EXHIBIT 1
EXTENSION OF TERM OF NOTES UNDER MASTER LINE OF CREDIT AGREEMENT
This Extension of Term of Notes under Master Line of Credit Agreement (this
"Agreement") is made and entered into as of February 14, 2002 (the "Effective
Date") by and between Mendocino Brewing Company, Inc., a California corporation
("Borrower"), and United Breweries of America, Inc., a Delaware corporation
("Lender").
RECITALS
A. Borrower and Lender entered into a Master Line of Credit Agreement
dated August 31, 1999 (the Master Line of Credit Agreement, together with all
amendments thereto shall hereinafter be referred to, collectively, as the
"Master Agreement"), which provides that on the terms and conditions contained
therein, Lender would make available to Borrower a credit facility in the
principal amount of $800,000.
B. The Master Agreement was subsequently amended on April 28, 2000, and
February 12, 2001, to increase the principal amount available under the credit
facility to an aggregate of $1,600,000.
C. Pursuant to the Master Agreement, Borrower made thirteen (13)
promissory notes in favor of Lender as listed on Exhibit A (collectively, the
"Notes").
D. Subject to the terms and conditions of this Agreement, the parties wish
to (i) confirm the extension of the terms of certain of the Notes, and (ii)
extend the terms of certain of the Notes.
E. Any capitalized terms not otherwise defined herein shall have the
meanings set forth in the Master Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, Borrower and Lender agree as follows:
1. Extension of Term. The Notes provide that Lender has the right, at any
time on or after the respective maturity dates of the Notes, to convert the
Notes into shares of Borrower's common stock. However, Section 3 of the Notes
provides that in the event that Lender has not converted the entire principal
amount of any Note on or before its respective maturity date, Lender has the
right to extend the term of such Note for a period of time mutually agreed upon
between Lender and Borrower. Borrower and Lender had previously agreed to extend
the term of each of the Notes itemized Nos. 1 through 8 on Exhibit A, effective
as of the maturity date of each respective Note, for an indefinite period of
time pending the Borrower's and Lender's discussions regarding conversion of the
Notes; this Agreement hereby confirms that agreement. The parties hereby modify
their previous agreement and agree to extend the term of each of the Notes
itemized Nos. 1 through 12 on Exhibit A, effective as of the maturity date of
each respective Note, for a period of time ending on August 15, 2002.
2. Capitalization of Interest. The Notes provide that the accrued interest
thereon shall be paid to Lender quarterly on the first day of the months of
April, July, October, and January. Borrower and Lender hereby agree that the
interest which accrues on the Notes during each such quarterly period may, upon
the mutual agreement of the parties, be capitalized and treated as principal for
the purposes of repayment and/or conversion.
3. Attorneys' Fees. In any legal action between Borrower and Lender, the
prevailing party in such legal action shall be entitled to recover for the fees
and expenses of its attorneys in such
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amount as the court may adjudge reasonable. The prevailing party shall be
determined by the court based on an assessment of which party's major arguments
or positions taken in the proceeding could fairly be said to have prevailed over
the other party's major arguments or positions on major disputed issues in the
court's decision.
4. Notices. All notices and demands which are required or permitted to be
given hereunder shall be in writing and shall either be personally delivered or
transmitted by United States mail, certified or registered, postage prepaid,
return receipt requested, as elected by the party giving such notice or demand
as follows:
To Borrower: Mendocino Brewing Company, Inc.
00000 Xxxxxxx 000 Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
To Lender: United Breweries of America, Inc.
Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
All notices shall be deemed to have been given as of the date of personal
delivery or three (1) business days after the date of mailing, whichever is
applicable. Either party hereto may change its address by giving notice as
stated above to the other party.
