UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 24, 2017
MENDOCINO BREWING COMPANY, INC.
(Exact Name of Registrant as Specified in Charter)
California
(State or Other Jurisdiction of Incorporation)
| 0-22524 | 68-0318293 |
(Commission File No.) |
(IRS Employer Identification Number) |
| 1601 Airport Road, Ukiah, California | 95482 |
| (Address of Principal Executive Offices) | (Zip Code) |
(707) 463-2627
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement
On May 24, 2017, Mendocino Brewing Company, Inc. a California corporation, (the “Company”) issued a promissory note (the “Note”) to Catamaran Services, Inc., a Delaware corporation (“Catamaran”) in the principal amount of $200,000. The Company previously issued six promissory notes to Catamaran on January 22, 2014, April 24, 2014, February 5, 2015, June 30, 2015, March 14, 2016 and March 30, 2016, (the “Prior Notes”). Such Prior Notes were substantially on the same terms as the Note. The Prior Notes have been disclosed in the Company’s current reports on Form 8-K filed on January 28, 2014, April 24, 2014, February 11, 2015, July 7, 2015, and on March 18, 2016 as subsequently amended by the Company’s current report on Form 8-K/A filed on March 22, 2016 and quarterly reports on Form 10-Q filed on May 15, 2014, August 14, 2014, November 14, 2014, May 15, 2015, August 14, 2015 and November 16, 2015 and annual reports on Form 10-K filed on March 31, 2014, March 31, 2015 and April 14, 2016 (all of which are incorporated by reference herein to the extent they refer to such Prior Notes).
Pursuant to the terms of the Note, the Company promises to pay the principal sum of $200,000 with accrued interest, as described below, to Catamaran within six months following the date of the Note, subject to the receipt by the Company of a bridge loan from its majority shareholder (the “Shareholder Loan”) in an amount sufficient either (a) to pay the Note through Permitted Payments, as defined below, or (b) to pay both the Note and certain existing obligations of the Company to MB Financial Bank, N.A., an Illinois banking corporation, successor in interest to Cole Taylor Bank, N.A. (“MB Financial”) in full pursuant to that certain Credit and Security Agreement dated as of June 23, 2011, as amended on March 29, 2013, January 21, 2015, June 20, 2016, July 22, 2016, September 21, 2016, October 18, 2016, December 22, 2016, January 25, 2017, February 23, 2017, March 16, 2017 and April 25, 2017, among Cole Taylor Bank, N.A., the Company and Releta Brewing Company LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Releta”), (collectively, the “Credit Agreement”). “Permitted Payments” on the Note are payments made from the portion of a Shareholder Loan that is in excess of $600,000.
If the Company is not able to satisfy its obligations on the Note within the six month period following the date of the Note, the Note shall be automatically extended for additional six month terms until a Shareholder Loan sufficient to satisfy the Note is received or the Note is otherwise paid. Interest shall accrue from the date of the Note on the unpaid principal at a rate equal to the lesser of (i) one and one-half percent (1.5%) per annum above the prime rate offered from time to time by the Bank of America Corporation in San Francisco, California, or (ii) ten percent (10%) per annum, until the principal is fully paid.
The Note may be prepaid without penalty at the option of the Company; however, no payments on the Note may be made unless such payment is a Permitted Payment or certain existing obligations of the Company to MB Financial pursuant to the Credit Agreement have been satisfied in full. The Note may not be amended without the prior written consent of MB Financial.
The foregoing is not intended to be a complete description of the Note and is subject to, and qualified in its entirety by, the full text of the Note which is filed as Exhibit 10.1 to this current report on Form 8-K.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
See Item 1.01 above.
Item 8.01. Other Events
On May 24, 2017, the Company received a letter from MB Financial permitting the Company to obtain a loan in a principal amount not to exceed $200,000 subject to certain conditions, including that no portion of such loan would be payable until either (a) certain obligations of the Company to MB Financial pursuant to the Credit Agreement were satisfied in full, or (b) the repayment is a Permitted Repayment.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
| Exhibit | ||
| Number | Description | |
| 10.1 | Promissory Note of Mendocino Brewing Company, Inc. in favor of Catamaran Services, Inc. dated May 24, 2017. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MENDOCINO BREWING COMPANY, INC. | ||
| (Registrant) | ||
| Date: May 31, 2017 | By: | /s/ Mahadevan Narayanan |
| Mahadevan Narayanan | ||
| Chief Financial Officer | ||
PROMISSORY NOTE
$200,000
May 24, 2017
Ukiah, California
FOR VALUE RECEIVED, MENDOCINO BREWING COMPANY, INC. (“Maker”), a California corporation, promises to pay to the order of CATAMARAN SERVICES, INC. (“Holder”), a Delaware corporation, the principal sum of Two Hundred Thousand Dollars ($200,000.00) (“Principal”), with interest as defined below.
