UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
SCHEDULE
14A
(Rule
14a-101)
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. __)
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Soliciting
Material Pursuant to § 240.14a-12 |
Mendocino
Brewing Company, Inc.
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of Registrant as Specified in its Charter)
N/A
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of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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MENDOCINO
BREWING COMPANY, INC.
1601
Airport Road
Ukiah,
CA 95482
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
be held on Thursday, January 14, 2016.
NOTICE
IS HEREBY GIVEN that the 2015 Annual Meeting of the Shareholders of Mendocino Brewing Company, Inc., a California corporation
(the “Company”), will be held at 1.00 p.m., Pacific Time, on Thursday, January 14, 2016, at our Ale House located
at Park Falls Plaza, Suite A3, 1252 Airport Park Boulevard, Ukiah, California, 95482 for the following purposes:
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1. |
To
elect nine (9) directors of the Company, each to hold office until the next Annual Meeting of Shareholders when his successor
has been duly elected and qualified or until his earlier resignation or removal. The Board of Directors has nominated the
following candidates: Joseph S. Cannata, James H. Grossman, Scott R. Heldfond, H. Michael Laybourn, Dr. Vijay Mallya, Jerome
G. Merchant, Sury Rao Palamand, Kent D. Price, and Yashpal Singh. |
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2. |
To
ratify the appointment of RBSM, LLP as the independent registered public accounting firm of the Company for the fiscal year
ending December 31, 2014. |
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3. |
To
transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
The
foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.
The
close of business on December 4, 2015 is the record date for the determination of shareholders entitled to notice of and to vote
at the Annual Meeting. Only shareholders of record at the close of business on that date are entitled to notice of and to vote
at the Annual Meeting and at any adjournment or postponement thereof.
To
help us in planning for the Annual Meeting, please mark the appropriate box on the accompanying proxy if you plan to attend. PLEASE
NOTE THAT THE ENCLOSED PROXY IS BEING SOLICITED BY THE COMPANY’S BOARD OF DIRECTORS.
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By
Order of the Board of Directors |
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| Ukiah,
California |
Mahadevan
Narayanan |
| December
16, 2015 |
Corporate
Secretary |
TABLE
OF CONTENTS
Attached
Document:
Annual
Report on Form 10-K for the fiscal year ended December 31, 2014 (WITHOUT EXHIBITS)
MENDOCINO
BREWING COMPANY, INC.
1601
Airport Road
Ukiah,
CA 95482
PROXY
STATEMENT FOR
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD ON THURSDAY, JANUARY 14, 2016
INTRODUCTION
This
Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Mendocino Brewing
Company, Inc., a California corporation (the “Company” or “MBC”), for use at the Annual Meeting of
Shareholders to be held at 1:00 p.m., Pacific Time, on Thursday, January 14, 2016 (the “Annual Meeting”) or at any
adjournment or postponement thereof. The Annual Meeting will be held at the Company’s Ale House located at Park Falls Plaza,
Suite A3, 1252 Airport Park Boulevard, Ukiah, California 95842. The Company intends to mail this Proxy Statement and accompanying
proxy card on or about December 16, 2015 to shareholders entitled to vote at the Annual Meeting. The mailing address of the principal
executive offices of the Company is: 1601 Airport Road, Ukiah, CA 95482 and its telephone number is (800) 733-3871.
Matters
for Consideration at the Annual Meeting
At
the Annual Meeting, the shareholders of the Company will be asked to consider and to vote upon the following:
Proposal
No. 1: To elect nine (9) directors of the Company, each to hold office until the next annual meeting of shareholders or until
his successor has been duly elected and qualified or until his earlier resignation or removal. The Board of Directors has nominated
the following candidates: Joseph S. Cannata, James H. Grossman, Scott R. Heldfond, H. Michael Laybourn, Dr. Vijay Mallya, Jerome
G. Merchant, Sury Rao Palamand, Kent D. Price, and Yashpal Singh, all of whom are currently members of the Board.
Proposal
No.2: To ratify the appointment of RBSM, LLP to serve as the Company’s independent registered public accounting firm
for the fiscal year ending December 31, 2014.
THE
BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” SUCH PROPOSALS.
GENERAL
INFORMATION
Persons
Making the Solicitation
This
solicitation of Proxies is being made by the Company’s Board of Directors. The expenses of preparing, assembling, printing,
and mailing this Proxy Statement and the materials used in the solicitation of Proxies for the Annual Meeting will be borne by
the Company. It is contemplated that Proxies will be solicited principally through the use of the mail, but officers, directors,
and employees of the Company may solicit Proxies personally or by telephone, without receiving special compensation therefor.
The Company will reimburse banks, brokerage houses, and other custodians, nominees, and fiduciaries for their reasonable expenses
in forwarding these Proxy materials to shareholders whose stock in the Company is held of record by such entities.
Voting
Securities of the Company
Information
about Voting
Shareholders
of record as of the Record Date (as defined below) may vote in person at the Annual Meeting or by proxy.
All
properly executed Proxies delivered by shareholders of record as of the Record Date pursuant to this solicitation and not previously
revoked will be voted at the Annual Meeting in accordance with the directions given; alternatively, shareholders may attend the
Annual Meeting and vote their shares in person. The Company recommends that shareholders planning to attend the meeting submit
proxies so that such shareholders’ votes will be counted if they later decide not to attend the meeting. Proxies which are
executed and returned to the Company without contrary instructions will be voted “For” the election of each
of the Board of Directors’ nine (9) nominees for Director (as indicated in Proposal No. 1), and “For”
the ratification of the appointment of RBSM, LLP as the Company’s independent registered accounting firm (as indicated in
Proposal No. 2). If other matters are properly presented for voting at the Annual Meeting, the proxy holders will vote on such
matters in their discretion.
Outstanding
Shares; Record Date. Only shareholders of record at the close of business on December 4, 2015 (the “Record Date”)
are entitled to receive notice of and to vote at the Annual Meeting. As of the Record Date, 12,611,133 shares of the Company’s
Common Stock (the “Common Stock”) were issued and outstanding.
Voting
Generally.
Holders
of Common Stock. On any matter submitted to the vote of the shareholders, other than the election of directors, each holder
of Common Stock will be entitled to one vote, in person or by Proxy, for each share of Common Stock held of record on the Company’s
books as of the Record Date. With respect to the special rules relating to the election of directors, please see below under the
captions “Election of Directors” and “Cumulative Voting.”
Holders
of Series A Preferred Stock. The Company’s 227,600 shares of Series A Preferred Stock do not have voting rights, except
to the extent required by law, and accordingly the holders of the Series A Preferred Stock will not have the right to vote on
any matters scheduled to come before the Annual Meeting.
Voting
Procedures. Holders of the Company’s Common Stock may vote in favor of or against any of the Proposals, or may abstain
from voting on Proposal No. 2, by specifying their choice as indicated on the enclosed proxy card. If no specific instructions
are given with respect to any Proposal, however, the shares represented by any signed proxy will be voted FOR that Proposal. If
a shareholder wishes to do so, he or she may also attend the Annual Meeting in person, and either submit a signed proxy card at
that time or vote by ballot at the Annual Meeting.
Votes
Required for Approval. Directors of the Company will be elected (Proposal No. 1) by the vote of a plurality of the shares
of Common Stock which are present in person or by proxy at the Annual Meeting, as discussed below under the heading “Election
of Directors.” A plurality means that the nominees receiving the largest number of votes cast will be elected. Pursuant
to NYSE Rule 452, brokers that do not receive specific voting instructions from the beneficial owners of the shares will not be
permitted to use such broker’s discretion in voting in uncontested directors’ elections and such shares will be deemed
broker non-votes. Broker non-votes and votes withheld could have an indirect effect on the outcome of the election of directors,
since they will enable a smaller number of votes to determine the outcome of the election.
The
ratification of RBSM, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December
31, 2014 (Proposal No. 2) will require only the affirmative vote of the holders of a majority of the shares of Common Stock of
the Company represented and voting in person or by proxy at the Annual Meeting (which shares voting affirmatively also constitute
at least a majority of the required quorum). Abstentions have the same effect as negative votes on these proposals because they
represent votes that are present but not cast.
Election
of Directors. With respect to the election of directors, shareholders may vote “FOR” all or some of the
nominees or may vote “WITHHOLD” with respect to one or more of the nominees, by following the instructions
on the enclosed proxy card. Directors will be elected by a plurality of the votes cast by the holders of the Company’s Common
Stock, voting in person or by proxy at the Annual Meeting.
A
shareholder may choose to withhold from the proxy holders the authority to vote for any of the individual candidates nominated
by the Board, by marking the appropriate box on the proxy card. In that event, the proxy holders will not cast any of the shareholder’s
votes for candidate(s) whose name(s) have been so indicated, whether or not cumulative voting is called for at the Annual Meeting,
but they will retain the authority to vote for the candidates nominated by the Board whose names have not been so indicated, and
for any other candidates who may be properly nominated at the Annual Meeting. If a shareholder wishes to specify the manner in
which his or her votes are allocated in the event of cumulative voting, then he or she must appear and vote in person at the Annual
Meeting. Ballots will be available at the Annual Meeting for persons desiring to vote in person. All votes will be tabulated by
the inspector of elections who will act as the tabulating agent for the Annual Meeting.
Cumulative
Voting. Solely in connection with the election of directors, shares may be voted cumulatively, but only for persons whose
names have been placed in nomination prior to the voting for election of directors and only if a shareholder present at the Annual
Meeting gives written notice at the Annual Meeting to the chairman of the meeting, prior to the vote, of his or her intention
to vote cumulatively. (Notice of intention to vote cumulatively may not be given by simply marking and returning a proxy.) If
any shareholder of the Company gives such notice, then all shareholders eligible to vote will be entitled to cumulate their votes
in voting for the election of the directors. Cumulative voting allows a shareholder to cast a number of votes equal to the number
of shares held in his or her name as of the Record Date, multiplied by the number of directors to be elected. All of these votes
may be cast for any one nominee, or they may be distributed among as many nominees as the shareholder chooses. The nominees receiving
the highest number of votes, up to the number of places to be filled, shall be elected.