5. Representations.
5.1 Borrower represents and warrants to Lender that: (i) Borrower
has the full power and authority to enter into and perform this Agreement; (ii)
the extension of the terms of the Notes contemplated in this Agreement does not
conflict with or constitute a material breach of, or constitute a default under,
any contract, agreement or other instrument by which Borrower is a party or by
which it is bound; and (iii) no consent from any third party is required to
effectuate the transactions contemplated hereunder. Borrower hereby agrees to
indemnify and hold harmless Lender from any loss, damages, claims, causes of
action that arises out of or from Borrower's breach of this Section 7.
5.2 Lender represents and warrants to Borrower that: (i) Lender has
the full power and authority to enter into and perform this Agreement; (ii) the
extension of the terms of the Notes contemplated in this Agreement does not
conflict with or constitute a material breach of, or constitute a default under,
any contract, agreement or other instrument by which Lender is a party or by
which it is bound; and (iii) no consent from any governmental entity is required
to effectuate the transactions contemplated hereunder. Lender hereby agrees to
indemnify and hold harmless Borrower from any loss, damages, claims, causes of
action that arises out of or from Lender's breach of this Section 7.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to the
conflicts of laws principles of that or any other jurisdiction.
7. Assignment; Successors and Assigns. Neither party shall have the right
or ability to assign, transfer, or subcontract this Agreement without the
written consent of the other party. This Agreement shall bind and inure to the
benefit of the parties and their respective heirs, successors and assigns.
8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all taken together
shall constitute one and the same instrument.
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9. Miscellaneous. This Agreement, in connection with the Master Agreement
and the Notes, contains all of the agreements, conditions, promises and
covenants between the parties with respect to the subject matter hereof and
supersedes all prior or contemporaneous agreements, representations or
understandings with respect to the subject matter hereof. This Agreement may not
be amended, modified, altered or otherwise changed in any respect except by
written agreement signed by authorized representatives on behalf of Borrower and
Lender. If any one or more of the provisions contained in this Agreement shall
be invalid, illegal or unenforceable in any respect, the validity, legality or
enforce ability of the remaining provisions contained herein shall not in any
way be affected or impaired.
IN WITNESS WHEREOF, duly executed representatives of each of the parties hereto
have executed and delivered this Agreement as of the Effective Date.
Borrower: Lender:
MENDOCINO BREWING COMPANY, INC. UNITED BREWERIES OF AMERICA, INC.
a California corporation a Delaware corporation
By: /s/ X. Xxxxxxxxx By: /s/ Xxxx Xxxxxxxxx
---------------------------- ----------------------------
Name: X. Xxxxxxxxx Name: Xxxx Xxxxxxxxx
-------------------------- ----------------------------
Title: Secretary Title: Secretary
------------------------- ---------------------------
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Exhibit A
Note No.
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1. Convertible Note dated September 7, 1999, in the principal amount of
$280,064.88, maturity date March 6, 2001.
2. Convertible Note dated October 21, 1999, in the principal amount of
$25,000, maturity date April 20, 2001.
3. Convertible Note dated November 12, 1999, in the principal amount of
$100,000, maturity date May 11, 2001.
4. Convertible Note dated December 17, 1999, in the principal amount of
$150,000, maturity date June 16, 2001.
5. Convertible Note dated December 31, 1999, in the principal amount of
$10,062, maturity date June 30, 2001.
6. Convertible Note dated February 15, 2000, in the principal amount of
$100,000, maturity date August 15, 2001.
7. Convertible Note dated February 16, 2000, in the principal amount of
$50,000, maturity date August 16, 2001.
8. Convertible Note dated April 28, 2000, in the principal amount of
$151,317.59, maturity date October 27, 2001.
9. Convertible Note dated September 11, 2000, in the principal amount of
$300,000, maturity date March 10, 2002.
10. Convertible Note dated September 30, 2000, in the principal amount of
$19,938, maturity date March 29, 2002.
11. Convertible Note dated December 31, 2000, in the principal amount of
$5,031, maturity date July 1, 2002.
12. Convertible Note dated February 12, 2001, in the principal amount of
$317,677.94, maturity date August 11, 2002.
13. Convertible Note dated July 1, 2001, in the principal amount of $6,279.54,
maturity date December 31, 2002.
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