SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-12
MENDOCINO BREWING COMPANY, INC.
(Name of Registrant as Specified in its Charter)
N/A
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined
(4) Proposed maximum aggregate value of transaction: (5) Total fee
paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date filed:
MENDOCINO BREWING COMPANY, INC.
Post Office Box 400
1601 Airport Road
Ukiah, California 95482
(800) 733-3871
December 10, 2004
Dear Shareholder:
I would like to personally invite you to attend the Annual Meeting of
Shareholders of Mendocino Brewing Company, Inc. (the "Company") to be held at 2
P.M., local time, on Friday, January 14, 2005, at our brewery located at 1601
Airport Road, Ukiah, California. Additional information about our Company and
about the Annual Meeting accompany this letter, and I urge each of you to read
through all this material carefully.
On August 16, 2003 our Company celebrated its 20th anniversary at the
Hopland Alehouse in the presence of its founders, friends, distributors,
employees and many loyal customers.
Mendocino Brewing Company started brewing beer in Hopland, California in
1983. From our humble beginnings in Hopland, we now distribute beer in two
continents, and sell over 1,600,000 cases of our various proprietary and
licensed ales, lagers, porters, and other specialty brews per year.
During the first quarter of 2003, our Company proudly launched Red Tail
Ale Reggae Commemorative 22 oz. bottle. The Reggae on the River Festival, which
began in 1983, at the same time as Mendocino Brewing Company, has since grown to
have over 20,000 people in attendance, making it the largest such festival in
North America. Our limited edition Reggae Commemorative bottle, with its
exciting `Reggae on the River' label, was designed by artist Jesse Miller for
distribution in West Coast markets.
In May of 2003, White Hawk India Pale Ale was selected as the `Best
Microbrew in San Francisco' as awarded and published by San Francisco Weekly.
This publication continued their `Best Of' San Francisco program, where the
readers vote each year on their favorite restaurant, bar, music, and beer. After
a successful West Coast launch of White Hawk in early 2002, we launched White
Hawk in the East Coast in the first quarter of 2003.
During the third quarter of 2003 we launched Raptor Red Lager Beer out
of our Ukiah facility, in draft and six packs, for the West Coast market. This
lager was produced to commemorate the twentieth anniversary of the brewery. It
is a traditional red lager, brewed with lager yeast and 100% malted barley,
using classic noble hops for finishing. Raptor Red Lager has a rich refreshing
flavor with a smooth light feel and a crisp dry finish.
To the Shareholders of
Mendocino Brewing Company
December 10, 2004
Page 2
Our Company continues to keep its focus on our core business,
capitalizing on the brand equity of our product portfolio, with a strong
emphasis on further penetrating our main markets in both coasts. We expect to
continue building brand and franchise value, and gaining market strength, as a
result of the strength and variety of our brands and the support we provide them
through our marketing and promotional programs.
I would like, once again, to express my personal gratitude to our
management, our many dedicated employees, and my colleagues on the Board of
Directors, for their tireless efforts and contributions during this period.
Finally, I want to thank you, our shareholders, for your support during
the last year, which is so important to us as we continue to pursue our goal of
leadership in each of the Company's chosen markets.
Dr. Vijay Mallya
Chairman
MENDOCINO BREWING COMPANY, INC.
1601, Airport Road
Ukiah, CA 95482
(800) 733-3871
December 10, 2004
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of shareholders
of Mendocino Brewing Company, Inc. (the "Company") to be held at 2:00 p.m.,
local time, on Friday, January 14, 2005, at our brewery located at 1601 Airport
Road, Ukiah, California (the "Annual Meeting").
As described in the accompanying Proxy Statement, at the Annual Meeting
the shareholders will elect Directors of the Company for the forthcoming year.
H. Michael Laybourn, Dr. Vijay Mallya, Jerome G. Merchant, Sury Rao Palamand,
Kent D. Price, and Yashpal Singh, all of whom are currently members of the
Company's Board of Directors, and Scott R. Heldfond, a new candidate for the
Board, have been nominated by the Board for election to the Board this year.
You will also be asked to approve the appointment of Moss Adams L.L.P.
as the Company's independent auditors for the current fiscal year. The Board of
Directors does not anticipate that any additional proposals will be presented
for consideration at the Annual Meeting.
Your Board of Directors recommends that you vote FOR the election of its
nominees for Director, and FOR ratification of the appointment of Moss Adams,
L.L.P. as the Company's independent auditors for the current fiscal year. You
are encouraged to read the enclosed Proxy Statement, which provides detailed
information concerning all of the Proposals which are expected to come before
the Annual Meeting.
Your vote is important, regardless of the number of shares you own. On
behalf of your Board of Directors, I urge you to complete, date, and sign the
accompanying proxy and return it to the Company promptly. Doing so will not
prevent you from attending the Annual Meeting or voting in person, but it will
assure that your vote is counted if you are unable to attend the Annual Meeting.
You may revoke your proxy at any time, by submitting either a written notice of
revocation or a duly executed proxy bearing a later date to the Company's
Secretary at the Company's offices prior to the Annual Meeting, or by attending
the Annual Meeting and voting in person.
All of us at Mendocino Brewing Company look forward to seeing you at the
Annual Meeting.
Sincerely,
N. Mahadevan
Corporate Secretary
MENDOCINO BREWING COMPANY, INC.
1601 Airport Road
Ukiah, CA 95482
(800) 733-3871
---------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on Friday, January 14, 2005
---------------------------------
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of the Shareholders
of Mendocino Brewing Company, Inc., a California corporation (the "Company"),
will be held at 2:00 p.m., local time, on Friday, January 14, 2005, at our
brewery located at 1601 Airport Road, Ukiah, California, for the following
purposes:
1. To elect Directors of the Company, each to serve until the next
Annual Meeting of Shareholders and until his successor has been
elected or until his earlier resignation or removal. The Board
of Directors has nominated the following candidates: Scott R.
Heldfond, H. Michael Laybourn, Dr. Vijay Mallya, Jerome G.
Merchant, Sury Rao Palamand, Kent D. Price, and Yashpal Singh.
2. To ratify the appointment of Moss Adams L.L.P. as independent
auditors of the Company for the year ending December 31, 2004.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on December 3,
2004 as the record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting or any adjournment thereof. Only
shareholders of record at the close of business on that date are entitled to
notice of and to vote at the Annual Meeting or any adjournment or postponement
thereof.
To help us in planning for the Annual Meeting, please mark the
appropriate box on the accompanying proxy if you plan to attend. PLEASE NOTE
THAT THE ENCLOSED PROXY IS BEING SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS.
BY ORDER OF THE BOARD OF DIRECTORS
----------------------------------------
UKIAH, CALIFORNIA N. Mahadevan
DECEMBER 10, 2004 Corporate Secretary
MENDOCINO BREWING COMPANY, INC.