If
one of the Company’s shareholders gives notice of intention to vote cumulatively, the persons holding the proxies solicited
by the Board will exercise their cumulative voting rights, at their discretion, to vote the shares they hold in such a way as
to ensure the election of as many of the Board’s nominees as they deem possible.
Under
the California General Corporation Law, cumulative voting may not be used in connection with any matter other than the election
of directors.
Quorum.
The presence at the Annual Meeting of the persons entitled to vote a majority of the voting shares of the Company, either in person
or by proxy, will constitute a quorum for purposes of transacting business at the Annual Meeting. If a quorum is not present at
the time the Annual Meeting is convened, or if for any other reason the Company believes that additional time should be allowed
for the solicitation of proxies or consideration of the issues raised at the Annual Meeting, the Annual Meeting may be adjourned
by the vote of a majority of the shares represented either in person or by proxy. The persons appointed as proxy in the enclosed
form of proxy will vote all shares for which such persons have voting authority in favor of such adjournment.
Votes
Cast at the Annual Meetings. The inspector of elections shall be appointed at the Annual Meeting to receive and tabulate any
votes cast at that time. The inspector of elections will separately tabulate affirmative and negative votes, abstentions, withheld
votes and broker non-votes.
Solicitation
of Proxies
The
expense of soliciting proxies (in the form accompanying this Proxy Statement) will be paid by the Company. Following the original
mailing of the proxies and other soliciting materials, the Company and/or its agents may also solicit proxies by mail, telephone
or facsimile, or in person. The Company will request that brokers, custodians, nominees, and other record holders of the Company’s
Common Stock forward copies of the proxy and other soliciting materials to persons for whom they hold such shares and request
authority for the exercise of proxies. In such cases, the Company, upon the request of the record holders, will reimburse such
holders for their reasonable expenses.
Revocability
of Proxies
A
form of proxy for voting your shares at the Annual Meeting is enclosed. Any shareholder who executes and delivers such a proxy
has the right to, and may, revoke it at any time before it is exercised by filing with the Secretary of the Company, at Mendocino
Brewing Company, Inc., 1601 Airport Road, Ukiah, CA 95482, a written notice of revocation or a duly executed proxy bearing a later
date. In addition, any proxy may be revoked if the shareholder attends the Annual Meeting and votes in person. Attendance at the
Annual Meeting will not, by itself, automatically revoke a proxy.
Market
Listing
Our
Common Stock is quoted for trading on the OTCQB tier of the OTC Markets under the symbol “MENB”.
Forward
Looking Statements Regarding the Company
Certain
information contained in this Proxy Statement which does not relate to historical financial information may be deemed to constitute
forward looking statements. The words or phrases “will likely result,” “are expected to,” “will
continue,” “is anticipated,” “estimate,” “project,” “believe,” “intend,”
“plan,” “budget,” or similar expressions identify “forward looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. This Proxy Statement contains certain forward-looking statements
with respect to the plans, objectives, future performance, and business of the Company. Because such statements are subject to
risks and uncertainties, actual results may differ materially from historical results and those presently anticipated or projected.
The Company’s shareholders are cautioned not to place undue reliance on such statements, which speak only as of the date
of this Proxy Statement. The Company does not undertake any obligation to release publicly any revisions to such forward-looking
statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
Available
Information
The
Company is subject to the informational reporting requirements of the Securities Exchange Act of 1934, as amended, (the “Exchange
Act”), and in accordance therewith periodically files reports, proxy statements, and other information with the Securities
and Exchange Commission (the “Commission”). Such reports, proxy statements and other information can be inspected
and copies can be made or obtained at or by writing to the public reference facilities of the Commission at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. Such material may also be accessed electronically through the Company’s filings on EDGAR
on the Commission’s internet website (http://www.sec.gov).
IMPORTANT
NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 14, 2016.
The Company’s Proxy Statement dated December 16, 2015 and Annual Report for the fiscal year ended December 31, 2014 are
available electronically at http://www.viewproxy.com/mendobrew/2016.
PROPOSAL
NO. 1: ELECTION OF DIRECTORS
At
the Annual Meeting, shareholders will elect directors to hold office until the next Annual Meeting of Shareholders when their
respective successors have been duly elected and qualified, or until a director’s earlier resignation or removal. Under
the Company’s Bylaws, the Company’s Board shall be composed of between five (5) and nine (9) members, with the exact
number within that range being determined by the Board of Directors. At present, the Board has set the number of directors at
nine (9).
Shares
represented by the accompanying proxy will be voted for the election of the nominees recommended by the Board unless the proxy
is marked to withhold authority to vote for any specific nominee. If any nominee for any reason is unable to serve, or for good
cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder may determine. The Company is not
aware of any nominee who will be unable to, or for good cause will not, serve as a director of the Company.
Nominees
for Director
The
entire Board acts as the nominating committee in the director nominee selection process. The Board has nominated nine (9) individuals
to serve as directors of the Company until the next Annual Meeting when the director’s successor has been duly elected and
qualified or until his earlier resignation or removal, all of whom are current members of the Board. The Board’s nominees
are: Joseph S. Cannata, James H. Grossman, Scott R. Heldfond, H. Michael Laybourn, Dr. Vijay Mallya, Jerome G. Merchant, Sury
Rao Palamand, Kent D. Price, and Yashpal Singh, all of whom are currently members of the Board. As of the date of this Proxy Statement,
no other names have been placed in nomination for consideration by the shareholders at the Annual Meeting.
The
Board has not adopted a charter or any other set of rules with respect to the nominating process. While the Board would carefully
consider the nomination of any candidate for director who may be recommended by the Company’s shareholders, due to the lack
of such nominations in the past, the Board does not believe it necessary at this time to adopt a formal policy relating to director
nominations. Similarly, the Board has not adopted any specific minimum qualifications for candidates for election as director
or identified any specific qualities or skills that such candidates should possess and rather has assessed candidates based on
their individual specific skill sets and relevant experience which may benefit the Company. Despite the fact that historically
there has been a lack of shareholder nominations for nominees to the Board, the Board would assess any such shareholder nominee
based on his/her specific skill set and relevant experience, as the Board currently assesses its nominees. Although there is no
formal written diversity policy in place, the Board considers each individual nominee’s differing experiences and backgrounds
in assessing director nominees. Any shareholder wishing to submit a recommendation for a nominee to the Board should follow the
procedures set forth herein under the captions “Shareholder Communications With the Board of Directors” and “Shareholder
Proposals to be Presented at the Next Annual Meeting”.
Directors
and Executive Officers of the Company
The
following table sets forth the name, approximate age as of November 30, 2015, position and term of office with the Company for
the executive officers as well as the nominees for directors (each of whom is also currently a director of the Company).
| Name |
|
Age
|
|
Position(s) |
|
Director
Since** |
|
| Joseph S. Cannata+ |
|
41 |
|
Director |
|
2015 |
|
| James H. Grossman* |
|
76 |
|
Director |
|
2015 |
|
| Scott R. Heldfond *+ |
|
70 |
|
Director |
|
2005 |
|
| Michael Laybourn+ |
|
77 |
|
Director |
|
1993 |
|
| Vijay Mallya, Ph.D. |
|
59 |
|
Director and Chairman of the Board |
|
1997 |
|
| Jerome G. Merchant* |
|
54 |
|
Director |
|
1997 |
|
| Mahadevan Narayanan |
|
57 |
|
Chief Financial Officer and Secretary |
|
N/A |
|
| Sury Rao Palamand, Ph.D. |
|
85 |
|
Director |
|
1998 |
|
| Kent D. Price*+ |
|
72 |
|
Director |
|
1998 |
|
| Yashpal Singh |
|
69 |
|
Director, President and Chief Executive Officer |
|
1997 |
|
* Member
of the Audit/Finance Committee.
+ Member
of the Compensation Committee.
Business
Experience
The
material occupations, positions, offices or employments for at least the past five (5) years of each current director, each of
the Board’s nominees for director and the Company’s executive officers are set forth below.
Mr.
Joseph Cannata joined the Board in August 2015. He is currently Executive Vice President of Sales & Distribution at Rockstar
Energy Drink. He was part of the original launch team. He also managed Rockstar’s on-premise channel of trade working with
Southern Wine & Spirits throughout Northern California. Additionally, he was responsible for Rockstar’s expanded Independent
Distributor partnership agreements throughout the Western United States for all channels of trade. He established and played a
key role in negotiating the Rockstar product distribution agreement with Dr. Pepper Snapple Group in 2003, Coca-Cola Company in
2005 and Pepsi-Cola North America in 2009. He oversees all National Chain Accounts for Rockstar and manages an Executive Team
of 14 direct reports and full national team of 150+ sales reps throughout the USA & Canada. In his position he is the liaison
and primary contact between Rockstar Inc. and Executive level Pepsi and Independent Distributor personnel. Mr. Cannata is a native
of San Francisco. He attended St. Ignatius College Preparatory and Saint Mary’s College of Moraga where he received a Bachelor
of Arts degree. Mr. Cannata’s expertise in beverage sales and distribution, led to his selection as a member of the Board.
Mr.
James Grossman joined the Board in August 2015. He has been an international, commercial, intellectual property, and energy focused
arbitrator and mediator since 2001 with a background as an international business person and corporate securities lawyer for more
than 35 years. He has served as a Director of both public and private companies. He has continued his business experience by serving
on the boards of directors of public companies based in the United Kingdom, which have been listed on NASDAQ, the London Stock
Exchange, and AIM. He has business activities in San Francisco, London, Monaco and Geneva. He is a founder and director of the
Silicon Valley Arbitration and Mediation Center based in Palo Alto, California. He also serves as Counsel and a Director of Applaud
Medical, Inc. a medical device company with a newly patented treatment for removal of kidney stones. Mr. Grossman served as Counsel
of Canoel International Energy Ltd from December 9, 2008 to March 23, 2011 and also served as its Chairman of the Board. Mr. Grossman
holds a BA in International Relations/Political Science/History from the University of California at Berkeley, and a JD from Harvard
University/Harvard Law School. Mr. Grossman’s experience as an international business person and his legal background led
to his selection as a member of the Board.
Mr.
