its
financial  affairs (or that of any  guarantor)  as Bank may request from time to
time hereafter, and shall promptly notify Bank of any material adverse change in
Borrower's financial condition and of any condition or event which constitutes a
breach  of or an  event  which  constitutes  an  Event  of  Default  under  this
Agreement.

     6.18 Borrower is now and shall be at all times  hereafter  solvent and able
to pay its debts (including trade debts) as they mature.

     6.19 Borrower shall  immediately and without demand  reimburse Bank for all
sums expended by Bank in connection  with any action  brought by Bank to correct
any default or enforce  any  provision  of this  Agreement,  including  all Bank
Expenses; Borrower authorizes and approves all advances and payments by Bank for
items described in this Agreement as Bank Expenses.

     6.20  Each  warranty,   representation  and  agreement  contained  in  this
Agreement shall be automatically  deemed repeated with each advance and shall be
conclusively  presumed  to  have  been  relied  on by  Bank  regardless  of  any
investigation   made  or  information   possessed  by  Bank.   The   warranties,
representations  and  agreements  set forth  herein shall be  cumulative  and in
addition to any and all other warranties,  representations  and agreements which
Borrower shall give, or cause to be given, to Bank, either now or hereafter.

     6.21  Borrower  shall keep all of its primary bank  accounts  with Bank and
shall notify the Bank  immediately in writing of the existence of any other bank
account,  deposit  account,  or  any  other  account  into  which  money  may be
deposited.

                                       16

<PAGE>

     6.22 Borrower shall furnish to the Bank: (a) as soon as possible, but in no
event  later than thirty  (30) days after  Borrower  knows or has reason to know
that any reportable event with respect to any formal deferred  compensation plan
has occurred,  a statement of the chief  financial  officer of Borrower  setting
forth the details concerning such reportable event and the action which Borrower
proposes to take with  respect  thereto,  together  with a copy of the notice of
such reportable  event given to the Pension Benefit Guaranty  Corporation,  if a
copy of such notice is  available to  Borrower;  (b)  promptly  after the filing
thereof  with the  United  States  Secretary  of Labor  or the  Pension  Benefit
Guaranty Corporation, copies of each annual report with respect to each deferred
compensation  plan;  (c) promptly  after receipt  thereof,  a copy of any notice
Borrower  may  receive  from the Pension  Benefit  Guaranty  Corporation  or the
Internal  Revenue  Service  with  respect  to any  deferred  compensation  plan;
provided,  however,  this  subparagraph  shall not  apply to  notice of  general
application  issued by the Pension Benefit Guaranty  Corporation or the Internal
Revenue Service;  and (d) when the same is made available to participants in the
deferred compensation plan, all notices and other forms of information from time
to time  disseminated to the  participants by the  administrator of the deferred
compensation plan.

     6.23 Borrower is now and shall at all times hereafter  remain in compliance
with all federal,  state and municipal laws, regulations and ordinances relating
to the  handling,  treatment  and  disposal  of  toxic  substances,  wastes  and
hazardous material and shall maintain all necessary authorizations and permits.

     6.24  Borrower  shall with  diligence and in good faith take such action as
shall be reasonably necessary to finalize the amount payable under the ERLY Note
(whether  through  negotiation  or litigation,  or both),  and pay the amount so
determined promptly after such determination.

7.   EVENTS OF DEFAULT.

     Any one or more of the  following  events  shall  constitute  a default  by
Borrower under this Agreement:

             a. If Borrower  fails or  neglects to perform,  keep or observe any
             term,  provision,   condition,  covenant,  agreement,  warranty  or
             representation contained in this Agreement, or any other present or
             future agreement between Borrower and Bank;

             b. If any representation,  statement, report or certificate made or
             delivered by Borrower, or any of its officers,  employees or agents
             to Bank is not true and correct;

             c. If Borrower  fails to pay when due and  payable or declared  due
             and  payable,  all or any  portion  of the  Borrower's  Obligations
             (whether  of  principal,  interest,  taxes,  reimbursement  of Bank
             Expenses,  or otherwise)  and such failure  continues for three (3)
             business days after written notice of such failure;

             d. If there is a material  impairment  of the prospect of repayment
             of all or any  portion  of  Borrower's  Obligations  or a  material
             impairment of the value or priority of Bank's security  interest in
             the Collateral,  including,  without limitation,  any action by any
             subcontractor  or  warehouseman  holding  or  asserting  a lien  in
             Collateral or asserting a setoff right ;

             e. If all or any of Borrower's assets are attached, seized, subject
             to a writ or distress warrant, or are levied upon, or come into the
             possession of any Judicial Officer or Assignee and the same are not
             released,  discharged  or  bonded  against  within  ten  (10)  days
             thereafter;

             f. If any Insolvency Proceeding is filed or commenced by or against
             Borrower without being dismissed within ten (10) days thereafter;

             g. If any  proceeding  is filed or  commenced  by or against
             Borrower  for its  dissolution  or liquidation;



                                       17

<PAGE>

             h. If Borrower is enjoined,  restrained  or in any way prevented by
             court order from  continuing to conduct all or any material part of
             its business affairs;

             i. If a notice of lien,  levy or assessment is filed of record with
             respect to any or all of  Borrower's  assets by the  United  States
             Government,  or any department,  agency or instrumentality thereof,
             or by any state,  county,  municipal or other government agency, or
             if any  taxes or debts  owing at any time  hereafter  to any one or
             more of such entities becomes a lien,  whether choate or otherwise,
             upon any or all of the  Borrower's  assets and the same is not paid
             on the payment date thereof;

             j. If a judgment or other claim becomes a lien or encumbrance  upon
             any or all of  Borrower's  assets  and the  same is not  satisfied,
             dismissed or bonded against within ten (10) days thereafter;

             k. If  Borrower's  records  are  prepared  and  kept by an  outside
             computer  service bureau at the time this Agreement is entered into
             or during  the term of this  Agreement  such an  agreement  with an
             outside service bureau is entered into, and at any time thereafter,
             without  first  obtaining  the  written  consent of Bank,  Borrower
             terminates,   modifies,   amends   or   changes   its   contractual
             relationship  with said  computer  service  bureau or said computer
             service bureau fails to provide Bank with any requested information
             or  financial  data  pertaining  to Bank's  Collateral,  Borrower's
             financial condition or the results of Borrower's operations;

             l. If Borrower permits a default in any material agreement to which
             Borrower  is a party  with  third  parties  so as to  result  in an
             acceleration of the maturity of Borrower's  indebtedness to others,
             whether under any indenture, agreement or otherwise;

             m. If Borrower makes any payment on account of  indebtedness  which
             has been formally  subordinated  to Borrower's  Obligations to Bank
             without the prior written consent of Bank;

             n.  If  any  misrepresentation  exists  now  or  thereafter  in any
             warranty or representation  made to Bank by any officer or director
             of Borrower, or if any such warranty or representation is withdrawn
             by any officer or director;

             o. If any party  subordinating  its claims to that of Bank's or any
             guarantor  of  Borrower's   Obligations   dies  or  terminates  its
             subordination  or  guaranty,  becomes  insolvent  or an  Insolvency
             Proceeding is commenced by or against any such subordinating  party
             or guarantor;

             p. If there is a change of  ownership  or  control  of  twenty-five
             percent  (25.00%)  or more of the issued and  outstanding  stock of
             Borrower; or

             q. If any reportable event,  which the Bank determines  constitutes
             grounds for the  termination of any deferred  compensation  plan by
             the Pension Benefit Guaranty  Corporation or for the appointment by
             the  appropriate  United  States  District  Court of a  trustee  to
             administer  any such plan,  shall have  occurred and be  continuing
             thirty (30) days after written notice of such  determination  shall
             have been  given to  Borrower  by Bank,  or any such Plan  shall be
             terminated  within  the  meaning  of  Title  IV of  the  Employment
             Retirement  Income  Security Act  ("ERISA"),or  a trustee  shall be
             appointed  by the  appropriate  United  States  District  Court  to
             administer  any  such  plan,  or  the  Pension   Benefit   Guaranty
             Corporation  shall institute  proceedings to terminate any plan and
             in case of any event  described in this Section 7.q, the  aggregate
             amount of the Borrower's  liability to the Pension Benefit Guaranty
             Corporation under Sections 4062, 4063 or 4064 of ERISA shall exceed
             five percent (5%) of Borrower's Net Worth.

             r. If Borrower  shall default  under,  or permit any other party to
             default under,  any of the Trademark  Rights.  Without limiting the
             generality of the foregoing, Borrower shall not terminate, nor take
             any action which would give grounds to any other party to terminate
             the Carbonated  Beverage License Agreement dated July 27, 1992, the
             Other Beverage License Agreement dated July 27, 1992 or the Royalty
             Sharing Agreement dated July 27, 1992.

                                       18

<PAGE>

     Notwithstanding anything contained in Section 7 to the contrary, Bank shall
refrain  from  exercising  its rights and  remedies  and Event of Default  shall
thereafter  not be deemed to have occurred by reason of the occurrence of any of
the events set forth in Sections  7.e, 7.f or 7.j of this  Agreement  if, within
ten  (10)  days  from  the  date  thereof,  the  same is  released,  discharged,
dismissed,  bonded against or satisfied;  provided, however, if the event is the
institution  of  Insolvency  Proceedings  against  Borrower,  Bank  shall not be
obligated to make advances to Borrower during such cure period.

8.   BANK'S RIGHTS AND REMEDIES.

     8.1 Upon the  occurrence  of an Event of  Default  by  Borrower  under this
Agreement, Bank may, at its election, without notice of its election and without
demand,  do any one or more of the  following,  all of which are  authorized  by
Borrower:

             a. Declare Borrower's Obligations,  whether evidenced otherwise,
             immediately due and payable to the Bank;

             b. Cease advancing money or extending  credit to or for the benefit
             of Borrower under this Agreement,  or any other  agreement  between
             Borrower and Bank;

             c.  Terminate  this  Agreement  as  to  any  future   liability  or
             obligation  of  Bank,  but  without  affecting  Bank's  rights  and
             security  interests  in the  Collateral,  and  the  Obligations  of
             Borrower to Bank;

             d. Without notice to or demand upon Borrower or any guarantor, make
             such  payments  and do such  acts as Bank  considers  necessary  or
             reasonable  to protect its  security  interest  in the  Collateral.
             Borrower  agrees to assemble the Collateral if Bank so requires and
             to make the  Collateral  available  to Bank as Bank may  designate.
             Borrower authorizes Bank to enter the premises where the Collateral
             is located,  take and maintain possession of the Collateral and the
             premises (at no charge to Bank),  or any part thereof,  and to pay,
             purchase,  contest or compromise  any  encumbrance,  charge or lien
             which in the opinion of Bank appears to be prior or superior to its
             security  interest and to pay all expenses  incurred in  connection
             therewith;

             e. Without limiting Bank's rights under any security interest, Bank
             is hereby granted a license or other right to use,  without charge,
             Borrower's labels, patents, copyrights,  rights of use of any name,
             trade secrets,  trade names,  trademarks and advertising matter, or
             any property of a similar nature as it pertains to the  Collateral,
             in completing  production of,  advertising for sale and selling any
             Collateral  and  Borrower's  rights  under  all  licenses  and  all
             franchise  agreement shall inure to Bank's benefit,  and Bank shall
             have the right and power to enter into  sublicense  agreements with
             respect to all such rights with third  parties on terms  acceptable
             to Bank; at the election of Bank,  Bank shall be substituted as the
             Licensee under the Carbonated Beverage License Agreement and/or the
             Other Beverage License Agreement referred to in Section 1.37 and/or
             in place of Borrower as a party to the  Royalty  Sharing  Agreement
             referred to in Section 1.37, and Borrower hereby assigns and grants
             such rights of substitution to Bank;

             f. Ship, reclaim, recover, store, finish, maintain, repair, prepare
             for sale,  advertise for sales and sell (in the manner provided for
             herein) the Inventory;

             g. Sell or  dispose  the  Collateral  at either a public or private
             sale, or both, by way of one or more contracts or transactions, for
             cash or on terms,  in such  manner  and at such  places  (including
             Borrower's  premises) as is commercially  reasonable in the opinion
             of Bank. It is not necessary  that the Collateral be present at any
             such sale;

                                       19

<PAGE>

             h. Bank shall  give  notice of the  disposition  of the
             Collateral as follows:

                      (1) Bank  shall  give the  Borrower  and each  holder of a
                      security  interest  in the  Collateral  who has filed with
                      Bank a written request for notice,  a notice in writing of
                      the time and  place of public  sale,  or, if the sale is a
                      private sale or some disposition  other than a public sale
                      is to be  made of the  Collateral,  the  time on or  after
                      which the private sale or other disposition is to be made;

                      (2) The notice  shall be  personally  delivered or mailed,
                      postage prepaid,  to Borrower's  address appearing in this
                      Agreement, at least ten (10) calendar days before the date
                      fixed for the sale,  or at least  ten (10)  calendar  days
                      before  the date on or after  which  the  private  sale or
                      other  disposition is to be made, unless the Collateral is
                      perishable  or  threatens  to decline  speedily  in value.
                      Notice to persons other than Borrower claiming an interest
                      in the Collateral  shall be sent to such addresses as they
                      have furnished to Bank;

                      (3) If the sale is to be a public  sale,  Bank  shall also
                      give notice of the time and place by  publishing  a notice
                      one time at least ten (10)  calendar  days before the date
                      of the sale in a newspaper of general  circulation  in the
                      county in which the sale is to be held; and

                      (4) Bank may credit bid and Purchase at any public sale.

             i. Borrower shall pay all Bank Expenses incurred in connection with
             Bank's  enforcement  and exercise of any of its rights and remedies
             as herein provided, whether or not suit is commenced by Bank;

             j. Any deficiency which exists after  disposition of the Collateral
             as provided above will be paid immediately by Borrower.  Any excess
             will be  returned,  without  interest  and subject to the rights of
             third parties,  to Borrower by Bank, or, in Bank's  discretion,  to
             any party who Bank  believes,  in good  faith,  is  entitled to the
             excess; and

             k. Without  constituting a retention of Collateral in  satisfaction
             of an  obligation  within  the  meaning  of  9505  of  the  Uniform
             Commercial  Code  or an  action  under  California  Code  of  Civil
             Procedure 726, apply any and all amounts  maintained by Borrower as
             deposit accounts (as that term is defined under 9105 of the Uniform
             Commercial  Code) or other  accounts that Borrower  maintains  with
             Bank against the Obligations.

     8.2  Bank's  rights  and  remedies  under  this  Agreement  and  all  other
agreements  shall be  cumulative.  Bank shall have all other rights and remedies
not inconsistent  herewith as provided by law or in equity.  No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of any
default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election or acquiescence by Bank.

                                       20

<PAGE>

9.   TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY.

     If Borrower  fails to pay  promptly  when due to another  person or entity,
     monies which Borrower is required to pay by reason of any provision in this
     Agreement,  Bank may,  but need  not,  pay the same and  charge  Borrower's
     account therefor, and Borrower shall promptly reimburse Bank. All such sums
     shall become additional  indebtedness owing to Bank, shall bear interest at
     the rate hereinabove provided, and shall be secured by all Collateral.  Any
     payments made by Bank shall not  constitute  (i) an agreement by it to make
     similar  payments  in the  future;  or (ii) a waiver by Bank of any default
     tinder this Agreement. Bank need not inquire as to, or contest the validity
     of, any such expense,  tax, security interest,  encumbrance or lien and the
     receipt  of the usual  official  notice  of the  payment  thereof  shall be
     conclusive  evidence  that the same was validly due and owing.  Except with
     respect  to  payment of any tax,  Bank  shall  make  reasonable  inquiry of
     Borrower regarding payment prior to making any such payment.  Such payments
     shall constitute Bank Expenses and additional advances to Borrower.

10.  WAIVERS.

     10.1 Borrower agrees that checks and other instruments  received by Bank in
payment or on account of  Borrower's  Obligations  constitute  only  conditional
payment until such items are actually paid to Bank and Borrower waives the right
to direct the application of any and all payments at any time or times hereafter
received by Bank on account of Borrower's  Obligations  and Borrower agrees that
Bank  shall  have the  continuing  exclusive  right to apply  and  reapply  such
payments in any manner as Bank may deem advisable,  notwithstanding any entry by
Bank upon its books.

     10.2 Borrower waives demand,  protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, documents, instruments chattel paper, and guarantees
at any time held by Bank on which Borrower may in any way be liable.

     10.3 Bank shall not in any way or manner be liable or  responsible  for (a)
the  safekeeping of the Inventory;  (b) any loss or damage thereto  occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof;  or (d)  any  act or  default  of any  carrier,  warehouseman,  bailee,
forwarding  agency  or other  person  whomsoever.  All risk of loss,  damage  or
destruction of Inventory shall be borne by Borrower.