1601 Airport Road
Ukiah, CA 95482
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 14, 2005
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Mendocino Brewing Company, Inc., a California
corporation (the "Company"), of proxies to be used at the Annual Meeting of the
Shareholders of the Company to be held at 2:00 p.m., local time, on Friday,
January 14, 2005, at our brewery located at 1601 Airport Road, Ukiah, California
, and at any adjournment or adjournments thereof (the "Annual Meeting"). The
approximate date on which this Proxy Statement and the accompanying Proxy were
mailed to stockholders is December 10, 2004. The mailing address of the
principal executive offices of the Company is: 1601 Airport Road, Ukiah, CA
95482, and its telephone number is: (800) 733-3871.
MATTERS FOR CONSIDERATION AT THE ANNUAL MEETING
At the Annual Meeting, Shareholders will be asked to consider and to
vote upon the following:
PROPOSAL NO. 1: To elect Directors of the Company, each to serve until
the next Annual Meeting of Shareholders and until his successor has been elected
and qualified or until his earlier resignation or removal. The Board of
Directors has nominated the following candidates: Scott R. Heldfond, H. Michael
Laybourn, Dr. Vijay Mallya, Jerome G. Merchant, Sury Rao Palamand, Kent D.
Price, and Yashpal Singh.
PROPOSAL NO. 2: To ratify the appointment of Moss Adams, L.L.P. to serve
as the Company's independent accountants for the year ending December 31, 2004.
THE BOARD OF DIRECTORS OF THE CORPORATION UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" EACH OF THE FOREGOING PROPOSALS.
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TABLE OF CONTENTS
Caption Page No.
- ------- --------
INTRODUCTION......................................................................................................1
Matters for Consideration at the Annual Meeting..........................................................1
GENERAL INFORMATION...............................................................................................3
Persons Making the Solicitation..........................................................................3
Voting Securities of the Company.........................................................................3
Solicitation of Proxies..................................................................................5
Revocability of Proxies..................................................................................6
Market Listing...........................................................................................6
Forward Looking Statements Regarding the Company.........................................................6
Available Information....................................................................................6
PROPOSAL NO. 1: ELECTION OF DIRECTORS.............................................................................6
Nominees for Director....................................................................................7
Directors and Executive Officers of the Company..........................................................7
Board of Directors' Meetings and Committees..............................................................8
Report of the Audit Committee............................................................................9
Director Compensation...................................................................................10
Significant Employees...................................................................................11
Security Ownership of Certain Beneficial Owners and Management..........................................11
Executive Compensation..................................................................................14
Stock Option Grants.....................................................................................14
Employment Agreement....................................................................................14
Certain Transactions....................................................................................15
Certain Other Agreements................................................................................15
Section 16(a) Beneficial Ownership Reporting Compliance.................................................16
Comparative Performance Graph...........................................................................16
VOTE REQUIRED FOR THE ELECTION OF DIRECTORS.............................................................17
PROPOSAL NO. 2: RATIFICATION OF INDEPENDENT AUDITORS.............................................................18
VOTE REQUIRED FOR APPROVAL OF THE APPOINTMENT OF MOSS ADAMS LLP..................................................19
OTHER MATTERS....................................................................................................19
Shareholder Communications with the Board of Directors..................................................19
Shareholder Proposals to be Presented at the Next Annual Meeting........................................19
Availability of Form 10-KSB.............................................................................20
Other Matters to be Considered at the Annual Meeting....................................................20
Attached Documents:
2003 Annual Report on Form 10-KSB
2
GENERAL INFORMATION
PERSONS MAKING THE SOLICITATION
THIS SOLICITATION OF PROXIES IS BEING MADE BY THE COMPANY'S BOARD OF
DIRECTORS. The expenses of preparing, assembling, printing, and mailing this
Proxy Statement and the materials used in the solicitation of Proxies for the
Annual Meeting will be borne by the Company. It is contemplated that Proxies
will be solicited principally through the use of the mails, but officers,
Directors, and employees of the Company may solicit Proxies personally or by
telephone, without receiving special compensation therefor. The Company will
reimburse banks, brokerage houses, and other custodians, nominees, and
fiduciaries for their reasonable expenses in forwarding these Proxy materials to
shareholders whose stock in the Company is held of record by such entities.
VOTING SECURITIES OF THE COMPANY
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given, and shareholders may of course attend the Annual Meeting and
vote their shares in person. Proxies which are executed and returned to the
Company without contrary instructions will be voted "For" the election of each
of the Board's nominees for Director (as indicated in Proposal No. 1), "For" the
appointment of Moss Adams as the Company's independent auditors for the year
2004 (as indicated in Proposal No. 2), and otherwise in the discretion of the
proxyholders.
OUTSTANDING SHARES; RECORD DATE. There were issued and outstanding
11,266,874 shares of the Company's Common Stock (the "Common Stock") and 227,600
shares of the Company's Series A Preferred Stock (the "Series A Preferred
Stock") at the close of business on December 3, 2004, which date has been fixed
as the record date for the purpose of determining shareholders entitled to
notice of, and to vote at, the Annual Meeting (the "Record Date").
VOTING GENERALLY.
HOLDERS OF COMMON STOCK. On any matter submitted to the vote of
the shareholders other than the election of Directors, each holder of Common
Stock will be entitled to one vote, in person or by Proxy, for each share of
Common Stock held of record on the Company's books as of the Record Date. With
respect to the special rules relating to the election of Directors, please see
below under the captions "Election of Directors" and "Cumulative Voting."
HOLDERS OF SERIES A PREFERRED STOCK. The Company's Series A
Preferred Stock does not normally carry with it the right to vote, and
accordingly the holders of the Series A Preferred Stock will not have the right
to vote on any matter scheduled to come before the Annual Meeting.
VOTING PROCEDURES. Holders of the Company's Common Stock may vote in
favor of or against any of the Proposals, or may abstain from voting on them, by
specifying their choice as indicated on the enclosed proxy card. If no specific
instructions are
3
given with respect to any Proposal, however, the shares represented by any
signed proxy will be voted FOR that Proposal. Shareholders may also abstain from
voting on all of the Proposals by simply not returning any proxy card. If a
shareholder wishes to do so, he or she may also attend the Annual Meeting in
person, and either submit a signed proxy card at that time or vote by ballot at
the Annual Meeting.
VOTES REQUIRED FOR APPROVAL. Directors of the Company will be elected
(Proposal No. 1) by the vote of a plurality of the shares of Common Stock which
are present at the Annual Meeting, as discussed below under the heading
"Election of Directors." Thus, abstentions and broker non-votes could have an
indirect effect on the outcome of the election of Directors, since they will
enable a smaller number of votes to determine the outcome of the election.