Scott Heldfond joined the Board in January 2005. He was a Director of NASDAQ Insurance Group, LLC, a national insurance brokerage
and consulting firm owned by the NASDAQ Stock Market prior to the firm’s sale to Aon Risk Services in 2009. Mr. Heldfond
currently services as a Director at Aon Risk Services. Mr. Heldfond has also served as the Managing Partner of eSEED Capital,
LLC, a technology-focused merchant banking firm since 1999. He also served as President and Chief Executive Officer of Frank Crystal
& Co. of California, a New York-based insurance brokerage firm from 1995 to 1999, as Chairman of Hales Capital LLC, an investment
banking firm from 1994 to February 1997 and as President of AON Real Estate & Investments Mr. Heldfond also previously served
as a Director of HomeGain, Inc. (later sold to Classified Ventures), a private, venture backed company, and currently serves as
a Director of UBICS Inc., a NASDAQ traded firm that provides information technology staffing and solutions for domestic and international
businesses. Mr. Heldfond also served as a Director of Galoob Toys, which was the third largest toy manufacturer before its sale
to Hasbro. Mr. Heldfond holds an undergraduate degree from the University of California, Berkeley and a J.D. from the University
of San Francisco Law School. He is a Mayoral appointed Commissioner of the Health Services Commission of the City and County of
San Francisco. In addition, he serves as an advisor to or on the board of directors of a number of local, statewide, and national
charitable and community service organizations. Mr. Heldfond is the retired Honorary Consul General to the United States for the
Republic of Rwanda. Mr. Heldfond’s expertise in risk management and insurance matters, in particular, led to his selection
as a member of the Board.
Mr.
H. Michael Laybourn, co-founder of the Company, served as the Company’s President from its inception in 1983 through December
1999, and as its Chief Executive Officer from inception through October 1997. Mr. Laybourn was elected as a Director of the Company
in November 1993 when the Company began the process of converting from a limited partnership to a corporation and served as Chairman
of the Board from June 1994 through October 1997. Mr. Laybourn is a former Vice President of the California Small Brewers Association
and a former Chairman of the board of directors of the Brewers Association of America. Mr. Laybourn holds a Bachelor of Fine Arts
degree from Arizona State University. Mr. Laybourn’s expertise in craft brewing, in particular, led to his selection as
a member of the Board.
Dr.
Vijay Mallya, Ph.D., became the Company’s Chairman of the Board in October 1997 and was MBC’s Chief Executive Officer
until January 2005. Dr. Mallya is a well known industrialist and the Chairman of UBICS, Inc., United Breweries Limited, United
Spirits Limited, Whyte & Makay Limited, United Breweries (Holdings) Limited (which is the indirect beneficial owner of two
of MBC’s largest shareholders (United Breweries of America, Inc. and Inversiones Mirabel S.A.), Kingfisher Airlines Limited,
UB Engineering Limited, Mangalore Chemicals and Fertilizers Ltd., and other affiliated companies (collectively the “UB Group”).
The UB Group is comprised of businesses in the following sectors: alcoholic beverages, life sciences, engineering, agrochemicals,
information technology, fertilizers, print media, civil aviation and infrastructure development. United Breweries Limited and
United Spirits Limited are two of Asia’s leading beer and spirits companies. Dr. Mallya is also a keen sportsman and an
ardent aviator and yachtsman. Dr. Mallya and certain companies with which he is associated provide financial and other support
for several sporting activities worldwide, including the Force India F1 Formula One Motor Racing Team, the United East Bengal
Football Team and the United Mohun Bagan Football Team. He also sits on the boards and committees of several foreign companies
and organizations including companies comprising the UB Group, The Institute of Economic Studies (India), the Federation of the
Indian Chamber of Commerce and Industries and Motorsports Association of India. Dr. Mallya has been the recipient of many prestigious
awards and accolades, including being nominated to the Global Leaders of Tomorrow by the World Economic Forum, receiving the Légion
d’ Honneur from the Government of France in 2008 and the Outstanding Business Leader Award from the Associated Chambers
of Commerce and Industry of India in 2009. Dr. Mallya is currently serving as a member of the Upper House of the Indian Parliament
for the second time. Dr. Mallya holds a Bachelor of Commerce degree from the University of Calcutta in India and an honorary Doctorate
in Business Administration from California Southern University, Santa Ana. Dr. Mallya’s knowledge and expertise in the global
alcoholic beverage industry were significant in his selection as a member of the Board as well as his appointment as Chairman
of the Board.
Mr.
Jerome G. Merchant became a Director of the Company in October 1997 and was Chief Financial Officer of the Company from November
1997 to October 1998. Mr. Merchant served as the Strategic Planning Consultant to the Chairman’s Office of the Company from
July 1996 until January 2007. Mr. Merchant is a Managing Director with Kinetic Advisors, LLC, a boutique mid-market investment
advisory company. He has over 20 years of experience in investment banking and capital raising transactions. Previously, he held
executive positions at McGladrey Capital Markets, Citigroup and MetLife Investors. Mr. Merchant has advised the investment division
and clients of Citibank and Smith Barney, amongst others. In executive and strategic planning capacities, he has advised public
and private companies and institutional and high-net worth investors. Between April 1993 and December 2003, Mr. Merchant served
in various senior capacities for Cal Fed Investments, a wholly owned subsidiary of Cal Fed Bank. Previously, Mr. Merchant directed
the west coast capital raising for a private equity group focused on equity oriented management buyouts and strategic acquisitions.
He received his B.S. degree in Managerial Economics-Finance from the University of California, Davis. Mr. Merchant’s expertise
in capital raising and financial markets contributed to his selection as a member of the Board.
Mr.
Mahadevan Narayanan joined the company in 2001 as Secretary and Chief Financial Officer. Before joining the Company, he served
the UB Group (including affiliates of the Company) in India for 17 years as part of the management team in various financial and
accounting capacities. Immediately prior to joining the Company, Mahadevan Narayanan was employed as Senior Manager of Accounting
Services of Herbertsons Ltd. for six years. He holds a Bachelor of Science degree in Mathematics from Madurai Kamaraj University
in India and is an Associate member of the Institute of Chartered Accountants of India.
Mr.
Sury Rao Palamand became a director of MBC in January 1998. Dr. Palamand is a director and partner of Summit Products, Inc., a
beverage development and consulting company serving the food and beverage industry. He is also a director and partner in the Historic
Lemp Brewery and is involved in the development of microbreweries and brewpubs, and in the restoration of historic buildings.
Dr. Palamand has over 40 years of experience in the brewing industry and has published numerous scientific and technical papers
on beer and other fermented beverages in various technical journals in the United States and abroad. He is an associate member
of the Institute of Brewing, London and is a member of several brewing organizations in the United States. In addition, Dr. Palamand
possesses technical and technological expertise in wine making as well as in the development of soft drinks. Prior to joining
the Company as a director, Dr. Palamand served as Director of Beer and New Beverage Development at Anheuser-Busch Companies, Inc.
Dr. Palamand holds a Bachelor of Science degree from the University of Mysore, India, a Master of Science degree in Applied Chemistry
from the University of Bombay, India and a Masters degree in Food Microbiology and a Ph.D. degree in Food and Flavor technology
from Ohio State University, Columbus, Ohio. Dr. Palamand is listed in the MARQUIS WHO’S WHO in America and in the WHO’S
WHO in the Midwest. In particular, Mr. Palamand’s technical expertise in fermented beverages was an important criteria in
his selection as a member of the Board.
Mr.
Kent D. Price became a director in January 1998. Kent Price is a founder and President of Parker Price Venture Capital. Mr. Price
was a Rhodes Scholar at Oxford University, attended the University of Montana, the University of California, Los Angeles and Harvard
Business School. Mr. Price is a member of the board of directors of the University of Montana and served on its Foundation and
Investment Committee. Mr. Price is the chairman of Fluid Inc., a technology enhanced service company that is a leader in the development
of eCommerce sites. Mr. Price has extensive operational experience, including as Chief Executive Officer of The Chloride Group,
a global battery company, Chief Executive Officer of the Bank of San Francisco, General Manager of Banking, Finance and Securities
Group at IBM, Chief Financial Officer at the Bank of New England, Executive Vice President of the Bank of America and a senior
officer at Citibank. He has lived and worked in England, Germany, Ireland, Nigeria, Ivory Coast, Taiwan, Hong Kong, Japan and
Singapore as well as the United States. He has served on various boards of directors of companies based in the UK, India, South
Africa, Hong Kong, Taiwan, China and the United States. Mr. Price served on the board of directors of UBICS (a NASDAQ listed company).
Mr. Price served as a Captain in the United States Air Force. Mr. Price’s banking and financial expertise was important
in his selection as a member of the Board.
Mr.
Yashpal Singh became a director of MBC in October 1997 and served as the Company’s Executive Vice President and Chief Operating
Officer beginning in April 1998. Mr. Singh became the Company’s President in January 2000 and its Chief Executive Officer
in January 2005. From May 1997 to March 1998, Mr. Singh served as Executive Vice-President- Operations for UBA, one of MBC’s
major shareholders. Between 1964 and 1990, Mr. Singh served in various capacities including as Head Brewer and Chief Executive
Officer of a large alcoholic beverage corporation in India. Between 1990 and 1997, Mr. Singh also served as Senior Vice President-Operations
for United Breweries Ltd., an Indian Corporation, where he was responsible for the operations of 12 breweries, the establishment
of new green-field projects, and technical and operational evaluations of potential acquisition opportunities worldwide. Mr. Singh
holds a Bachelor’s degree in Science from Punjab University in India, a Diploma in Brewing from the Institute of Brewing
and Distilling in London and has extensive training in the fields of Brewing, Malting, and Mineral Water Technology. Mr. Singh
is an Associate member of the Institute of Brewing, London, a member of the Master Brewers Association of America, and was a former
executive member of the Managing Committee of the All India Brewer’s Association. Mr. Singh has over 48 years of varied
experience in the brewing industry. Mr. Singh’s long standing technical and management expertise in brewing led to his selection
as a member of the Board.
Corporate
Governance
Director
Independence
The
Board has determined that the following directors qualify as “independent” in accordance with the published listing
requirements of NASDAQ: Mr. Cannata, Mr. Grossman, Mr. Heldfond, Mr. Laybourn, Mr. Palamand, Mr. Merchant and Mr. Price. Mr. Singh
is not “independent” because he is an employee of the Company. Dr. Mallya is not “independent” since he
has received payments in excess of the applicable threshold from the Company during the last three (3) years. Prior to 2007, Mr.