                                       21

<PAGE>

     10.4  Borrower  waives  the right  and the  right to assert a  confidential
relationship,  if any, it may have with any  accountant,  accounting firm and/or
service  bureau or consultant in connection  with any  information  requested by
Bank pursuant to or in accordance  with this  Agreement,  and agrees that a Bank
may contact directly any such accountants, accounting firm and/or service bureau
or consultant in order to obtain such information.

     10.5  BORROWER AND BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
OR  PROCEEDING  RELATING TO THIS  AGREEMENT  OR ANY  TRANSACTION  HEREUNDER,  OR
CONTEMPLATED  HEREUNDER,  OR ANY OTHER CLAIM  (INCLUDING  TORT OR BREACH OF DUTY
CLAIMS) OR DISPUTE HOWSOEVER ARISING BETWEEN BANK AND BORROWER.

     10.6 In the  event  that  Bank  elects  to waive  any  rights  or  remedies
hereunder,  or compliance  with any of the terms  hereof,  or delays or fails to
pursue or enforce any terms, such waiver,  delay or failure to pursue or enforce
shall  only be  effective  with  respect  to that  single  act and  shall not be
construed to affect any subsequent  transactions or Bank's right to later pursue
such rights and remedies.

11.  ONE CONTINUING LOAN TRANSACTION.

     All loans and advances  heretofore,  now or at any time or times  hereafter
     made by Bank to  Borrower  under  this  Agreement  or any  other  agreement
     between  Bank and  Borrower,  shall  constitute  one loan secured by Bank's
     security  interests in the Collateral and by all other security  interests,
     liens, encumbrances heretofore,  now or from time to time hereafter granted
     by Borrower to Bank.

     Notwithstanding  the  above,  (i) to the  extent  that any  portion  of the
     Obligations  are a consumer loan,  that portion shall not be secured by any
     deed of trust or mortgage on or other  security  interest in the Borrower's
     principal  dwelling which is not a purchase  money security  interest as to
     that portion,  unless expressly  provided to the contrary in another place,
     or (ii) if the Borrower (or any of them) has (have) given or give(s) Bank a
     deed of trust or mortgage  covering  real  property,  that deed of trust or
     mortgage shall not secure the loan and any other Obligation of the Borrower
     (or any of them),  unless  expressly  provided  to the  contrary in another
     place.

12.  NOTICES.

     Unless  otherwise  provided  in this  Agreement,  all notices or demands by
     either party on the other  relating to this  Agreement  shall be in writing
     and sent by regular United States mail, postage prepaid, properly addressed
     to Borrower or to Bank at the  addresses  stated in this  Agreement,  or to
     such other  addresses  as Borrower or Bank may from time to time specify to
     the other in writing.  Requests to Borrower by Bank  hereunder  may be made
     orally.

                                       22

<PAGE>

13.  AUTHORIZATION TO DISBURSE.

     Bank is  hereby  authorized  to make  loans  and  advances  hereunder  upon
     telephonic or other  instructions  received from anyone purporting to be an
     officer,  employee,  or representative of Borrower, or at the discretion of
     Bank if said loans and advances are  necessary to meet any  Obligations  of
     Borrower  to Bank.  Bank shall  have no duty to make  inquiry or verify the
     authority of any such party, and Borrower shall hold Bank harmless from any
     damage,  claims or  liability  by reason of Bank's  honor of, or failure to
     honor, any such instructions.

14.  DESTRUCTION OF BORROWER'S DOCUMENTS.

     Any documents,  schedules,  invoices or other papers delivered to Bank, may
     be destroyed or otherwise disposed of by Bank six (6) months after they are
     delivered to or received by Bank, unless Borrower requests, in writing, the
     return of the said documents, schedules, invoices or other papers and makes
     arrangements, at Borrower's expense, for their return.

15.  CHOICE OF LAW.

     The  validity  of this  Agreement,  its  construction,  interpretation  and
     enforcement,  and the rights of the parties  hereunder and  concerning  the
     Collateral,  shall be  determined  according  to the  laws of the  State of
     California.  The parties agree that all actions or  proceedings  arising in
     connection  with this  Agreement  shall be tried and litigated  only in the
     state and federal  courts in the Northern  District of California or County
     of Santa Clara.

16.  GENERAL PROVISIONS.

     16.1 This Agreement shall be binding and deemed  effective when executed by
the Borrower and accepted and executed by Bank at its Headquarter Office.

     16.2 This  Agreement  shall bind and inure to the benefit of the respective
successors and assigns of each of the parties, provided,  however, that Borrower
may not assign this  Agreement  or any rights  hereunder  without  Bank's  prior
written  consent and any  prohibited  assignment  shall be  absolutely  void. No
consent to an assignment by Bank shall  release  Borrower or any guarantor  from
their  Obligations  to Bank.  Bank may assign this  Agreement and its rights and
duties hereunder.  Bank reserves the right to sell, assign, transfer,  negotiate
or grant  participations in all or any part of, or any interest in Bank's rights
and benefits hereunder. In connection therewith, Bank may disclose all documents
and  information  which Bank now or hereafter  may have  relating to Borrower or
Borrower's business.

                                       23

<PAGE>

     16.3  Paragraph  headings and paragraph  numbers have been set forth herein
for  convenience  only;  unless  the  contrary  is  compelled  by  the  context,
everything contained in each paragraph applies equally to this entire Agreement.

     16.4 Neither this Agreement nor any  uncertainty or ambiguity  herein shall
be construed or resolved  against  Bank or Borrower,  whether  under any rule of
construction or otherwise;  on the contrary, this Agreement has been reviewed by
all parties and shall be  construed  and  interpreted  according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto. When permitted by the context,  the singular includes the
plural and vice versa.

     16.5 Each provision of this  Agreement  shall be severable from every other
provision  of  this  Agreement  for  the  purpose  of   determining   the  legal
enforceability of any specific provision.

     16.6 This Agreement  cannot be changed or terminated  orally.  Except as to
currently existing  Obligations owing by Borrower to Bank, all prior agreements,
understandings,  representations,  warranties,  and  negotiations,  if any, with
respect to the subject matter hereof, are merged into this Agreement.

     16.7 The parties  intend and agree that their  respective  rights,  duties,
powers liabilities, obligations and discretions shall be performed, carried out,
discharged and exercised reasonably and in good faith.

     IN WITNESS  WHEREOF,  the parties hereto have caused this Revolving  Credit
Loan & Security Agreement (Accounts and Inventory) to be executed as of the date
first hereinabove written.

ATTEST:                                      BORROWER:
                                             HANSEN BEVERAGE COMPANY

___________________________________          By: _____________________________
Title:                                                Signature of

Accepted and effective as of_____________    Title: __________________________
at Bank's Headquarter Office

                                             By: _____________________________
                                                      Signature of

     (Bank)                                  Title: __________________________


By: _____________________________________    By: _____________________________
                                                      Signature of

Title: __________________________________    Title: __________________________


                                             By: _____________________________
                                                      Signature of

                                             Title: __________________________


                                       24

<PAGE>
                        SECURITY AGREEMENT (ALL ASSETS)

- --------------------------------------------------------------------------------


As of May 15, 1997, for value  received,  the undersigned  ("Debtor")  grants to
Comerica   Bank-California   ("Bank"),  a  California  banking  corporation,   a
continuing  security  interest in the  Collateral  (as defined  below) to secure
payment when due, whether by stated maturity, demand, acceleration or otherwise,
of all existing and future  indebtedness  ("Indebtedness") to the Bank of Hansen
Beverage   Company,   a  Delaware   corporation   ("Borrower")   and/or  Debtor.
Indebtedness  includes  without limit any and all  obligations or liabilities of
the Borrower and/or Debtor to the Bank,  whether absolute or contingent,  direct
or indirect,  voluntary or  involuntary,  liquidated or  unliquidated,  joint or
several,  known or unknown; any and all obligations or liabilities for which the
Borrower and/or Debtor would otherwise be liable to the Bank were it not for the
invalidity or unenforceability  of them by reason of any bankruptcy,  insolvency
or other law, or for any other reason;  any and all  amendments,  modifications,
renewals  and/or  extensions of any of the above;  all costs incurred by Bank in
establishing,  determining, continuing, or defending the validity or priority of
its  security  interest,  or in  pursuing  its  rights and  remedies  under this
Agreement or under any other  agreement  between Bank and Borrower and/or Debtor
or in connection with any proceeding involving Bank as a result of any financial
accommodation  to Borrower  and/or  Debtor;  and all other  costs of  collecting
Indebtedness,  including  without limit attorney fees. Debtor agrees to pay Bank
all such costs incurred by the Bank, immediately upon demand, and until paid all
costs shall bear interest at the highest per annum rate applicable to any of the
Indebtedness,  but not in excess  of the  maximum  rate  permitted  by law.  Any
reference  in this  Agreement  to attorney  fees shall be deemed a reference  to
reasonable  fees,  costs,  and expenses of both in-house and outside counsel and
paralegals, whether or not a suit or action is instituted, and to court costs if
a suit or action is  instituted,  and whether  attorney  fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy, administrative or
probate proceeding or otherwise.

1. Collateral shall mean all the following  property Debtor now or later owns or
has an interest in, wherever located:

         (a) All Accounts  Receivable (For purposes of this Agreement  "Accounts
Receivable"  consists  of all  accounts,  general  intangibles,  chattel  paper,
deposit accounts, documents and instruments).


         (b) All Inventory.

         (c) All Equipment and Fixtures.

Specific items listed below are also included in Collateral.

All shares of capital stock of Hansen Beverage Company, a Delaware corporation

All investment property, as defined in Section 9115 of the California Commercial
Code

All  goods,   instruments,   investment   property,   documents,   policies  and
certificates  of  insurance,  deposits,  money or other  property  (except  real
property  which is not a fixture)  which are now or later in possession of Bank,
or as to which Bank now or later controls possession by documents or otherwise.

All additions,  attachments,  accessions,  parts,  replacements,  substitutions,
renewals, interest, dividends,  distributions, rights of any kind (including but
not limited to stock splits,  stock  rights,  voting and  preferential  rights),
products,  or proceeds of or pertaining to the above  including,  without limit,
cash or other  property  which were  proceeds and are  recovered by a bankruptcy
trustee or otherwise as a preferential transfer by Debtor.

2. Warranties,  Covenants and Agreements. Debtor warrants, covenants; and agrees
as follows:

2.1 Debtor shall  furnish to Bank, in form and at intervals as Bank may request,
any information Bank may reasonably request and allow Bank to examine,  inspect,
and copy any of Debtor's  books and  records.  Debtor  shall,  at the request of
Bank,  mark its records and the  Collateral  to clearly  indicate  the  security
interest of Bank under this Agreement.

                                       25

<PAGE>

2.2 At the time any  Collateral  becomes,  or is represented to be, subject to a
security  interest in favor of Bank,  Debtor  shall be deemed to have  warranted
that (a)  Debtor is the  lawful  owner of the  Collateral  and has the right and
authority to subject it to a security  interest granted to Bank; (b) none of the
Collateral is subject to any security  interest other than that in favor of Bank
and there are no financing  statements on file, other than in favor of Bank; and
(c) Debtor  acquired its rights in the Collateral in the ordinary  course of its
business.

2.3 Debtor will keep the  Collateral  free at all times from all claims,  liens,
security  interests and encumbrances  other than those in favor of Bank.  Debtor
will not, without the prior written consent of Bank, sell, transfer or lease, or
permit to be sold,  transferred or leased, any or all of the Collateral,  except
for  Inventory  and assets in the  ordinary  course of its business and will not
return  any  Inventory  to its  supplier  other than in the  ordinary  course of
business.  Bank or its  representatives  may at all reasonable times inspect the
Collateral and may enter upon all premises where the Collateral is kept or might
be located.

2.4 Debtor will do all acts and will execute all  writings  requested by Bank to
establish, maintain and continue a perfected and first security interest of Bank
in the  Collateral.  Debtor  agrees  that Bank has no  obligation  to acquire or
perfect any lien on or  security  interest in any  asset(s),  whether  realty or
personalty,  to secure  payment of the  Indebtedness,  and Debtor is not relying
upon assets in which the Bank may have a lien or security  interest  for payment
or the Indebtedness.

2.5 Debtor  will pay within the time that they can be paid  without  interest or
penalty all taxes,  assessments and similar charges which at any time are or may
become a lien, charge, or encumbrance upon any Collateral,  except to the extent
contested in good faith and bonded in a manner  satisfactory  to Bank. If Debtor
fails to pay any of these  taxes,  assessments,  or  other  charges  in the time
provided above, Bank has the option (but not the obligation) to do so and Debtor
agrees to repay  all  amounts  so  expended  by Bank  immediately  upon  demand,
together with interest at the highest lawful default rate which could be charged
by Bank to Debtor on any Indebtedness.

2.6 Debtor will keep the  Collateral in good  condition and will protect it from
loss, damage, or deterioration  from any cause.  Debtor has and will maintain at
all times (a) with  respect  to the  Collateral,  insurance  under an "all risk"
policy against fire and other risks customarily insured against,  and (b) public
liability  insurance and other insurance as may be required by law or reasonably
required by Bank, all of which insurance  shall be in amount,  form and content,
and written by companies as may be satisfactory  to Bank,  containing a lender's
loss  payable  endorsement  acceptable  to Bank.  Debtor  will  deliver  to Bank
immediately  upon  demand  evidence  satisfactory  to  Bank  that  the  required
insurance has been procured. If Debtor fails to maintain satisfactory insurance,
Bank has the option (but not the obligation) to do so and Debtor agrees to repay
all amounts so expended by Bank immediately upon demand,  together with interest
at the highest  lawful  default rate which could be charged by Bank to Debtor on
any Indebtedness.

2.7 If  Debtor's  Accounts  Receivable  are  pledged  as  Collateral  under this
Agreement,  on each  occasion  on which  Debtor  evidences  to Bank the  account
balances on and the nature and extent of the Accounts  Receivable,  Debtor shall
be deemed to have warranted that except as otherwise indicated (a) each of those
Accounts  Receivable is valid and enforceable  without  performance by Debtor of
any act; (b) each of those account  balances are in fact owing, (c) there are no
setoffs,  recoupments,  credits,  counterclaims  or defenses  (other than in the
ordinary course of business) against any of those Accounts Receivable, (d) as to
any Accounts Receivable represented by a note, trade acceptance,  draft or other
instrument or by any chattel paper or document, if a default has occurred and is
continuing,  the same have been endorsed and/or delivered by Debtor to Bank, (e)
Debtor has not received  with respect to any Account  Receivable,  any notice of
the death of the related account debtor,  nor of the  dissolution,  liquidation,
termination  of  existence,  insolvency,  business  failure,  appointment  of  a
receiver  for,  assignment  for the  benefit  of  creditors  by,  or filing of a
petition in bankruptcy  by or against,  the account  debtor,  and (f) as to each
Account Receivable, the account debtor is not an affiliate of Debtor, the United
States of  America  or any  department,  agency or  instrumentality  of it, or a
citizen or resident of any jurisdiction outside of the United States (other than
as  previously  approved by Bank).  Debtor will do all acts and will execute all
writings  requested by Bank in  accordance  with the  Revolving  Credit Loan and
Security Agreement, dated May 15, 1997 (the "Loan Agreement"),  between Borrower
and  Bank  to  perform,   enforce  performance  of,  and  collect  all  Accounts
Receivable. Debtor shall neither make nor permit any modification, compromise or
substitution  for any Account  Receivable  (other than in the ordinary course of
business)  without the prior written  consent of Bank.  Debtor shall,  at Bank's
request,  arrange for verification of Accounts  Receivable directly with account
debtors  or by other  methods  acceptable  to Bank in  accordance  with the Loan
Agreement.

                                       26

<PAGE>

2.8 Debtor at all times shall be in strict  compliance with all applicable laws,
including without limit any laws, ordinances,  directives,  orders, statutes, or
regulations an object of which is to regulate or improve health,  safety, or the
environment ("Environmental Laws" ).

2.9 If Bank, acting in its sole discretion,  redelivers  Collateral to Debtor or
Debtor's  designee for the purpose of (a) the ultimate sale or exchange thereof;
or (b) presentation,  collection,  renewal, or registration of transfer thereof;
or (c) loading,  unloading,  storing,  shipping,  transshipping,  manufacturing,
processing or otherwise  dealing with it preliminary  to sale or exchange;  such
redelivery  shall be in trust for the benefit of Bank and shall not constitute a
release of Bank's  security  interest in it or in the proceeds or products of it
unless Bank  specifically  so agrees in  writing.  If Debtor  requests  any such
redelivery,  Debtor will  deliver with such  request a duly  executed  financing
statement in form and substance satisfactory to Bank. Any proceeds of Collateral
coming into Debtor's possession as a result of any such redelivery shall be held
in trust  for Bank and  immediately  delivered  to Bank for  application  on the
Indebtedness.  Bank  may  (in its  sole  discretion)  deliver  any or all of the
Collateral to Debtor,  and such delivery by Bank shall  discharge  Bank from all
liability  or  responsibility  for such  Collateral.  Bank,  at its option,  may
require delivery of any Collateral to Bank at any time with such endorsements or
assignments of the Collateral as Bank may request.

