Exhibit 10.2


 


 


FOUNDERS FOOD & FIRKINS LTD.


 


2002 EQUITY INCENTIVE PLAN


 


SECTION 1


 


DEFINED TERMS


 


In addition to the other
definitions contained herein, the following definitions shall apply:


 


1.1           Award. The term “Award” shall mean any award or
benefit granted in accordance with the terms of the Plan. Awards under the Plan
may be in the form of (i) Stock Options; (ii) Restricted Stock; and/or (iii)
Tax Offset Payments. In addition, any Award may de designated as a “Performance
Award” as described in Section 5. The terms and conditions of the Award shall
be set forth in an “Award Agreement.”


 


1.2           Board. The term “Board” shall mean the Board of
Directors of the Company.


 


1.3           Change in Control. The term “Change in Control” shall mean:


 


(a)           an acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) of 50% or more of either:


 


(1)           the then outstanding Stock; or


 


(2)           the combined voting power of the Company’s
outstanding voting securities immediately after the merger or acquisition
entitled to vote generally in the election of directors; provided, however,
that the following acquisition shall not constitute a Change of Control:


 


(i)            any acquisition directly from the Company;


 


(ii)           any acquisition by the Company or a
Subsidiary;


 


(iii)          any acquisition by the trustee or other
fiduciary of any employee benefit plan or trust sponsored by the Company or a
Subsidiary; or


 


(iv)          any acquisition by any corporation with
respect to which, following such acquisition, more than 50% of the Stock or
combined voting power of Stock and other voting securities of the Company is
beneficially owned by substantially all of the individuals and entities who
were beneficial owners of Stock and other voting securities of the Company
immediately prior to the acquisition in substantially similar proportions
immediately before and after such acquisition; or


 


(b)           individuals who, as of the Effective Date of
this Plan, constitute the Board (the “Incumbent Board”), cease to constitute at
least a majority of the Board. Individuals nominated by the Incumbent Board and
subsequently elected shall be deemed for this purpose to be members of the
Incumbent Board; or


 


(c)           approval by the shareholders of the Company
of a reorganization, merger, consolidation, liquidation, dissolution, sale or
statutory exchange of Stock which changes the beneficial ownership of Stock and
other voting securities so that after the corporate change the immediately previous
owners of 50% of Stock and other voting securities do not own 50% of the
Company’s Stock and other voting securities either legally or beneficially; or


 


(d)           the sale, transfer or other disposition of
all substantially all of the Company’s assets; or


 





















 


(e)           a merger of the Company with another entity
after which the pre-merger shareholders of the Company own less than 50% of the
stock of the surviving corporation.


 


A “Change in Control” shall
not be deemed to occur with respect to a Participant if the acquisition of a
50% or greater interest is by a group that includes the Participant, nor shall
it be deemed to occur if at least 50% of the Stock and other voting securities
owned before the occurrence are beneficially owned subsequent to the occurrence
by a group that includes the Participant.


 


1.4           Code. The term “Code” shall mean the Internal
Revenue Code of 1986, as amended. A reference to any provision of the Code
shall include reference to any successor provision of the Code.


 


1.5           Committee. The term “Committee” shall mean a committee
described in Section 10.


 


1.6           Company. The term “Company” shall mean Founders Food
& Firkins, Ltd.


 


1.7           Covered Shares. The term “Covered Shares” shall mean the
number of shares of Stock that an Eligible Individual may purchase pursuant to
an Option.


 


1.8           Director. The term “Director” shall mean a member of
the Company’s Board.


 


1.9           Eligible Individual. The term “Eligible Individual” shall mean
(a) any common law employee, prospective employee, or officer of the Company,
(b) members of the Company’s Board, (c) consultants and advisors to the
Company, and (d) employees of any Related Company or business partner of the
Company. All Eligible Individuals must be natural persons who provide bona fide
services to the Company or a Related Company. In addition, the services
provided to the Company or Related Company must not be in connection with an
offer or sale of securities in a capital raising transaction and must not
directly or indirectly promote or maintain a market for the Company’s Stock. An
Award may be granted to an Eligible Individual prior to the date the Eligible
Individual performs services for the Company or Related Company, provided that
such Award shall not become vested prior to the date the Eligible Individual first
performs such services.