Ratification of Proposal No. 2 (approval of the auditors for fiscal
2004) will require only the affirmative vote of the holders of a majority of the
shares of Common Stock of the Company voting in person or by proxy at the Annual
Meeting. Thus, abstentions and broker non-votes, although they will be counted
in determining whether a quorum is present for the vote on all matters to come
before the Annual Meeting, will have no direct effect on the outcome of the
votes on Proposal No. 2.
ELECTION OF DIRECTORS. With respect to the election of Directors,
shareholders may vote in favor of all nominees, or withhold their votes as to
all nominees, or withhold their votes as to specific nominees, by following the
instructions on the enclosed proxy card. Directors will be elected by a
plurality of the votes cast by the holders of the Company's Common Stock, voting
in person or by proxy at the Annual Meeting.
A shareholder may choose to withhold from the proxyholders the authority
to vote for any of the individual candidates nominated by the Board of
Directors, by marking the appropriate box on the proxy card and writing in the
names of the disfavored candidates as they appear on the proxy card. In that
event, the proxyholders will not cast any of the shareholder's votes for
candidates whose names have been so indicated, whether or not cumulative voting
is called for at the Annual Meeting, but they will retain the authority to vote
for the candidates nominated by the Board of Directors whose names have not been
so indicated, and for any other candidates who may be properly nominated at the
Annual Meeting. If a shareholder wishes to specify the manner in which his or
her votes are allocated in the event of cumulative voting, then he or she must
appear and vote in person at the Annual Meeting. Ballots will be available at
the Annual Meeting for persons desiring to vote in person. All votes will be
tabulated by EquiServe, Inc., the Company's Registrar and Transfer Agent, which
will act as the tabulating agent for the Annual Meeting.
CUMULATIVE VOTING. In connection with the election of Directors (only),
shares may be voted cumulatively, but only for persons whose names have been
placed in nomination prior to the voting for election of Directors and only if a
shareholder present at the Annual Meeting gives notice at the Annual Meeting,
prior to the vote, of his or her intention to vote cumulatively. (Notice of
intention to vote cumulatively may not be given by simply marking and returning
a proxy.) If any Company shareholder gives such notice, then all shareholders
eligible to vote will be entitled to cumulate their votes in voting for election
of Directors. Cumulative voting allows a shareholder
4
to cast a number of votes equal to the number of shares held in his or her name
as of the Record Date, multiplied by the number of Directors to be elected. All
of these votes may be cast for any one nominee, or they may be distributed among
as many nominees as the shareholder sees fit. The nominees receiving the highest
number of votes, up to the number of places to be filled, shall be elected.
If one of the Company's shareholders gives notice of intention to vote
cumulatively, the persons holding the proxies solicited by the Board of
Directors will exercise their cumulative voting rights, at their discretion, to
vote the shares they hold in such a way as to ensure the election of as many of
the Board's nominees as they deem possible. This discretion and authority of the
proxyholders may be withheld by checking the box on the proxy card marked
"withhold from all nominees." Such an instruction, however, will also deny the
proxyholders the authority to vote for any or all of the nominees of the Board
of Directors, even if cumulative voting is not called for at the Annual Meeting,
although it will not prevent the proxyholders from voting, at their discretion,
for any other person whose name may be properly placed in nomination at the
Annual Meeting.
Under California law, cumulative voting may not be used in connection
with any matter other than the election of Directors.
QUORUM. The presence of the persons entitled to vote a majority of the
voting shares of the Company at the Annual Meeting, whether those persons are
present in person or only by proxy, will constitute a quorum for the transaction
of business at the Annual Meeting. If a quorum is not present at the time the
Annual Meeting is convened, or if for any other reason the Company believes that
additional time should be allowed for the solicitation of proxies or
consideration of the issues raised at the Annual Meeting, the Company may
adjourn the Annual Meeting. If the Company proposes to adjourn the Annual
Meeting by a vote of the shareholders, the persons named in the enclosed form of
proxy will vote all shares for which they have voting authority in favor of such
adjournment.
VOTES CAST AT THE ANNUAL MEETINGS. Representatives of EquiServe, Inc.,
the Company's Registrar and Transfer Agent, will be in attendance at the Annual
Meeting in order to receive and tabulate any votes cast at that time.
SOLICITATION OF PROXIES
The expense of soliciting proxies in the form accompanying this Proxy
Statement will be paid by the Company. Following the original mailing of the
proxies and other soliciting materials, the Company and/or its agents may also
solicit proxies by mail, telephone or facsimile, or in person. The Company will
request that brokers, custodians, nominees, and other record holders of the
Company's Common Stock forward copies of the proxy and other soliciting
materials to persons for whom they hold such shares and request authority for
the exercise of proxies. In such cases, the Company, upon the request of the
record holders, will reimburse such holders for their reasonable expenses.
5
REVOCABILITY OF PROXIES
A form of Proxy for voting your shares at the Annual Meeting is
enclosed. Any shareholder who executes and delivers such a Proxy has the right
to, and may, revoke it at any time before it is exercised, by filing with the
Secretary of the Company an instrument revoking it or a duly executed Proxy
bearing a later date. In addition, if the person executing a Proxy is present at
the Annual Meeting, and elects to vote in person, the powers of the Proxy
holders will be superseded as to those Proposals on which the shareholder
actually votes at the Annual Meeting.
MARKET LISTING
The Company's Common Stock is quoted on the OTC Bulletin Board of The
Nasdaq Stock Market, Inc. under the symbol "MENB".
FORWARD LOOKING STATEMENTS REGARDING THE COMPANY
Certain information contained in this proxy statement which does not
relate to historical financial information may be deemed to constitute forward
looking statements. The words or phrases "will likely result," "are expected
to," "will continue," "is anticipated," "estimate," "project," "believe,"
"intend," "plan," "budget," or similar expressions identify "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. This proxy statement contains certain forward-looking statements with
respect to the plans, objectives, future performance, and business of the
Company. Because such statements are subject to risks and uncertainties, actual
results may differ materially from historical results and those presently
anticipated or projected. The Company's shareholders are cautioned not to place
undue reliance on such statements, which speak only as of the date of this Proxy
Statement. The Company does not undertake any obligation to release publicly any
revisions to such forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith periodically files reports, proxy statements, and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copies can
be made or obtained at or by writing to the public reference facilities of the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549. Such material may also be accessed electronically through the Edgar
filings by the Company, by means of the Commission's Internet Web site
(http://www.sec.gov).
PROPOSAL NO. 1: ELECTION OF DIRECTORS
At the Annual Meeting, Shareholders will elect Directors to hold office
until the next Annual Meeting of Shareholders and until their respective
successors have been elected or until their earlier resignation or removal.
Under the Company's Bylaws, the Company's Board may consist of between five and
nine members, with the exact
6
number within that range being determined by the Board of Directors. At present
the Board has set the number of Directors at seven.
