EXECUTION COPY
REFUNDABLE DEPOSIT AGREEMENT
THIS REFUNDABLE DEPOSIT AGREEMENT (this "Agreement"), dated as of May
2, 1997, is entered into by and between THE UB GROUP ("The UB Group") and
MENDOCINO BREWING COMPANY, INC. ("MBC").
RECITALS
A. The UB Group and MBC are parties to that certain Letter of Intent,
dated as of the date hereof (the "Letter of Intent"), pursuant to which they
have set out their intentions with respect to a proposed series of two linked
transactions. Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Letter of Intent.
B. It is a condition to the execution by The UB Group and MBC of the
Letter of Intent that The UB Group shall have paid to MBC a refundable deposit
in the amount of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) (the "Deposit")
as contemplated pursuant to Section F.7. of the Letter of Intent.
C. The UB Group and MBC wish to set forth their agreement relating to
the Deposit.
AGREEMENT
NOW, THEREFORE, The UB Group and MBC hereby agree as follows:
1. Concurrently with the execution and delivery by The UB
Group and MBC of the Letter of Intent, The UB Group hereby pays to MBC the
Deposit.
2. MBC hereby accepts The UB Group's deposit of the Deposit
and agrees that the Deposit shall be used by MBC in accordance with the Section
F.7. of the Letter of Intent.
3. The Deposit is secured by a pledge to The UB Group by
Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxx (collectively, the "Shareholders") of the
"Collateral", as defined in, and pursuant to the terms of, those certain Pledge
Agreements, each dated as of the date hereof, executed by the Shareholders in
favor of The UB Group (collectively, the "Pledge Agreements").
4. In order to induce The UB Group to pay the Deposit to MBC,
MBC hereby represents and warrants to The UB Group as follows:
(a) MBC (i) is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation and
(ii) has the power and authority to own, lease and operate its
properties and carry on its business as now conducted;
(b) MBC has full capacity to execute and deliver both this
Agreement and the Letter of Intent and no further action is necessary
on the part of MBC to make this Agreement or the Letter of Intent
legal, valid and binding upon MBC and enforceable in accordance with
its terms;
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(c) The execution, delivery and performance of this Agreement
and the Letter of Intent by MBC does not conflict with, violate, result
in a breach of, or cause a default, either immediately or with the
passage of time or the giving of notice or both, under (i) any
provision of federal, state or local law or regulation relating to MBC
or MBC's assets, (ii) any provision of any order, arbitration award,
judgment or decree to which MBC or any portion of MBC's assets are
subject, (iii) any provision of any note, bond, indenture, license,
lease, mortgage, agreement or instrument to which MBC or any portion of
MBC's assets are subject, or (iv) any other restriction of any kind or
character to which MBC or any portion of MBC's assets are subject;
(d) The execution, delivery and performance of this Agreement
and the Letter of Intent will not result in giving to others any
interest or rights, including rights of termination, acceleration or
cancellation, in or with respect to any of the properties, contracts,
leases, mortgages, commitments or other agreements of MBC, nor are any
consents, approvals or authorizations of, or declarations to or filings
with, any governmental authorities required in connection herewith or
therewith; and
(e) The Annual Report on Form 10-KSB/A No. 1 for the fiscal
year ending December 31, 1996 does not contain any untrue statement of
material fact or omits to state a material fact necessary to make such
representation and warranty or any such statement therein not
misleading.
MBC understands and acknowledges that The UB Group is paying the Deposit to MBC
in reliance on the representations and warranties of MBC set forth herein.
5. At the Closing, the Deposit shall be credited against the
purchase price of the Securities.
6. In the event the negotiations between the parties with
respect to the consummation of the transactions set out in the Letter of Intent
are terminated by either party for any reason other than as provided below, the
Deposit shall be returned by MBC to The UB Group within sixty (60) days after
such termination (such sixty (60) day period to be hereinafter referred to as
the "Repayment Period"). In addition, if a "Refund Event" (as defined below)
occurs, the Deposit shall be immediately due and payable by MBC to The UB Group
without presentment, demand, protest or any other notice of any kind, all of
which are expressly waived by MBC. A Refund Event shall occur if (a) MBC fails
to observe or perform any covenant, obligation, condition or agreement contained
in this Agreement or Sections F.1, H, I, J and K of the Letter of Intent, or any
representation or warranty made or furnished by MBC in or in connection with
this Agreement or the Letter of Intent shall be materially false, incorrect,
incomplete or misleading in any material respect when made or furnished; (b)
either Shareholder fails to observe or perform any covenant, obligation,
condition or agreement contained in the Pledge Agreements, or any representation
or warranty made by either Shareholder in Section 3 of the Pledge Agreements
shall be materially false, incorrect, incomplete or misleading in any material
respect when made or furnished; (c) MBC makes a general assignment for the
benefit of creditors or admits in writing its inability to pay its debts
generally as they become due, any voluntary petition is filed by MBC under the
federal or similar state bankruptcy laws, or MBC consents to the filing of any
such petition or consents to the appointment of a receiver, liquidator or
trustee in bankruptcy; (d) a court of competent jurisdiction enters an order or
decree under the federal or any similar state bankruptcy law (i) for the
appointment of a receiver, liquidator, trustee or assignee in bankruptcy or
insolvency of MBC of all or substantially all of its assets or for the winding
up or liquidation of its affairs, or (ii) adjudicating MBC a bankrupt or
insolvent or approving a petition seeking reorganization of MBC under any
bankruptcy law, and in any event such order or decree has continued in force
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undischarged and unstayed for a period of sixty (60) days; or (e) either
Shareholder shall contest the enforceability of his respective Pledge Agreement,
or assert that his respective Pledge Agreement does not constitute the legal,
valid and binding obligation of such Shareholder enforceable against him in
accordance with its terms.
7. Miscellaneous.
(a) All notices, requests, demands, consents, instructions or
other communications to or upon MBC or The UB Group under this
Agreement shall be in writing and faxed, mailed or delivered at its
respective facsimile number or address set forth below (or to such
other facsimile number or address for either party as indicated in any
notice given by that party to the other party). All such notices and
communications shall be effective (i) when sent by Federal Express or
other overnight service of recognized standing, on the second day
following the deposit with such service; (ii) when mailed, first class
postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; (iii) when delivered by hand, upon
delivery; and (iv) when faxed, upon confirmation of receipt.
The UB Group: THE UB GROUP
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
MBC: MENDOCINO BREWING COMPANY, INC.
00000 Xxxxx Xxxxxxx 000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) MBC shall pay on demand all reasonable fees and expenses,
including reasonable attorneys' fees and expenses, incurred by The UB
Group in the enforcement or the attempted enforcement of this
Agreement, the Pledge Agreements or any of MBC's obligations hereunder
not performed when due (including, without limitation, all such fees
and expenses incurred in connection with any refund demand made with
respect to the occurrence of any Refund Event.
(c) This Agreement may not be amended or modified, nor may any
of its terms be waived, except by written instruments signed by MBC and
The UB Group. Each waiver or consent under any provision hereof shall
be effective only in the specific instances for the purpose for which
given.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of California without reference
to conflicts of law rules.
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IN WITNESS WHEREOF, the undersigned have executed and
delivered this Agreement as of the date first above written.
THE UB GROUP
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Chairman
MENDOCINO BREWING COMPANY, INC.
/s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx
President
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