FIFTH
AMENDMENT TO CREDIT AND SECURITY AGREEMENT


 


This
Fifth Amendment to Credit and Security Agreement (this “Amendment”)
is made effective as of September 21, 2016, by and among MB FINANCIAL BANK, N.A., successor in interest to Cole Taylor Bank (“Lender”),
MENDOCINO BREWING COMPANY, INC., a California corporation (“MBC”), and RELETA
BREWING COMPANY LLC, a Delaware limited liability company (“RBC”; RBC and
MBC are collectively referred to as “Borrowers” and, individually, as a “Borrower”).


 


PRELIMINARY
STATEMENTS


 


A. Borrowers
and Lender have entered into that certain Credit and Security Agreement dated as of June 23, 2011 (as amended, restated, or otherwise
modified from time to time, the “Credit Agreement”).


 


B.
As of the date hereof, Events of Default under Section 13.01(b) of the Credit Agreement are continuing, including, without
limitation, the failure to comply with the Tangible Net Worth covenant contained in Section 12.01 of the Credit Agreement
and the failure to comply with the Fixed Charge Coverage covenant contained in Section 12.02 of the Credit Agreement, each
as of the period ending June 30, 2016 and the dates set forth in the Second Amendment to Credit and Security Agreement dated as
of June 21, 2015 (collectively, the “Existing Defaults”).


 


C.
Borrowers have advised the Lender that Borrowers are unable to pay the Obligations by the current Maturity Date and have requested
that Lender amend the Credit Agreement to extend the Maturity Date. Borrowers acknowledge that the failure to pay the Obligations
in full by the Maturity Date is an Event of Default. Lender has therefore agreed to amend the Credit Agreement to extend the Maturity
Date to no later than October 21, 2016 on the terms and conditions set forth below.


 


NOW
THEREFORE, in consideration of the foregoing and such other consideration as the parties mutually agree, the parties hereto
agree as follows:


 


1. Preliminary
Statements. The preliminary statements set forth above are accurate, represent the intent of the parties hereto and are incorporated
herein by reference. Unless otherwise defined in this Amendment, capitalized terms used herein will have the same meaning in this
Amendment as set forth in the Credit Agreement.


 


2. Amendment
to Credit Agreement. Definition of “Maturity Date” in Section 1.01 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following:


 


“‘Maturity
Date’ means October 21, 2016.”


 


3. Reservation
of Rights; No Waiver. As a result of the Existing Defaults, Lender is permitted to exercise its default rights and remedies
as provided in the Credit Agreement without further notice or demand. All new advances continue to be in the sole discretion of
Lender and neither the entering into this Amendment nor the making of additional advances by Lender waives any of the default
rights and remedies of Lender under Section 13.02 of the Credit Agreement. All default rights and remedies of Lender are
therefore reserved.


 


4. Conditions
Precedent to Effectiveness of this Amendment. The following are conditions precedent to the effectiveness of this Amendment,
notwithstanding anything contained herein to the contrary:


 




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(a) Lender
shall have received a fully executed copy of this Amendment in form and substance satisfactory to Lender; and


 


(b) Lender
shall have received payment from Borrowers of all amounts due to Lender in connection with this Amendment.


 


5. Expenses.
Immediately upon request, Borrowers shall pay all reasonable expenses and costs of Lender (including, without limitation, the
reasonable attorney fees of counsel for Lender and reasonable expenses of counsel for Lender) in connection with the preparation,
negotiation, execution and approval of this Amendment and any and all other documents, instruments and things contemplated hereby,
whether or not such transactions are consummated, together with all other reasonable expenses and costs incurred by Lender chargeable
to Borrowers pursuant to the terms of the Credit Agreement which are unpaid at such time.


 


6. Amendment
Fee. Borrowers agree to pay on the date hereof an amendment fee of $15,000, which fee Lender may charge as a Revolving Loan.


 


7. Ratification;
Estoppel; Reaffirmation.


 


(a) Each
Borrower reaffirms the Credit Agreement and other Loan Documents, and ratifies the Credit Agreement and the other Loan Documents,
as amended, modified, and supplemented.


 


(b) Each
Borrower reaffirms to Lender each of the representations, warranties, covenants and agreements set forth in Sections 9
through 12 of the Credit Agreement and the other Loan Documents with the same force and effect as if each were separately
stated herein and made as of the date hereof to Lender.


 


(c) Each
Borrower further represents and warrants that, as of the date hereof, there are no counterclaims, defenses or offsets of any nature
whatsoever to the Loans or any of the Loan Documents and that, as of the date hereof, no Event of Default (other than the Existing
Defaults) has occurred or exists under any of the Loan Documents.


 


(d) Each
Borrower ratifies, affirms and agrees that the Credit Agreement and other Loan Documents, as amended, modified, and supplemented
hereby by this Amendment, represent the valid, enforceable and collectible obligations of Borrower.


