EXHIBIT 10.2
(PYRAMID BREWERIES LOGO) [v42695v4269501.gif]
EMPLOYMENT SEPARATION AGREEMENT BETWEEN PYRAMID BREWERIES INC.
AND MICHAEL O’BRIEN
          This agreement (the “Employment Separation Agreement”) between you,
Michael O’Brien, and us, Pyramid Breweries, Inc. (“Pyramid”), is dated for
reference purposes August 5, 2008, which is the date we delivered it to you for
your consideration.

  1.   Your full-time employment by us is terminated effective August 8, 2008
(the “Separation Date”).     2.   Subject to our receipt of an ink signed
original of this Employment Separation Agreement and subject further to the
terms of paragraph 12, you will be paid: (a) your regular salary and car
allowance, less authorized deductions and withholdings, through the Separation
Date; (b) the cash value of your current, accrued but unused vacation; (c) a pro
rata share of the 2008 Gain Sharing award for which you are eligible, if it is
awarded; and (d) your base salary, less applicable deductions and withholdings,
from the Separation Date through and including February 8, 2009, which
represents a period of six months. Any sick leave you have accrued will be
forfeited as of the Separation Date. You understand and agree that except as set
forth herein, you have no right to receive any further payments for salary,
bonuses, profit sharing or any other form of compensation or incentive
compensation. No payment will be made to you under under (d) of this paragraph 2
until you have returned all Pyramid property and the revocation period set forth
at paragraph 12 has expired.     3.   Your participation in all employee benefit
plans and programs shall end on February 28, 2009. 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 and/or state law.
You will be advised of your rights under separate cover. 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.   We
will provide you with a general letter of reference which will identify your
dates of employment, last position held, duties and responsibilities in that
position, final rate of pay, and that you performed your job satisfactorily. All
telephone reference checks and verifications of you prior employment, must be
directed to Human Resources. In response to any such inquiries, Human Resources
will only disclose information consistent with the letter and spirit of the
letter of reference described herein.     5.   All restricted stock options and
other equity compensation that you have received, and that are vested pursuant
to their terms, will be paid to you at the time and in the manner provided in
the Agreement and Plan of Merger dated as of June 27, 2008 among the Company,
Independent Brewers United, Inc., Magic Hat Brewing Company & Performing Arts
Center, Inc. and PMID Merger Sub, Inc. (“Merger Sub”).     6.   In exchange for
the payments and benefits set forth above and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, you
hereby forever unconditionally and irrevocably release and discharge us, any
related or affiliated entity, their parent entities, subsidiaries, general
partners, managing members, direct and indirect affiliates,

 

--------------------------------------------------------------------------------

 