2.10 At any  time  and  without  notice  upon  the  occurrence  and  during  the
continuance  of a default under the Loan  Agreement or any document  relating to
the  Indebtedness,  Bank  may  (a)  cause  any or all  of the  Collateral  to be
transferred  to its name or to the name of its nominees;  (b) receive or collect
by legal proceedings or otherwise all dividends,  interest,  principal  payments
and other sums and all other  distributions at any time payable or receivable on
account of the Collateral, and hold the same as Collateral, or apply the same to
the  Indebtedness,  the manner and  distribution of the application to be in the
sole   discretion  of  Bank;  (c)  enter  into  any  extension,   subordination,
reorganization,   deposit,  merger  or  consolidation  agreement  or  any  other
agreement  relating to or  affecting  the  Collateral,  and deposit or surrender
control of the  Collateral,  and  accept  other  property  in  exchange  for the
Collateral and hold or apply the property or money so received  pursuant to this
Agreement.

2.11 Bank may  assign  any of the  Indebtedness  and  deliver  any or all of the
Collateral  to its  assignee,  who then shall have with respect to Collateral so
delivered all the rights and powers of Bank under this Agreement, and after that
Bank  shall be fully  discharged  from all  liability  and  responsibility  with
respect to Collateral so delivered.

2.12  Debtor  delivers  this  Agreement  based  solely on  Debtor's  independent
investigation  of (or decision not to  investigate)  the financial  condition of
Borrower and is not relying on any information furnished by Bank. Debtor assumes
full  responsibility  for  obtaining  any  further  information  concerning  the
Borrower's  financial  condition,  the status of the  Indebtedness  or any other
matter which the  undersigned  may deem necessary or  appropriate  now or later.
Debtor  waives  any duty on the part of Bank,  and  agrees  that  Debtor  is not
relying  upon nor  expecting  Bank to  disclose  to Debtor any fact now or later
known by Bank, whether relating to the operations or condition of Borrower,  the
existence,   liabilities  or  financial   condition  of  any  guarantor  of  the
Indebtedness, the occurrence of any default with respect to the Indebtedness, or
otherwise,  notwithstanding  any effect such fact may have upon Debtor's risk or
Debtor's rights against  Borrower.  Debtor  knowingly  accepts the full range of
risk  encompassed  in this  Agreement,  which risk  includes  without  limit the
possibility  that  Borrower may incur  Indebtedness  to Bank after the financial
condition of Borrower,  or Borrower's  ability to pay debts as they mature,  has
deteriorated.

                                       27

<PAGE>

2.13 Debtor shall  defend,  indemnify  and hold harmless  Bank,  its  employees,
agents,  shareholders,  officers,  and directors  from and against,  any and all
claims,  damages,  fines, expenses,  liabilities or causes of action of whatever
kind,  including  without limit consultant fees, legal expenses,  and reasonable
attorneys'  fees,  suffered by any of them as a direct or indirect result of any
actual or asserted violation of any law,  including without limit  Environmental
Laws,  or of any  remediation  relating  to any  property  required  by any law,
including without limit Environmental Laws.

3.       Collection of Proceeds.

3.1 Debtor agrees to collect and enforce  payment of all  Collateral  until Bank
shall direct Debtor to the contrary.  Immediately  upon notice to Debtor by Bank
and at all times after that,  Debtor agrees to fully and promptly  cooperate and
assist Bank in the collection  and  enforcement of all Collateral and to hold in
trust for Bank all payments  received in connection with Collateral and from the
sale,  lease  or other  disposition  of any  Collateral,  all  rights  by way of
suretyship  or  guaranty  and all  rights in the  nature  of a lien or  security
interest which Debtor now or later has regarding  Collateral.  Immediately  upon
and after such  notice,  Debtor  agrees to (a)  endorse to Bank and  immediately
deliver to Bank all payments  received on Collateral or from the sale,  lease or
other  disposition  of any  Collateral  or  arising  from any  other  rights  or
interests of Debtor in the  Collateral,  in the form received by Debtor  without
commingling  with any  other  funds,  and (b)  immediately  deliver  to Bank all
property in Debtor's possession or later coming into Debtor's possession through
enforcement  of  Debtor's  rights  or  interests  in  the   Collateral.   Debtor
irrevocably authorizes Bank or any Bank employee or agent to endorse the name of
Debtor  upon any checks or other  items  which are  received  in payment for any
Collateral,  and to do any and all  things  necessary  in order to reduce  these
liens to money.  Bank shall have no duty as to the  collection  or protection of
Collateral  or the  proceeds  of it, nor as to the  preservation  of any related
rights,  beyond the use of reasonable  care in the custody and  preservation  of
Collateral in the possession of Bank.  Debtor agrees to take all steps necessary
to preserve rights against prior parties with respect to the Collateral.

3.2 If Accounts  Receivable  are  pledged as  Collateral  under this  Agreement,
Debtor agrees that  immediately upon Bank's request (whether or not any Event of
Default exists), Debtor shall at its sole expense establish and maintain: (a) an
United  States Post Office lock box (the "Lock  Box"),  to which Bank shall have
exclusive access.  Debtor expressly authorizes Bank, from time to time to remove
contents from the Lock Box, for  disposition in accordance  with this Agreement.
Debtor  agrees to notify all account  debtors  and other  parties  obligated  to
Debtor that all payments made to Debtor (other than payments by electronic funds
transfer)  shall be  remitted,  for the credit of Debtor,  to the Lock Box,  and
Debtor shall include a like  statement on all invoices;  and (b) a  non-interest
bearing  deposit account with Bank in the name of Bank for the benefit or Debtor
(the "Cash  Collateral  Account") as security for payment of the Indebtedness to
which Bank shall have  exclusive  access.  Debtor  agrees to notify all  account
debtors and other  parties  obligated to Debtor that all payments made to Debtor
by electronic funds transfer shall be remitted, for the credit of Debtor, to the
Cash Collateral  Account,  and Debtor,  at Bank's request,  shall include a like
statement on all invoices. Debtor shall execute all documents and authorizations
necessary  to  establish  and  maintain  the Lock  Box and the  Cash  Collateral
Account.

3.3 All  items or  amounts  which  are  remitted  to the  Lock Box or  otherwise
delivered  by or for the benefit of Debtor to Bank on account of partial or full
payment of, or with respect to, any Collateral  shall, at Bank's option,  (i) be
applied to the  payment of the  Indebtedness,  whether  then due or not, in such
order of  application  as Bank may  determine in its sole  discretion,  or, (ii)
shall be deposited to the Cash Collateral Account. Debtor agrees that Bank shall
not be liable  for any loss or damage  which  Debtor  may  suffer as a result of
Bank's processing of items or its exercise of any other rights or remedies under
this Agreement,  including without limitation indirect, special or consequential
damages,  loss of  revenues or  profits,  or any claim,  demand or action by any
third party arising out of or in connection  with the processing of items or the
exercise of any other rights or remedies under this Agreement.  Debtor agrees to
indemnify  and hold Bank  harmless from and against all such third party claims,
demands or actions, including without limitation attorney fees.

                                       28

<PAGE>

4.       Defaults, Enforcement and Application of Proceeds.

4.1 Upon the  occurrence  of any of the  following  events  (each an  "Event  of
Default"), Debtor shall be in default under this Agreement:

(a) Any failure to pay the  Indebtedness  when due, or such portion of it as may
be due, by  acceleration  or otherwise,  which  failure  continues for three (3)
business days after written notice thereof; or

(b) Any  failure  or  neglect  to comply  with,  or breach  of, any term of this
Agreement, or any other agreement or commitment between Borrower,  Debtor or any
guarantor of any of the Indebtedness ("guarantor") and Bank; or

(c) Any warranty,  representation,  financial  statement,  or other  information
made,  given or furnished to Bank by or on behalf of  Borrower,  Debtor,  or any
guarantor shall be, or shall prove to have been, false or materially  misleading
when made, given, or furnished; or

(d) Any loss, theft,  substantial damage or destruction to or of any Collateral,
or  the  issuance  or  filing  of  any  attachment,  levy,  garnishment  or  the
commencement of any proceeding in connection with any Collateral or of any other
judicial process of, upon or in respect of Borrower,  Debtor, any guarantor,  or
any Collateral; or

(e) Sale or other  disposition  by  Borrower,  Debtor,  or any  guarantor of any
substantial  portion of its assets or property or  voluntary  suspension  of the
transaction  of  business  by  Borrower,  Debtor,  or any  guarantor,  or death,
dissolution,  termination  of  existence,  merger,  consolidation,   insolvency,
business failure,  or assignment for the benefit of creditors of or by Borrower,
Debtor, or any guarantor;  or commencement of any proceedings under any state or
federal  bankruptcy or  insolvency  laws or laws for the relief of debtors by or
against Borrower,  Debtor,  or any guarantor;  or the appointment of a receiver,
trustee, court appointee,  sequestrator or otherwise, for all or any part of the
property of Borrower, Debtor, or any guarantor; or

(f) If there is a material impairment of the prospect of repayment of all or any
portion of the Indebtedness or a material impairment of the value or priority of
Bank's security interest in the Collateral,  including,  without limitation, any
action by any  subcontractor  or  warehouseman  holding or  asserting  a lien in
Collateral or asserting a setoff right

         Notwithstanding  anything contained in Section 4 to the contrary,  Bank
shall refrain from exercising its rights and remedies and Event of Default shall
thereafter  not be deemed to have occurred by reason of the occurrence of any of
the events set forth in Sections  4(d) or 4(e) of this  Agreement if, within ten
(10) days from the date thereof,  the same is released,  discharged,  dismissed,
bonded against or satisfied;  provided, however, if the event is the institution
of Insolvency Proceedings against Borrower,  Bank shall not be obligated to make
advances to Borrower during such cure period.

4.2 Upon the occurrence of any Event of Default,  Bank may at its discretion and
without  prior  notice to Debtor  declare any or all of the  Indebtedness  to be
immediately due and payable,  and shall have and may exercise any one or more of
the following rights and remedies:

(a)  exercise all the rights and  remedies  upon  default,  in  foreclosure  and
otherwise,  available to secured  parties  under the  provisions  of the Uniform
Commercial Code and other applicable law;

(b) institute legal proceedings to foreclose upon the lien and security interest
granted by this  Agreement,  to recover  judgment  for all amounts  then due and
owing as  Indebtedness,  and to collect  the same out of any  Collateral  or the
proceeds of any sale of it;

(c) institute legal  proceedings  for the sale,  under the judgment or decree of
any court of competent jurisdiction, of any or all Collateral; and/or

d) personally or by agents,  attorneys, or appointment of a receiver, enter upon
any premises where Collateral may then be located, and take possession of all or
any of it and/or render it unusable;  and without being  responsible for loss or
damage to such Collateral,  hold, operate, sell, lease, or dispose of all or any
Collateral at places and times and on terms and conditions as Bank may deem fit,
without any  previous  demand or  advertisement;  and except as provided in this
Agreement,  all notice of sale, lease or other  disposition,  and advertisement,
and  other  notice  or  demand,  any  right or  equity  of  redemption,  and any
obligation of a  prospective  purchaser or lessee to inquire as to the power and
authority of Bank to sell,  lease, or otherwise  dispose of the Collateral or as
to the  application  by Bank of the proceeds of sale or  otherwise,  which would
otherwise  be required  by, or available  to Debtor  under,  applicable  law are
expressly waived by Debtor to the fullest extent permitted.

                                       29

<PAGE>

Bank shall give notice of the disposition of the Collateral as follows:

         (1) Bank shall give  Debtor and each  holder of a security  interest in
         the Collateral who has filed with Bank a written request for notice,  a
         notice in writing of the time and place of public sale, or, if the sale
         is a private sale or some disposition other than a public sale is to be
         made of the Collateral,  the time on or after which the private sale or
         other disposition is to be made;

         (2) The  notice  shall  be  personally  delivered  or  mailed,  postage
         prepaid, to Debtor's address appearing in this Agreement,  at least ten
         (10)  calendar days before the date fixed for the sale, or at least ten
         (10)  calendar  days before the date on or after which the private sale
         or other disposition is to be made, unless the Collateral is perishable
         or threatens to decline speedily in value. Notice to persons other than
         Debtor  claiming an interest  in the  Collateral  shall be sent to such
         addresses as they have furnished to Bank;

         (3) If the sale is to be a public sale,  Bank shall also give notice of
         the time and place by  publishing  a notice  one time at least ten (10)
         calendar  days  before the date of the sale in a  newspaper  of general
         circulation in the county in which the sale is to be held; and

         (4)      Bank may credit bid and purchase at any public sale.

At any sale  pursuant to this Section 4.2,  whether  under the power of sale, by
virtue of judicial proceedings or otherwise,  it shall not be necessary for Bank
or a  public  officer  under  order  of a court  to  have  present  physical  or
constructive  possession of Collateral to be sold. The recitals contained in any
conveyances  and  receipts  made and given by Bank or the public  officer to any
purchaser  at any sale made  pursuant  to this  Agreement  shall,  to the extent
permitted by applicable  law,  conclusively  establish the truth and accuracy of
the matters stated (including, without limit, as to the amounts of the principal
of and  interest  on the  Indebtedness,  the accrual  and  nonpayment  of it and
advertisement  and conduct of the sale); and all prerequisites to the sale shall
be  presumed  to  have  been  satisfied  and  performed.  Upon  any  sale of any
Collateral,   the  receipt  of  the  officer  making  the  sale  under  judicial
proceedings  or of Bank shall be  sufficient  discharge to the purchaser for the
purchase  money,  and  the  purchaser  shall  not  be  obligated  to  see to the
application of the money.  Any sale of any Collateral under this Agreement shall
be a perpetual bar against Debtor with respect to that Collateral.

4.3 Debtor shall at the request of Bank,  notify the account debtors or obligors
of Bank's security  interest in Accounts  Receivable and direct payment of it to
Bank.  Bank may,  itself,  upon the occurrence of any Event of Default so notify
and direct any account debtor or obligor.

4.4 The proceeds of any sale or other  disposition  of Collateral  authorized by
this  Agreement  shall be applied by Bank first upon all expenses  authorized by
the Uniform Commercial Code and all reasonable  attorney fees and legal expenses
incurred by Bank;  the balance of the proceeds of the sale or other  disposition
shall be applied in the payment of the Indebtedness,  first to interest, then to
principal, then to remaining Indebtedness and the surplus, if any, shall be paid
over to  Debtor  or to such  other  person(s)  as may be  entitled  to it  under
applicable law.  Debtor shall remain liable for any  deficiency,  which it shall
pay to Bank immediately upon demand.

4.5  Nothing  in this  Agreement  is  intended,  nor shall it be  construed,  to
preclude Bank from pursuing any other remedy  provided by law for the collection
of the  Indebtedness  or for the  recovery of any other sum to which Bank may be
entitled for the breach of this  Agreement by Debtor.  Nothing in this Agreement
shall  reduce or  release in any way any rights or  security  interests  of Bank
contained in any existing  agreement between Borrower,  Debtor, or any guarantor
and Bank.

4.6 No waiver of  default or  consent  to any act by Debtor  shall be  effective
unless in writing and signed by an authorized  officer of Bank. No waiver of any
default or  forbearance on the part of Bank in enforcing any of its rights under
this  Agreement  shall  operate as a waiver of any other  default or of the same
default on a future occasion or of any rights.

                                       30

<PAGE>

4.7 Debtor irrevocably  appoints Bank or any agent of Bank (which appointment is
coupled  with an  interest)  the true and lawful  attorney of Debtor  (with full
power of  substitution)  in the name, place and stead of, and at the expense of,
Debtor:

(a) to demand,  receive,  sue for,  and give  receipts or  acquittances  for any
moneys due or to become due on any  Account  Receivable  and to endorse any item
representing any payment on or proceeds of the Collateral;

(b) to  execute  and file in the name of and on behalf of Debtor  all  financing
statements or other filings  deemed  necessary or desirable by Bank to evidence,
perfect, or continue the security interests granted in this Agreement; and

(c) to do and perform any act on behalf of Debtor  permitted  or required  under
this Agreement.

4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon request
of Bank, to assemble the  Collateral  and make it available to Bank at any place
designated by Bank which is reasonably convenient to Bank and Debtor.

5.       Miscellaneous.

5.1 Until Bank is advised in  writing by Debtor to the  contrary,  all  notices,
requests and demands  required under this Agreement or by law shall be given to,
or made upon, Debtor at the address indicated in Section 5.15 below.

5.2  Debtor  will give Bank not less than 90 days  prior  written  notice of all
contemplated  changes in Debtor's name, chief executive office location,  and/or
location of any  Collateral,  but the giving of this notice  shall not in itself
cure any Event of Default caused by this change.

5.3 Bank  assumes  no duty of  performance  or other  responsibility  under  any
contracts contained within the Collateral.

