EXHIBIT 10.34
TO
REGISTRATION STATEMENT ON FORM SB-2
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ASSIGNMENT OF DEPOSIT ACCOUNT IN FAVOR OF THE SAVINGS BANK OF MENDOCINO COUNTY
ASSIGNMENT OF DEPOSIT ACCOUNT
Borrower: Mendocino Brewing Company, a California Corporation PO Box 400
Hopland, CA 95449
Lender: SAVINGS BANK OF MENDOCINO COUNTY MAIN OFFICE PO Box 3600 200 N. School
Street Ukiah, CA 95482
THIS ASSIGNMENT OF DEPOSIT ACCOUNT Is entered Into between Mendocino Brewing
Company, a California Corporation (referred to below as "Grantor"); and SAVINGS
BANK OF MENDOCINO COUNTY (referred to below as "Lender").
ASSIGNMENT. For valuable consideration, Grantor assigns and grants to Lender a
security interest in the Collateral, including without limitation the deposit
accounts described below, to secure the Indebtedness and agrees that Lender
shall have the rights stated in this Agreement with respect to the Collateral,
in addition to all other rights which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
Account. The word "Account" means the deposit account described below in the
definition for "Collateral..
Agreement. The word "Agreement" means this Assignment of Deposit Account, as
this Assignment of Deposit Account may be amended or modified from time to time,
together with all exhibits and schedules attached to this Assignment of Deposit
Account from time to time.
Collateral. The word "Collateral" means the following described deposit account:
Savings Account #21-301341 Issued by Lender In an amount not less than $
together with (a) all interest, whether now accrued or hereafter accruing; (b)
all additional deposits hereafter made to the Account; (c) any and all proceeds
from the Account; and (d) all renewals, replacements and substitutions for any
of the foregoing.
In addition, the word "Collateral" includes all property of Grantor (however
owned if owned by more than one person), in the possession of Lender (or in the
possession of a third party subject to the control of Lender), whether existing
now or later and whether tangible or intangible in character, including without
limitation each and all of the following:
(a) All property to which Lender acquires title or documents of title. (b) All
property assigned to Lender.
(c) All promissory notes, bills of exchange, stock certificates, bonds, savings
passbooks, time certificates of deposit, Insurance policies, and an other
Instruments and evidences of an obligation.
EXHIBIT 10.34
(d) All records relating to any of the properly described In this Collateral
section, whether In the form of writing, microfilm, microfiche, or electronic
media.
Event of Default. The words "Event of Defaults" mean and include without
limitation any of the Events of Default set forth below in the section titled
"Events of Default."
Grantor. The word "Grantor" means Mendocino Brewing Company, a California
corporation, its successors and assigns.
Guarantor. The word "Guarantor" means and includes without limitation each and
all of the guarantors, sureties, and accommodation parties in connection with
the Indebtedness.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the
Note, including all principal and interest, together with all other indebtedness
and costs and expenses for which Grantor is responsible under this Agreement or
under any of the Related Documents.
Lender. The word "Lender" means SAVINGS BANK OF MENDOCINO COUNTY, its successors
and assigns.
Note. The word "Note" means the note or credit agreement dated October 7, 1996,
in the principal amount of $2,700,000.00 from Mendocino Brewing Company, a
California Corporation to Lender, together with all renewals of, extensions of,
modifications of, re-financings of, consolidations of and substitutions for the
note or credit agreement.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and warrants to Lender that:
Ownership. Grantor is the lawful owner of the Collateral free and clear of all
loans, liens, encumbrances, and claims except as disclosed to and accepted by
Lender in writing.
Right to Grant Security Interest. Grantor has the full right, power, and
authority to enter into this Agreement and to assign the Collateral to Lender.
No Further Transfer. Grantor will not sell, assign, encumber, or otherwise
dispose of any of Grantor's rights in the Collateral except as provided in this
Agreement.
No Defaults. There are no defaults relating to the Collateral, and there are no
offsets or counterclaims to the same. Grantor will strictly and promptly do
everything required of Grantor under the terms, conditions, promises, and
agreements contained in or relating to the Collateral.
Proceeds. Any and all replacement or renewal certificates, instruments, or other
benefits or proceeds related to the Collateral that are received by Grantor
shall be held by Grantor in trust for
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Lender and immediately shall be delivered by Grantor to Lender to be held as
part of the Collateral.
LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL. While this
Agreement is in effect, Lender may retain the rights to possession of the
Collateral, together with any and all evidence of the Collateral, such as
certificates. This Agreement will remain in effect until (a) there no longer is
any Indebtedness owing to Lender; (b) all other obligations secured by this
Agreement have been fulfilled; and (c) Grantor, in writing, has requested from
Lender a release of this Agreement.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care
in the physical preservation and custody of any certificate or passbook for the
Collateral but shall have no other obligation to protect the Collateral or its
value. In particular, but without limitation, Lender shall have no
responsibility (a) for the collection or protection of any income on the
Collateral, (b) for the preservation of rights against issuers of the Collateral
or against third persons; (c) for ascertaining any maturities, conversions,
exchanges, offers, tenders, or similar matters relating to the Collateral; nor
(d) for informing the Grantor about any of the above, whether or not Lender has
or is deemed to have knowledge of such matters.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Grantor to make any payment when due on the
Indebtedness.
Other Defaults. Failure of Grantor to comply with or to perform any other term,
obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or in any other agreement between Lender and Grantor.
Default In Favor of Third Parties. Should Borrower or any Grantor default under
any loan, extension of credit, security agreement, purchase or sales agreement,
or any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or
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Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to
Lender by or on behalf of Grantor under this Agreement, the Note or the Related
Documents is false or misleading in any material respect, either now or at the
time made or furnished.
Detective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any time
and for any reason.
Insolvency. The dissolution or termination of Grantor's existence as a going
business, the insolvency of Grantor, the appointment of a receiver for any part
of Grantor's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Grantor or by any governmental agency against
the Collateral or any other collateral securing the Indebtedness. This includes
a garnishment of any of Grantor's deposit accounts with Lender. However, this
Event of Default shall not apply if there is a good 0th dispute by Grantor as to
the validity or reasonableness of the claim which is the basis of the creditor
or forfeiture proceeding and if Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a surety
bond for the creditor or forfeiture proceeding, in an amount determined by
Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the Indebtedness or such Guarantor dies or becomes
incompetent.
Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
Right to Cure. If any default, other than a Default on Indebtedness, is curable
and if Grantor has not been given a prior notice of a breach of the same
provision of this Agreement, it may be cured (and no Event of Default will have
occurred) if Grantor, after Lender sends written notice demanding cure of such
default, (a) cures the default within one (1) days, or (b), if the cure requires
more than one (1) days, immediately initiates steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of an Event of Default, or
at any time thereafter, Lender may exercise any one or more of the following
rights and remedies, in addition to any rights or remedies that may be available
at law, in equity, or otherwise:
Accelerate Indebtedness. Lender may declare all Indebtedness of Grantor to
Lender immediately due and payable, without notice of any kind to Grantor.
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Application of Account Proceeds. Lender may obtain all funds in the Account from
the issuer of the Account and apply them to the Indebtedness in the same manner
as if the Account had been issued by Lender. If the Account is subject to an
early withdrawal penalty, that penalty shall be deducted from the Account before
its application to the Indebtedness, whether the Account is with Lender or some
other institution. Any excess funds remaining after application of the Account
proceeds to the Indebtedness win be paid to Grantor as the interests of Grantor
may appear. Grantor agrees, to the extent permitted by law, to pay any
deficiency after application of the proceeds of the Account to the Indebtedness.
Lender also shall have all the rights of a secured party under the California
Uniform Commercial Code, even if the Account is not otherwise subject to such
Code concerning security interests, and the parties to this Agreement agree that
the provisions of the Code giving rights to a secured party shall nonetheless be
a part of this Agreement.
Collect the Collateral Lender may collect any of the Collateral and, at Lender's
option and to the extent permitted by applicable law, may retain possession of
the Collateral while suing on the Indebtedness.
Sell the Collateral. Lender may sell the Collateral, at Lender's discretion, as
a unit or in parcels, at one or more public or private sales. Unless the
Collateral is perishable or threatens to decline speedily in value, Lender shall
give or mail to Grantor, or any of them, notice at least ten (10) days in
advance of the time and place of public sale, or of the date after which private
sale may be made. Grantor agrees that any requirement of reasonable notice is
satisfied if Lender mails notice by ordinary mail addressed to Grantor, or any
of them, at the last address Grantor has given Lender in writing. If public sale
is held, there shall be sufficient compliance with all requirements of notice to
the public by a single publication in any newspaper of general circulation in
the county where the Collateral is located, setting forth the time and place of
sale and a brief description of the properly to be sold.
Lender may be a purchaser at any public sale.
Register Securities. Lender may register any securities included in the
Collateral in Lender's name and exercise any rights normally incident to the
ownership of securities.
Sell Securities. may sell any securities included in the Collateral in a manner
consistent with applicable federal and state securities laws, notwithstanding
any other provision of this or any other agreement. If, because of restrictions
under such laws, Lender is or believes it is unable to sell the securities in an
open market transaction, Grantor agrees that (a) Lender shall have no obligation
to delay sale until the securities can be registered, (b) Lender may make a
private sale to a single person or restricted group of persons, even though such
sale may result in a price that is less favorable than might be obtained in an
open market transaction, and (c) such a sale shall be considered commercially
reasonable. If any securities held as Collateral are "restricted securities" as
defined in the Rules of the Securities and Exchange Commission (such as
Regulation D or Rule 144) or state securities departments under state "Blue Sky"
laws, or if Grantor, or any of them (if more than one), is an adulate of the
issuer of the securities, Grantor agrees that Grantor will neither sell nor
dispose of any securities of such issuer without obtaining Lender's prior
written consent.