Merchant had provided certain consulting services to the Company, however, given the timing and nature of such services as well
as the amount of compensation provided in relation thereto, the Board has determined that Mr. Merchant meets the criteria for
being an “independent” director.
The
NASDAQ rules contain both objective tests and a subjective test for determining who is an “independent” director.
The objective tests provide that a director is not considered independent if he (i) is an employee of the Company (or a parent
or subsidiary) (or has been in the past three (3) years); (ii) has accepted (or a family member has accepted) compensation from
the Company in excess of $120,000 during any period of twelve (12) consecutive months within the preceding three (3) year period
(subject to certain exceptions); (iii) has a family member that was employed as an executive officer of the Company (or a parent
or subsidiary) during the past three (3) years; (iv) is (or has a family member who is) a controlling shareholder or an executive
officer of an organization to which the Company made or received payments in the current year or at any time during the past three
(3) years that exceed the greater of (a) five percent (5%) of the recipient’s consolidated gross revenues or (b) $200,000
for that year; (v) is (or has a family member who is) employed as an executive officer of another entity where at any time during
the past three (3) years any of the executive officers of the Company serve on the compensation committee of such other entity;
or (vi) is (or has a family member who is) a current partner of the Company’s outside auditor who worked on the Company’s
audit at any time during any of the past three (3) years. The subjective test is based on the standard that an independent director
must be a person who lacks a relationship that, in the opinion of the Board, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director.
Leadership
Structure
Since
January 2005, the Company has separated the roles of Chairman of the Board and Chief Executive Officer. From 1997 until January
2005, Dr. Vijay Mallya served as both the Chief Executive Officer and Chairman of the board of directors of MBC (the “Board
of Directors” or the “Board”). The Board of Directors believes that the separation of the roles of Chief Executive
Officer and Chairman of the Board provides the Company with additional processes, controls and oversights that facilitate the
functioning of the Board of Directors and its decision-making in the best interests of MBC and its shareholders. In addition,
the separation of the roles of Chairman and Chief Executive Officer permit the holders of such offices to focus on the fundamental
duties and specialized nature of the respective office. MBC’s Chairman, Dr. Vijay Mallya, and the Board of Directors work
together with the Chief Executive Officer to develop MBC’s strategic goals. Dr. Mallya also acts as an international brand
ambassador and presides over the Board of Directors meetings at which he is present. MBC’s Chief Executive Officer, Yashpal
Singh, is responsible for the day-to-day oversight of MBC’s performance and its brewing operations. Mr. Singh is also responsible
for the implementation of MBC’s strategic goals. The Board of Directors may review its leadership structure from time to
time and implement any changes that it deems appropriate to respond to the needs of the Company.
Risk
Oversight
The
Audit/Finance Committee and Compensation Committee play key roles in the Board’s risk oversight function as the members
of such committees are all non-employee directors. The committee system provides an independent level of protection with regards
to the Company’s decision-making processes and an additional mechanism for the oversight of the Company’s risk management
controls and procedures. The Board as a whole will continue to monitor the Company’s general and specific risks and implement
risk management as it deems appropriate or necessary.
Board
of Directors’ Meetings and Committees
During
the fiscal year ended December 31, 2014, the Board of Directors held one meeting and the Audit/Finance Committee held six meetings.
One director did not attend the meeting of the Board of Directors and no director attended fewer than 75% of the aggregate of
the total number of meetings of the Board and any committees of which such Director was a member.
Directors
are encouraged to attend the Annual Meeting. At the 2013 Annual Meeting of Shareholders, all members of the Board were in attendance.
Listed
below are the committees of the Board of Directors.
Audit/Finance
Committee. The Board of Directors has a standing Audit/Finance Committee.
Messrs.
Merchant, Price, and Heldfond served as the members of the Audit/Finance Committee (established in accordance with Section 3(a)(58)(A)
of the Exchange Act) for the fiscal year ended December 31, 2014. This committee met six times during fiscal year 2014. Effective
November 10, 2015, Mr. James Grossman was appointed as a member of this committee. The Audit/Finance Committee reviews, acts on,
and reports to the Board of Directors with respect to various auditing, accounting and finance matters, including the selection
of the Company’s auditors, the scope of the annual audits, the fees to be paid to the auditors, the performance of the Company’s
auditors, and the accounting practices of the Company. In the judgment of MBC’s Board of Directors, the members of the Committee
are “independent,” as that term is defined in Rule 5605(a)(2) of the NASDAQ Listing Rules and also meet the additional
criteria for independence of Audit Committee members set forth in Rule 10A-3(b)(1) under the Exchange Act. The Board has determined
that Mr. Price qualifies as an “audit committee financial expert” under SEC rules.
Nominating
Committee. Due to its limited size, the Board of Directors does not have a nominating committee or a committee performing
similar functions. Instead, all of the Directors participate in the director nomination process. As discussed above, Mr. Singh
and Dr. Mallya may not meet the criteria to qualify as “independent” under the rules of NASDAQ or under the applicable
rules of the other national securities exchanges.
Compensation
Committee. Messrs. Heldfond (Chair), Price, and Laybourn served on MBC’s Compensation Committee for the fiscal year
ended December 31, 2014. Effective November 10, 2015, Mr. Joseph Cannata was appointed as a member of this committee. The Compensation
Committee considers all matters of compensation with respect to the chief executive officer, president, any vice president, and
any other senior executive, and makes recommendations to the Board of Directors regarding the compensation of such persons. The
Compensation Committee also makes determinations with respect to the granting of stock awards to directors who are also employees
of MBC. In the judgment of MBC’s Board of Directors, the members of the Compensation Committee are “independent”
as that term is defined in Rule 5605(a)(2) of the NASDAQ Listing Rules.
COMPENSATION
DISCUSSION AND ANALYSIS
The
Compensation Committee determines and administers the compensation of the Company’s executive officers. The Compensation
Committee reviews and determines all components of the executive officers’ compensation, including making individual compensation
decisions and reviewing and revising compensation guidelines as appropriate. The Compensation Committee also consults with the
Company’s Chief Executive Officer regarding revisions to the compensation of the Company’s Chief Financial Officer
and other non-executive employees, as appropriate.
The
Compensation Committee does not delegate its authority to other persons.
The
Company has entered into an employment agreement with its Chief Executive Officer that sets forth the terms of his employment
and provides for certain benefits.
Total
compensation for the Company’s Chief Executive Officer and Chief Financial Officer consists of base salary, annual cash
bonus payments, use of a company vehicle, vacation reimbursement, health benefits for such executive officers and their respective
immediate dependent family members, and, with respect to the Chief Executive Officer only, life insurance benefits.
Elements
of Compensation
The
Company has structured its executive compensation packages to provide incentives for its current executive officers to relocate
to the United States from India and to provide competitive compensation to retain experienced executive talent. In formulating,
such compensation packages, the Company reviewed the executive officers’ respective previous compensation arrangements with
their former employers in India in order to provide comparable packages.
Base
Salary
The
Compensation Committee determines the Company’s executive officers’ base salaries on an annual basis. Historically,
approximately 25% of the cash compensation paid to the Chief Executive Officer and Chief Financial Officer, respectively, was
paid in the form of a bonus rather than as salary. This policy was implemented due to the Company’s limited working capital
during certain periods. However, since January 1, 2008, the Company has been opting to increase the executive officers’
annual base salary and reduce the discretionary bonus component to ten percent (10%). Effective October 1, 2015, the Company merged
the bonus component of the Chief Executive Officer in to his basic salary. Given the present market value of the Company’s
Common Stock and the Company’s financial situation, the Compensation Committee has currently opted not to base the Company’s
executive officers’ compensation specifically on either the fair market value of the Company’s Common Stock or the
Company’s financial performance or results of operations.
Annual
Cash Bonus
As
discussed above, the compensation packages for the Chief Executive Officer and the Chief Financial Officer provide for the payment
of annual cash bonuses. Given the Company’s past working capital limitations, the Compensation Committee has historically
determined that a percentage of the cash compensation of the executive officers would be in the form of annual cash bonuses that
could be disbursed following the completion of the applicable fiscal year. Effective October 1, 2015, the Company merged the bonus
component of the Chief Executive Officer in to his basic salary.
Perquisites
and Personal Benefits
In
addition to base salaries and annual bonuses, the total compensation of the Company’s Chief Executive Officer and Chief
Financial Officer include perquisites and personal benefits. The types of perquisites and personal benefits awarded to the executive
officers were determined when each such executive officer commenced employment with the Company and are substantially of the same
nature as the perquisites provided to such executive officers by previous employers. The perquisites available to the executive
officers consist of: the use of company vehicles, health care reimbursements for the executive officer and his immediate family,
reimbursement of certain specified vacation expenses and life insurance policy benefits.
Equity
Plans
The
Company does not currently maintain any equity compensation plans for or provide any form of equity compensation to its executive
officers.
Retirement
Plans
On
August 27, 2009, we entered into a certain Separation and Severance Agreement (the “Separation Agreement”) with Mr.
Yashpal Singh, our President and Chief Executive Officer.
Pursuant
to the terms of the Separation Agreement, upon Mr. Singh’s (i) termination of employment for Good Reason (as defined in
the Separation Agreement), (ii) termination of employment at the end of the employment term, (iii) death, (iv) disability or (v)
termination by us without Cause (as defined in the Separation Agreement), he shall be entitled to certain severance benefits and
payments. The severance payment shall equal the product of (x) 2.5 times his average monthly base salary (calculated over the
twelve (12) month period preceding the termination event), multiplied by (y) the number of years (on a pro rated basis) he had
been employed by the us at the Termination Date (as defined in the Separation Agreement); provided, however, that the severance
payment may not exceed thirty (30) months of Mr. Singh’s average monthly base salary (calculated over the twelve (12) months
preceding his termination date). In addition, we agreed to pay COBRA premiums for Mr. Singh and his spouse until the earlier of
(i) the effective date on which he obtains comparable health insurance from a subsequent employer or (ii) eighteen (18) months
following his Termination Date. Mr. Singh shall also be entitled to accrued salary, vacation time and benefits as set forth in
Mr. Singh’s employment agreement.