 


8. Release.
Each Borrower does hereby release, remise, acquit and forever discharge Lender and Lender’s employees, agents, representatives,
consultants, attorneys, fiduciaries, servants, officers, directors, partners, predecessors, successors and assigns, subsidiary
corporations, parent corporation, and related corporate divisions (all of the foregoing hereinafter called the “Released
Parties”), from any and all action and causes of action, judgments, executions, suits, debts, claims, demands, liabilities,
obligations, damages and expenses of any and every character, known or unknown, direct and/or indirect, at law or in equity, of
whatsoever kind or nature, whether heretofore or hereafter arising, for or because of any matter or things done, omitted or suffered
to be done by any of the Released Parties prior to and including the date of execution hereof, and in any way directly or indirectly
arising out of or in any way connected to this Amendment, the Credit Agreement and the other Loan Documents (all of the foregoing
hereinafter called the “Released Matters”). Each Borrower acknowledges that the agreements in this paragraph
are intended to be in full satisfaction of all or any alleged injuries or damages arising in connection with the Released Matters.
Each Borrower represents and warrants to Lender that it has not purported to transfer, assign or otherwise convey any right, title
or interest of such Borrower in any Released Matter to any other Person and that the foregoing constitutes a full and complete
release of all Released Matters.


 




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EACH
BORROWER INTENDS THE ABOVE RELEASE TO COVER, ENCOMPASS, RELEASE, AND EXTINGUISH, INTER ALIA, ALL CLAIMS, DEMANDS, AND CAUSES
OF ACTION THAT MIGHT OTHERWISE BE RESERVED BY THE CALIFORNIA CIVIL CODE SECTION 1542, (OR ITS EQUIVALENT UNDER ILLINOIS LAW) WHICH
PROVIDES AS FOLLOWS:


 


“A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”


 


EACH
BORROWER ACKNOWLEDGES THAT IT MAY HEREAFTER DISCOVER FACTS DIFFERENT FROM OR IN ADDITION TO THOSE NOW KNOWN OR BELIEVED TO BE
TRUE WITH RESPECT TO SUCH CLAIMS, DEMANDS, OR CAUSES OF ACTION, AND AGREES THAT THIS AMENDMENT AND THE ABOVE RELEASE ARE AND WILL
REMAIN EFFECTIVE IN ALL RESPECTS NOTWITHSTANDING ANY SUCH DIFFERENCES OR ADDITIONAL FACTS


 


9. No
Cancellation. This Amendment evidences the same indebtedness as evidenced by the Credit Agreement and other Loan Documents
(as modified hereby). This Amendment is secured by the Collateral as provided in the Credit Agreement including all amendments
and modifications thereto. This Amendment is an extension, modification and amendment of the prior documents and the execution
hereof does not evidence a cancellation of the indebtedness evidenced by the prior documents.


 


10. Miscellaneous.


 


(a) No
inference in favor of, or against, any party will be drawn from the fact that such party has drafted any portion of this Amendment,
the Credit Agreement, or any other Loan Document, as each may be amended.


 


(b) This
Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which,
when so executed and delivered, shall be deemed an original, but all of which counterparts together shall constitute but one agreement.
Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (i.e., “pdf”
or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment. Any party who
chooses to deliver its signature in such manner agrees to provide promptly to the other parties a copy of this Amendment with
its inked signature, but the party’s failure to deliver a copy of this Amendment with its inked signature shall not affect
the validity, enforceability and binding effect of this Amendment.


 


(c) This
Amendment shall be governed and controlled by the internal laws of the State of Illinois as to interpretation, enforcement, validity,
construction, effect, and in all other respects.


 


(d) This
Amendment will be binding upon and will inure to the benefit of the parties hereto and to their respective successors and assigns.


 


(e) Sections
16.03 and 16.09 of the Credit Agreement are specifically incorporated herein as though set forth in full.


 


(f) This
Amendment is a Loan Document.


 




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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first written above.


 


	LENDER	 
	MB
    FINANCIAL BANK, N.A.	 
	 	 
	By:	/sd/
    Martha Gaskin	 
	Name:	Martha
    Gaskin	 
	Title:	Senior
    Vice President	 
	 	 	 
	BORROWERS	 
	MENDOCINO
    BREWING COMPANY, INC., 	 
	a
    California corporation	 
	 	 
	By:	/sd/
    Mahadevan Narayanan	 
	Name:
    	Mahadevan
    Narayanan	 
	Title:
    	Chief
    Financial Officer	 
	 	 	 
	RELETA
    BREWING COMPANY LLC, 	 
	a
    Delaware limited liability company	 
	 	 	 
	By:	MENDOCINO
    BREWING COMPANY,	 
	 	 a
    California corporation,	 
	 	its
sole member	 
	 	 	 
	By:
    	/sd/
    Mahadevan Narayanan	 
	Name:
    	Mahadevan
    Narayanan	 
	Title:
    	Chief
    Financial Officer	 


 


Signature
Page to Fifth Amendment – Mendocino Brewing Company