EXHIBIT 10.35
EMPLOYMENT SEPARATION AGREEMENT BETWEEN
PYRAMID BREWERIES INC. AND JASON REES
     This agreement (the “Employment Separation Agreement”) between you, Jason
Rees and us, Pyramid Breweries Inc. (“Pyramid”), is dated for reference purposes
August 25, 2006 which is the date we delivered it to you for your consideration.
     1. Your full-time employment by us is terminated effective September 1,
2006 (the “Separation Date”).
     2. You will be paid: (a) your regular salary, less authorized and customary
deductions and withholdings, through the Separation Date; (b) the cash value of
your current, accrued but unused vacation, less customary tax and other
withholdings; (c) your normal salary, less authorized and customary deductions
and withholdings, from the Separation Date through March 1, 2007, which
represents a period of six months. Any sick leave you have accrued will be
forfeited on the Separation Date. You understand and agree that you have no
right to receive any further payments for salary, bonuses, profit sharing or any
other form of compensation or incentive compensation unless indicated in this
document. Payments under 2 (c) will not begin until you have executed this
Employment Separation Agreement and the revocation period set forth at paragraph
12 has expired.
     3. Your participation in all employee benefit plans and programs ends on
March 31, 2007 per the terms of your Termination Clause. After that date
continuation coverage of health/dental insurance will be made available to you
and your dependents, at your expense, to the extent required by federal law.
Your rights under any retirement benefit plans in which you may have
participated will be determined in accordance with the written plan documents
governing those plans.
     4. You will be paid a pro rata share, through September 1, 2006 (your
termination date) of any 2006 personal performance bonus awards for which you
are eligible for under the 2006 Officer Incentive Compensation Plan in the year
of termination upon approval of the Compensation Committee.
     5. You will be granted stock awards or stock units for 4,000 shares on
January 1, 2007 and will be eligible for stock awards or stock units for an
additional 4,000 shares based on the Company’s achievement of certain
performance goals as set forth in the letter dated April 26, 2006 re: Revision
in Officer Compensation and Termination Provisions.
     6 All telephone reference checks and verifications of your prior employment
must be directed to Human Resources. In response to any such inquiries, Human
Resources will only disclose dates of employment, last position held, duties and
responsibilities in that position, and final rate of pay.
     7. In consideration for the payments and other promises described at
paragraphs 1, 2, 3, 4 and 5, you hereby release us from any and all claims of
any kind, known or unknown, that arose on or before the date you signed this
Employment Separation Agreement. The claims that you are releasing include,
without limitation, all claims related to or arising out of your employment by
Pyramid and/or the separation of that employment. You specifically understand

 

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that you are waiving any rights or claims that you may have under any federal,
state or local law, including without limitation the Civil Rights Act of 1964
(including Title VII of that Act); the Age Discrimination in Employment Act of
1967, American With Disabilities Act, the Older Workers Benefit Protection Act,
the Family and Medical Leave Act, the Employee Retirement Income Security Act
and the Washington Law Against Discrimination. You understand that the claims
you are releasing include any claims for discrimination on the basis of age
under federal, state or local law. The release you are giving releases not only
all claims you may have against Pyramid, but also all claims you may have
against Pyramid’s past and present shareholders, officers, directors, agents,
employees, representatives, attorneys, parents, subsidiaries, affiliates,
benefit plans, predecessors, successors, transferees and assigns. You agree not
to complain to any governmental agency about any of the claims you have released
in this Employment Separation Agreement and you represent and warrant that you
have not already done so. You also agree never to assert any of these claims in
any lawsuit, administrative proceeding or arbitration and you represent and
warrant that you have not already done so. You understand that you are releasing
potentially unknown claims, and that you may have limited knowledge with respect
to some of the claims being released. You agree that this release is fairly and
knowingly made. You assume the risk of mistake in entering into this Employment
Separation Agreement.
     8. You represent and warrant that upon the Separation Date or our request,
whichever is earlier, you will return all keys, credit cards, documents and
other material that belong to us. You further agree neither during this
agreement or at any time thereafter will you disparage us or our business or
services. You also agree that following the Separation Date, you will not, apart
from good faith competition, interfere with our relationships with our
customers, potential customers, employees, vendors, bankers or others.
     9. You agree that information not generally known to the public to which
you have been exposed as a result of being employed by us is confidential
information that belongs to us. You agree that at all times you will hold
Pyramid’s confidential information in strict confidence, and not disclose or use
it except as authorized by us and for our benefit.
     10. You acknowledge that with the payments and other promises set forth at
paragraphs 2 and 3 above, Pyramid has fully and forever satisfied, in fact
exceeded, all obligations owed to you. You acknowledge that, effective
September 1, 2006, you are no longer authorized to incur expenses on Pyramid’s
behalf.
     11. This Employment Separation Agreement does not constitute and may not be
construed as an admission of liability on the part of Pyramid or of any persons
or entities relating in any way to Pyramid or an admission of any violation of
any applicable law or regulation. You and we have entered into this Employment
Separation Agreement solely to facilitate the cessation of their prior
employment relationship.
     12. You agree to keep the terms of this Employment Separation Agreement
confidential. You agree that except as otherwise required by law, you shall not
disclose to any third party, except your legal counsel, accountants and tax
advisors, any of the terms of this Employment Separation Agreement. You
represent and warrant that you have not already done so.

 

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     13. You have 7 days to consider this Employment Separation Agreement before
signing it. You may use as much or as little of this 7-day period as you wish
before signing. The 7-day period expires September 1, 2006 at 5:00 p.m. (the
“Expiration Date.”) You have seven calendar days after signing this Employment
Separation Agreement to revoke it. Revocation may be made by delivering a
written notice of revocation to Sylvia Washington, Human Resources Director. If
you have not signed and returned this agreement by the Expiration Date or you
timely revoke it after signing, your employment nevertheless will remain
terminated effective the Separation Date and you will only be paid your accrued
vacation, compensation, less authorized and customary deductions and
withholdings, earned through the Separation Date. You agree that you have had
reasonable time in which to consider whether to sign this Employment Separation
Agreement.
     14. Each of the undersigned parties to this Employment Separation Agreement
has had ample opportunity to review the facts and law relevant to this issue,
has consulted fully and freely with competent counsel of its choice if desired,
and has entered this Employment Separation Agreement knowingly and intelligently
without duress or coercion from any source.
     15. This Employment Separation Agreement is governed by the internal laws
of the State of Washington without giving effect to provisions thereof related
to choice of laws or conflict of laws. Venue and jurisdiction of any legal
proceeding of any kind, including arbitration and civil litigation, involving
this Employment Separation Agreement or your employment shall exist exclusively
in state and federal courts located in King County, Washington, unless
injunctive relief is sought by Pyramid and, in our sole judgment, may not be
effective unless obtained in some other venue. In any dispute involving this
Employment Separation Agreement, the party who substantially prevails shall be
entitled to recover reasonable attorneys’ fees, costs and disbursements from the
other party. This Employment Separation Agreement is the final and complete
expression of all agreements between us on all subjects. You acknowledge that
you have had adequate time to review and consider this agreement and consult
with counsel. You acknowledge you are not signing this agreement relying on
anything not set out here.

         
AGREED BY EMPLOYER:
  AGREED BY EMPLOYEE:    
 
       
/s/ Scott Barnum
  /s/ Jason Rees    
 
Scott Barnum
 
 
Jason Rees    
Chief Executive Officer
  Date: 8/29/06    
Date: 8/25/06