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Transfer Title. Lender may effect transfer of title upon sale of all or part of
the Collateral. For this purpose, Grantor irrevocably appoints Lender as its
attorney-in-fact to execute endorsements, assignments and instruments in the
name of Grantor and each of them (if more than one) as shall be necessary or
reasonable.
Application of Proceeds. Lender may apply any cash which is part of the
Collateral, or which is received from the collection or sale of the Collateral,
to (a) reimbursement of any expenses, including any costs of any securities
registration, commissions incurred in connection with a sale, attorney fees as
provided below and court costs, whether or not there is a lawsuit and including
any fees on appeal, incurred by Lender in connection with the collection and
sale of such Collateral, and (b) to the payment of the Indebtedness of Grantor
to Lender, with any excess funds to be paid to Grantor as the interests of
Grantor may appear.
Other Rights and Remedies. Lender shall have and may exercise any or all of the
rights and remedies of a secured creditor under the provisions of the California
Uniform Commercial Code, at law, in equity, or otherwise.
Deficiency Judgment. If permitted by applicable law, Lender may obtain a
judgment for any deficiency remaining in the Indebtedness due to Lender after
application of all amounts received from the exercise of the rights provided in
this section.
Cumulative Remedies. All of Lender's rights and remedies, whether evidenced by
this Agreement or by any other writing, shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Grantor under this Agreement, after
Grantor's failure to perform, shall not affect Lender's right to declare a
default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.
Applicable Low. This Agreement has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Grantor agrees upon
Lender's request to submit to the jurisdiction of the courts of Mendocino
County, State of California. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's
costs and expenses, including attorneys' fees and Lender's legal expenses,
incurred in connection with the enforcement of this Agreement. Lender may pay
someone else to help enforce this Agreement, and Grantor shall pay the costs and
expenses of such enforcement. Costs and expenses include Lender's attorneys'
fees and legal expenses whether or not there is a lawsuit, including attorneys'
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fees and legal expenses for bankruptcy proceedings (and including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Grantor also shall pay all court costs and
such additional fees as may be directed by the court.
Multiple Parties; Corporate Authority. All obligations of Grantor under this
Agreement shall be Joint and several, and all references to Grantor shall mean
each and every Grantor. This means that each of the Borrowers signing below is
responsible for all obligations in this Agreement.
Notices. All notices required to be given under this Agreement shall be given in
writing, may be sent by telefacsimilie, and shall be effective when actually
delivered or when deposited with a nationally recognized overnight courier or
deposited in the United Sates mail, first class, postage prepaid, addressed to
the party to whom the notice is to be given at the address shown above. Any
party may change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of the notice
is to change the party's address. To the extent permitted by applicable law, if
there is more than one Grantor, notice to any Grantor will constitute notice to
all Grantors. For notice purposes, Grantor will keep Lender informed at all
times of Grantor's current address(es).
Power of Attorney. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover all
sums of money or other property which may now or hereafter become due, owing or
payable from the Collateral; (b) to execute, sign and endorse any and all
claims, instruments, receipts, checks, drafts or warrants issued in payment for
the Collateral; (c) to settle or compromise any and all claims arising under the
Collateral, and, in the place and stead of Grantor, to execute and deliver its
release and settlement for the claim; and (d) to file any claim or claims or to
take any action or institute or take part in any proceedings, either in its own
name or in the name of Grantor, or otherwise, which in the discretion of Lender
may seem to be necessary or advisable. This power is given as security for the
Indebtedness, and the authority hereby conferred is and shall be irrevocable and
shall remain in full force and effect until renounced by Lender.
Severability. If a court of competent jurisdiction finds any provision of this
Agreement to be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to any other
persons or circumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken
and all other provisions of this Agreement in all other respects shall remain
valid and enforceable.
Successor Interests. Subject to the limitations set forth above on transfer of
the Collateral, this Agreement shall be binding upon and inure to the benefit of
the parties, their successors and assigns.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No delay
or omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender's right
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otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Grantor, shall constitute a waiver of any of Lender's rights or of
any of Grantor's obligations as to any future transactions. Whenever the consent
of Lender is required under this Agreement, the granting of such consent by
Lender in any instance not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS ASSIGNMENT OF
DEPOSIT ACCOUNT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER
25,1996.
GRANTOR:
Mendocino Brewing Company, a California corporation
By: /s/ Norman Franks
Norman Franks, Chief Financial Officer
By: /s/ Michael Laybourn
Michael Laybourn, Chief Executive Officer
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