If
Mr. Singh’s employment is terminated without Cause, in addition to the severance payment described above, he shall also
receive either (i) 365 days prior written notice or (ii) a lump sum payment equal to twelve (12) months of his base salary at
the rate in place at the Termination Date (the “Notice Payment”).
In
case of Mr. Singh’s resignation without Good Reason, he shall be entitled to accrued salary, vacation time and benefits
set forth in his employment agreement but shall not be entitled to the severance payment or the Notice Payment.
If
Mr. Singh is terminated by us for Cause, he shall be entitled to (i) accrued salary, vacation time and benefits as set forth in
his employment agreement and (ii) if we do not provide Mr. Singh at least twelve (12) months prior notice, the Notice Payment.
Mr. Singh shall not be entitled to the severance payment in case of termination by MBC for Cause.
Payments
due to Mr. Singh under the Separation Agreement shall be paid in equal installments by the Company over a 20 month period. The
receipt of payments is contingent on Mr. Singh executing a release of claims for the benefit of the Company.
For
purposes of illustrating the potential amounts payable to Mr. Singh under the Separation Agreement, assuming a termination date
of June 30, 2016 when Mr. Singh’s current employment contract ends, Mr. Singh would receive the following approximate amounts
of compensation for the applicable triggering event: termination by the Company for Cause prior to completion of term of Employment
Agreement - $319,200; completion of term of Employment Agreement - $798,100 plus COBRA payments; termination due to disability
or death - $798,100 plus COBRA payments; termination by Mr. Singh for Good Reason - $798,100 plus COBRA payments; or termination
by the Company without Cause - $1,117,300 plus COBRA payments.
Except
for the Employment Agreement and Separation Agreement with Mr. Singh, MBC does not currently maintain any other retirement plans
nor provide any post-retirement benefits to any employee or executive officer.
The
Company does not currently have an employment agreement in place with its Chief Financial Officer, but may enter into an employment
agreement with such executive officer in the future.
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee currently consists of Joseph Cannata, Scott R. Heldfond, Kent D. Price and H. Michael Laybourn. Mr. Laybourn
co-founded the Company and served as the Company’s President from its inception in 1982 through December 1999, and as its
Chief Executive Officer from inception through October 1997.
Compensation
Committee Report
The
Compensation Committee, which is composed solely of independent members of the Board, assists the Board in fulfilling its responsibilities
with regard to compensation matters and is responsible for determining the compensation of the Company’s executive officers.
The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” section of this Proxy
Statement with management, including our Chief Executive Officer, Yashpal Singh, and our Chief Financial Officer, Mahadevan Narayanan.
Based on this review and discussion, the Compensation Committee recommended to the Board that the “Compensation Discussion
and Analysis” section be included in this Proxy Statement.
Compensation
Committee
Scott
R. Heldfond (Chairman)
Kent
D. Price
H.
Michael Laybourn
Joseph
Cannata
Compensation
Committee Charter
The
Compensation Committee has not adopted a formal written charter.
Compensation
Consultants
The
Company has not engaged any consultants to assist with the determination or recommendation of the amount of or form of executive
or director compensation. However, in the future, the Company may from time to time engage consultants to review its compensation
policies.
SUMMARY
COMPENSATION TABLE
The
following table sets forth the annual compensation of the executive officers and employees whose total compensation exceeded $100,000
during the fiscal year ended December 31, 2014.
To
date, none of these executive officers have been issued any equity securities or stock options as compensation.
The
Company’s Chairman, Dr. Vijay Mallya, served as the Company’s Chief Executive Officer until January 13, 2005. Mr.
Yashpal Singh, the Company’s President, was appointed as Chief Executive Officer, effective as of January 14, 2005.
The
following chart sets forth the compensation of the Company’s named executive officers (the Company’s Chief Executive
Officer and Chief Financial Officer) for fiscal years 2013 and 2014:
Name and Principal
Position | |
Year | |
Salary
($) | | |
Bonus
($) | | |
All Other Compensation ($)* | | |
Total
($) | |
| (a) | |
(b) | |
(c) | | |
(d) | | |
(i) | | |
(j) | |
| Yashpal Singh - President and Chief Executive Officer | |
2014 | |
| 304,000 | | |
| 30,500 | | |
| 22,300 | | |
| 356,800 | |
| | |
2013 | |
| 304,000 | | |
| 30,500 | | |
| 18,600 | | |
| 353,100 | |
| | |
| |
| | | |
| | | |
| | | |
| | |
| Mahadevan Narayanan - Chief Financial Officer and Corporate Secretary | |
2014 | |
| 181,100 | | |
| 18,200 | | |
| 12,700 | | |
| 212,000 | |
| | |
2013 | |
| 181,100 | | |
| 18,200 | | |
| 22,100 | | |
| 221,400 | |
*
Other compensation includes use of a company vehicle, vacation reimbursement, health benefits for such executive officers and
their respective immediate dependent family members, and, with respect to the Chief Executive Officer only, life insurance benefits.
DIRECTORS’
COMPENSATION FOR THE YEAR 2014
Dr.
Vijay Mallya, Chairman of the Board, is paid $120,000 per year by MBC for services rendered as Chairman, and £89,600 per
year (approximately $140,100 in United States dollars at the average exchange rate for the year 2014) by United Breweries International
U.K. Limited (“UBI”) for promoting our products in Europe outside the United Kingdom (together with Europe, the “Foreign
Territory”).
Effective
as of January 1, 2012, the Board adopted a directors compensation plan (the “Directors’ Compensation Plan”)
with respect to the compensation of Non-Employee (as defined therein) members of the Board for their services as directors. The
Directors’ Compensation Plan was subsequently approved by the shareholders in January 2013. Under the terms of the Directors’
Compensation Plan, each Non-Employee director receives a fixed annual retainer of $15,000 as well as additional fees of $1,250
per meeting of the Board and $1,250 per committee meeting attended. The chairs of the Compensation Committee and the Audit/Finance
Committee each receive $4,500 in fees for acting as chairpersons of such committees. In addition, each Non-Employee Director on
January 1 of each calendar year during the five year period commencing January 1, 2012 and ending December 31, 2016 shall receive
an addition $2,000 per year.
| | |
Fees Earned
or Paid in Cash | | |
Total | |
| Name | |
($) | | |
($) | |
| (a) | |
(b) | | |
(h) | |
| Dr. Vijay Mallya | |
| 267,700 | | |
| 267,700 | |
| Kent Price | |
| 30,250 | * | |
| 30,250 | |
| Sury Rao Palamand | |
| 18,250 | + | |
| 18,250 | |
| Jerome Merchant | |
| 24,500 | # | |
| 24,500 | |
| Scott Heldfond | |
| 30,250 | ## | |
| 30,250 | |
| Michael Laybourn | |
| 17,000 | ^ | |
| 17,000 | |
| * |
Fee
for attending one Board meeting and six committee meetings calculated at $1,250 per meeting, $15,000 fixed annual retainer,
$2,000 additional fixed retainer and $4,500 for acting as Chairman of Audit Committee. $9,375 of the fees earned for the year
2013 were not paid and no payment was made for the fees earned during 2014. Such unpaid fees are accrued and to be paid in
the future out of available cash. |
| |
|
| + |
Fixed
annual retainer of $15,000 and $2,000 additional fixed retainer and fee for attending one Board meeting calculated at $1,250
per meeting. $5,750 of the fees earned for the year 2013 were not paid and no payment was made for the fees earned during
2014. Such unpaid fees are accrued and to be paid in the future out of available cash. |
| |
|
| # |
Fee
for attending one Board meeting and five committee meetings calculated at $1,250 per meeting, $15,000 fixed annual retainer
and $2,000 additional fixed retainer. $8,250 of the fees earned for the year 2013 was not paid and no payment was made for
the fees earned during 2014. Such unpaid fees are accrued and to be paid in the future out of available cash. |
| |
|
| ## |
Fee
for attending one Board meeting and six committee meetings calculated at $1,250 per meeting, $15,000 fixed annual retainer,
$2,000 additional fixed retainer and $4,500 for acting as Chairman of Compensation Committee. $9,375 of the fees earned for
the year 2013 was not paid and no payment was made for the fees earned during 2014. Such unpaid fees are accrued and to be
paid in the future out of available cash. |
| |
|
| ^ |
Fixed
annual retainer of $15,000 and $2,000 additional fixed retainer. $5,750 of the fees earned for the year 2013 was not paid
and no payment was made for the fees earned during 2014. Such unpaid fees are accrued and to be paid in the future out of
available cash. |
Report
of the Audit Committee
The
following audit committee report is provided in accordance with the rules and regulations of the Securities and Exchange Commission
(the “SEC”). Pursuant to such rules and regulations, this report shall not be deemed to be (i) “soliciting materials,”
(ii) “filed” with the SEC, (iii) subject to Regulation 14A or 14C, or (iv) subject to the liabilities of Section 18
of the Exchange Act.
The
Board maintains an Audit/Finance Committee currently comprised of four of the Company’s outside directors. The Board and
the Audit/Finance Committee believe that the Audit/Finance Committee’s current member composition satisfies the NASDAQ rules
governing audit committee composition, including the requirement that all audit committee members be “independent”
directors. The audit committee has adopted a formal written charter which is attached as Appendix A hereto.
The
Audit/Finance Committee assists the Board with fulfilling its oversight responsibility regarding the quality and integrity of
accounting, auditing, and financial reporting practices of the Company. In discharging its oversight responsibilities regarding
the audit process, the Audit/Finance Committee has (i) reviewed and discussed the audited financial statements with management,
(ii) discussed with the independent auditors the material required to be discussed by the Statement on Auditing Standards No.
61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T and (iii) received the written disclosures
and the letter from the independent auditors required by the applicable requirements of the Public Company Accounting Oversight
Board regarding the independent auditors’ communications with the audit committee concerning independence, and has discussed
with the independent auditors the independent auditors’ independence.
Based
on the review and discussions referred to above, the Audit/Finance Committee recommended to the Board that the audited financial
statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, for filing with
the SEC.