5.4  Bank  has  the  right  to  sell,  assign,  transfer,   negotiate  or  grant
participations  or any  interest  in,  any or all of the  Indebtedness  and  any
related obligations,  including without limit this Agreement. In connection with
the above,  but without  limiting its ability to make other  disclosures  to the
full extent  allowable,  Bank may disclose all documents and  information  which
Bank now or later has relating to Debtor,  the  Indebtedness  or this Agreement,
however obtained. The undersigned agree(s) that the Bank may provide information
relating to this Security  Agreement or to the undersigned to the Bank's parent,
affiliates, subsidiaries and service providers.

5.5 In addition to Bank's  other  rights,  any  indebtedness  owing from Bank to
Debtor can be set off and  applied by Bank on any  Indebtedness  at any  time(s)
either before or after maturity or demand without notice to anyone.

5.6 Debtor  waives any right to require  the Bank to: (a)  proceed  against  any
person or property;  (b) unless otherwise  required by the Loan Agreement,  give
notice of the terms,  time and place of any public or private  sale of  personal
property  security held from Borrower or any other person,  or otherwise  comply
with the  provisions  of Section  9-504 of the  California  or other  applicable
Uniform  Commercial  Code;  or (c) pursue any other remedy in the Bank's  power.
Debtor waives notice of acceptance of this  Agreement and  presentment,  demand,
protest,  notice of protest,  dishonor,  notice of dishonor,  notice of default,
notice of intent to accelerate or demand  payment of any  Indebtedness,  any and
all other  notices to which the  undersigned  might  otherwise be entitled,  and
diligence in collecting any  Indebtedness,  and agree(s) that the Bank may, once
or any  number  of times,  modify  the  terms of any  Indebtedness,  compromise,
extend, increase,  accelerate, renew or forbear to enforce payment of any or all
Indebtedness,  or permit Borrower to incur additional Indebtedness,  all without
notice  to  Debtor  and  without  affecting  in  any  manner  the  unconditional
obligation  of  Debtor  under  this  Agreement.   Debtor   unconditionally   and
irrevocably  waives each and every defense and setoff of any nature which, under
principles of guaranty or otherwise,  would operate to impair or diminish in any
way the obligation of Debtor under this Agreement,  and  acknowledges  that such
waiver  is  by  this  reference   incorporated  into  each  security  agreement,
collateral  assignment,  pledge  and/or other  document from Debtor now or later
securing  the  Indebtedness,  and  acknowledges  that  as of the  date  of  this
Agreement no such defense or setoff exists.

5.7  Debtor  waives  any and all  rights  (whether  by  subrogation,  indemnity,
reimbursement,  or otherwise)  prior to 120 days after full and final payment of
the Indebtedness to recover from Borrower any amounts paid by Debtor pursuant to
this Agreement.

                                       31

<PAGE>

5.8 In the event that applicable law shall obligate Bank to give prior notice to
Debtor of any action to be taken  under this  Agreement,  Debtor  agrees  that a
written  notice given to it at least ten (10)  calendar  days before the date of
the act  shall be  reasonable  notice of the act and,  specifically,  reasonable
notification of the time and place of any public sale or of the time after which
any private sale,  lease, or other  disposition is to be made,  unless a shorter
notice period is reasonable under the circumstances. A notice shall be deemed to
be given  under this  Agreement  when  delivered  to Debtor or when placed in an
envelope  addressed to Debtor and  deposited,  with postage  prepaid,  in a post
office or official depository under the exclusive care and custody of the United
States Postal Service. The mailing shall be by overnight courier,  certified, or
first class mail.

5.9 Notwithstanding any prior revocation,  termination,  surrender, or discharge
of this Agreement in whole or in part, the effectiveness of this Agreement shall
automatically  continue or be reinstated in the event that any payment  received
or credit given by Bank in respect of the  Indebtedness is returned,  disgorged,
or rescinded under any applicable law, including, without limitation, bankruptcy
or insolvency laws, in which case this Agreement,  shall be enforceable  against
Debtor as if the  returned,  disgorged,  or rescinded  payment or credit had not
been received or given by Bank, and whether or not Bank relied upon this payment
or  credit or  changed  its  position  as a  consequence  of it. In the event of
continuation or  reinstatement  of this Agreement,  Debtor agrees upon demand by
Bank to execute and deliver to Bank those  documents  which Bank  determines are
appropriate  to further  evidence  (in the public  records  or  otherwise)  this
continuation or reinstatement, although the failure of Debtor to do so shall not
affect in any way the reinstatement or continuation.

5.10 This Agreement and all the rights and remedies of Bank under this Agreement
shall  inure to the  benefit of Bank's  successors  and assigns and to any other
holder who derives from Bank title to or an interest in the  Indebtedness or any
portion  of it, and shall bind  Debtor  and the  heirs,  legal  representatives,
successors, and assigns of Debtor.
Nothing in this  Section 5.10 is deemed a consent by Bank to any  assignment  by
Debtor.

5.11 If  there  is more  than  one  Debtor,  all  undertakings,  warranties  and
covenants  made by Debtor and all  rights,  powers and  authorities  given to or
conferred upon Bank are made or given jointly and severally.

5.12 Except as otherwise provided in this Agreement, all terms in this Agreement
have the  meanings  assigned to them in  Division 9 (or,  absent  definition  in
Division 9, in any other  Division) of the Uniform  Commercial  Code,  as of the
date of this Agreement.  "Uniform  Commercial Code" means the California Uniform
Commercial Code, as amended.

5.13 No single or partial  exercise,  or delay in the exercise,  of any right or
power under this  Agreement,  shall  preclude  other or further  exercise of the
rights and powers under this Agreement. The unenforceability of any provision of
this  Agreement  shall not affect the  enforceability  of the  remainder of this
Agreement.  This Agreement  constitutes the entire  agreement of Debtor and Bank
with  respect  to  the  subject  matter  of  this  Agreement.  No  amendment  or
modification  of this Agreement  shall be effective  unless the same shall be in
writing and signed by Debtor and an authorized  officer of Bank.  This Agreement
shall in all respects be governed by and construed in  accordance  with the laws
of the State of California without regard to conflict of laws principles.

5.14 To the extent that any of the Indebtedness is payable upon demand,  nothing
contained  in this  Agreement  shall  modify  the terms and  conditions  of that
Indebtedness  nor shall anything  contained in this Agreement  prevent Bank from
making demand,  without notice and with or without reason, for immediate payment
of any or all of that  Indebtedness  at any time(s),  whether or not an Event of
Default has occurred.

5.15 Debtor's chief executive  office is located and, unless otherwise stated in
the notice to Bank  required by Section 5.2,  shall be  maintained  at 2401 East
Katella Avenue, Suite 650, Anaheim,  California.  Collateral shall be maintained
only at the locations identified in this Section 5.15.

5.16 A carbon,  photographic  or other  reproduction  of this Agreement shall be
sufficient as a financing statement under the Uniform Commercial Code and may be
filed by Bank in any filing office.

                                       32

<PAGE>

5.17 This  Agreement  shall be  terminated  only by the filing of a  termination
statement in accordance with the applicable provisions of the Uniform Commercial
Code,  but the  obligations  contained in Section 2.14 of this  Agreement  shall
survive termination.

6.  DEBTOR  AND  BANK  ACKNOWLEDGE  THAT  THE  RIGHT  TO  TRIAL  BY  JURY  IS  A
CONSTITUTIONAL  ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE  OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,  KNOWINGLY
AND VOLUNTARILY,  AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION  REGARDING THE  PERFORMANCE OR ENFORCEMENT  OF, OR IN
ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

DEBTOR:

HANSEN NATURAL CORPORATION


By:_____________________________

Its:_____________________________

By:____________________________

Its:_____________________________


                                       33

<PAGE>

                    SECURITY AGREEMENT IN LICENSE AGREEMENT
                              AND OTHER AGREEMENTS

                  This  Security  Agreement  dated May 15, 1997, is made between
Comerica Bank-California ("Bank"), a California banking corporation,  and Hansen
Beverage  Company,  a  Delaware  corporation  ("Borrower")  for the  purpose  of
providing  security  interests in favor of Bank against certain trademark rights
owned by  Borrower.  This  Security  Agreement  is made  with  reference  to the
following facts.

                                    RECITALS

                  A. Bank has agreed to extend credit to Borrower  pursuant to a
Revolving  Credit  Loan and  Security  Agreement  and a Term  Loan  Note  ("Loan
Agreement").  In consideration for such extension of credit, Borrower has agreed
to pledge and grant a security  interest in certain of its assets as  collateral
for Borrower's obligations under the Loan Agreement.

                  B.  Borrower has entered into three  license  agreements  with
Gary  Hansen,  Anthony  Kane,  and Burton S. Rosky,  as  Trustees  (collectively
"Trustees") with respect to the use of the trademarks HANSEN'S, HANSEN'S NATURAL
SODA, GRAPEFRUIT HANSEN'S NATURAL SODA, MANDARIN LIME HANSEN'S NATURAL SODA, and
LEMON LIME HANSEN'S NATURAL SODA,  specifically,  a Carbonated  Beverage License
Agreement dated July 27, 1992, an Other Beverage License Agreement with Trustees
dated July 27, 1992,  and a Royalty  Sharing  Agreement with Trustees dated July
27, 1992.  Borrower desires to provide security  interests in such agreements in
favor of Bank.

                  NOW THEREFORE,  in consideration of the Loan Agreement and for
other good and  valuable  consideration,  the receipt and  adequacy of which are
hereby acknowledged, the parties agree as follows.

               1.  Definitions.  Terms defined in the Loan  Agreement and not
otherwise defined in this Security Agreement shall have the meanings defined for
those  terms in the Loan  Agreement.  As used in this  Security  Agreement,  the
following terms shall have the meanings defined in this paragraph.

               a.  "Trademark  Rights" shall mean all of the  Borrower's  rights
          under a Carbonated  Beverage License Agreement dated July 27, 1992, an
          Other  Beverage  License  Agreement  dated July 27, 1992 and a Royalty
          Sharing Agreement dated July 27, 1992, and all amendments, supplements
          and  modifications  of each or any of the  foregoing,  such  rights to
          include without  limitation (a) all of the Borrower's rights in and to
          the following trademarks:  (i) HANSEN'S; U. S. Trademark  Registration
          No. 1,258,780; (ii) HANSEN'S NATURAL SODA; U.S. Trademark Registration
          No. 1,258,779; (iii) GRAPEFRUIT HANSEN'S NATURAL SODA; U. S. Trademark
          Registration No. 1,253,907;  (iv) MANDARIN LIME HANSEN'S NATURAL SODA;
          U.  S.  Trademark  Registration  No.  1,243,037;  and  (v)  LEMON-LIME
          HANSEN'S  NATURAL SODA; U. S. Trademark  Registration  No. (none) (the
          "Specified  Trademarks"),  including such rights (but not obligations)
          as may arise  under  the  Lanham  Act,  common  law,  by  contract  or
          otherwise  to sue in the name of the  Borrower  or the Bank for  past,
          present or future infringements;  (b) all goodwill associated with the
          Borrower's  rights  in  the  Specified  Trademarks;  (c)  all  of  the
          Borrower's rights relating to the manufacture, sale or distribution of
          products utilizing the Specified Trademarks;  and (d) all products and
          proceeds  of  any  of  the  foregoing  whether  now  or  hereafter  in
          existence.

               b. "Trademark  Collateral" shall mean all of Borrower's Trademark
          Rights as defined by this Agreement.

               c.  "Secured  Obligations"  shall mean the  payments  due to Bank
          under the Loan Agreement.

                  2. Security  Agreement.  Borrower  hereby  assigns  solely for
security  to Bank,  and  grants to Bank a  security  interest  in the  Trademark
Collateral,  as security for the timely  payment and  performance of the Secured
Obligations.  This  security  interest  in favor  of Bank  shall be prior to any
security interests of any third parties for any reason whatsoever.

                                       34

<PAGE>

                  3.  Borrower's   Representations   and  Warranties.   Borrower
represents, warrants, and agrees that (a) Borrower is, and shall continue to be,
the licensee  pursuant to the Carbonated  Beverage License  Agreement dated July
27, 1992, the licensee to the Other Beverage  License  Agreement  dated July 27,
1992, and the licensee to the Royalty Sharing Agreement dated July 27, 1992, (b)
Borrower shall not sell, assign, transfer,  hypothecate,  or create or permit to
exist any lien upon or security interest in the Trademark Collateral in favor of
anyone  other than Bank,  (c)  Borrower  has entered  into only the licenses and
sublicenses  with third parties with respect to the Specified  Trademarks  which
are set forth on Exhibit A, except for contracts for the sale or distribution of
finished products  utilizing  Specified  Trademarks entered into in the ordinary
course of its business and has delivered to Bank true and complete copies of all
presently existing assignments and security agreements which may affect title to
any of the License  Agreements  and  Royalty  Sharing  Agreement  referred to in
clause (a), the Trademark Collateral referred to in clause (b) and the Specified
Trademarks referred to in this clause (c) (other than such sale and distribution
contracts  referred  to in clause  (c)),  and (d)  Borrower  has full  power and
authority to execute this Agreement and perform its obligations  hereunder,  and
to subject the Trademark  Collateral to the security interest created hereby and
by the Loan Documents.

                  4. Bank's Obligations In Respect to Trademark Collateral. Bank
shall be under no duty or  obligation  whatsoever to take any action to preserve
any  rights  of or  against  any  prior or other  party in  connection  with the
Trademark  Collateral,  to  exercise  managerial  rights  with  respect  to  the
Trademark Collateral, whether or not an Event of Default (as defined in the Loan
Agreement) has occurred, or to make or give any demands for performance, notices
of nonperformance, protests, notices of protests, notices of dishonor or notices
of any other nature  whatsoever in connection  with the Trademark  Collateral or
the Secured Obligations. Bank shall be under no duty or obligation whatsoever to
take any action to protect or preserve the Trademark Collateral or any rights of
Borrower  therein,  or to participate in any foreclosure or other  proceeding in
connection therewith.

                  5. Bank's  Rights Upon Event of Default.  Upon the  occurrence
and during the  continuance  of an Event of Default,  Bank shall have the rights
set forth in the Loan  Agreement  with respect to  foreclosure  on the Trademark
Collateral.

                  6. No Waiver.  No delay on the part of Bank in the exercise of
any right or remedy under this  Security  Agreement or under the Loan  Agreement
shall operate as a waiver thereof,  and no single or partial exercise by Bank of
any right or remedy  shall  preclude  other or further  exercise  thereof or the
exercise of any other right or remedy of Bank.

                  7. Release of Trademark  Collateral.  This Security  Agreement
shall terminate when all Secured  Obligations  have been paid in full. Upon such
termination and at Borrower's  reasonable  request and sole expense,  Bank shall
(a)  return  any  Trademark  Collateral  to  Borrower  or to  the  person(s)  or
entity(ies)  legally  entitled  thereto,  (b) shall endorse,  execute,  deliver,
record and file all instruments  and documents  (including  without  limitation,
Form UCC-3 termination statements), (c) do all other acts and things, reasonably
required  for the  return of the  Trademark  Collateral  to  Borrower  or to the
person(s) or entity(ies) legally entitled thereto,  and (d) evidence or document
the release of Bank's security interests arising under this Security Agreement.

                  8. Governing  Law.  This  Security  Agreement  shall be
governed by, and construed and enforced in accordance with, the laws of the
State of California.

                  IN WITNESS  WHEREOF,  the parties have  executed this Security
Agreement by their duly  authorized  officers as of the date listed on page 1 of
this Security Agreement.

                                       35

<PAGE>

HANSEN BEVERAGE COMPANY


________________________________                     Date:  May __, 1997
Name:  _________________________
Title:    _________________________


                                                   ACKNOWLEDGMENT


State of _______________________)
                                             )SS.
County of _____________________)

On May _____, 1997, before me, __________________________, personally appeared
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
personally  known to me (or proved to me on the basis of satisfactory  evidence)
to be the person(s)  whose names(s) is/are  subscribed to the within  instrument
and  acknowledged  to me that  he/she/they  executed  the same in  his/her/their
authorized  capacity(ies),  and  that  by  his/her/their  signatures(s)  on  the
instrument  the  person(s),  or the entity  upon  behalf of which the  person(s)
acted, executed the instrument. WITNESS my hand and official seal.


Signature____________________________________________


(This area for official seal)


COMERICA BANK


________________________________                     Date:  May __, 1997
Name:  _________________________
Title:    _________________________


                                                   ACKNOWLEDGMENT


State of _______________________)
                                             )SS.
County of _____________________)

On May _____, 1997, before me, ___________________________, personally appeared
- ------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
personally  known to me (or proved to me on the basis of satisfactory  evidence)
to be the person(s)  whose names(s) is/are  subscribed to the within  instrument
and  acknowledged  to me that  he/she/they  executed  the same in  his/her/their
authorized  capacity(ies),  and  that  by  his/her/their  signatures(s)  on  the
instrument  the  person(s),  or the entity  upon  behalf of which the  person(s)
acted, executed the instrument. WITNESS my hand and official seal.