Shares represented by the accompanying proxy will be voted for the
election of the nominees recommended by the Board unless the proxy is marked in
such a manner as to withhold authority so to vote. If any nominee for any reason
is unable to serve or for good cause will not serve, the proxies may be voted
for such substitute nominee as the proxy holder may determine. The Company is
not aware of any nominee who will be unable to, or for good cause will not,
serve as a Director.
NOMINEES FOR DIRECTOR
The Board has nominated seven individuals to serve as Directors of the
Company until the next Annual Meeting, all of whom except Mr. Heldfond are
current members of the Board. The Board's nominees are: Scott R. Heldfond, H.
Michael Laybourn, Dr. Vijay Mallya, Kent D. Price, Sury Rao Palamand, Jerome G.
Merchant, and Yashpal Singh. As of the date of this Proxy Statement, no other
names had been placed in nomination for consideration by the Shareholders at the
Annual Meeting.
The Board has not adopted a charter or any other set of rules with
respect to the nominating process. While the Board would carefully consider the
nomination of any candidate for Director who may be recommended by the Company's
shareholders, due to the lack of such nominations in the past it has not felt
the need to adopt any specific policy in his regard. Similarly, it has not
adopted any specific minimum qualifications for candidates for election as
Director or identified any specific qualities or skills that such candidates
should possess.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names, ages as of September 15, 2004,
and certain information regarding each of the Company's current Directors,
Director-nominees, and executive officers, and each of the Board's nominees for
Director:
Director
Name Age Position Since
- ---- --- -------- -----
Scott R. Heldfond 59 Director-Nominee ----
H. Michael Laybourn 66 Director 1993
Vijay Mallya, Ph.D. 49 Director, Chairman of the Board, and Chief 1997
Executive Officer
Jerome G. Merchant*+ 43 Director 1997
Mahadevan Narayanan 46 Chief Financial Officer and Secretary ----
Sury Rao Palamand, Ph.D.*+ 74 Director 1998
Kent D. Price*+ 61 Director 1998
Yashpal Singh 58 Director and President 1997
- --------------
* Member of the Audit/Finance Committee.
+ Member of the Compensation Committee.
7
Biographical information about all but one of the above-listed Directors
of the Company is incorporated by reference from the Company's 2003 Annual
Report on Form 10-KSB which accompanies this Proxy Statement, under the heading
"Item 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT - Directors and Executive
Officers of the Company, beginning at page 21.
One new candidate has been nominated for election at the Annual Meeting
- - Mr. Scott R. Heldfond. Mr. Heldfond has been nominated for election to the
Board for the first time at the Annual Meeting. Since 1999, he has been a
Managing Partner of eSEED Capital, LLC, a technology-focused merchant bank, and
the Executive Director of Nasdaq Insurance, LLC, a national insurance brokerage
and consulting firm. From 1995 to 1999, he was the President and Chief Executive
Officer of Frank Crystal & Co., a New York-based insurance company. Mr. Heldfond
also currently serves as a Director of HomeGain, Inc., a private venture backed
company, and UBICS, a NASDAQ traded firm that provides information technology
staffing and solutions for domestic and international businesses. He is a
Commissioner, and the President, of the Health Services Commission of the City
and County of San Francisco, in addition to serving as an advisor to or on the
Board of Directors of a number of local, statewide, and national charitable and
community service organizations. Mr. Heldfond received his undergraduate degree
from the University of California, Berkeley, and a J.D. from the University of
San Francisco Law School.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 2003, the Board of Directors
held three meetings. Except for Mr. Palamand, as described below under the
heading "Audit and Finance Committee," no Director attended fewer than 75% of
the aggregate of the total number of meetings of the Board and the total number
of meetings held by all committees of the Board on which he served.
Directors are encouraged to attend the Annual Meeting of Shareholders.
At the 2003 Annual Meeting, all eight of our directors were in attendance.
Listed below are the committees of the Board of Directors, along with
Directors who served as members of each committee during 2003 and the first nine
months of 2004.
AUDIT AND FINANCE COMMITTEE. The Board has a standing Audit/Finance
Committee and a standing Compensation Committee.
Messrs. Merchant, Price, and Palamand presently serve as the members of
the Audit/Finance Committee, which met four times during 2003 and four times to
date during 2004. Mr. Palamand did not attend one of those meetings. The
Audit/Finance Committee reviews, acts on, and reports to the Board of Directors
with respect to various auditing, accounting and finance matters, including the
selection of the Company's auditors, the scope of the annual audits, fees to be
paid to the auditors, the performance of the Company's auditors, and the
accounting practices of the Company. In the judgment of the Company's Board of
Directors, Messrs. Price and
8
Palamand are "Independent," as that term is defined in Section 4200(a)(15) of
the Rules of the National Association of Securities Dealers, Inc, but Mr.
Merchant is not.
NOMINATING COMMITTEE. Because of its limited size, the Board does not
have a nominating committee or a committee performing similar functions.
Instead, all of the Directors participate in the consideration of Director
nominees. Several of the Company's Directors would not be considered to be
"independent" under the rules of the New York Stock Exchange or any of the other
national securities exchanges.
COMPENSATION COMMITTEE. Messrs. Merchant, Price, and Palamand presently
serve as the members of the Compensation Committee, which considers all matters
of compensation with respect to the chief executive officer, president, any vice
president, and any other senior executives, and makes recommendations to the
Board regarding the compensation of such persons. The Compensation Committee
also makes determinations with respect to the granting of stock options with
respect to Directors who are also employees of the Company. The Compensation
Committee met twice during 2003.
SPECIAL COMMITTEE. The Special Committee, consisting of Directors Kent
D. Price (as Chairman), Sury Rao Palamand, and Michael Laybourn, was created by
the Board in 1998 for the purpose of advising the Board concerning certain
potential transactions by the Company, including among others the acquisition
during 2001 of United Breweries International (UK), Ltd. ("UBI") and its
wholly-owned subsidiary UBSN, Ltd. ("UBSN"). It continues to serve as a primary
forum for the review of transactions or potential transactions that could have a
material effect on the Company.
REPORT OF THE AUDIT COMMITTEE
The following audit committee report is provided in accordance with the
rules and regulations of the Securities and Exchange Commission (the "SEC").
Pursuant to such rules and regulations, this report shall not be deemed to be
(i) "soliciting materials," (ii) filed with the SEC, (iii) subject to Regulation
14A or 14C, or (iv) subject to the liabilities of Section 18 of the Securities
Exchange Act of 1934, as amended.
The Board of Directors maintains an Audit/Finance Committee comprised of
three of the Company's outside directors. The Board of Directors and the
Audit/Finance Committee believe that the Audit/Finance Committee's current
member composition satisfies the rules of the National Association of Securities
Dealers, Inc. ("NASD") governing audit committee composition, including the
requirement that all audit committee members be "independent directors." The
Audit/Finance Committee has adopted a written charter.