Approved
by the Members of the Audit Committee:
| |
Kent
D. Price (Chairman) |
| |
Jerome
G. Merchant |
| |
Scott
R. Heldfond |
| |
James
Grossman |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The
following table sets forth certain information known to the Company regarding the beneficial ownership of our Common Stock and
Series A Preferred Stock as of November 30, 2015, for each shareholder known by the Company to beneficially own 5% or more of
the outstanding shares of the Company’s Common Stock or Series A Preferred Stock:
| Security Ownership of Certain Beneficial Owners | |
| | |
| |
| Name and Address | |
Amount and Nature of Beneficial Ownership | | |
Percent of Class(1) | |
| COMMON STOCK | |
| | | |
| | |
| | |
| | | |
| | |
United Breweries of America, Inc.
1050, Bridge way,
Sausalito, CA 94965 | |
| 3,087,818 | (2) | |
| 24.5 | % |
| | |
| | | |
| | |
Inversiones Mirabel S.A.
Hong Kong Bank Building
6th Floor, Samuel Lewis Avenue
P O Box 6-4298, El Dorado
Panama City, Panama | |
| 5,500,000 | | |
| 43.6 | % |
| | |
| | | |
| | |
United Breweries (Holdings) Limited.
100/1, Richmond Road,
Bangalore - 560 025, India | |
| 8,587,818 | (3) | |
| 68.1 | % |
| | |
| | | |
| | |
Vijay Mallya
United Breweries of America, Inc.
1050, Bridge way,
Sausalito, CA 94965 | |
| 8,587,818 | (4) | |
| 68.1 | % |
(1)
Applicable percentages of ownership are based on 12,611,133 shares of Common Stock outstanding as of November 30, 2015.
(2)
Does not include 2,466,400 shares issuable to United Breweries of America, Inc. (“UBA”) upon conversion of certain
convertible notes issued by MBC to UBA under a Master Line of Credit Agreement. United Breweries (Holdings) Limited (“UBHL”)
is the ultimate beneficial owner of substantially all of the shares owned by UBA.
(3)
Includes all shares held by the Company’s two largest shareholders, UBA and Inversiones Mirabel S.A. (“Inversiones”).
UBHL is the beneficial owner of UBA and Inversiones as they are both controlled by Rigby International Corp., a company registered
in the British Virgin Island, with primary offices at Vanterpool Plaza, 2nd Floor, Wickhams Cay I, Road Town, Tortola, British
Virgin Island 2 and a mailing address c/o CAS SA, 12-14 Avenue, Riverdil, CH-1260, Lyon, Switzerland (“Rigby”). Rigby
is a wholly-owned subsidiary of UBHL. Such amount does not include 2,466,400 shares issuable to UBA upon conversion of certain
convertible notes issued by MBC to UBA under a Master Line of Credit Agreement.
(4)
Includes all shares indirectly held by UBHL. Does not include 2,466,400 shares issuable to UBA upon conversion of certain convertible
notes issued by MBC to UBA described in footnotes (2) and (3) above. Dr. Mallya disclaims beneficial ownership of the reported
securities except to the extent of his pecuniary interest therein.
The
following table sets forth certain information known to the Company regarding the beneficial ownership of the Company’s
Common Stock and Series A Preferred Stock as of November 30, 2015, for each director and all directors and named executive officers
of the Company as a group. Except as otherwise noted, the Company believes that the beneficial owners of the Common Stock and
Series A Preferred Stock listed below, based on information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
| Security Ownership of Management | |
| | |
| |
COMMON
STOCK | |
Amount and Nature of Beneficial Ownership | | |
Percent of Class (1) | |
| Vijay Mallya | |
| 8,587,818 | (2) | |
| 68.1 | % |
| H. Michael Laybourn | |
| 492,221 | | |
| 3.9 | % |
| Kent D. Price | |
| 428,401 | | |
| 3.4 | % |
| Sury Rao Palamand (3) | |
| 332,110 | | |
| 2.6 | % |
| Jerome G. Merchant | |
| 290,530 | | |
| 2.3 | % |
| Yashpal Singh | |
| — | | |
| — | |
| Scott R. Heldfond | |
| 257,275 | | |
| 2.0 | % |
| Mahadevan Narayanan | |
| — | | |
| — | |
| Joseph S. Cannata | |
| — | | |
| — | |
| James H. Grossman | |
| — | | |
| — | |
| All Directors and executive officers as a group (8 persons) | |
| 10,388,355 | | |
| 82.4 | % |
| | |
| | | |
| | |
| SERIES A PREFERRED STOCK | |
| | | |
| | |
| H. Michael Laybourn | |
| 6,100 | | |
| 2.7 | % |
| All Directors and executive officers as a group (8 persons) | |
| 6,100 | | |
| 2.7 | % |
(1)
Applicable percentages of ownership are based on (i) 12,611,133 shares of Common Stock outstanding as of November 30, 2015and
(ii) 227,600 shares of Series A Preferred Stock outstanding as of November 30, 2015.
(2)
Includes all shares indirectly held by UBHL. Does not include 2,466,400 shares issuable to UBA upon conversion of certain convertible
notes issued by MBC to UBA described in footnote (2) of Table 1 above. Dr. Mallya disclaims beneficial ownership of the reported
securities except to the extent of his pecuniary interest therein.
(3)
Shares are held by a revocable trust for the benefit of Mr. Palamand’s immediate family and lineal descendants. Mr. Palamand
serves as the trustee of the trust.
Stock
Option Grants
No
stock options nor freestanding stock appreciation rights were held by, granted to, or exercised by any of the Company’s
executive officers during the fiscal year ended December 31, 2014, and no such options nor stock appreciation rights have been
granted to or exercised by any executive officer to date during the 2015 fiscal year.
Certain
Relationships and Related Transactions
During
fiscal years 2013 and 2014, and through the date of this Proxy Statement, the Company is a participant in the following transactions
pursuant to which (i) the amount involved exceeds $120,000 and (ii) a related person had or will have a direct or indirect material
interest:
UBA
Notes
On
August 31, 1999, the Company and United Breweries of America, Inc. (“UBA”), a major shareholder of the Company, entered
into a Master Line of Credit Agreement, which was subsequently amended on April 28, 2000, and February 12, 2001 (the “Credit
Agreement”). The Company’s Chairman, Dr. Vijay Mallya, is also the Chairman of the board of directors of UBA. The
terms of the Credit Agreement provide the Company with a line of credit in the principal amount of up to $1,600,000.
UBA
has made thirteen (13) separate advances to the Company under the Credit Agreement, and one separate advance with a principal
amount of $400,000 on terms substantially similar to those of the Credit Agreement, each pursuant to an eighteen-month convertible
promissory note, (collectively, the “UBA Notes”). Interest accrues on the UBA Notes at an interest 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 Bank of America in San
Francisco, California, or (ii) ten percent (10%). UBA executed an Extension of Term of Notes under Master Line of Credit Agreement
(the “Extension Agreement”). The Extension Agreement confirms UBA’s extension of the terms of the UBA Notes
for a period ending on June 30, 2012 with automatic renewals after such maturity date for successive one year terms, provided
that either the Company or UBA may elect not to extend a term upon written notice given to the other party no more than 60 days
and no fewer than 30 days prior to the expiration of such term. Neither the Company nor UBA issued a notice of an election not
to extend the term of the UBA Notes prior to June 2015 and hence the maturity dates of the notes have been automatically extended
until June 30, 2016.
On
September 14, 2011, the Board approved the issuance (the “Issuance”) of shares of unregistered Common Stock to certain
of the Company’s non-employee directors as compensation. The Issuance triggered an adjustment in the conversion rate of
the convertible promissory note dated March 2, 2005 (the “March 2005 Note”) issued by us to UBA. Prior to the Issuance,
the principal and interest owed pursuant to the March 2005 Note would have converted into shares of Common Stock at a per share
price of $1.50. After the Issuance, the principal and interest outstanding under the March 2005 Note will convert at a per share
price of approximately $1.44. The outstanding principal amount of the UBA Notes, other than the March 2005 Note, and the unpaid
interest thereon may be converted, at UBA’s discretion, into shares of our unregistered Common Stock at a conversion rate
of $1.50 per share.
As
of November 30, 2015, the aggregate outstanding principal amount of the UBA Notes is $1,915,400, and the accrued but unpaid interest
thereon is equal to approximately $1,756,800. As of November 30, 2015, the outstanding principal and interest on the UBA Notes
was convertible into 2,466,400 shares of Common Stock. As of November 30, 2015, UBA beneficially owns approximately 24.5% of the
Company’s outstanding Common Stock (excluding any shares issuable upon the conversion of the UBA Notes). During fiscal years
2013 and 2014, the largest aggregate amount of principal outstanding equaled $1,915,400. No principal or interest payments
were made during fiscal years 2013 or 2014.
License
Agreements
UBI
and Kingfisher Beer Europe Limited (“KBEL”) hold the exclusive brewing and distribution rights for Kingfisher Premium
Lager in the United Kingdom, Ireland, continental Europe and Canada through a licensing agreement with United Breweries Limited,
an Indian corporation (“UB Limited”). Under its terms, this licensing agreement provided for expiration in October
2013, although as previously reported by the Company, the Company received a letter from UB Limited stating that UB Limited shall
extend the term of the license granted pursuant to this licensing agreement for an additional period of five years, commencing
on October 9, 2013 on terms to be mutually agreed to by the parties and subject to certain conditions.
In
July 2001, the Company entered into a Trademark and Trade Name License Agreement with Kingfisher America, Inc., a Delaware corporation
affiliated with UB Limited, pursuant to which the Company obtained a royalty-free, exclusive license to use the Kingfisher trademark
and trade name in connection with the brewing and distribution of beer in the United States. Under its terms, this agreement will
remain in effect for so long as the Distribution Agreement (described below) between the Company’s wholly-owned subsidiary
United Breweries International U.K. Limited (“UBI”) and UBI’s wholly-owned subsidiary Kingfisher Beer Europe
Limited (“KBEL”), which was formerly known as UBSN Limited, remains in effect. Currently, the Distribution Agreement
is scheduled to expire in October 2018.
As
the Company’s Chairman of the Board, Dr. Vijay Mallya, is also the chairman of the board of UB Limited and certain of its
affiliates, the transactions represented by these license agreements may be deemed to be related party transactions.