Signature____________________________________________


(This area for official seal)

                                       36

<PAGE>

                                INVENTORY RIDER
                              (REVOLVING ADVANCE)

- --------------------------------------------------------------------------------

Borrower(s): HANSEN BEVERAGE COMPANY


     Borrower  has entered  into a certain  Revolving  Credit Loan and  Security
Agreement (Accounts and Inventory)(hereinafter referred to as "Agreement") dated
May 15,  1997 with Bank  (Secured  Party).  This  INVENTORY  RIDER  (hereinafter
referred  to as this  Rider)  dated May 15,  1997 is  hereby  made a part of and
incorporated into that agreement.

     1. At the  request  of  Borrower,  made at any time  and from  time to time
during the term of the  Agreement,  and so long as no event of default under the
Agreement has occurred and Borrower is in full,  faithful and timely  compliance
with each and all of the covenants,  conditions,  warranties and representations
contained in the Agreement,  this Rider and/or any other agreement  between Bank
and Borrower,  Bank agrees to lend Borrower fifty three percent  (53.00%) of the
lower of cost or  market  value  of  Borrower's  finished  goods  Inventory  and
Inventory consisting of apple juice concentrate ("Eligible  Inventory"),  and as
may be adjusted by Bank, in Bank's discretion,  for age and seasonality or other
factors  affecting  the  value  of  the  Inventory,  up  to  a  maximum  advance
outstanding  at any one  time of One  Million,  Five  Hundred  Thousand  Dollars
($1,500,000)  upon  Borrower's  concurrent  execution  and delivery to Bank of a
Designation of Eligible  Inventory,  or Certification of Borrowing Base, in form
customarily  used by  Bank;  provided,  however,  that  for a  period  of  sixty
consecutive days during each calendar year, which period shall commence no later
than October 1 of each such year, such Inventory Borrowing Base shall be reduced
to zero and the Borrower shall be required, immediately upon the commencement of
such  period  shall to pay down and  maintain  at zero the  amount of the Credit
attributable  to the Inventory  Borrowing Base. All advances made and to be made
pursuant to this Rider are solely and exclusively  for working capital  purposes
including enabling Borrower to acquire rights in and purchase new Inventory, and
Borrower  represents  and warrants  that all  advances by Bank  pursuant to this
Rider  will be used  solely and  exclusively  for such  purpose;  and since such
advances will be used for the foregoing  purposes,  Bank's security  interest in
Borrower's  Inventory  is and shall be at all times a  purchase  money  security
interest as that term is  described in Section  9107 of the  California  Uniform
Commercial Code.

     2.  Advances  made by Bank to  Borrower  pursuant  to this  Rider  shall be
included  as  part  of  the   Obligations  of  Borrower  to  Bank  as  the  term
"Obligations"  is  defined  in the  Agreement;  and at Bank's  option,  advances
pursuant to this Rider may be evidenced by  promissory  note(s),  in form and on
terms  satisfactory  to Bank.  All such advances shall bear interest at the rate
and be payable in the manner  specified in said promissory  note(s) in the event
Bank exercises the  aforementioned  option, and in the event Bank does not, such
advances shall bear interest at the rate and be payable in the manner  specified
in the Agreement.

     3. All of the terms,  covenants,  warranties,  conditions,  agreements  and
representations of the Agreement are incorporated  herein as though set forth in
their  entirety and are hereby  reaffirmed  by Borrower and Bank as though fully
set forth hereat.

BORROWER:
HANSEN BEVERAGE COMPANY



By:________________________________________


By:________________________________________                       :


Accepted   this   __________   day  of  May  at  Bank's  place  of  business  in
_____________________________.

                                        ----------------------------------------
                                          By:

                                       37

<PAGE>

                                   EQUIPMENT
                                     RIDER
- --------------------------------------------------------------------------------

Borrower(s): HANSEN BEVERAGE COMPANY

     Borrower  has entered  into a certain  Revolving  Credit Loan and  Security
Agreement  (Accounts and  Inventory)  (hereinafter  referred to as  "Agreement,"
dated May15, 1997 with Bank (Secured Party).  This EQUIPMENT RIDER  (hereinafter
referred  to as this  Rider)  dated May 15,  1997 is  hereby  made a part of and
incorporated into that Agreement.

1. Borrower  grants to Bank a security  interest in the  following  (hereinafter
referred to as "Equipment"):

     (a) All of Borrower's present  machinery,  equipment,  fixtures,  vehicles,
         office  equipment,  furniture,   furnishings,  tools,  dies,  jigs  and
         attachments, wherever located;

     (b) all of Borrower's  additional  equipment,  wherever located, of like or
         unlike  nature,  to  be  acquired  hereafter,   and  all  replacements,
         substitutes,  accessions,  additions  and  improvements  to  any of the
         foregoing; and

     (c) all of Borrowers general  Intangibles,  including  without  limitation,
         computer programs, computer disks, computer tapes, literature, reports,
         catalogs, drawings, blueprints and other proprietary items.

2. Bank's  security  interest in the  Equipment  as set forth above shall secure
each, any and all of Borrower's  Obligations to Bank, as the term  "Obligations"
is defined in the Agreement;  and, the payment of Borrower's indebtedness in the
aggregate principal amount of Seven Million Dollars and No Cents ($7,000,000.00)
or so much thereof as has been advanced from time to time, and interest  accrued
thereon,  and fees and costs thereon evidenced by the Agreement and that certain
Term Loan Note of even date herewith.

3. Bank may, in its sole discretion,  from time to time hereafter, make loans to
Borrower.  Loans  made by Bank to  Borrower  pursuant  to this  Rider  shall  be
included as part of the  Obligations  of Borrower to Bank and at Bank's  option,
may be evidenced by promissory note(s), in form satisfactory to Bank. Such loans
shall bear  interest at the rate and be payable in the manner  specified in said
promissory note(s) in the event Bank exercises the aforementioned option, and in
the event Bank does not,  such  loans  shall  bear  interest  at the rate and be
payable in the manner specified in the Agreement.

4. Borrower represents and warrants to Bank that:

     (a) it has good and indefeasible title to the Equipment;

     (b) the  Equipment  is and will be free and  clear of all  liens,  security
         interests,  encumbrances and claims, except as held by Bank, and except
         that Borrower may sell its route trucks ,

     (c) Bank  shall  have  the  right  upon  demand  now  and/or  at all  times
         hereafter,  during  Borrower's  usual  business  hours to  inspect  and
         examine the  Equipment  and Borrower  agrees to reimburse  Bank for its
         reasonable costs and expenses in so doing.

5. Borrower  shall keep and maintain the Equipment in good  operating  condition
and  repair,  make all  necessary  replacements  thereto  so that the  value and
operating  efficiency  thereof shall at all times be maintained  and  preserved.
Borrower  shall not  permit any items of  Equipment  to become a fixture to real
estate or accession to other property, and the Equipment is now and shall at all
times remain and be personal property.

                                       38

<PAGE>

6.  Borrower,  at its expense,  shall keep and maintain:  the Equipment  insured
against  loss or  damage by fire,  theft,  explosion,  sprinklers  and all other
hazards  and risks  ordinarily  insured  against  by other  owners  who use such
properties  and  interest  in  properties  in  similar  businesses  for the full
insurable  value  thereof;  and  business  interruption   insurance  and  public
liability and property damage insurance relating to Borrowers  ownership and use
of its assets.  All such policies of insurance  shall be in such form, with such
companies and in such amounts as may be  satisfactory  to Bank.  Borrower  shall
deliver to Bank  certified  copies of such policies of insurance and evidence of
the payment of all premiums  thereof.  All such  policies of  insurance  (except
those of public liability and property damage) shall contain an endorsement in a
form  satisfactory to Bank showing loss payable to Bank and all proceeds payable
thereunder shall be payable to Bank and upon receipt by Bank shall be applied on
the  account of  Borrower's  Obligations.  To secure the  payment of  Borrower's
Obligations,  Borrower  grants  Bank a  security  interest  in  and to all  such
policies of insurance (except those of public liability and property damage) and
the proceeds  thereof and directs all insurers  under such policies of insurance
to pay all  proceeds  thereof  directly  to Bank.  Borrower  hereby  irrevocably
appoints  Bank (and any of Bank's  officers,  employees or agents  designated by
Bank) as  Borrower's  attorney-in-fact  for the purpose of making,  settling and
adjusting   claims  under  such   policies  of  insurance  and  for  making  all
determinations  and decisions  with respect to such policies of insurance.  Each
such insurer shall agree by endorsement upon the policy or policies of insurance
issued by it to  Borrower  as  required  above,  or by  independent  instruments
furnished to Bank that it will give Bank at least ten (10) days  written  notice
before any such policy or policies of  insurance  shall be altered or  canceled,
and that no act or default of Borrower,  or any other  person,  shall affect the
right of Bank to recover  under such policy or policies  of  insurance  required
above or to pay any premium in whole or in part relating thereto.  Bank, without
waiving or releasing any obligations or defaults by Borrower  hereunder,  may at
any time or times hereafter,  but shall have no obligations to do so, obtain and
maintain  such  policies of insurance  and pay such  premiums and take any other
action with respect to such  policies  which Bank deems  advisable.  All sums so
disbursed by Bank, including reasonable  attorney's fees, court costs,  expenses
and other charges relating  thereto,  shall be a part of Borrower's  Obligations
and payable on demand.

7. Until default by Borrower  under the  Agreement or this Rider,  Borrower may,
subject  to the  provisions  of the  Agreement  and this  Rider  and  consistent
therewith, remain in possession thereof and use the Equipment referred to herein
in the  ordinary  course of business at the  location or  locations  hereinabove
designated.

8.  All  of  the  terms,  conditions,   warranties,  covenants,  agreements  and
representations of the Agreement are incorporated herein and reaffirmed.

9. Upon a default by Borrower  under the Agreement or this Rider,  Borrower upon
request of Bank to do so,  agrees to assemble and make the Equipment or any part
thereof available to Bank at a place designated by Bank.

10. Borrower shall upon demand by Bank immediately  deliver to Bank and properly
endorse,  any  and  all  evidences  of  ownership,   certificates  of  title  or
applications for titles to any of the aforesaid items of Equipment.

11.  Bank  shall not in any way or manner be liable or  responsible  for (a) the
safekeeping  of the  Equipment;  (b) any loss or  damage  thereto  occurring  or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof or (d) any act or default  by any person  whomsoever.  All risk of Loss,
damage or destruction of the Equipment shall be borne by Borrower.

Borrower(s):

HANSEN BEVERAGE COMPANY


- --------------------------------------------------
By:

- --------------------------------------------------
By:

Accepted this ___ day of _________ at Bank's place of business in  ____________

By:__________________________________________________


                                       39

<PAGE>

                              ENVIRONMENTAL RIDER
- --------------------------------------------------------------------------------

                                              San Jose
                                         -------------------------
                                            Name of office
                        333 West Santa Clara Street, San Jose, California 95113
                       ---------------------------------------------------------
                                               Address

         This  ENVIRONMENTAL  RIDER (this  "Rider")  dated this 15th day of May,
1997 is  hereby  made a part of and  incorporated  into that  certain  Revolving
Credit Loan & Security  Agreement (the "Agreement") dated May 15th, 1997 between
Comerica  Bank-California,  a  California  corporation  ("Lender"),  and  Hansen
Beverage Company, a Delaware corporation ("Borrower").

         1. Borrower hereby represents,  warrants and covenants that none of the
collateral or real property occupied and/or owned by Borrower has ever been used
by Borrower or, to the best knowledge of Borrower  after due inquiry,  any other
previous owner and/or  operator in connection with the disposal of or to refine,
generate, manufacture, produce, store, handle, treat, transfer, release, process
or transport any hazardous waste, as defined in 42 U.S.C.  9601 (14) ("Hazardous
Substance"),  and Borrower will not at any time use the  collateral or such real
property for the disposal of, refining of, generating, manufacturing, producing,
storing,   handling,   treating,   transferring,   releasing,   processing,   or
transporting any such Hazardous Waste and/or Hazardous Substances.

         2. None of the  collateral  or real  property  used and/or  occupied by
Borrower has been  designated,  listed or identified in any manner by the United
States Environmental  Protection Agency (the "EPA") or under and pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended,  set  forth  at 42  U.S.C.  9601 et  seq.  ("CERCLA")  or the  Resource
Conservation and Recovery Act of 1986, as amended,  set forth at 42 U.S.C.  9601
et seq. ("RCRA") or any other  environmental  protection  statute as a Hazardous
Waste or Hazardous Substance disposal or removal site, superfund or cleanup site
or  candidate  for  removal of  closure  pursuant  to RCRA,  CERCLA or any other
environmental protection statute.

         3. Borrower has not received a summons,  citation,  notice,  directive,
letter  or  other  communication,  written  or oral,  from the EPA or any  other
federal or state governmental agency or instrumentality,  authorized pursuant to
an environmental protection statute, concerning any intentional or unintentional
action or omission by Borrower  resulting in the releasing,  spilling,  leaking,
pumping,  pouring,  emitting,   emptying,  dumping  or  otherwise  disposing  of
Hazardous Waste or Hazardous Substance into the environment  resulting in damage
thereto or to the fish, shellfish, wildlife, biota or other natural resources.

         4.  Borrower  shall not  cause or  permit  to exist,  as a result of an
intentional or  unintentional  action or omission on its part, or on the part of
any third party,  on property owned and/or  occupied by Borrower,  any disposal,
releasing, spilling, leaking, pumping, omitting, pouring, emptying or dumping of
a Hazardous Waste or Hazardous  Substance into the environment  where damage may
result to the environment,  fish,  shellfish,  wildlife,  biota or other natural
resources  unless  such  disposal,  release,  spill,  leak,  pumping,  emission,
pouring,  emptying  or  dumping  is  pursuant  to and  in  compliance  with  the
conditions of a permit issued by the appropriate  federal or state  governmental
authority.

         5. Borrower shall furnish to Lender:

              (a)  Promptly  and in any event  within  thirty  (30)  days  after
receipt thereof, a copy of any notice, summons, citation,  directive,  letter or
other   communications  from  the  EPA  or  any  other  governmental  agency  or
instrumentality  concerning any intentional or unintentional  action or omission
on Borrower's part in connection with the handling, transporting,  transferring,
disposal or in the releasing,  spilling,  leaking, pumping,  pouring,  emitting,
emptying  or  dumping  of  Hazardous  Waste  or  Hazardous  Substances  into the
environment resulting in damage to the environment,  fish, shellfish,  wildlife,
biota and any other natural resource;

              (b) Promptly  and in any event  within  thirty (30) days after the
receipt thereof, a copy of any notice of or other  communication  concerning the
filing of a lien upon, against or in connection with Borrower, the collateral or
Borrower's  real  property  by the  EPA  or any  other  governmental  agency  or
instrumentality  authorized  to file such a lien  pursuant  to an  environmental
protection  statute in connection  with a fund to pay for damages and/or cleanup
and/or  removal costs arising from the  intentional or  unintentional  action or
omission of Borrower resulting from the disposal or in the releasing,  spilling,
leaking, pumping, pouring,  emitting,  emptying or dumping of Hazardous Waste or
Hazardous Substances into the environment;

                                       40

<PAGE>

              (c) Promptly  and in any event  within  thirty (30) days after the
receipt thereof, a copy of any notice, directive,  letter or other communication
from the EPA or any other governmental  agency or  instrumentality  acting under
the authority of an environmental  protection statute indicating that all or any
portion of the Borrower's  property or assets have been listed and/or  borrowers
deemed by such  agency to be the owner and  operator  of the  facility  that has
failed  to  furnish  to the  EPA or  other  authorized  governmental  agency  or
instrumentality,  all the  information  required  by the  RCRA,  CERCLA or other
applicable environmental protection statutes;

              (d)  Promptly and in no event more than thirty (30) days after the
filing  thereof  with the EPA or other  governmental  agency or  instrumentality
authorized as such pursuant to an environmental  protection  statute,  copies of
any and all  information  reports filed with such agency or  instrumentality  in
connection with  Borrower's  compliance  with RCRA,  CERCLA or other  applicable
environmental protection statutes.

         6. Any one or more of the following  events which occur with respect to
Borrower shall constitute an event of default:

              (a)  The  breach  by  Borrower  of  any  covenant  or   condition,
representation or warranty contained in this Rider;

              (b) The failure by Borrower to comply with each,  every and all of
the  requirements  of  RCRA,  CERCLA  or  any  other  applicable   environmental
protection statutes on the real property occupied and/or on owned by borrower;

              (c) The  receipt by Borrower of a notice from the EPA or any other
governmental  agency  or  instrumentality  acting  under  the  authority  of any
environmental protection statute,  indicating that a lien has been filed against
any of the  collateral,  or any of Borrower's  other  property by the EPA or any
other  governmental  agency or  instrumentality  in connection  with a fund as a
result of damage arising from an intentional or unintentional action or omission
by Borrower resulting from the disposal, releasing,  spilling, leaking, pumping,
pouring,  emitting,  emptying or dumping of  Hazardous  Substances  or Hazardous
Waste into the environment; and

              (d) Any  other  event or  condition  exists  which  might,  in the
opinion of Lender, under applicable  environmental  protection statutes,  have a
material adverse effect on the financial or operational condition of Borrower or
the value of all or any material  part of the  collateral  or other  property of
Borrower.