The Audit/Finance Committee assists the Board of Directors with
fulfilling its oversight responsibility regarding the quality and integrity of
accounting, auditing, and financial reporting practices of the Company. In
discharging its oversight responsibilities regarding the audit process, the
Audit/Finance Committee has (i) reviewed and discussed the audited financial
statements with management, (ii) discussed with the independent auditors the
material required to be discussed by Statement on Auditing Standards no. 61, and
(iii) received and reviewed the written
9
disclosures and the letter from the independent auditors required by the
Independence Standards Board's Standard No. 1, and discussed with the
independent auditors any relationships that may impact their objectivity and
independence.
Based on the review and discussions referred to above, the Audit/Finance
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
years ended December 31, 2002 and 2003, as filed with the SEC.
Approved by the Members of the Audit Committee:
Jerome G. Merchant
Sury Rao Palamand
Kent D. Price
DIRECTOR COMPENSATION
The Company's policy with respect to compensation of outside Directors
for their services as Directors is as follows: each outside Director receives
$3,000 per Board meeting he attends and $1,000 per committee meeting he attends.
The outside Directors may opt to receive such compensation in cash, or in shares
of the Company's Common Stock which will be valued at its fair market value as
of the date of the meeting for which the he is being compensated. To date, all
of the outside Directors have elected to receive such compensation in shares of
the Company's Common Stock.
Mr. Merchant receives a monthly fee of $4,000 in exchange for consulting
services he renders to the Company. This monthly fee is in lieu of the normal
Directors' fees of $3,000 per Board meeting and $1,000 per committee meting.
During 2001, Mr. Merchant also received 105,665 shares of Company Common Stock
as special compensation for his extraordinary contributions to the Company in
connection with the acquisition of United Breweries International Limited, which
closed in August 2001. (A description of this transaction is incorporated by
reference from the Company's 2003 Annual Report on Form 10-KSB which accompanies
this Proxy Statement, under the heading "Item 12, - Acquisition of UBI,"
beginning at page 26 of the Form 10-KSB.)
From 2001 through November of 2004, David Townshend (who resigned in
November of 2004) was both a Director of MBC and the Managing Director of UBSN,
(a post he had held since 1998). Mr. Townshend had been seconded to UBSN for
this purpose by Shepherd Neame, Ltd. ("Shepherd Neame"), under a Secondment
Agreement which called for the Company to reimburse Shepherd Neame for Mr.
Townshend's salary and benefits, and for certain associated taxes. Under the
terms of the Secondment Agreement, Shepherd Neame remained Mr. Townshend's
actual employer. Bobby Neame, who is the Chairman of the Board of Shepherd
Neame, was also a Director of both MBC and UBSN and the Vice-Chairman of UBSN's
Board of Directors. Like Mr. Townshend, Mr. Neame resigned from the MBC Board in
November of 2004. Both Mr. Neame and Mr. Townshend resigned voluntarily; as far
10
as the Company is aware neither resigned as a result of a disagreement on any
matter relating to the Company's operations, policies, or practices.
SIGNIFICANT EMPLOYEES
As the Managing Director of UBSN from 1998 until November of 2004, Mr.
Townshend may be deemed to have been a significant employee as well as a
Director of the Company. The following chart sets forth the amounts paid to
Shepherd Neame by UBSN under the Secondment Agreement for the years indicated.
All such payments were made in pounds sterling; for purposes of the chart the
various amounts have been converted to dollars at the exchange rates prevailing
as of December 31 of each of the respective years. Neither Mr. Townshend nor
Shepherd Neame have received from the Company or UBSN any stock options,
restricted stock awards, stock appreciation rights, or other forms of long-term
compensation pursuant or related to the Secondment Agreement. The amounts shown
below are in addition to the fees Mr. Townshend received for attending meetings
as a member of the MBC Board ($3,000 per Board meeting and $1,000 per committee
meeting attended).
Annual Compensation Under the
Secondment Agreement
- ------------------- --------------------- ------------------- ------------------
Year Salary Bonus Other *
- ------------------- --------------------- ------------------- ------------------
2003 $101,190* $0.00 $19,037
2002 $86,538 $0.00 $24,562
2001 $74,105 $0.00 $28,635
- -------------
* Includes annual payments of $9,200, $11,900, and $12,773, respectively,
to the British National Insurance on behalf of Mr. Townshend, contributions of
$9,019, $11,137, and $14,356 respectively, to the Shepherd Neame pension plan,
and other cost reimbursements of $818, $1,525, and $1,506 respectively
Don Barkley, 50, joined the Company in 1983 as Master Brewer and has
served in that capacity continuously since then. In 1993 Mr. Barkley was the
President and representative to the national board of governors of the Master
Brewers Association of the Americas, Northern California District. Mr. Barkley
holds a Bachelor of Science degree in fermentation science from the University
of California, Davis.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock and Series A
Preferred Stock as of the close of business on October 13, 2004, for (a) each
shareholder known by the Company to own beneficially 5% or more of the
outstanding shares of its Common Stock or Series A Preferred Stock; (b) each
Director; and (c) all Directors and executive officers of the Company as a
group. Except as noted, the Company believes that the beneficial owners of the
Common Stock and Series A Preferred Stock listed below, based on information
furnished by such owners, have
11
sole investment and voting power with respect to such shares, subject to
community property laws where applicable.
Shares Approximate
Name and Address of Beneficially Percentage
Beneficial Owner Owned(1) Of Class
---------------- -------- --------
COMMON STOCK:
United Breweries of America, Inc.+ 3,087,818(2) 27.4%
Inversiones Mirabel S.A. 5,500,000 48.8%
Hong Kong Bank Building
6th Floor, Samuel Lewis Avenue
P O Box 6-4298, El Dorado
Panama City
Scott R. Heldfond --(3) --
H. Michael Laybourn++ 354,254(4) 3.1%
Vijay Mallya, Ph.D.+ 8,587,818(5) 76.2%
Jerome G. Merchant+ 173,742(6) 1.5%
R.H.B. (Bobby) Neame 105,588(6)(7) 0.9%
c/o Shepherd Neame, Ltd.
17 Court Street.
Faversham, Kent ME13 3AX
United Kingdom
Sury Rao Palamand, Ph.D. 125,278(6) 1.1%
50 Crestwood Executive
Center, Suite 207
St. Louis, MO 63126
Kent D. Price 157,875(6) 1.4%
c/o Parker Price Venture
Capital
101 California #2830
San Francisco, CA 94111
Yashpal Singh++ -- --
David Townshend --(7)
c/o UBSN Limited
17 Court Street
Faversham, Kent ME13 3AX
United Kingdom
12
All Directors and executive officers as a group (8 9,504,555(8) 81.9%
persons)
SERIES A PREFERRED STOCK:
H. Michael Laybourn 6,100 2.7%
All Directors and executive officers as a group 6,100 2.7%
(8 persons)
- --------------
+ 2400 Bridgeway, Suite 290, Sausalito, CA 94965
++ 1601 Airport Road, Ukiah, CA 95402
(FOOTNOTES CONTINUE ON THE FOLLOWING PAGE.)