Maker promises to pay interest to Holder from the date of this Note on unpaid Principal owing from time to time at a rate equal to the lesser of (i) one and one-half percent (1.50%) per annum above the prime rate offered from time to time by the Bank of America Corporation in San Francisco, California, or (ii) ten percent (10%) per annum, until the Principal is fully paid.
Maker shall make payments in lawful money of the United States of America and in immediately available funds. Computations of interest shall be based on a year of 365 days but shall be calculated for the actual number of days in the period for which interest is charged.
All payments under this Note shall be made to Holder as directed by the Holder in writing.
This Note may be prepaid in whole or in part, without penalty, at the option of Maker and without the consent of Holder. All payments shall be applied first to accrued and unpaid interest, and then to the principal balance outstanding.
All payments made pursuant to this Note are expressly subject to the following conditions:
| a) | No portion of Principal or interest on this Note will be payable or paid until either 1) the Obligation (as that term is defined in the Credit and Security Agreement dated as of June 23, 2011, as amended, modified, or supplemented from time to time, between Maker, Releta Brewing Company LLC, and Cole Taylor Bank) to Cole Taylor Bank, now known as MB Financial Bank, N.A. (“Bank”) has been paid and satisfied in full; or 2) the repayment is a Permitted Payment (as defined below). | |
| b) | If Maker receives a bridge loan from its majority shareholder (the “Bridge Loan”), Maker may use that portion (and only that portion) of the Bridge Loan that is in excess of $600,000 (“Excess Contribution”) to make payment on this Note in an amount not greater than the amount of the Excess Contribution (“Permitted Payment”). |
The full payment of this Note, and accompanying interest, shall be due within six (6) months of the date of this Note, subject to the Maker having received an Excess Contribution sufficient to pay the Note either through 1) Permitted Payments, or 2) a complete satisfaction of both the Obligation to Bank and the Note. Should Maker not be able to satisfy this Note at the end of the original six (6) month term, this Note shall be extended for additional six (6) month terms until such time as Maker receives such a Bridge Loan sufficient to satisfy this Note.
PROMISSORY NOTE
$200,000
May 24, 2017
Page 2
This Note is unsecured, not subject to any guarantee by any third party, nor has Maker granted a security interest in any of its property to Holder in relation to this Note.
Maker waives presentment, protest, and demand, notice of protest, notice of demand, and dishonor, and notice of nonpayment of this Note. Except for the right to demand and receive payments of the Permitted Payments, if any, Holder agrees to take no enforcement action on this Note until the Obligation to Bank has been paid and satisfied in full. Maker expressly agrees that this Note or any payment under this Note may be extended by Holder from time to time without in any way affecting the liability of Maker. Further, for the benefit of Bank, until the Obligation to Bank has been paid and satisfied in full, this Note may not be amended or modified without the prior written consent of Bank.
This Note shall be governed by the laws of the State of California excluding its conflict of law rules.
The prevailing party in any action (i) to collect payment on this Note, or (ii) in connection with any dispute that arises as to its enforcement, validity, or interpretation, whether or not a legal action is instituted or prosecuted to judgment, shall be entitled to all costs and expenses incurred, including attorneys’ fees.
If any provision or any word, term, clause, or part of any provision of this Note shall be invalid for any reason, the same shall be ineffective, but the remainder of this Note and of the provision shall not be affected and shall remain in full force and effect.
Except as those terms and conditions concerning Bank or the Obligation, any of the terms or conditions of this Note may be waived by Holder, but no such waiver shall affect or impair the rights of Holder to require observance, performance, or satisfaction, either of that term or condition as it applies on a subsequent occasion or of any other term or condition of this Note.
IN WITNESS WHEREOF, Maker, by its appropriate officers duly authorized, has executed this promissory note and affixed its corporate seal on this on the day and year first written above.
| MAKER | ACCEPTED AND AGREED: | |||
| MENDOCINO BREWING COMPANY, INC. | CATAMARAN SERVICES, INC. | |||
| /s/ Mahadevan Narayanan | /s/ Rajwinder Kaur | |||
| By: | Mahadevan Narayanan | By: | Rajwinder Kaur | |
| Chief Financial Officer | Secretary | |||
| Mendocino Brewing Company, Inc. | Catamaran Services, Inc. | |||
| 1601, Airport Toad | 2711, Centerville Road, Suite 400 | |||
| Ukiah, CA 95482 | Wilmington, DE | |||