Item
1.01. Entry into a Material Definitive Agreement
On
August 28, 2017, Mendocino Brewing Company, Inc. (the “Company”) issued a promissory note (the “New Secured
Note”) to Catamaran Services, Inc., a Delaware corporation (“Catamaran”), in the principal amount of $250,000.
The New Secured Note was issued under, and is governed by the terms of, that certain Loan and Security Agreement, dated July 11,
2017, by and between the Company and Catamaran (the “Loan and Security Agreement”), which Loan and Security Agreement
was disclosed in the Company’s current report on Form 8-K filed on July 17, 2017. The Company previously issued eight promissory
notes to Catamaran on January 22, 2014, April 24, 2014, February 5, 2015, June 30, 2015, March 14, 2016, March 30, 2016, May 24,
2017 and July 11, 2017 (collectively, the “Prior Notes”). The Prior Notes were 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, March 18, 2016 as subsequently
amended by the Company’s current report on Form 8-K/A filed on March 22, 2016, May 31, 2017 and July 17, 2017; 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 New Secured Note, the Company promises to pay the principal sum of $250,000, together with accrued interest
as described below, to Catamaran within six months following the date of the New Secured Note except that no portion of principal
or interest on the New Secured Note will be payable or paid until the Obligation (as that term is defined in the Credit and Security
Agreement, dated as of June 23, 2011, as amended, modified, or supplemented from time to time (the “Credit Agreement”),
by and among the Company, Releta Brewing Company LLC, (together with the Company, the “Borrowers”) and Cole Taylor
Bank ) to Cole Taylor Bank, now known as MB Financial Bank, N.A. (“Lender”) has been paid and satisfied in full.
If
the Company is not able to satisfy its obligations under the New Secured Note within the six month period following the date of
such note, the New Secured Note shall be automatically extended for additional six month terms until it is paid. Interest shall
accrue on the unpaid principal of the New Secured Note 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
New Secured Note may be prepaid without penalty at the option of the Company; however, no payments on the New Secured Note may
be made unless the Obligations have been satisfied in full.
The
New Secured Note is secured by a security interest in all of the assets, real, personal and intangible, of the Borrowers, which
security interest is subject and subordinated to the security interest held by Lender pursuant to the Credit Agreement, as further
set forth in that certain Subordination Agreement, dated July 11, 2017, by and among Borrowers, Catamaran and Lender (the “Subordination
Agreement”). The Subordination Agreement was disclosed in the Company’s current report on Form 8-K filed on July 17,
2017.
The
foregoing is not intended to be a complete description of the New Secured Note and is subject to, and qualified in its entirety
by, the full text of the New Secured Note which is filed as Exhibit 10.1 to this current report on Form 8-K.