Distribution
Agreement
UBI
entered into a Distribution Agreement with its wholly-owned subsidiary KBEL on October 9, 1998. Under this agreement, which was
subsequently amended by a Supplemental Agreement dated as of October 24, 2001 and a deed of variation dated March 11, 2013 and
effective October 9, 2013 (together, the “Distribution Agreement”), UBI granted KBEL an exclusive sublicense for the
distribution of all lager and other beer products brewed or prepared for sale in the Foreign Territory, and a sublicense to use
the Kingfisher trademark and trade name, to manufacture, package, market, distribute, and sell beer and other products using the
Kingfisher trademark and logo, and to enter into a Brewing License Agreement described below. The Distribution Agreement, which
also requires KBEL to pay UBI a royalty fee of 50 British pence (approximately $0.80 at the average exchange rates in effect during
fiscal year 2013) for every 100 liters (26 gallons) of beer brewed for sale in the Foreign Territory, will expire, with respect
to the Foreign Territory sublicense, in October 2018. The royalty due to UBI for the year 2014 was approximately $67,700.
Brewing
License Agreement
Effective
October 26, 2001, MBC entered into a Brewing License Agreement with KBEL, under the terms of which KBEL granted us an exclusive
license to brew and distribute Kingfisher Premium Lager, in exchange for a royalty, payable to KBEL, of eighty cents ($0.80) for
each case of Kingfisher Premium Lager sold by us under this agreement. The Brewing License Agreement expires pursuant to its terms
in October 2018. Pursuant to a deed of variation, after October 9, 2013, royalty payable to KBEL was reduced to $0.56 per US barrel.
The royalty due to KBEL pursuant to the Brewing License Agreement for the year 2014 was approximately $6,400.
Brewing
Agreement
On
April 18, 2013, KBEL and UBI entered into a Contract Brewing and Distribution Agreement (the “Brewing Agreement”)
with HUK. Affiliates of HUK are significant shareholders of UB Limited. In addition, UB Limited has arrangements with affiliates
of HUK pursuant to which UB Limited brews Heineken beer for the Indian market. The Chairman of the board of directors of the Company,
Dr. Vijay Mallya, is also the Chairman of the board of directors of UB Limited.
Commencing
October 9, 2013, the Brewing Agreement granted HUK the exclusive right to manufacture, package and supply Kingfisher beer for
sale in the United Kingdom and to manufacture and package Kingfisher beer for export by KBEL to Europe (excluding Germany) for
a period of five years whereupon the Brewing Agreement will automatically terminate. In addition, under the Brewing Agreement,
in exchange for royalty payments to KBEL, HUK received the right to be the sole and exclusive reseller of the Product (as defined
in the Brewing Agreement) to certain customers. If HUK fails to sell a specified amount to such customers, KBEL will be entitled
to withdraw such exclusivity upon the terms provided in the Brewing Agreement. KBEL will continue to sell the Product purchased
from HUK to certain wholesale and on trade customers in the United Kingdom. HUK is entitled to terminate the Brewing Agreement
on thirty days’ notice upon a change of control of KBEL, or immediately upon the occurrence, and failure to rectify within
30 days, of an Event of Default or Potential Event of Default (as such terms are defined in the HUK Loan Agreement, described
below). KBEL purchased beer from HUK for an amount of $12,884,700 in 2014. Royalty fees receivable from HUK in 2014 were $61,800.
HUK
Loan Agreement
On
April 18, 2013, KBEL entered into a loan agreement with HUK pursuant to which HUK provided KBEL with a secured term loan facility
of £1,000,000 on October 9, 2013. The loan has to be repaid in twelve equal quarterly installments commencing on January
9, 2014. Interest on the loan will accrue from day to day and is calculated on the basis of the actual number of days elapsed
and a year of 365 days. Such interest is payable quarterly in arrears on the outstanding balance of the loan at the rate of 5%
above the Bank of England base rate. Prepayment is permitted. Upon an Event of Default, as defined in the loan agreement, if HUK
and KBEL fail to agree on a payment plan acceptable to HUK, HUK may, among other remedies, declare the loan immediately due and
repayable or exercise its right to an exclusive license pursuant to the Sub-Licence Agreement described and defined below. The
largest amount of principal outstanding under the loan agreement in 2014 and 2013 was £1,000,000. The amount of principal
outstanding as of September 30, 2015 was £416,700. Principal and interest repayments in 2014 were £333,300 and £56,900
respectively. No principal or interest was paid in 2013.
Sub-Licence
Agreement
On
April 18, 2013, HUK, UBI, KBEL and UB Limited entered into that certain Heineken Sub-Licence Agreement (the “Sub-Licence
Agreement”) pursuant to which HUK has the option, exercisable upon a default or breach by KBEL under the Brewing Agreement
or the loan agreement with HUK described above or a change of control or bankruptcy of KBEL, to acquire an exclusive license from
UBI to produce, market and sell Kingfisher beer in the United Kingdom. Such license would expire on the earlier of the date certain
debts (the “Debt”) between HUK and KBEL are settled, and October 9, 2018. As consideration for such license, HUK would
reduce the Debt pursuant to the terms of the Sub-Licence Agreement. HUK may terminate the Sub-Licence Agreement upon a material
breach by UBI, after notice and a thirty day cure period, or, immediately upon the termination of UBI’s license pursuant
to its agreement with UB Limited. Upon termination of the Sub-Licence Agreement, the Debt shall become immediately due and payable.
HUK’s aggregate liability for breaches of the Sub-Licence Agreement is capped.
The
dollar value of the Sub-Licence Agreement cannot be accurately estimated.
Policies
of the Company
Although
there is no formal written policy in place regarding the approval of related party transactions, historically, the Board, including
the independent members of the Board, has reviewed and approved or ratified the Company’s related party transactions.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act, requires each of the Company’s directors and executive officers, and each person who or which
is a beneficial owner of more than 10% of the Company’s Common Stock, to file reports with the SEC of each such person’s
ownership of equity securities of the Company and changes in such person’s ownership. These persons are required by SEC
regulations to furnish the Company with copies of all such forms they file.
Based
solely on a review of written statements of the Company’s insiders and Forms 3, 4, and 5 furnished to the Company, except
as herein or previously disclosed, no transactions were reported on an untimely basis. As a result of the extensions of the maturity
dates of the UBA Notes, the amount of interest due to UBA by the Company continues to increase, resulting in an increase in the
number of shares of Common Stock issuable upon conversion of the UBA Notes. This potential increase may be reportable on Form
4. To date, neither UBA nor its beneficial owners, which may include its chairman, Dr. Mallya, have filed Form 4s reflecting this
potential increase.
VOTE
REQUIRED FOR THE ELECTION OF DIRECTORS
The
affirmative vote of the holders of a plurality of the shares of Common Stock present and voting at the Annual Meeting is required
to elect each of the nominees for director. Each share of Common Stock which is represented, in person or by proxy, at the Annual
Meeting will be accorded one vote on each nominee for director, unless one or more shareholders express an intention to exercise
their right to cumulative voting, in which case all shares will be accorded cumulative voting rights. For purposes of this vote,
abstentions and broker non-votes will in effect not be counted. Please see “GENERAL INFORMATION — Voting Securities
of the Company – Cumulative Voting,” above, for a brief description of the voting procedures in the event that cumulative
voting is requested at the Annual Meeting in connection with the election of directors.
THE
COMPANY’S BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES FOR DIRECTOR DESCRIBED ABOVE.
PROPOSAL
NO. 2: RATIFICATION OF INDEPENDENT AUDITORS
The
Company has appointed RBSM, LLP (“RBSM”), as its independent auditors to perform the audit of the Company’s
financial statements for the fiscal year ending December 31, 2014, and the shareholders are being asked to ratify that appointment.
RBSM audited the Company’s 2013 and 2012 financial statements. The Company’s Annual Report on Form 10-K for the year
ended December 31, 2014, which incorporates the 2014 financial statements, is included (without Exhibits) with this Proxy Statement.
All
audit and other services performed by RBSM on behalf of the Company are approved in advance by the Audit Committee, on a case-by-case
basis.
A
representative of RBSM will be present at the Annual Meeting, will have the opportunity to make a statement, at such representative’s
option, and will be available to answer questions.
Fees
and Services
AUDIT
FEES. The aggregate fees billed by RBSM during the year 2014 and 2013 for the audit of our annual consolidated financial statements
was $80,000 and an additional $36,000 were billed to us in connection with RBSM’s review of interim financial statements
in connection with our Quarterly Reports on Form 10-Q for such years. The fees described in this paragraph represented approximately
89% of the total fees for services billed to us by RBSM during 2014 and 2013.
AUDIT
RELATED FEES. RBSM did not bill us any amount in fees for assurance or related services in 2014 or 2013.
TAX
FEES. The aggregate fees billed by RBSM during 2014 and 2013 for tax products and services related to the preparation of our tax
returns other than those described in the foregoing paragraphs, was $14,500. Such fees represented approximately 11% of the total
fees for services rendered to us by RBSM during 2014 and 2013.
ALL
OTHER FEES. RBSM did not bill us for any amount towards fees for services other than those mentioned above during the years 2014
and 2013.
All
audit and other services performed by RBSM on our behalf are approved in advance by our Audit Committee.
All
of the work done during the course of the audit of our 2014 Financial Statements was performed by full-time, permanent employees
of RBSM.
THE
COMPANY’S BOARD OF DIRECTORS RECOMMENDS A VOTE ‘“FOR” RATIFICATION OF THE APPOINTMENT OF
RBSM, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Shareholder
Communications with the Board of Directors
Shareholders
wishing to communicate with the Board, the non-management directors, or with any individual director concerning the Company may
write to the Board or to the applicable director or directors. Such communications should be addressed as follows: Mahadevan Narayanan,
Corporate Secretary, Mendocino Brewing Company, Inc., 1601 Airport Road, Ukiah, CA 95482. The envelope should indicate that the
enclosed correspondence contains a shareholder communication. All such communications relating to the Company will be forwarded
to the entire Board, or to the director or directors to whom they are addressed, as applicable.
Shareholder
Proposals to be Presented at the Next Annual Meeting
Any
proposal which a shareholder wishes to have presented at the next annual meeting and included in the Company’s proxy statement
and form of proxy relating to such meeting must be received at the main office of the Company no later than August 18, 2016, which
is 120 calendar days prior to the first anniversary of the date on which this Proxy Statement first became available to shareholders.