      and all other related entities and/or funds or investment partnerships,
predecessors, successors and assigns, any employee benefit plans established or
maintained by any of the foregoing entities, and each and all of their current
and former officers, directors, employees, trustees, agents, attorneys, plan
administrators, representatives, partners, members, advisors and shareholders
(collectively and individually, the “Released Parties”), from any and all
claims, causes of action, complaints, agreements, promises, contracts,
undertakings, covenants, guarantees, grievances, liabilities, damages, rights,
obligations, expenses, debts and demands whatsoever, in law or equity, known or
unknown, whether present or future and without regard to the subsequent
discovery or existence of facts in addition to or different from those which you
now know or believe to be true, that you, your heirs, executors, administrators,
representatives and assigns ever had, now have or hereafter can, shall or may
have, for, upon or by reason of any alleged or actual matter, cause or thing
from the beginning of time until the date you sign this letter agreement,
including, but not limited to, those arising out of, in connection with or
relating to in any way, the terms and conditions of your employment or the
cessation of your employment.         You understand and acknowledge that by
signing this Employment Separation Agreement you are hereby expressly waiving
and releasing, to the fullest extent permitted by law, any and all claims you
may have against us or any of the Released Parties, whether or not known or
suspected to exist in your favor at the time of the execution of this letter
agreement. As such, this release includes, regardless of whether such laws apply
to the Released Parties, any claims arising under any federal statute, the
Washington Law Against Discrimination (RCW 49.60), the Washington Prohibited
Employment Practices Law (RCW 49.44), the Civil Rights Act of 1964 (including
Title VII of that Act), the Americans with Disabilities Act, or the Age
Discrimination in Employment Act of 1967, and any other federal, state or local
statutes or the common law.         You intend hereby to expressly waive and
relinquish, to the fullest extent permitted by law, all claims you may have
whether or not known or suspected to exist in your favor at the time of
executing this Employment Separation Agreement. You further acknowledge that you
are aware that you may hereafter discover facts in addition to or different from
those which you now know or believe to be true with respect to the subject
matter of this Employment Separation Agreement, but it is your intention to, and
you do fully, finally and forever settle and release any and all claims against
the Released Parties in any forum whatsoever, relating in any way to the claims
being released herein, whether known or unknown, suspected or unsuspected, which
now exist, may hereafter exist, or heretofore have existed, and without regard
to the subsequent discovery or existence of such different additional facts.    
7.   You represent that you have not filed any claim, action, lawsuit, charge,
complaint, arbitration or proceeding of any kind against us or any of the
Released Parties. You further covenant and agree that you will not bring any
claim, action, lawsuit, charge, complaint, arbitration or proceeding of any
kind, at law or in equity, against us or any of the Released Parties arising out
of, in connection with or relating to in any way your employment or the
termination of your employment. In the event you violate this paragraph you
agree to pay all costs and expenses of defending against any such claim, action,
lawsuit, charge, complaint, arbitration or proceeding incurred by us or any of
the Released Parties, including reasonable attorneys’ fees.     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 or
property that belong to us. You further agree that you will not at any time
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, 3 and 5
above, Pyramid has fully and forever satisfied, in fact exceeded, all
obligations owed to you under the Employment Agreement. You acknowledge that,
effective August 8, 2008 you are no longer authorized to incur expenses on the
Pyramid’s behalf.     11.   You hereby agree that:

  •   The payments and benefits that you are receiving under this Employment
Separation Agreement are more than you would be entitled had you not signed this
agreement.     •   We hereby advise you to consult with an attorney regarding
this Employment Separation Agreement and its effect on you prior to signing it.
    •   You have been afforded sufficient time, twenty-one (21) days in which to
consider this Employment Separation Agreement. You understand that you may use
as much or as little of this twenty-one (21) day period before signing. The
twenty-one (21) day period expires on August 26, 2008 at 5:00 p.m. (the
“Expiration Date.”).     •   You will review the Company’s report on Form 10-Q
for the fiscal quarter ended June 30, 2008, any such other reports that may be
filed with the U.S. Securities Exchange Commission relating to such fiscal
quarter and the information statement relating to the shareholder vote in
connection with the merger of Merger Sub into the Company (collectively, the
“Reports”), and reasonably cooperate with the Company and its officers in
connection with the preparation and filing of the Reports, including but not
limited to making such certifications to the Company and the proper officers as
may be required of the Chief Financial Officer under the Securities and Exchange
Act of 1934, as amended.

  12.   You have seven (7) calendar days from the date that you sign this
Employment Separation Agreement to revoke it. Revocation may be made by
delivering a written notice of revocation received by R. Martin Kelly within
that seven (7) day period, within that seven (7) day period. 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 not be entitled to the payments and benefits
set forth in this Employment Separation Agreement and will only be paid your
accrued vacation, compensation and car allowance, less applicable deductions and
withholdings, earned through the Separation Date. For the avoidance of doubt,
you will remain bound by the provisions of your Employment Agreement, including
without limitation the provisions identified at paragraph 11.     13.   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 the prior employment
relationship.     14.   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.

 

--------------------------------------------------------------------------------

 

  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, together with the provisions
of the Employment Agreement referenced at paragraph 9, 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.

THE PARTIES HAVE CAREFULLY READ THIS AGREEMENT, HAVE EXECUTED IT OF THEIR OWN
FREE WILL AND HAVE HAD THE OPPORTUNITY TO CONSULT WITH ATTORNEYS OF THEIR CHOICE
WITH RESPECT TO ITS TERMS.

         
AGREED BY EMPLOYER:
  AGREED BY EMPLOYEE:    
 
       
/s/ R. Martin Kelly
  /s/ Michael O’Brien    
 
       
R. Martin Kelly
  Michael O’Brien    
Chief Executive Officer
  Date: August 5, 2008    
Date: August 5, 2008