 


1.10         Exchange Act. The term “Exchange Act” shall mean the
Securities Act of 1934, as amended.


 


1.11         Exercise Price. The term “Exercise Price” shall mean the
exercise price of each Option granted under Section 4 established by the
Committee and determined by any reasonable method established by the Committee
at the time the Option is granted. Options granted pursuant to Section 4 of the
Plan shall not have an Exercise Price of less than 100% of the Fair Market
Value of the Company’s Stock on the date the Option is granted (or, if greater,
the par value of a share of Company Stock). Notwithstanding the foregoing, any
ISO granted to any shareholder owning 10% or more of the Company’s Stock must
be at an option price of at least 110% of the Fair Market Value of the Stock on
the date the Option is granted.


 


1.12         Fair Market Value. The term “Fair Market Value” of a share of
Stock on a given date shall mean the closing price of the share of Stock as
reported on the Nasdaq Stock Market on such date, if the share of Stock is then
quoted on the Nasdaq Stock Market or, if the market is closed on that date, the
closing price of the share of Stock on the previous trading day. If the Stock
is not listed on the Nasdaq Stock Market, Fair Market Value shall be determined
in good faith by the Board or Committee.


 


1.13         Incentive Stock Option. The term “Incentive Stock Option” or “ISO”
shall mean an Option that is intended to satisfy the requirements of Section
422(b) of the Code. ISO grants may be awarded only to employees of the Company.


 


1.14         Non-Employee Director. The term “Non-Employee Director” shall mean
a “non-employee director” as defined in Rule 16b-3(b)(3)(i) of the Exchange
Act.


 





















 


1.15         Non-Qualified Stock Option. The term “Non-Qualified Stock Option” or “NSO”
shall mean an Option that is not intended to satisfy the requirements
applicable to an “incentive stock option” described in Section 422(b) of the
Code. NSO grants may be awarded to any Eligible Individual.


 


1.16         Option. The term “Option” or “Stock Option” shall
mean an ISO or NSO granted pursuant to the Plan. The grant of an Option
entitles the Eligible Individual to purchase shares of Stock at an Exercise
Price established by the Committee.


 


1.17         Performance Award. The term “Performance Award” shall mean an
award or grant of shares based upon the achievement of performance objectives,
as contemplated by Section 5.


 


1.18         Plan. The term “Plan” shall mean this 2002 Equity
Incentive Plan.


 


1.19         Related Company. The term “Related Company” shall mean any
corporation other than the Company and any partnership, joint venture or other
entity in which the Company owns, directly or indirectly, at least a 20%
beneficial ownership interest. A Related Company includes a subsidiary of the
Company and an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain
owns 50% or more of the voting stock in one of the other corporations in such
chain.


 


1.20         Stock. The term “stock” shall mean shares of common
stock, $0.01 par value, of the Company.


 


1.21         Stock Option Agreement. The term “Stock Option Agreement” or “Agreement”
shall mean any written agreement evidencing the terms and conditions of an ISO
or NSO granted under the Plan. The Agreement shall be subject to the terms and
conditions of the Plan.


 


SECTION 2


 


PURPOSE


 


The Founders Food &
Firkins, Ltd. 2002 Equity Incentive Plan has been established by Founders Food
& Firkins, Ltd. to (i) attract and retain individuals eligible to
participate in the Plan; (ii) motivate Eligible Individuals, by means of
appropriate incentives, to achieve long-range goals; (3) provide incentive
compensation opportunities that are competitive with those of other similar
companies; and (iv) further identify Eligible Individuals’ interests with those
of the Company’s other shareholders through compensation that is based on the
Company’s common stock; and thereby promote the long-term financial interest of
the Company and any Related Company, including the growth in value of the
Company’s equity and enhancement of long-term shareholder return.


 


SECTION 3


 


PARTICIPATION


 


Subject to the terms and
conditions of the Plan, the Committee may determine and designate, from time to
time, Eligible Individuals who will be granted one or more Awards under the
Plan at the Exercise Price. In its sole discretion and without shareholder
approval, the Committee may grant to an Eligible Individual any Award or Awards
permitted under the provisions of the Plan. Awards may be granted as
alternatives to or replacement of Awards outstanding under the Plan, or any
other plan or arrangement of the Company or Related Company (including a plan
or arrangement of a business or entity, all or a portion of which is acquired
by the Company or a Related Company). Only employees are eligible to be granted
Incentive Stock Options.