         In witness  whereof,  the  Borrower has agreed as of the date first set
forth above.


HANSEN BEVERAGE COMPANY
         (BORROWER/PLEDGOR)

By:_____________________________________________

Its:_____________________________________________

By:_____________________________________________

Its:_____________________________________________

                                       41

<PAGE>

                              ENVIRONMENTAL RIDER
- --------------------------------------------------------------------------------

                                              San Jose
                                         -------------------------
                                            Name of office
                        333 West Santa Clara Street, San Jose, California 95113
                       ---------------------------------------------------------
                                               Address

         This  ENVIRONMENTAL  RIDER (this  "Rider")  dated this 15th day of May,
1997 is  hereby  made a part of and  incorporated  into  that  certain  Security
Agreement (All Assets) (the  "Agreement")  dated May 15th, 1997 between Comerica
Bank-California,   a  California  corporation  ("Lender"),  and  Hansen  Natural
Corporation, a Delaware corporation ("Pledgor").

         1. Pledgor hereby  represents,  warrants and covenants that none of the
collateral or real property  occupied and/or owned by Pledgor has ever been used
by Pledgor or, to the best  knowledge of Pledgor  after due  inquiry,  any other
previous owner and/or  operator in connection with the disposal of or to refine,
generate, manufacture, produce, store, handle, treat, transfer, release, process
or transport any hazardous waste, as defined in 42 U.S.C.  9601 (14) ("Hazardous
Substance"),  and Pledgor will not at any time use the  collateral  or such real
property for the disposal of, refining of, generating, manufacturing, producing,
storing,   handling,   treating,   transferring,   releasing,   processing,   or
transporting any such Hazardous Waste and/or Hazardous Substances.

         2. None of the  collateral  or real  property  used and/or  occupied by
Pledgor has been  designated,  listed or  identified in any manner by the United
States Environmental  Protection Agency (the "EPA") or under and pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended,  set  forth  at 42  U.S.C.  9601 et  seq.  ("CERCLA")  or the  Resource
Conservation and Recovery Act of 1986, as amended,  set forth at 42 U.S.C.  9601
et seq. ("RCRA") or any other  environmental  protection  statute as a Hazardous
Waste or Hazardous Substance disposal or removal site, superfund or cleanup site
or  candidate  for  removal of  closure  pursuant  to RCRA,  CERCLA or any other
environmental protection statute.

         3. Pledgor has not  received a summons,  citation,  notice,  directive,
letter  or  other  communication,  written  or oral,  from the EPA or any  other
federal or state governmental agency or instrumentality,  authorized pursuant to
an environmental protection statute, concerning any intentional or unintentional
action or omission by Pledgor  resulting in the  releasing,  spilling,  leaking,
pumping,  pouring,  emitting,   emptying,  dumping  or  otherwise  disposing  of
Hazardous Waste or Hazardous Substance into the environment  resulting in damage
thereto or to the fish, shellfish, wildlife, biota or other natural resources.

         4.  Pledgor  shall not  cause or  permit  to  exist,  as a result of an
intentional or  unintentional  action or omission on its part, or on the part of
any third party,  on property  owned and/or  occupied by Pledgor,  any disposal,
releasing, spilling, leaking, pumping, omitting, pouring, emptying or dumping of
a Hazardous Waste or Hazardous  Substance into the environment  where damage may
result to the environment,  fish,  shellfish,  wildlife,  biota or other natural
resources  unless  such  disposal,  release,  spill,  leak,  pumping,  emission,
pouring,  emptying  or  dumping  is  pursuant  to and  in  compliance  with  the
conditions of a permit issued by the appropriate  federal or state  governmental
authority.

         5. Pledgor shall furnish to Lender:

              (a)  Promptly  and in any event  within  thirty  (30)  days  after
receipt thereof, a copy of any notice, summons, citation,  directive,  letter or
other   communications  from  the  EPA  or  any  other  governmental  agency  or
instrumentality  concerning any intentional or unintentional  action or omission
on Pledgor's part in connection with the handling,  transporting,  transferring,
disposal or in the releasing,  spilling,  leaking, pumping,  pouring,  emitting,
emptying  or  dumping  of  Hazardous  Waste  or  Hazardous  Substances  into the
environment resulting in damage to the environment,  fish, shellfish,  wildlife,
biota and any other natural resource;

              (b) Promptly  and in any event  within  thirty (30) days after the
receipt thereof, a copy of any notice of or other  communication  concerning the
filing of a lien upon, against or in connection with Pledgor,  the collateral or
Pledgor's  real  property  by the  EPA  or  any  other  governmental  agency  or
instrumentality  authorized  to file such a lien  pursuant  to an  environmental
protection  statute in connection  with a fund to pay for damages and/or cleanup
and/or  removal costs arising from the  intentional or  unintentional  action or
omission of Pledgor  resulting from the disposal or in the releasing,  spilling,
leaking, pumping, pouring,  emitting,  emptying or dumping of Hazardous Waste or
Hazardous Substances into the environment;

                                       42

<PAGE>

              (c) Promptly  and in any event  within  thirty (30) days after the
receipt thereof, a copy of any notice, directive,  letter or other communication
from the EPA or any other governmental  agency or  instrumentality  acting under
the authority of an environmental  protection statute indicating that all or any
portion of the Pledgor's  property or assets have been listed  and/or  borrowers
deemed by such  agency to be the owner and  operator  of the  facility  that has
failed  to  furnish  to the  EPA or  other  authorized  governmental  agency  or
instrumentality,  all the  information  required  by the  RCRA,  CERCLA or other
applicable environmental protection statutes;

              (d)  Promptly and in no event more than thirty (30) days after the
filing  thereof  with the EPA or other  governmental  agency or  instrumentality
authorized as such pursuant to an environmental  protection  statute,  copies of
any and all  information  reports filed with such agency or  instrumentality  in
connection  with  Pledgor's  compliance  with RCRA,  CERCLA or other  applicable
environmental protection statutes.

         6. Any one or more of the following  events which occur with respect to
Pledgor shall constitute an event of default:

              (a)  The  breach  by  Pledgor  of  any   covenant  or   condition,
representation or warranty contained in this Rider;

              (b) The failure by Pledgor to comply  with each,  every and all of
the  requirements  of  RCRA,  CERCLA  or  any  other  applicable   environmental
protection statutes on the real property occupied and/or on owned by Pledgor;

              (c) The  receipt by Pledgor of a notice  from the EPA or any other
governmental  agency  or  instrumentality  acting  under  the  authority  of any
environmental protection statute,  indicating that a lien has been filed against
any of the  collateral,  or any of  Pledgor's  other  property by the EPA or any
other  governmental  agency or  instrumentality  in connection  with a fund as a
result of damage arising from an intentional or unintentional action or omission
by Pledgor resulting from the disposal,  releasing,  spilling, leaking, pumping,
pouring,  emitting,  emptying or dumping of  Hazardous  Substances  or Hazardous
Waste into the environment; and

              (d) Any  other  event or  condition  exists  which  might,  in the
opinion of Lender, under applicable  environmental  protection statutes,  have a
material adverse effect on the financial or operational  condition of Pledgor or
the value of all or any material  part of the  collateral  or other  property of
Pledgor.

         In witness  whereof,  the  Pledgor  has agreed as of the date first set
forth above.


HANSEN NATURAL CORPORATION
         (BORROWER/PLEDGOR)

By:_____________________________________________

Its:_____________________________________________

By:_____________________________________________

Its:_____________________________________________


                                       43

<PAGE>






<PAGE>
                       SEVERANCE AND CONSULTING AGREEMENT

                  AGREEMENT dated as of June 20, 1997 (this  "Agreement") by and
among Hansen Beverage Company,  a Delaware  corporation (the "Company"),  Hansen
Natural  Corporation,  a  Delaware  corporation  and the  parent of the  Company
("HNC"),  and Harold C. Taber,  Jr.,  an  individual  residing at 1421  Brighton
Street, La Habra, California 90631 ("Taber").

                              W I T N E S S E T H:

                  WHEREAS, Taber is the President and Chief Executive Officer of
the Company and is employed pursuant to that certain Employment  Agreement dated
July 27, 1992 between the Company and Taber (the "Employment Agreement");

                  WHEREAS, HNC has granted to Taber an incentive stock option to
purchase  shares of HNC's common  stock  pursuant to HNC's Stock Option Plan and
that certain  Stock Option  Agreement  between HNC and Taber dated June 30, 1995
(the "Option Agreement");

                  WHEREAS,  Taber desires to retire from his employment with the
Company and the Company  desires to assure itself of the continued  availability
of the  consulting  services  of Taber,  and to that end desires to enter into a
severance  and  consulting  agreement  with him,  upon the terms and  conditions
herein set forth; and

                  WHEREAS, Taber is desirous of entering into such a severance
and consulting agreement;
 NOW, THEREFORE, in consideration of the mutual
covenants herein contained and for other good and valuable consideration,
the  receipt and  sufficiency  of which is hereby acknowledged, the parties
hereby agree as follows:

                  1.     Termination of Employment.

                         (a)  Taber's  employment  with  the  Company  shall  be
                    terminated effective as of the close of business on June 30,
                    1997 and the Employment  Agreement and the Option  Agreement
                    will  each be  deemed  to be  terminated  as of  such  date.
                    Simultaneously with the execution of this Agreement, HNC and
                    Taber shall enter into a Stock Option  Agreement in the form
                    of Exhibit A hereto.

                         (b) Taber  hereby fully and forever  releases,  acquits
                    and  discharges  the  Company  and HNC and their  respective
                    employees,   agents,   attorneys,    officers,    directors,
                    successors   and   assigns    (collectively   the   "Company
                    Releasees"), from all manner of action and causes of action,
                    suits, choses in action, contacts, covenants, claims, bonds,
                    bills,  debts,  dues, sums of money,  rentals,  commissions,
                    compensation  for  purported   personal  services  rendered,
                    judgments,   executions,   damages,   demands   and   rights
                    whatsoever,  in law or in equity,  now existing or which may
                    hereafter   accrue  in  favor  of  Taber   pursuant  to  the
                    Employment Agreement and the Option Agreement other than the
                    Company's  obligations under the Employment  Agreement which
                    by the terms of the  Employment  Agreement  the  Company  is
                    required  to fulfill  between  the date  hereof and June 30,
                    1997, which  obligations are specified on Schedule A hereto.
                    Taber  covenants  that he will refrain from  commencing  any
                    action or suit or  participating  or assisting in any manner
                    in the commencement or prosecution of any action or suit, in
                    law or equity, against the Company Releasees, or any of them
                    jointly or  severally,  on account of any action or cause of
                    action released  hereby.  In addition to any other liability
                    which shall accrue upon the breach of this  covenant,  Taber
                    shall indemnify the Company Releasees and hold them harmless
                    from any such action or suit, and shall be liable to pay all
                    reasonable attorney's fees and costs incurred by the Company
                    Releasees in defense of such action or suit.

                                       1

<PAGE>

                         (c)  each of the  Company  and HNC  fully  and  forever
                    releases,  acquits and  discharges  Taber and his successors
                    and assigns (collectively,  the "Taber Releasees"), from all
                    manner of action  and  causes of  action,  suits,  choses in
                    action, contracts,  covenants,  claims, bonds, bills, debts,
                    dues, sums of money, rentals, commissions,  compensation for
                    purported personal services rendered, judgments, executions,
                    damages, demands and rights whatsoever, in law or in equity,
                    now existing or which may  hereafter  accrue in favor of the
                    Company or HNC pursuant to the  Employment  Agreement  other
                    than Taber's obligations (i) under the Employment  Agreement
                    which by the  terms  of the  Employment  Agreement  Taber is
                    required  to fulfill  between  the date  hereof and June 30,
                    1997 and (ii)  arising  under  Sections 9, 10,  11.1,  11.2,
                    11.4(c) and 11.4(d) of the Employment  Agreement which Taber
                    and  the  Company   agree  shall  survive  until  the  fifth
                    anniversary  of the  date  of  this  Agreement.  Each of the
                    Company  and  HNC  covenants   that  it  will  refrain  from
                    commencing any action or suit or  participating or assisting
                    in any manner in the  commencement  of or prosecution of any
                    action  or suit,  in law or in  equity,  against  the  Taber
                    Releasees,  or any of them jointly or severally,  on account
                    of any  action  or  cause  of  action  released  hereby.  In
                    addition to any other  liability which shall accrue upon the
                    breach of this covenant, the Company and HNC shall indemnify
                    to Taber  Releasees  and hold  them  harmless  from any such
                    action or suit,  and  shall be liable to pay all  reasonable
                    attorney's fees and costs incurred by the Taber Releasees in
                    defense of such action or suit.

                         (d) It is  understood  that  Taber may  raise  with the
                    Company the issue of the  possible  payment of up to $20,000
                    to him in  connection  with the  voluntary  reduction of his
                    Base  Pay  (as  such  term  is  defined  in  the  Employment
                    Agreement) for the year ended December 31, 1996. The Company
                    agrees to consider  such a request,  but is not obligated to
                    pay any portion of that amount.

                  2.     Consulting Term

                         The  Company   hereby  agrees  to  retain  Taber  as  a
                    consultant to the management of the Company and Taber hereby
                    accepts and agrees to serve in such  capacity,  for a period
                    of two (2) years  commencing  on July 1, 1997 and  ending on
                    June 30, 1999 unless sooner  terminated  as herein  provided
                    (the "Consulting Term"). 

                  3.     Consulting Duties

                         Taber shall make himself  available for up to six hours
                    per month (i) for consultation  with the Company  concerning
                    the  manufacture,  distribution,  sale and  promotion of the
                    products   sold  by  the   Company  or  its   licensees   or
                    sublicensees,  together  with  consultation  and advice with
                    respect to such other matters as the Company may request and
                    (ii) to attend  meetings  with or to contact  customers  and
                    suppliers of the Company as  requested  by the  Company.  In
                    addition,  during  the  Consulting  Term,  Taber  agrees  to
                    continue  to  serve  without  additional  compensation,   if
                    elected, as a director of HNC.

                  4.     Consulting Compensation

                         (a)  For and in  consideration  of the  services  to be
                    rendered by Taber to the Company during the Consulting Term,
                    the Company  agrees to pay Taber a consulting  fee of $5,000
                    per month payable  monthly or in such other  installments as
                    the parties may mutually  agree upon.

                         (b) During the  period  commencing  on July 1, 1997 and
                    ending on  December  31,  1997,  the Company  shall  provide
                    medical  and  dental  benefits  to Taber  comparable  to the
                    medical  and  dental  benefits  provided  to him  under  the
                    Employment Agreement.

                                       2

<PAGE>

                  5.     Repayment of Note.

                         Taber and the Company  agree that Taber owes $62,246 in
                    principal  and  accrued  interest  as of June 30, 1997 under
                    Taber's  Amended and Restated  Promissory Note dated May 31,
                    1994  in the  original  principal  amount  of  $82,170  (the
                    "Note"),  and that the Note shall be repaid by  setting  off
                    (a) $4,000 in accrued  but unpaid  Base Pay (as such term is
                    defined in the Employment  Agreement)  through June 30, 1997
                    and (b) a portion  of the  consulting  fees  payable  by the
                    Company  to  Taber   pursuant  to   paragraph   4(a)  hereof
                    commencing  with the fees payable in respect of the month of
                    January,  1998 and  continuing  with each  successive  month
                    thereafter  until the entire  principal  amount of the Note,
                    together with all interest accrued thereon, has been paid in
                    full. The portion of the  consulting  fees to be set off for
                    payment of the Note shall be  calculated  to fully  amortize
                    the Note over eighteen  months,  in equal  monthly  amounts,
                    beginning   with   January,   1998.  In  the  event  of  the
                    termination  of this  Agreement  for any reason prior to the
                    repayment  in full of the Note,  then Taber shall pay to the
                    Company  on the date of  termination  the  entire  principal
                    balance due and payable  under the Note,  together  with all
                    interest   accrued   thereon   through   the  date  of  such
                    termination.

                6.       Independent Contractor

                         It is  understood  and agreed  that Taber  shall at all
                    times  during  the  Consulting  Term  be  deemed  to  be  an
                    independent contractor,  and nothing in this Agreement shall
                    in any way be deemed or construed to constitute  Taber as an
                    agent or  employee  of the  Company nor shall Taber have the
                    right or  authority to act as,  incur,  assume or create any
                    obligation, responsibility or liability, express or implied,
                    in the name of or on behalf of the Company or HNC or to bind
                    the  Company  or HNC in any  manner  whatsoever  or sign any
                    documents on their behalf.

                  7.     Withholding Tax

                         The Company shall not be  responsible  for  withholding
                    from any payments made to Taber hereunder any  contributions
                    levied by any state or federal  statutes  relating to social
                    security or similar benefits.