(1) Applicable percentages of ownership are based on 11,266,874 shares of
Common Stock outstanding and 227,600 shares of Series A Preferred Stock
outstanding. Shares of Common Stock subject to a contract of purchase or
options currently exercisable or exercisable within 60 days after the
date of this Statement are deemed outstanding for computing the
percentage ownership of the person obligated to purchase the shares or
holding the options but are not deemed outstanding for computing the
percentage of any other person.
(2) Does not include (i) 1,323,635 shares issuable upon conversion of
certain convertible notes issued to UBA, or (ii) 882,057 outstanding
shares which are held in the aggregate by Messrs. Laybourn, Scahill,
Franks, and Barkley and which, pursuant to a Shareholders' Agreement,
are subject to (A) a right of first refusal to purchase, held by the
Company, which may become exercisable within 60 days, and (B) the
requirement that the owners of record vote such shares for four
Directors designated by UBA and two additional independent Directors who
are acceptable to UBA.
(3) Mr. Heldfond is a nominee for election to the Board of Directors at the
2004 Annual Meeting. He has no current position with the Company or any
of its subsidiaries.
(4) Includes 68,077 shares subject to options exercisable or that will be
exercisable within 60 days. Does not include 3,683,698 currently
outstanding shares held by UBA, Messrs. Scahill, Franks, and Barkley,
all of which are subject to Shareholders' Agreement which requires the
parties thereto to vote for one Director designated by Mr. Laybourn.
(5) Includes all shares held by UBA and Inversiones. Dr. Mallya may be
deemed to be a beneficial owner of UBA and Inversiones because they are
both controlled by Golden Eagle Trust, which in turn is controlled by
persons who may exercise discretion in Dr. Mallya's favor among others.
Dr. Mallya is also the Chairman and Chief Executive Officer of UBA. Does
not include 1,323,635 shares issuable upon conversion of certain
convertible notes issued to UBA.
13
(6) Includes 68,077 shares subject to options which are presently
exercisable or will be exercisable within 60 days.
(7) Mr. Neame and Mr. Townshend resigned from the Board in November of 2004.
See "Director Compensation," above.
(8) Does not include 595,880 outstanding shares held by Messrs. Scahill,
Franks, and Barkley pursuant to a Shareholders' Agreement which requires
the parties thereto to vote for four Directors designated by UBA, one
Director designated by Mr. Laybourn, and two additional independent
Directors who are acceptable to UBA, and which grants UBA a right of
first refusal with respect to such shares. Includes 429,273 shares
subject to options which are presently exercisable or will be
exercisable within 60 days.
EXECUTIVE COMPENSATION
The annual compensation, including salary, bonuses, and certain other
compensation, paid by the Company to its Chief Executive Officer and most
highly-compensated executive officers during each of the fiscal years ended
December 31, 2001, 2002, and 2003 is set forth in the Company's 2003 Annual
Report on Form 10-KSB, under the heading "Item 10 - EXECUTIVE COMPENSATION -
Summary Compensation Table," beginning at page 23 of the Form 10-KSB, and that
table is incorporated into this Proxy Statement by reference. Additionally,
David Townshend, who was until November of 2004 a Director of MBC and the
Managing Director of its subsidiary UBSN, received salary from Shepherd Neame
during those years that was indirectly paid by the Company through a Secondment
Agreement between the Company and Shepherd Neame, which called for the Company
to reimburse Shepherd Neame for certain expenses of his employment, including
his salary. During the years 2003, 2002, and 2001, Shepard Neame paid Mr.
Townshend (and the Company reimbursed it for) annual salaries of approximately
$101,190, $86,538, and $74,105 at current exchange rates. (See "Director
Compensation" and "Significant Employees," above.) Mr. Townshend did not receive
any stock, stock options or other forms of compensation under long-term
incentive plans during any of those years.
During those years, there were no restricted stock awards or long-term
incentive program payouts, and none of the Company's other executive officers
received total compensation in excess of $100,000 in any of those years.
STOCK OPTION GRANTS
No stock options were held by, granted to, or exercised by any of the
Company's executive officers during the year ended December 31, 2003; and no
such options have been granted to or exercised by any executive officer to date
during 2004.
EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with its current
President and Chief Operating Officer, Yashpal Singh, effective on April 1,
1998. Under that agreement, which was extended during 2004 and will now expire
in 2008 (but may be terminated at any time, by either party, upon six months
notice), Mr. Singh's base
14
salary was initially set at $100,000 per year, however, based on performance
reviews, his base salary may be increased annually by the Company's Board of
Directors. For the current year, Mr. Singh's base salary is $120,000. Mr. Singh
is also entitled to receive an annual bonus, based on an annual performance
review, and such bonuses may amount to as much as 36% of Mr. Singh's base
salary. The Company provides Mr. Singh with standard medical and dental benefits
and may also provide approximately $250,000 in life insurance benefits.
Additionally, in 1998 the Company's subsidiary UBSN entered into a
Secondment Agreement with Shepherd Neame, pursuant to which David Townshend, who
was from 2001 to November of 2004 a Director of the Company, also served as the
Managing Director of UBSN from 1998 until 2004. (See "Director Compensation,"
"Senior Employees," and "Executive Compensation," above.)
CERTAIN TRANSACTIONS
MASTER LINE OF CREDIT AGREEMENT
On August 31, 1999, the Company and UBA entered into a Master Line of
Credit Agreement, which was subsequently amended on April 28, 2000, and February
12, 2001 (the "Credit Agreement"). The terms of the Credit Agreement provide the
Company with a line of credit in the principal amount of up to $1,600,000.
UBA has made thirteen (13) separate advances under the Credit Agreement,
each pursuant to an eighteen-month promissory note (collectively, the "UBA
Notes"). The first of the UBA Notes was issued by the Company on As of September
30, 2004, the aggregate outstanding principal amount of the UBA Notes was
approximately $1,515,400, and the accrued but unpaid interest thereon was
approximately $470,100, so that the aggregate amount then owed was $1,985,500.
On December 28, 2001, MBC and UBA entered into a Confirmation of Waiver which
confirms that as of August 13, 2001, UBA waived its rights with regard to all
conversion rate protection as set forth in the UBA Notes.
As of the date of this Proxy Statement, UBA has made advances to the
Company under the Credit Agreement pursuant to a series of thirteen (13)
individual eighteen- month promissory notes issued by the Company to UBA (the
"UBA Notes"), the aggregate outstanding principal amount of which was
$1,515,371, and the accrued but unpaid interest thereon was equal to
approximately $406,155. .