 





















 


SECTION 4


 


STOCK OPTIONS


 


4.1           General. The grant of an Option entitles the Eligible
Individual to purchase shares of Stock at an Exercise Price established by the
Committee. Any Option awarded to Eligible Individuals under this Section 4 may
be either NSOs or ISOs, as determined in the discretion of the Committee. To
the extent that any Stock Option does not qualify as an ISO, it shall
constitute an NSO.


 


4.2           Option Awards. Subject to the following provisions, Options
awarded under the Plan shall be in such form and shall have such terms as the
Committee may determine and specify in a Stock Option Agreement entered into
between the Eligible Individual and the Company.


 


(a)           Exercise of an Option. An Option shall be exercisable in accordance
with such terms and conditions and during such periods as may be established by
the Committee. In no event shall any fraction of a share of Stock be issued
upon the exercise of an Option. An Option must be exercised for at least 100
shares of Stock, or such lesser number of shares of Stock if the remaining
portion of an Option is for fewer than 100 shares of Stock.


 


(b)           Exercise Price. The Exercise Price of an Option granted under
this Section 4 shall be established by the Committee or shall be determined by
a method established by the Committee at the time the Option is granted, except
that the Exercise Price shall not be less than 100% of the Fair Market Value of
the Company’s Stock on the date of the Option is granted (or, if greater, par
value of a share of stock). Notwithstanding the foregoing, any ISO granted to
any shareholder owning 10% or more of the Company’s Stock must be at an option
price of at least 110% of the Fair Market Value of the Stock subject to the
Option.


 


(c)           Payment of Option Exercise
Price. The payment of the
Exercise Price of an Option granted under this Section 4 shall be subject to
the following:


 


(1)           Subject to the following provisions of this
Subsection 4.2(c), the full Exercise Price for shares of Stock purchased upon
the exercise of any Option shall be paid at the time of such exercise or such
other time as approved by the Committee.


 


(2)           Payment of the Exercise Price shall be made
in such manner as the Committee may provide in the Award, which may include
cash (including cash equivalents), tendering of shares of Stock acceptable to
the Committee and either already owned by the Eligible Individual or subject to
Awards hereunder (so-called “cashless” or “immaculate” exercise methods), and
any other manner permitted by law and approved by the Committee, or any
combination of the foregoing. If the Company determines that a Stock Option may
be exercised using shares of Restricted Stock, then unless the Committee
provides otherwise, the shares received upon the exercise of a Stock Option
which are paid for using Restricted Stock shall be restricted in accordance
with the original terms of the Restricted Stock Award. In the case of any
deferred payment arrangement, interest shall be compounded at least annually
and shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.


 


(3)           An Eligible Individual may elect to pay the
Exercise Price upon the exercise of an Option by irrevocably authorizing a
third party to sell shares of Stock (or a sufficient portion of the shares)
acquired upon exercise of the Option and remit to the Company a sufficient
portion of the sale proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise.


 


(d)           Settlement of Option. Shares of Stock delivered pursuant to the
exercise of an Option shall be subject to such conditions, restrictions and
contingencies as the Committee, in its


 





















 


discretion, may establish in
addition to such conditions, restrictions, and contingencies set forth in the
Agreement.


 


(e)           Reload Options. The Committee may grant “reload” options,
pursuant to the terms and conditions established by the Committee and any
applicable requirements of Rule 16b-3 of the Exchange Act (“Rule 16b-3”) or any
other applicable law. The Eligible Individual would be granted a new Option
when the payment of the Exercise Price of a previously granted Option is made
by the delivery of shares of the Company’s Stock owned by the Eligible
Individual pursuant to Section 4.2(c)(2) hereof and/or when shares of the
Company’s Stock are tendered or forfeited as payment of the amount to be
withheld under applicable income tax laws in connection with the exercise of an
Option. The new Option would be an Option to purchase the number of shares not
exceeding the sum of (i) the number of shares of the Company’s Stock provided
as consideration upon the exercise of the previously granted Option to which
such “reload” option relates and (ii) the number of shares of the Company’s
Stock tendered or forfeited as payment of the amount to be withheld under applicable
income tax laws in connection with the exercise of the Option to which such “reload”
option relates. “Reload” options may be granted with respect to Options granted
under this Plan. Such “reload” options shall have a per share exercise price
equal to the Fair Market Value as of the date of grant of the new Option.