                  8.     Termination

                         Taber's consulting services hereunder may be terminated
                    by the Company only under the following  circumstances:

                         (a)  Death.   In  the  event   Taber  dies  during  the
                    Consulting  Term, the Consulting  Term shall  terminate upon
                    his  death.

                         (b) Cause. The Company may, at any time, terminate this
                    Agreement for Cause upon thirty (30) days' written notice of
                    termination  to Taber.  "Cause" shall mean the occurrence of
                    one or more of the following during the Consulting Term: (i)
                    the commission of embezzlement,  theft or other dishonest or
                    fraudulent acts, effecting the Company, (ii) conviction of a
                    felony involving moral turpitude (from which,  through lapse
                    of time or otherwise,  no successful  appeal shall have been
                    made) or (iii) material  breach by Taber of his  obligations
                    under Sections 9, 10, 11.1, 11.2,  11.4(c) or 11.4(d) of the
                    Employment Agreement or under paragraph 9 of this Agreement.

                         If the  Agreement  shall be terminated  for Cause,  the
                    Company shall have no further obligations to Taber as of the
                    date of termination.

                                       3

<PAGE>

                  9.     Restrictive Covenants

                         (a) Taber agrees that during the period  commencing  on
                    July 1, 1997 and  ending on June 30,  1999 that he shall not
                    directly or indirectly (i) own,  manage,  operate,  control,
                    participate  in,  or be  connected  in any  manner  with the
                    ownership,  management, operation or control of any business
                    engaged  in  the   manufacture,   marketing,   sale   and/or
                    distribution  of "New Age  Beverages" (as defined in Section
                    11.4(a) of the Employment  Agreement),  juices, juice drinks
                    or   Smoothies,   functional   beverages   or  apple   juice
                    (collectively,  "Competing  Beverages") which is competitive
                    with the business of the Company (except that mere ownership
                    as an  investor  of not more then 5% of the  publicly-traded
                    securities  of  a   corporation   shall  not  be  deemed  an
                    association with such corporation) or become employed by any
                    such business or (ii) provide or offer or attempt to provide
                    such  products  or  services  to any  business,  person,  or
                    enterprise (or  successor(s)  to any of the same),  wherever
                    located, who or which is or was a customer of the Company on
                    or within two years prior to the date of this Agreement,  as
                    conclusively evidenced by the accounts receivable,  invoices
                    and other  records of the  Company,  where such  products or
                    services are similar to or competitive  with any products or
                    services offered or provided by the Company on or within two
                    years prior to the date of this Agreement. In recognition of
                    the  geographic  extent  of the  Company's  operations,  the
                    restrictive  covenant contained in this paragraph 9(a) shall
                    apply throughout the mainland United States. For purposes of
                    this  paragraph  9(a)  and  paragraph  9(b)  only,  the term
                    "Competing Beverages" shall be deemed to exclude cold filled
                    teas and coffees in cans.

                      (b)Subject to the  provisions  of  Section  11.4(c) of the
                    Employment  Agreement  and  to the  last  sentence  of  this
                    paragraph  9(b),  nothing  in  paragraph  9(a)  above  shall
                    prohibit or restrict Taber's right or ability to be employed
                    by any business  which is not  substantially  engaged in the
                    manufacture,    marketing,    sale    and/or    distribution
                    (collectively,   "sale")  of  Competing  Beverages,  and  to
                    fulfill  the   responsibilities  of  such  employment.   For
                    purposes of this  paragraph  9(b), a firm or entity shall be
                    deemed to be "substantially engaged in the sale of Competing
                    Beverages"  only if more than 25% of its gross revenues from
                    the sale of all types of beverages are  attributable  to the
                    sale of Competing  Beverages.  It is understood that, during
                    the period referred to in paragraph  9(a),  Taber may not be
                    employed  by any  business  in a  position  in  which he has
                    direct management responsibility,  on a regular,  continuing
                    and   day-to-day   basis  for  or  within  any  division  or
                    department  engaged  substantially  in the sale of Competing
                    Beverages,  regardless of whether or not the business, taken
                    as a whole is deemed  to be  "substantially  engaged  in the
                    sale of  Competing  Beverages"  pursuant  to this  paragraph
                    9(b).

                         (c) Notwithstanding  anything to the contrary contained
                    in this  Agreement,  Taber  agrees  that  during  the period
                    commencing  on July 1, 1997 and ending on June 30, 1999 that
                    under  no  circumstances  shall  he own,  operate,  control,
                    participate  in,  or be  connected  in any  manner  with the
                    ownership,  management, operation or control of any business
                    which supplies Competing  Beverages to Trader Joe's or which
                    procures  Competing  Beverages  for  Trader  Joe's.  Taber's
                    employment  by or acting as a  consultant  for any  business
                    which supplies Competing  Beverages to Trader Joe's or which
                    procures  Competing  Beverages  for Trader  Joe's  shall not
                    constitute a breach of this  paragraph  9(c) if Taber has no
                    involvement whatsoever,  directly or indirectly, in any such
                    activity.

                         (d) During the Consulting  Term (i) Taber agrees not to
                    make any public  announcement  concerning the Company or HNC
                    without the prior written  consent of the Company or HNC, as
                    the  case  may  be,  (ii)  Taber  agrees  not  to  make  any
                    derogatory  statements or comments of any nature  whatsoever
                    to any third party  concerning  the Company or HNC or any of
                    the  officers,   directors,   employees,   agents  or  other
                    representatives  of the Company or HNC and (iii) the Company
                    and HNC  agree  not to make  any  derogatory  statements  or
                    comments  of  any  nature  whatsoever  to  any  third  party
                    concerning Taber.

                                       4

<PAGE>

                  10.    Specific Performance

                         Taber  acknowledges  and agrees that the services to be
                    rendered under this  Agreement are of a special,  unique and
                    extraordinary   character,  and  by  reason  thereof,  Taber
                    consents  and agrees  that in the event of the breach of any
                    of the covenants  given in paragraph 9 hereof (or any of its
                    parts) by Taber,  the  Company,  in  addition,  to any other
                    rights  and  remedies  available  under  this  Agreement  or
                    otherwise,  shall be entitled to an  injunction to be issued
                    by any  tribunal  of  competent  jurisdiction,  which  shall
                    restrain and prohibit Taber from committing or continuing to
                    commit any such breach of this Agreement.

                  11.    Entire Agreement

                         This Agreement  constitutes the entire  agreement among
                    the parties  with respect to the subject  matter  hereof and
                    there is no other agreement between the parties with respect
                    to the subject matter hereof, written or oral, other than as
                    provided   hereby.   This  Agreement  may  not  be  amended,
                    modified,  supplemented  or  discharged  except by a writing
                    duly executed by the parties hereto.

                  12.    Notices

                         Notices  required or  permitted  hereunder  shall be in
                    writing directed as follows: If to the Company or HNC:

                           Hansen Beverage Company
                           2401 East Katella Avenue, Suite 650
                           Anaheim, California  92806
                           Attention:  Mr. Rodney C. Sacks


                           If to Taber:

                           Mr. Harold C. Taber, Jr.
                           1421 Brighton Street
                           La Habra, California  90631


The above-named persons may designate by notice to each other any new address to
which notice may be made  pursuant to this  Agreement.  All  notices,  requests,
demands and other communications which are required or permitted hereunder shall
be in writing  and shall be deemed to have been duly given upon the  delivery or
making thereof, as the case may be, if delivered  personally or by registered or
certified mail,  postage prepaid,  return receipt  requested,  or by a reputable
overnight messenger service.

                  13.      Waiver

                         The  waiver  by any party  hereto of the  breach of any
                    provision  of this  Agreement  by the other party or parties
                    hereto  shall not operate or be construed as a waiver of any
                    other provision  hereof or of any subsequent  breach by such
                    other party.

                                       5

<PAGE>

                  14.      Severability

                         If any provision of this Agreement  shall be held to be
                    invalid  or  unenforceable,  the  other  provisions  of this
                    Agreement  shall not be affected  thereby and this Agreement
                    shall be construed as if the provision held to be invalid or
                    unenforceable  had  never  been  contained  herein  and such
                    provision  shall be reformed  and redrawn only to the extent
                    necessary so as to be valid and enforceable under applicable
                    law.

                  15.    Assignability

                         Taber  shall  not have the  right to  assign,  commute,
                    encumber  or  dispose  of  this  Agreement  or  any  rights,
                    interests,  benefits or payments  hereunder,  which contract
                    rights,  interests,   benefits  or  payments  are  expressly
                    declared   non-assignable  and   non-transferable   and  any
                    attempted  assignment or other disposition of this Agreement
                    or any rights,  interests,  benefits  or payments  hereunder
                    contrary  to  the  foregoing  provisions,  or  the  levy  or
                    attachment or similar process  thereupon,  shall be null and
                    void and without  effect.  This  Agreement  shall be binding
                    upon and shall  inure to the  benefit of the Company and HNC
                    and any  successor  of the  Company  and  HNC,  and any such
                    successor  shall be deemed  substituted  for the  Company or
                    HNC,  as the  case  may be,  under  the  provisions  of this
                    Agreement.  As used herein,  the term "successor" shall mean
                    any person, firm, corporation or other business entity which
                    at any time,  whether by merger,  purchase,  liquidation  or
                    otherwise,  acquires all or substantially  all of the assets
                    or business at the Company or HNC, as the case may be.

                  16.    Governing Law

                         This  Agreement  shall be governed by and  construed in
                    accordance  with the laws of the  State  of  California.  IN
                    WITNESS  WHEREOF,  the  parties  hereto have  executed  this
                    Agreement on the date first above written.

                                 HANSEN BEVERAGE COMPANY


                       By:________________________________



                                HANSEN NATURAL CORPORATION


                       By:_______________________________



                       ----------------------------------
                                 Harold C. Taber, Jr.


                                       6

<PAGE>




<PAGE>

                             STOCK OPTION AGREEMENT


     This Stock Option Agreement ("Agreement") is made as of June 20, 1997 by
and between Hansen Natural Corporation, a Delaware corporation (the "Company"),
and Harold C. Taber, Jr. ("Holder").

                              Preliminary Recitals

                  A. Holder,  the Company and Hansen Beverage Company ("HBC"), a
wholly-owned  subsidiary of the Company,  are parties to that certain  Severance
and  Consulting  Agreement of even date herewith (the  "Consulting  Agreement"),
providing  for the  termination  of  Holder's  employment  with  HBC  and  HBC's
engagement of Holder as a consultant.

                  B.  Pursuant to the Hansen  Natural  Corporation  Stock Option
Plan, and that certain Stock Option  Agreement dated as of June 30, 1995 between
the Company and Holder (the "1995 Option Agreement"), the Company granted Holder
a stock  option (the "1995  Option")  to  purchase  up to 180,000  shares of the
Company's  common stock,  par value $.005 per share (the "Common  Stock"),  at a
purchase price of $1.38 per share (the "1995 Exercise Price").

                  C. Pursuant to the Consulting Agreement the Company has agreed
to grant to Holder a stock  option  to  purchase  shares  of Common  Stock at an
exercise  price  equal to the 1995  Exercise  Price,  subject  to the  terms and
conditions  set forth  below,  in  consideration  of, among other
  matters,  the
termination  of the  1995  Option  Agreement  and the  cancellation  of the 1995
Option.

                  NOW, THEREFORE, the Company and Holder agree as follows:

                  1. Grant of Stock Option. The Company hereby grants to Holder,
subject  to the  terms  and  conditions  set  forth  herein,  the  stock  option
("Option")  to purchase up to 100,000  shares of Common  Stock,  at the purchase
price of $1.38  per  share,  such  Option to be  exercisable  and  exercised  as
hereinafter provided.

                  2. Exercise Period.  The period during which the Option may be
exercised  shall  commence  on July 1,  1997 and shall  expire on June 30,  1999
unless the  Consulting  Agreement is  terminated by HBC for Cause (as defined in
the Consulting  Agreement) or unless the  Consulting  Agreement is terminated by
reason of the death of Holder. If the Consulting  Agreement is terminated by HBC
for  Cause,  the Option  shall  expire as of the date the  Consulting  Agreement
terminates.  If the Consulting  Agreement terminates due to Holder's death, then
the Option may be  exercised by the person or persons to which  Holder's  rights
under this Agreement  pass by will, or if no such person has such right,  by his
executors or  administrators,  within six months after the date of death, but no
later than June 30, 1999.

                  3. Exercise of Option

                         (a)  The  Option  may  be  exercised,   to  the  extent
                    exercisable  by its terms,  from time to time in whole or in
                    part  at any  time  prior  to the  expiration  thereof.  Any
                    exercise  shall be  accompanied  by a written  notice to the
                    Company  specifying  the  number of shares as to which  this
                    Option is being exercised (the "Option Shares").

                         (b)  Holder  hereby  agrees to notify  the  Company  in
                    writing  in  the  event  shares  acquired  pursuant  to  the
                    exercise of this Option are transferred,  other than by will
                    or by the laws of the descent and  distribution,  within two
                    years  after the date  indicated  above or  within  one year
                    after the issuance of such shares pursuant to such exercise.

                                       1

<PAGE>

                  4. Payment of Purchase Price Upon Exercise. At the time of any
exercise of the Option the purchase price of the Option shall be paid in full to
the  Company  in  either  of the  following  ways or in any  combination  of the
following ways:
                         (a)  By check or other immediately available funds.

                         (b)  With  property  consisting  of  shares  of  Common
                    Stock(The shares of Common Stock to be used as payment shall
                    be valued as of the date of  exercise  of the  Option at the
                    Closing  Price as  defined  below.  For  example,  if Holder
                    exercises  the option for 4,000  shares at a total  exercise
                    price of $8,000, assuming exercise price of $2.00 per share,
                    and the  Closing  Price is  $5.00,  he may pay for the 4,000
                    Option Shares by  transferring  1,600 shares of Common Stock
                    to the Company.)

                         (c) For purposes of this  Agreement,  the term "Closing
                    Price" means,  with respect to the  Company's  Common Stock,
                    the last  sale  price  regular-way  or, in case no such sale
                    takes place on such date, the average of the closing bid and
                    asked  prices   regular-way   on  the   principal   national
                    securities  exchange on which the  securities  are listed or
                    admitted to trading;  or, if they are not listed or admitted
                    to trading on any  national  securities  exchange,  the last
                    sale price of the securities on the consolidated transaction
                    reporting  system of the National  Association of Securities
                    Dealers ("NASD"),  if such last sale information is reported
                    on such  system or, if not so  reported,  the average of the
                    closing  bid  and  asked  prices  of the  securities  on the
                    National   Association  of  Securities   Dealers   Automatic
                    Quotation System ("NASDAQ") or any comparable system, if the
                    securities are not listed on NASDAQ or a comparable  system,
                    the average of the closing bid and asked prices as furnished
                    by two members of the NASD selected from time to time by the
                    Company for that purpose.

                  5. Purchase for Investment; Resale Restrictions. Unless at the
time of exercise of the Option there shall be a valid and effective registration
statement  under  the  Securities  Act  of  1933  ("`33  Act")  and  appropriate
qualification  and registration  under applicable state securities laws relating
to the Option  Shares being  acquired,  Holder shall upon exercise of the Option
give a  representation  that he is acquiring such shares for his own account for
investment and not with a view to, or for sale in connection with, the resale or
distribution of any such shares. In the absence of such registration  statement,
Holder shall execute a written affirmation, in a form reasonably satisfactory to
the Company,  of such investment intent.  Holder further agrees that he will not
sell or transfer any Option  Shares until he requests and receives an opinion of
the Company's counsel or other counsel reasonably satisfactory to the Company to
the effect that such proposed sale or transfer will not result in a violation of
the `33 Act, or a  registration  statement  covering the sale or transfer of the
shares has been declared effective by the Securities and Exchange Commission, or
he obtains a no-action  letter from the Securities and Exchange  Commission with
respect to the proposed transfer.

                  6.  Nontransferability.  The Option shall not be  transferable
other  than by will or by the  laws of  descent  and  distribution.  During  the
lifetime of Holder, the Option shall be exercisable only by Holder.

                  7. Adjustments.  In the event of any change in the outstanding
Common  Stock of the  Company by reason of any stock  recapitalization,  merger,
consolidation,  combination or exchange of shares, the kind of shares subject to
the Option and the purchase price per share (but not the number of shares) shall
be  appropriately  adjusted  consistent  with such  change in such manner as the
Board of  Directors of the Company may deem  equitable.  In the event of a stock
dividend or stock split the kind of shares, the purchase price per share and the
number of shares shall be appropriately adjusted, consistent with such change in
such manner as the Board of Directors may deem equitable. Any adjustment so made
shall be final and binding on Holder.  No  adjustments  shall be made that would
have the effect of  modifying an Option  under  Internal  Revenue Code " 422 and
424.

                                       2

<PAGE>

                  8. No Rights as Stockholder.  Holder shall have no rights as a
stockholder  with  respect to any shares of Common  Stock  subject to the Option
prior to the date of issuance to him of a certificate or  certificates  for such
shares.