CERTAIN OTHER AGREEMENTS
In addition to the agreements referred to above, the Company has entered
into a number of other agreements and relationships with companies that may be
viewed as related entities, including among others a license agreements for the
Kingfisher trademark, an agreement for the distribution of lager and beer
products in Europe, and a brewing agreement and a loan agreement in connection
with the brewing and distribution of beers and related products sold under the
Kingfisher trademark in Europe. Descriptions of these transactions are
incorporated by reference to Item 12 of the Company's 2003 Annual Report on Form
10-KSB which accompanies this Proxy Statement, under the headings " CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS -
15
License of the Kingfisher Trademark," "--Distribution Agreement," "--Brewing
Agreement between UBI and Shepherd Neame," "--Loan Agreement Between UBSN and
Shepherd Neame," "--Market Development Agreement," and "--Brewing License
Agreement," beginning at page 26 of the Form 10-KSB.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires each of the Company's executive Directors and
officers, and each person who or which is a beneficial owner of more than 10% of
the Company's Common Stock, to file forms with the Securities and Exchange
Commission ("SEC") reports of ownership and changes in ownership of the
Company's shares. These persons are required by SEC regulation to furnish the
Company with copies of all such forms they file.
Based solely on a review of written statements of the Company's insiders
and Forms 3, 4, and 5 furnished to the Company, only one report required by
Section 16 of the Exchange Act was not filed in a timely manner during and with
respect to the Company's 2003 fiscal year. Due to an error on the part of the
Company's financial printer, the Form 4 of United Breweries of America, Inc.
("UBA"), which was due to be filed on August 18, 2003, was not filed until
August 20, 2003, although the Company provided the filing to its printer well in
advance of the filing deadline. However, the Form 4 of Dr. Vijay Mallya, the
ultimate beneficiary of the securities held by UBA, was timely filed on August
18, 2003. The Company has since engaged a different financial printer and does
not expect to encounter these difficulties in the future.
COMPARATIVE PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total return to
shareholders on the Company's Common Stock with the cumulative total return of
the Russell 2000 Index and an index comprised of other publicly-traded craft
beer companies (the "Peer Group") for the period beginning on December 31, 1998
and ended on December 31, 2003. The total return on the Company's Common Stock,
the Russell 2000 Index and the Peer Group Index assumes the value of each
investment was $100 on December 31, 1998, and that any dividends were
reinvested. The points represent fiscal year-end index levels based on the last
trading day in each fiscal year. Return information is historical and not
necessarily indicative of future performance.
16
[GRAPH]
- ------------------------------------------ ----------- ----------- ------------- ------------ ------------ -----------
1998 1999 2000 2001 2002 2003
- ------------------------------------------ ----------- ----------- ------------- ------------ ------------ -----------
MENDOCINO BREWING 100 111 145 93 59 36
- ------------------------------------------ ----------- ----------- ------------- ------------ ------------ -----------
PEER GROUP 100 85 102 193 166 208
- ------------------------------------------ ----------- ----------- ------------- ------------ ------------ -----------
RUSSEL 2000 INDEX 100 120 114 116 91 132
- ------------------------------------------ ----------- ----------- ------------- ------------ ------------ -----------
The Company's Peer Group is comprised of three publicly traded craft
beer companies. As required, the returns of each of the component companies in
the Peer Group return are calculated and weighted according to their respective
market capitalization at the beginning of the period. The Peer Group is composed
of: Red Hook Ale Brewery, Inc. (NASDAQ: HOOK), The Boston Beer Company, Inc.
(NYSE: SAM), and Pyramid Breweries Inc. (formerly Hart Brewing) (Nasdaq: PMID).
VOTE REQUIRED FOR THE ELECTION OF DIRECTORS
The affirmative vote of the holders of a plurality of the shares of
Common Stock present and voting at the Annual Meeting is required to elect each
of the nominees for Director. Each share of Common Stock which is represented,
in person or by proxy, at the Annual Meeting will be accorded one vote on each
nominee for Director, unless one or more shareholders express an intention to
exercise the right of cumulative voting, in which case all shares will be
accorded the cumulative voting rights. For purposes of this vote, abstentions
and broker non-votes will in effect not be counted. Please see "GENERAL
INFORMATION -- Voting Securities of the Company - Cumulative Voting," above, for
a brief description of the voting procedures in the event that cumulative voting
is requested at the Annual Meeting in connection with the election of Directors.
The Board of Directors recommends that shareholders vote FOR the
election of all eight of the nominees named above.
17
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
EACH OF THE NOMINEES FOR DIRECTOR DESCRIBED ABOVE.
PROPOSAL NO. 2: RATIFICATION OF INDEPENDENT AUDITORS
The Company has appointed Moss Adams, L.L.P. ("Moss Adams"), as its
independent auditors to perform the audit of the Company's financial statements
for the year 2003, and the shareholders are being asked to ratify that
appointment. Moss Adams audited the Company's 2001 and 2002 financial
statements. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 2003, which incorporates the 2002 financial statements, is included
(without Exhibits) with this Proxy Statement.
All audit and other services performed by Moss Adams on behalf of the
Company are approved in advance by the Audit Committee, on a case-by-case basis.
AUDIT FEES. The aggregate fees billed by Moss Adams for the audit of the
Company's annual consolidated financial statements for the years ended December
31, 2002 and 2003 were $62,688 and $69,251, respectively; fees of an additional
$15,216 and $15,868 were billed to the Company during 2002 and 2003,
respectively, in connection with Moss Adams' review of its financial statements
in connection with the Company's Quarterly Reports on Form 10-QSB for those
years. Such fees represented 77% and 79%, respectively, of the total fees for
services rendered to the Company by Moss Adams during 2002 and 2003.
AUDIT RELATED FEES. Moss Adams billed $2,146 in fees to the Company in
2003 for assurance or related services. No such fees were billed for services
during 2002.
TAX FEES. The aggregate fees billed during 2002 and 2003 for products
and services provided by Moss Adams, other than those described in the foregoing
paragraphs, were $13,923 and $18,865, respectively. Such fees represented 14%
and 17%, respectively of the total fees for services rendered to the Company by
Moss Adams during 2002 and 2003.
ALL OTHER FEES. The aggregate fees billed to the Company for all other
services rendered by Moss Adams for the years ended December 31, 2002 and 2003
were $8,704 and $970, respectively. Such fees represented 9% and 9%,
respectively of the total fees for services rendered to the Company by Moss
Adams during 2002 and 2003.
The Audit Committee has determined that the provision of the services
rendered above for (a) financial information systems design and implementation
and (b) all other fees is compatible with the maintenance of Moss Adams'
independence.
The Company is not aware that any significant amount of the work done
during the course of Moss Adams' audit of the Company's 2003 Financial
Statements was performed by persons other than Moss Adams' full-time, permanent,
employees.
