Item
1.01 Entry into a Material Definitive Agreement
On
May 24, 2017, Mendocino Brewing Company, Inc. a California corporation, (the “
Company
”) issued a promissory note
(the “
Note
”) to Catamaran Services, Inc., a Delaware corporation (“
Catamaran
”) in the principal
amount of $200,000. The Company previously issued six promissory notes to Catamaran on January 22, 2014, April 24, 2014, February
5, 2015, June 30, 2015, March 14, 2016 and March 30, 2016, (the “
Prior Notes
”). Such Prior Notes were substantially
on the same terms as the Note. The Prior Notes have been disclosed in the Company’s current reports on Form 8-K filed on
January 28, 2014, April 24, 2014, February 11, 2015, July 7, 2015, and on March 18, 2016 as subsequently amended by the Company’s
current report on Form 8-K/A filed on March 22, 2016 and quarterly reports on Form 10-Q filed on May 15, 2014, August 14, 2014,
November 14, 2014, May 15, 2015, August 14, 2015 and November 16, 2015 and annual reports on Form 10-K filed on March 31, 2014,
March 31, 2015 and April 14, 2016 (all of which are incorporated by reference herein to the extent they refer to such Prior Notes).
Pursuant
to the terms of the Note, the Company promises to pay the principal sum of $200,000 with accrued interest, as described below,
to Catamaran within six months following the date of the Note, subject to the receipt by the Company of a bridge loan from its
majority shareholder (the “
Shareholder Loan
”) in an amount sufficient either (a) to pay the Note through Permitted
Payments, as defined below, or (b) to pay both the Note and certain existing obligations of the Company to MB Financial Bank,
N.A., an Illinois banking corporation, successor in interest to Cole Taylor Bank, N.A. (“
MB Financial
”) in full
pursuant to that certain Credit and Security Agreement dated as of June 23, 2011, as amended on March 29, 2013, January 21, 2015,
June 20, 2016, July 22, 2016, September 21, 2016, October 18, 2016, December 22, 2016, January 25, 2017, February 23, 2017, March
16, 2017 and April 25, 2017, among Cole Taylor Bank, N.A., the Company and Releta Brewing Company LLC, a Delaware limited liability
company and wholly-owned subsidiary of the Company (“
Releta
”), (collectively, the “
Credit Agreement
”).
“Permitted Payments” on the Note are payments made from the portion of a Shareholder Loan that is in excess of $600,000.
If
the Company is not able to satisfy its obligations on the Note within the six month period following the date of the Note, the
Note shall be automatically extended for additional six month terms until a Shareholder Loan sufficient to satisfy the Note is
received or the Note is otherwise paid. Interest shall accrue from the date of the Note on the unpaid principal at a rate equal
to the lesser of (i) one and one-half percent (1.5%) per annum above the prime rate offered from time to time by the Bank of America
Corporation in San Francisco, California, or (ii) ten percent (10%) per annum, until the principal is fully paid.
The
Note may be prepaid without penalty at the option of the Company; however, no payments on the Note may be made unless such payment
is a Permitted Payment or certain existing obligations of the Company to MB Financial pursuant to the Credit Agreement have been
satisfied in full. The Note may not be amended without the prior written consent of MB Financial.
The
foregoing is not intended to be a complete description of the Note and is subject to, and qualified in its entirety by, the full
text of the Note which is filed as Exhibit 10.1 to this current report on Form 8-K.