However, if the date of the Company’s 2016 Annual Meeting of Shareholders has been changed by more than 30 days from January
14 (the date of this year’s Annual Meeting), then for any proposal notice by a shareholder with respect to next year’s
Annual Meeting to be timely, it must be received by the Company a reasonable time before the Company begins to print and send
its proxy materials. If a shareholder proposal for consideration at the 2016 Annual Meeting is in compliance with all of the requirements
of Rule 14a-8 promulgated under the Exchange Act, it will be included in the proxy statement for that meeting, and set forth on
the form of proxy issued for the 2016 Annual Meeting of Shareholders.
In
addition, under the Company’s Bylaws, any shareholder intending to nominate a candidate for election to the Board or to
propose any business at our next Annual Meeting of Shareholders, other than precatory (non-binding) proposals presented under
Rule 14a-8, must give notice to the Company’s Corporate Secretary at the address specified below no later than ten (10)
days prior to the date of that Annual Meeting of Shareholders. The notice must include information specified in the Company’s
Bylaws, including information concerning the shareholders, nominee or proposal, as the case may be, and must be in the form and
format described in our Bylaws. The Company will not entertain any proposals or nominations at any Annual Meeting of Shareholders
that do not meet the requirements set forth in the Company’s Bylaws.
Notice
of such proposals should be addressed to:
Mahadevan
Narayanan
Corporate
Secretary
Mendocino
Brewing Company, Inc.
1601
Airport Road
Ukiah,
California 95482
It
is urged that any shareholder proposals be sent by certified mail, return receipt requested.
Availability
of Annual Report on Form 10-K
Included
with this Proxy Statement, and partially incorporated herein, is a copy of the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2014 (without exhibits). THE COMPANY WILL PROVIDE TO ANY SHAREHOLDER, UPON WRITTEN REQUEST
AND WITHOUT CHARGE, AN ADDITIONAL COPY OF THIS REPORT (also without exhibits). Such written requests should be made to the Company
at Mendocino Brewing Company, Inc., Attn: Sarah T. McDaniel, Manager, Shareholder Relations, 1601 Airport Road, Ukiah, CA 95482,
Telephone: (800) 733-3871.
Other
Matters to be Considered at the Annual Meeting
The
Board of Directors does not presently intend to present matters other than the foregoing for action by the shareholders at the
Annual Meeting, and, so far as is known to the Board, no matters are to be brought before the Annual Meeting except as specified
herein. As to any business that may properly come before the Annual Meeting, however, it is intended that proxies, in the form
accompanying this Proxy Statement, will be voted in accordance with the judgment of the persons voting such proxies.
Shareholders
Sharing the Same Last Name and Address
To
reduce the expense of delivering duplicate proxy materials to shareholders who may have more than one account holding the Company’s
Common Stock but who share the same address, the Company has adopted a procedure approved by the SEC called “householding.”
Under this procedure, certain shareholders of record who have the same address and last name will receive only one copy of the
Company’s proxy materials that are delivered until such time as one or more of these shareholders notifies the Company that
they want to receive separate copies. This procedure reduces duplicate mailings and saves printing costs and postage fees, as
well as natural resources.
If
you receive a single set of proxy materials as a result of householding, and you would like to have separate copies of the Company’s
proxy materials mailed to you, please submit a written request to the Company at Mendocino Brewing Company, Inc., Attn: Sarah
T. McDaniel, Manager, Shareholder Relations, 1601 Airport Road, Ukiah, CA 95482, or by telephone at (800) 733-3871, and the Company
will promptly send you separate copies. You can also contact the Company’s Corporate Secretary at the address or phone number
specified above if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future,
or if you would like to opt out of householding for future mailings.
Attached
Documents
A
copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (not including the exhibits thereto)
accompanies this Proxy Statement.
EXHIBIT
A
MENDOCINO
BREWING COMPANY, INC.
CHARTER
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I.
Purpose
The
purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Mendocino
Brewing Company, Inc. (the “Company”) is to assist the Board in fulfilling its statutory and fiduciary oversight responsibilities
relating to the Company’s financial accounting, reporting and controls. The Committee’s principal functions are to:
●
monitor the periodic reviews of the adequacy of the accounting and financial reporting process and systems of internal control
that are conducted by the Company’s independent auditors and the Company’s financial and senior management;
●
review and evaluate the independence and performance of the Company’s independent auditors; and
●
facilitate communication among the Company’s independent auditors, the Company’s financial and senior management,
and the Board.
The
Committee will fulfill these functions primarily by carrying out the activities enumerated in Part IV of this charter. In order
to serve these functions, the Committee shall have unrestricted access to Company personnel and documents, and shall have authority
to direct and supervise an investigation into any matters within the scope of its duties, including the power to retain outside
counsel in connection with any such investigation.
While
the Audit Committee has the responsibilities and powers set forth in this charter, it is not the duty of the Committee to plan
or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance
with generally accepted accounting principles. This is the responsibility of the management and the Company’s independent
auditors. Nor is the duty of the Committee to conduct investigations, to resolve disagreements, if any, between management and
its independent auditors or to assure compliance with laws and regulations and the Company’s policies and procedures.
II.
Membership
All
members of the Committee will be appointed by, and shall serve at the discretion of, the Board. Unless a Chair is elected by the
full Board, the members of the Committee may designate a Chair by majority vote of the Committee membership.
As
of the date this charter is adopted, the Committee shall consist of three or more members of the Board, with the exact number
being determined by the Board. Each member of the Committee shall be “independent” as defined by the rules of The
Nasdaq Stock Market, as they may be amended from time to time (the “Rules”), except as otherwise permitted by such
Rules. Each member of the Committee shall have the ability to read and understand fundamental financial statements (or become
able to do so within a reasonable time after joining the Committee) and at least one member shall have prior experience in accounting,
financial management or financial oversight, as required by the Rules.
III.
Meetings
Meetings
of the Committee shall be held from time to time as determined by the members of the Committee. The Committee should periodically
meet with the independent auditors out of the presence of management about internal controls, the fullness and accuracy of the
Company’s financial statements and any other matters that the Committee or these groups believe should be discussed privately
with the Committee. The Committee members, or the Chairman of the Committee on behalf of all of the Committee members, should
communicate with management and the independent auditors on a quarterly basis in connection with their review of the Company’s
financial statements.
IV.
Responsibilities and duties
The
following shall be the principal recurring process of the Committee in carrying out its oversight responsibilities. These processes
are set forth as a guide with the understanding that the Committee may supplement them as appropriate and may establish policies
and procedures from time to time that it deems necessary or advisable in fulfilling its responsibilities.
1.
Review the Company’s quarterly and annual financial statements, including any report or opinion by the independent auditors,
prior to distribution to the public or filing with the Securities and Exchange Commission.
2.
In connection with the Committee’s review of the financial statements:
●
Discuss with the independent auditors and management the financial statements and the results of the independent auditors’
audit of the financial statements.
●
Discuss any items required to be communicated by the independent auditors in accordance with SAS 61, as amended. These discussions
should include the independent auditors’ judgment about the quality and appropriateness of the Company’s accounting
principles, the reasonableness of significant judgments, the clarity of disclosures in the Company’s financial statements
and any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or
access to required information.
3.
In connection with the Committee’s review of the quarterly financial statements:
●
Discuss with the independent auditors and management the results of the independent auditors’ SAS 71 review of the quarterly
financial statements.
●
Discuss significant issues, events and transactions and any significant changes regarding accounting principles, practices, judgments
or estimates with management and the independent auditors, including any significant disagreements among management and the independent
auditors.
4.
Discuss any comments or recommendations of the independent auditors outlined in their annual management letter. Approve a schedule
for implementing any recommended changes and monitor compliance with the schedule.
5.
Discuss with the independent auditors and management their periodic reviews of the adequacy of the Company’s accounting
and financial reporting processes and systems of internal control, including the adequacy of the systems of reporting to the Audit
Committee by each group.
6.
Periodically consult with the independent auditors out of the presence of management about internal controls, the fullness and
accuracy of the Company’s financial statements and any other matters that the Committee or these groups believe should be
discussed privately with the Committee.
7.
Review the independence and performance of the independent auditors. Recommend to the Board the appointment or discharge of the
independent auditors.
8.
Communicate with the Company’s independent auditors about the Company’s expectations regarding its relationship with
the auditors, including the following; (i) the independent auditors’ ultimate accountability to the Board and the Committee,
as representatives of the Company’s stockholders; and (ii) the ultimate authority and responsibility of the Board and the
Committee to select, evaluate and, where appropriate, replace the independent auditors.
9.
Review and approve processes and procedures to ensure the continuing independence of the Company’s independent auditors.
These processes shall include obtaining and reviewing, on an annual basis, a letter from the independent auditors describing all
relationships between the independent auditors and the Company required to be disclosed by Independence Standards Board Standard
No. 1, reviewing the nature and scope of such relationships and discontinuing any relationships that the Committee believes could
compromise the independence of the auditors.
10.
Review the independent auditor’s audit plan.
11.
Approve the fees and other significant compensation to be paid to the independent auditors.
12.
Periodically review the status of any legal matters that could have a significant impact on the Company’s financial statements.
13.
Annually prepare a report to the Company’s stockholders for inclusion in the Company’s annual proxy statement as required
to by the rules and regulations of the Securities and Exchange Commission, as they may be amended from time to time.
14.
Maintain minutes and periodically report to the Board on significant matters related to the Committee’s responsibilities.
15.
Review and reassess the adequacy of the Committee’s charter at least annually.
16.
Perform any other activities required by applicable law, rules or regulations, including the rules of the Securities and Exchange
Commission and any stock exchange or market on which the Company’s Common Stock is listed, and perform other activities
that are consistent with this charter, the Company’s Bylaws, and governing laws, as the Committee or the Board deems necessary
or appropriate.
Mendocino Brewing (CE) (USOTC:MENB)
Gráfica de Acción Histórica
De Nov 2024 a Dic 2024
Mendocino Brewing (CE) (USOTC:MENB)
Gráfica de Acción Histórica
De Dic 2023 a Dic 2024