18
Representatives of Moss Adams, L.L.P. are expected to be present at the
Annual Meeting, will have an opportunity to make a statement at the Annual
Meeting if they desire to do so, and are expected to be available to respond to
appropriate questions.
Ratification of the appointment of Moss Adams, L.L.P. requires the vote
of a majority of the shares of the Company's Common Stock present in person or
represented by a proxy at the Annual Meeting and entitled to vote. Abstentions
have no effect.
VOTE REQUIRED FOR APPROVAL OF THE APPOINTMENT OF MOSS ADAMS LLP
The affirmative vote of the holders of a majority of the shares of
Common Stock present and voting at the Annual Meeting is required to approve the
appointment of Moss Adams L.L.P. as the Company's independent auditors for the
year 2004. Each share of Common Stock which is represented, in person or by
proxy, at the Annual Meeting will be accorded one vote on this Proposal. For
purposes of this vote, abstentions and broker non-votes will in effect not be
counted.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF MOSS ADAMS, L.L.P.
OTHER MATTERS
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board of Directors has a process by which shareholders may
communicate with the Board, the non-management Directors, or with any individual
Director concerning the Company. Shareholders wishing to do so may write to the
Board or to the Director or Directors at issue care of: N. Mahadevan, Corporate
Secretary, Mendocino Brewing Company, Inc., 1601 Airport Road, Ukiah, CA 95482.
The envelope should indicate that it contains a shareholder communication. All
such communications relating to the Company will be forwarded to the Director or
Directors to whom they are addressed.
SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT ANNUAL MEETING
Any proposal which a shareholder wishes to have presented at the next
annual meeting and included in the management proxy materials relating to such
meeting must be received at the main office of the Company a reasonable time
before the Company begins to print and mail its proxy material in connection
with that meeting. The Company will advise its shareholders of the date of its
next (2005) Annual Meeting of Shareholders, once that date has been set, through
its Quarterly Reports on Form 10-Q or by a Current Report on Form 8-K. If a
shareholder proposal for consideration at the 2005 Annual Meeting is in
compliance with all of the requirements of Rule 14a-8 promulgated under the
Securities Exchange Act of 1934, it will be included in the proxy statement for
that meeting, and set forth on the form of proxy issued for the 2005 Annual
Meeting of Shareholders.
If a shareholder of the Company wishes to present a proposal before the
Company's next annual meeting but does not wish to have the proposal considered
for
19
inclusion in the Company's proxy statement and proxy card, such shareholders
must give written notice to the Secretary of the Company at its main office.
Such a notice must be received a reasonable time before the 2005 Annual Meeting.
It is urged that any shareholder proposals be sent by certified mail,
return receipt requested.
AVAILABILITY OF FORM 10-KSB
Included with this Proxy Statement, and partially incorporated herein,
is a copy of the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2003 (without exhibits). THE COMPANY WILL PROVIDE TO ANY
SHAREHOLDER, UPON WRITTEN REQUEST AND WITHOUT CHARGE, AN ADDITIONAL COPY OF THIS
REPORT (also without Exhibits). Such written requests should be made to the
Company at Mendocino Brewing Company, Inc., Attn: Sarah T. McDaniel, Manager,
Shareholder Relations, 1601 Airport Road, Ukiah, CA 95482, Telephone: (800)
733-3871.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
The Board of Directors does not presently intend to present matters
other than the foregoing for action by the shareholders at the Annual Meeting,
and, so far as is known to the Board of Directors, no matters are to be brought
before the Annual Meeting except as specified herein. As to any business that
may properly come before the Annual Meeting, however, it is intended that
proxies, in the form accompanying this Proxy Statement, will be voted in
accordance with the judgment of the persons voting such proxies.
ATTACHED DOCUMENTS
A copy of the Company's 2003 Annual Report on Form 10-KSB (not including
the Exhibits thereto) accompanies this Proxy Statement. The Company hereby
incorporates into this Proxy Statement by reference the following parts of the
Company's 2003 Annual Report on Form 10-KSB, as described above:
1. Biographical information about the Directors of the Company is
incorporated by reference from "Item 9 - DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS, AND CONTROL PERSONS -- Directors and Executive Officers of the
Company," beginning at page 21.
2. Descriptions of certain transactions are incorporated by
reference from Item 12 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
beginning at page 26.
3. The Summary Compensation Table is incorporated by reference from
Item 10 - EXECUTIVE COMPENSATION at page 24.
The information specifically incorporated by reference herein is deemed
to be a part of this Proxy Statement; but only to the extent that any statements
or information contained therein have not been superseded or corrected by
statements or information provided in this Proxy Statement.
20
DETACH HERE ZMEN42
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
MENDOCINO BREWING COMPANY, INC.
The undersigned holder of shares of Common Stock of MENDOCINO BREWING
COMPANY, INC., a California corporation (the "Company") hereby acknowledges
receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement,
each dated December 10, 2004, and appoints Dr. Vijay Mallya, Jerome Merchant and
Yashpal Singh, and each of them, as proxy of the undersigned, with power of
substitution and revocation, to represent the undersigned at the Annual Meeting
of the Shareholders of the Company to be held at 2:00 p.m., local time, on
Friday, January 14, 2005, at 1601 Airport Road, Ukiah, California, and at any
adjournment thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote as if the undersigned were present and
voting the shares.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL NO. 1 AND FOR THE APPOINTMENT OF
MOSS ADAMS, L.L.P. AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE 2004 FISCAL
YEAR AS DESCRIBED IN PROPOSAL NO. 2. IN THEIR DISCRETION, THE PROXY HOLDERS ARE
ALSO AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS,
JUST SIGN ON THE REVERSE SIDE. YOU NEED NOT MARK ANY BOXES.
- --------------- ---------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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MENDOCINO BREWING COMPANY
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE ZMEN41
PLEASE MARK
[X] VOTES AS IN #MEN
THIS EXAMPLE.
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The Board of Directors recommends a vote FOR Proposals 1 and 2.
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1. Election of the 7 Directors nominated by the Board
(or if any nominee is not available for election,
such substitute(s) as the Board of Directors may FOR AGAINST ABSTAIN
designate). 2. To ratify the appointment of Moss Adams, [ ] [ ] [ ]
L.L.P. as independent auditors of the
NOMINEES: (01) Scott Heldfond, (02) Jerome Merchant, Company for the current fiscal year.
(03) Michael Laybourn, (04) Vijay Mallya,
(05) Sury Rao Palamond, (06) Kent D. Price
and (07) Yashpal Singh
FOR WITHHOLD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ] ___________________________________________
To withhold authority to vote for any individual
nominee write that nominee's name in the space
provided above and mark the box.
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MARK HERE MARK HERE
FOR ADDRESS [ ] [ ] IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such.
Signature:_______________________________ Date:_________________ Signature:_______________________________ Date:_________________