                  9. Compliance with Law and Regulation.  This Agreement and the
obligation of the Company to sell and deliver  shares of Common Stock  hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
If at any time the Board of Directors of the Company  shall  determine  that (i)
the listing, registration or qualification of the shares of Common Stock subject
or related  thereto upon any  securities  exchange or under any state or federal
law,  or (ii) the  consent or approval of any  government  regulatory  body,  is
necessary  or desirable  as a condition  of or in  connection  with the issue or
purchase of shares of Common Stock hereunder, the Option may not be exercised in
whole or in part  unless such  listing,  registration,  qualification,  consent,
approval  or  agreement  shall  have  been  effected  or  obtained  free  of any
conditions  not acceptable to the Board of Directors.  Moreover,  the Option may
not be  exercised  if its  exercise  or the  receipt  of shares of Common  Stock
pursuant thereto would be contrary to applicable law.

                  10. Tax Withholding  Requirements.  The Company shall have the
right to require Holder to remit to the Company an amount  sufficient to satisfy
any federal,  state or local withholding tax requirements  prior to the delivery
of any certificate or certificates for Common Stock.

                  11. Fractional Shares.  Notwithstanding any other provision of
this Agreement,  no fractional shares of stock shall be issued upon the exercise
of the Option and the Company  shall not be under any  obligation  to compensate
Holder in any way for such fractional shares.

                  12.  Notices.  Any notice  hereunder  to the Company  shall be
addressed to it at its offices at 2401 East Katella Avenue,  Suite 650, Anaheim,
California  92806,  Attention:  Rodney C. Sacks with a copy to Benjamin M. Polk,
Esq.,  Whitman Breed Abbott & Morgan, 200 Park Avenue, New York, New York 10166,
and any notice  hereunder to Holder  shall be addressed to him at 1421  Brighton
Street,  La Habra,  California  90631,  subject to the right of either  party to
designate at any time hereafter in writing some other address.

                  13. Amendment. No modification,  amendment or waiver of any of
the  provisions  of  this  Agreement  shall  be  effective   unless  in  writing
specifically referring hereto, and signed by both parties.

                  14. Governing Law. This Agreement shall be construed according
to the  laws of the  State  of  Delaware  and all  provisions  hereof  shall  be
administered  according to and its validity shall be determined  under, the laws
of such State, except where preempted by federal laws.

                  15. Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall constitute one and the same instrument.

                  IN WITNESS WHEREOF, Hansen Natural Corporation has caused this
Agreement  to be executed by a duly  authorized  officer and Holder has executed
this Agreement both as of the day and year first above written.

                                                   HANSEN NATURAL CORPORATION



                                                   By:__________________________
                                                   Title:



- -------------------------------
Holder


                                       3

<PAGE>




<PAGE>

                         VARIABLE RATE INSTALLMENT NOTE

- -------------------------------    --------------------------------
AMOUNT $4,000,000.00 (U.S.)        NOTE DATE  October 14, 1997  

MATURITY DATE October 1, 2002      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-  and-one-half  percentage  points  (1.500%) 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) on April 1, 1999, on each  anniversary date thereafter in 2000 and 2001,
and on the Maturity Date,  equal on each such date to thirty-five  percent (35%)
of  Adjusted  Cash Flow  during the  immediately  preceding  fiscal  year of the
Borrower  (each such payment,  a "Profit  Recapture  Payment").  As used in this
Note,  the term  Adjusted  Cash Flow for such  fiscal  year means Cash Flow,  as
defined  below,  for such fiscal year less the  aggregate  sum of all  scheduled
payments  during such  fiscal year of  principal  of this Note  (which,  for the
avoidance of doubt,  shall not include the Profit Recapture Payment described in
this paragraph (a) or the Mandatory Principal Repayments described in paragraphs
(b),  (c) and (d)  below).  As used in this  Note,  the term Cash Flow means Net
Income  (after  deduction  for  income  taxes  and  other  taxes of such  person
determined  by  reference  to income or profits of such person) for such period,
plus, to the extent  deducted in computation  of such Net Income,  the amount of
depreciation and  amortization  expense and the amount of deferred tax liability
during such period,  all as determined  in  accordance  with GAAP and Net Income
means  the net  income  (or  loss)  of a person  for any  period  determined  in
accordance  with GAAP but  excluding  in any event (i)any gains or losses on the
sale  or  other  disposition,  not  in  the  ordinary  course  of  business,  of
investments or fixed or capital assets,  and any taxes on the excluded gains and
any tax  deductions or credits on account on any excluded  losses;  and (ii) net
earnings of any Person in which Borrower has an ownership interest,  unless such
net earnings  shall have  actually been received by Borrower in the form of cash
distributions; and

    (b) within  five  business  days of  repayment  of the  indebtedness  of the
undersigned  to ERLY  Industries,  Inc.,  100 percent of the amount by which the
amount advanced under this Note exceeds the amount paid to ERLY Industries, Inc.
in settlement of such indebtedness  minus the reasonable legal fees and expenses
of the  undersigned  incurred in any  litigation to determine the amount of such
repayment; and

                                       1

<PAGE>

    (c) within five business  days of any sale or other  transfer of any capital
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 of the  requirement  that the
undersigned  obtain the prior written consent of the Bank in connection with any
such sale; and

    (d)  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)  through  (d)  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,  and  any  and all  modifications,
renewals or extensions of it, whether joint or several,  contingent or absolute,
now   existing   or  later   arising,   and  however   evidenced   (collectively
"Indebtedness")  are  secured by and the Bank is granted a security  interest in
all items deposited in any account of any of the  undersigned  with the Bank and
by all proceeds of these items (cash or otherwise),  all account balances of any
of the  undersigned  from time to time with the Bank,  by all property of any of
the undersigned from time to time in the possession of the Bank and by any other
collateral,  rights and  properties  described  in each and every deed of trust,
mortgage,  security agreement,  pledge, assignment and other agreement which has
been,  or  will  at any  time(s)  later  be,  executed  by any  (or  all) of the
undersigned  to or for the  benefit  of the Bank,  specifically  including  that
certain  Revolving Credit Loan and Security  Agreement  (Accounts and Inventory)
between  the  undersigned  and  the  Bank of even  date  herewith  (collectively
"Collateral").  Notwithstanding the above, (i) to the extent that any portion of
the  Indebtedness  is a consumer loan,  that portion shall not be secured by any
deed  of  trust  or  mortgage  on or  other  security  interest  in  any  of the
undersigned's  principal  dwelling or in any of the undersigned's  real property
which is not a purchase  money  security  interest  as to that  portion,  unless
expressly  provided to the contrary in another place, or (ii) if the undersigned
(or any of them) has (have)  given or give(s)  Bank a deed of trust or  mortgage
covering  real  property,  that deed of trust or mortgage  shall not secure this
Note or any other  indebtedness  of the  undersigned  (or any of  them),  unless
expressly provided to the contrary in another place.

                                       2

<PAGE>

If the  undersigned (or any of them) or any guarantor under a guaranty of all or
part of the  Indebtedness  ("guarantor")  (a) fail(s) to pay this Note or any of
the Indebtedness when due, by maturity,  acceleration or otherwise,  or fails to
pay any  Indebtedness  owing on a demand  basis and such failure  continues  for
three (3) business days after written notice thereof or written demand therefor;
or (b) fail(s) to comply with any of the terms or  provisions  of any  agreement
between the  undersigned  (or any of them) or any guarantor and the Bank; or (c)
become(s)  insolvent or the subject of a voluntary or involuntary  proceeding in
bankruptcy, or a reorganization, arrangement or creditor composition proceeding,
(if a business entity) cease(s) doing business as a going concern, (if a natural
person) die(s) or become(s) incompetent,  (if a partnership)  dissolve(s) or any
general  partner of it dies,  becomes  incompetent  or becomes  the subject of a
bankruptcy  proceeding or (if a corporation or a limited  liability  company) is
the subject of a dissolution, merger or consolidation: or (d) if any warranty or
representation  made by any of the  undersigned  or any  guarantor in connection
with this Note or any of the  Indebtedness  shall be  discovered to be untrue or
incomplete; or (e) if there is any termination, notice of termination, or breach
of any  guaranty,  pledge,  collateral  assignment  or  subordination  agreement
relating to all or any part of the Indebtedness;  or (f) if there is any failure
by  any  of the  undersigned  or  any  guarantor  to  pay  when  due  any of its
indebtedness (other than to the Bank) or in the observance or performance of any
term, covenant or condition in any document evidencing,  securing or relating to
such indebtedness;  or (g) If there is a material  impairment of the prospect of
repayment of all or any portion of this Note or the Indebtedness,  or a material
impairment  of  the  value  or  priority  of  Bank's  security  interest  in the
Collateral,  including,  without limitation,  any action by any subcontractor or
warehouseman  holding or  asserting a lien in  Collateral  or asserting a setoff
right  or (h) if  there is  filed  or  issued  a levy or writ of  attachment  or
garnishment or other like judicial process upon the undersigned (or any of them)
or any guarantor or any of the Collateral, including without limit, any accounts
of the  undersigned  (or any of them) or any guarantor  with the Bank,  then the
Bank, upon the occurrence of any of these events (each a "Default"),  may at its
option and without prior notice to the undersigned (or any of them), declare any
or all of the  Indebtedness to be immediately  due and payable  (notwithstanding
any  provisions  contained in the  evidence  thereof to the  contrary),  sell or
liquidate all or any portion of the Collateral, set off against the Indebtedness
any  amounts  owing  by the Bank to the  undersigned  (or any of  them),  charge
interest at the default rate  provided in the document  evidencing  the relevant
Indebtedness  and exercise any one or more of the rights and remedies granted to
the Bank by any agreement with the  undersigned  (or any of them) or given to it
under applicable law. In addition, if this Note is secured by a deed of trust or
mortgage  covering  real  property,  then the  trustor  or  mortgagor  shall not
mortgage or pledge the mortgaged premises as security for any other indebtedness
or obligations.  This Note, together with all other indebtedness secured by said
deed of trust or  mortgage,  shall become due and payable  immediately,  without
notice,  at the  option of the Bank,  (a) if said  trustor  or  mortgagor  shall
mortgage  or  pledge  the  mortgaged  premises  for any  other  indebtedness  or
obligations or shall convey,  assign or transfer the mortgaged premises by deed,
installment  sale  contact  or  other  instrument,  or (b) if the  title  to the
mortgaged  premises  shall  become  vested in any  other  person or party in any
manner  whatsoever,  or (c) if there  is any  disposition  (through  one or more
transactions)  of legal or beneficial  title to a  controlling  interest of said
trustor or  mortgagor.  All  payments  under  this Note shall be in  immediately
available United States funds, without setoff or counterclaim.

Notwithstanding anything contained in this paragraph to the contrary, Bank shall
refrain from exercising its rights and remedies and Default shall thereafter not
be deemed to have occurred by reason of the  occurrence of any of the events set
forth in clause (c) (as it  relates  to a person or entity  other than a natural
person) or clause (h) of this  paragraph  if, within ten (10) days from the date
thereof,  the  same  is  released,  discharged,  dismissed,  bonded  against  or
satisfied;  provided,  however,  if the event is the  institution of insolvency,
bankruptcy or similar proceedings against Borrower,  Bank shall not be obligated
to make advances to Borrower during such cure period.

If this Note is signed by two or more  parties  (whether  by all as makers or by
one or more  as an  accommodation  party  or  otherwise),  the  obligations  and
undertakings  under this Note  shall be that of all and any two or more  jointly
and also of each  severally.  This  Note  shall  bind the  undersigned,  and the
undersigned's  respective  heirs,  personal   representatives,   successors  and
assigns.

                                       3

<PAGE>

The  undersigned  waive(s)  presentment,  demand,  protest,  notice of dishonor,
notice  of  demand or intent  to  demand,  notice of  acceleration  or intent to
accelerate,  and all other  notices and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release,  substitution or  nonenforcement
of any  security,  or release or  substitution  of any of the  undersigned,  any
guarantor or any other party,  whether with or without notice,  shall affect the
obligations of any of the undersigned.  The undersigned waive(s) all defenses or
right to discharge  available  under  Section  3-605 of the  California  Uniform
Commercial  Code  and  waive(s)  all  other  suretyship  defenses  or  right  to
discharge. The undersigned agree(s) that the Bank has the right to sell, assign,
or grant participations, or any interest, in any or all of the Indebtedness, and
that, in connection  with this right,  but without  limiting its ability to make
other  disclosures  to the full  extent  allowable,  the Bank may  disclose  all
documents  and  information  which  the Bank now or later  has  relating  to the
undersigned  or the  Indebtedness.  The  undersigned  agree(s) that the Bank may
provide  information  relating to this Note or to the  undersigned to the Bank's
parent, affiliates, subsidiaries and service providers.

The  undersigned  agree(s) to reimburse the holder or owner of this Note for any
and all costs and expenses (including without limit, court costs, legal expenses
and reasonable attorney fees, whether inside or outside counsel is used, whether
or not suit is instituted and, if suit is instituted, whether at the trial court
level, appellate level, in a bankruptcy, probate or administrative proceeding or
otherwise) incurred in collecting or attempting to collect this Note or incurred
in any other matter or proceeding relating to this Note.

The  undersigned   acknowledge(s)  and  agree(s)  that  there  are  no  contrary
agreements, oral or written,  establishing a term of this Note and agree(s) that
the terms and  conditions  of this Note may not be  amended,  waived or modified
except in a writing signed by an officer of the Bank expressly  stating that the
writing  constitutes an amendment,  waiver or  modification of the terms of this
Note.  As used in this Note,  the word  "undersigned"  means,  individually  and
collectively,  each maker, accommodation party, indorser and other party signing
this Note in a similar capacity.  If any provision of this Note is unenforceable
in whole or part for any reason,  the remaining  provisions shall continue to be
effective. THIS NOTE IS MADE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE  WITH THE INTERNAL LAWS OF THE STATE OF  CALIFORNIA,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

THE MAXIMUM INTEREST RATE SHALL NOT EXCEED THE HIGHEST APPLICABLE USURY CEILING.

THE  UNDERSIGNED AND THE BANK  ACKNOWLEDGE  THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL  ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE  OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,  KNOWINGLY
AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT,  WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION  REGARDING THE  PERFORMANCE OR ENFORCEMENT  OF, OR IN
ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.


               For Corporations, Partnerships, Trusts, or Estates


HANSEN BEVERAGE COMPANY    By:______________________ Its:_______________________
OBLIGOR NAME TYPED/PRINTED SIGNATURE OF              TITLE


___________________________By:_______________________Its:_______________________
STREET ADDRESS             SIGNATURE OF              TITLE


___________________________By:_______________________Its:_______________________
CITY                       SIGNATURE OF              TITLE


__________________________ By:_______________________Its:_______________________
STATE ZIP CODE             SIGNATURE OF              TITLE


For Bank Use Only                              CCAR #
- ---------------------------------- ---------------------------------------------

Loan Officer Initials    Loan Group Name        Obligor(s) Name

- ----------------------   -------------------- ---------------------- ---------

Loan Officer I.D. No.    Loan Group No.   Obligor #      Note #     Amount

- ----------------------   --------------   ------------   ---------- ---------


                                       4

<PAGE>




<TABLE> <S> <C>

<ARTICLE>                     5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
PAGES 3 AND 4 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK>                         0000865752
<NAME>                        HANSEN NATURAL CORPORATION
       
<S>                                           <C>
<PERIOD-TYPE>                                  9-MOS
<FISCAL-YEAR-END>                              DEC-31-1997
<PERIOD-START>                                 JAN-01-1997
<PERIOD-END>                                   SEP-30-1997
<CASH>                                         514,569
<SECURITIES>                                   0
<RECEIVABLES>                                  3,725,930
<ALLOWANCES>                                   1,625,806
<INVENTORY>                                    3,432,690
<CURRENT-ASSETS>                               6,525,699
<PP&E>                                         1,096,390
<DEPRECIATION>                                 603,179
<TOTAL-ASSETS>                                 17,891,847
<CURRENT-LIABILITIES>                          4,479,855
<BONDS>                                        0
<PREFERRED-MANDATORY>                          0
<PREFERRED>                                    0
<COMMON>                                       45,614
<OTHER-SE>                                     9,815,989
<TOTAL-LIABILITY-AND-EQUITY>                   17,891,847
<SALES>                                        32,054,709
<TOTAL-REVENUES>                               32,057,012
<CGS>                                          18,952,135
<TOTAL-COSTS>                                  11,343,320
<OTHER-EXPENSES>                               183,839
<LOSS-PROVISION>                               0
<INTEREST-EXPENSE>                             415,746
<INCOME-PRETAX>                                1,124,928
<INCOME-TAX>                                   40,200
<INCOME-CONTINUING>                            1,084,728
<DISCONTINUED>                                 0
<EXTRAORDINARY>                                0
<CHANGES>                                      0
<NET-INCOME>                                   1,084,728
<EPS-PRIMARY>                                  .12
<EPS-DILUTED>                                  .11
        


</TABLE>