 


(f)            Vesting. Eligible Individuals shall vest in all
Options in accordance with the terms and conditions of the Agreement entered
into by and between the Eligible Individual and the Company. The total number
of shares of Stock subject to an Option may, but need not, vest and therefore
become exercisable in periodic installments that may, but need not, be equal.


 


(g)           Option Term. The term of each Option shall be fixed by
the Committee. In the event that the Plan is terminated pursuant to terms and
conditions of Section 11, the Plan shall remain in effect as long as any Awards
under it are outstanding; provided, however, that, to the extent required by
the Code, no ISO may be granted under the Plan on a date that is more than ten
years from the date the Plan is adopted or, if earlier, the date the Plan is
approved by shareholders and, further, no ISO may be exercised after the
expiration of ten years from the date the Award is granted, or, in the case of
options granted to 10% or greater shareholders of the Company, after the
expiration of five years from the date the option is granted.


 


(h)           Termination of Employment. Following the termination of Eligible
Individual’s employment with the Company or a Related Company, the Option shall
be exercisable to the extent determined by the Committee and specified in the
Award Agreement. The Committee may provide different post-termination exercise
provisions with respect to termination of employment for different reasons.


 


(i)            Incentive Stock Options. ISO grants may only be awarded to employees
of the Company, a “parent corporation,” or a “subsidiary corporation” as those
terms are defined in Sections 424(e) and 424(f) of the Code. In order for an
employee to be eligible to receive an ISO grant, the employee must be employed
by the Company, parent corporation, or subsidiary corporation during the period
beginning on the date the Option is granted and ending on the day three months
prior to the date such Option is exercised. Notwithstanding the provisions of
Section 4.2, no ISO shall (i) have an Exercise Price which is less than 100% of
the Fair Market Value of the Stock on the date of the ISO Award, (ii) be
exercisable more than ten (10) years after the ISO is awarded, or (3) be
awarded more than ten (10) years after the Effective Date of this Plan, or, if
earlier, the date the Plan was approved by the shareholders. No ISO awarded to
an employee who owns more than 10% of the total combined voting power of all
classes of Stock of the Company, its “parent corporation” or any “subsidiary
corporation” shall (i) have an Exercise Price of less than 110% of the Fair
Market Value of the Stock on the date of the ISO Award or (ii) be exercisable
more than five (5) years after the date of the ISO Award. Notwithstanding
Section 8.7, no ISO shall be


 





















 


transferable other than by
will and the laws of descent and distribution. To the extent that the aggregate
fair market value (determined at the time of grant) of shares of Stock with
respect to ISOs are exercisable for the first time by the employee during any
calendar year, in combination with shares first exercisable under all other
plans of the Company and any Related Company, exceeds $100,000, such Options
shall be treated as NSOs.


 


(j)            Early Exercise. The Option may, but need not, include a
provision whereby the Eligible Individual may elect at any time prior to his or
her termination of employment with the Company to exercise the Option as to any
part or all of the shares of Stock subject to the Option prior to the full
vesting of the Option. Any unvested shares of Stock so purchased may be subject
to a repurchase option in favor of the Company or to any other restrictions the
Committee determines to be appropriate.


 


SECTION 5


 


PERFORMANCE AWARDS


 


The Committee shall have the
right to designate Awards as “Performance Awards.” The Committee may designate
whether any Award being granted to any Participant is intended to be “performance-based
compensation” as that term is used in section 162(m) of the Code. Any such
Awards designated as intended to be “performance-based compensation” shall be
conditioned on the achievement of one or more performance measures, to the
extent required by Code section 162(m). The performance measures that may be
used by the Committee for such Awards shall be based on any one or more of the
following criteria, in each case applied to the Company on a consolidated basis
or to a business unit, as specified by the Committee in an Award Agreement, and
which the Committee may use as an absolute measure, as a measure of improvement
relative to prior performance, or as a measure of comparable performance
relative to a peer group of companies: sales, operating profits, operating
profits before interest expenses and taxes, net earnings, earnings per share,
return on equity, return on assets, return on invested capital, total
shareholder return, cash flow, debt to equity ratio, market share, stock price,
economic value added, and market value added. The terms and conditions of a
Performance Award shall be set forth in an Award Agreement entered into between
the Company and the Eligible Individual, as selected by the Committee. For
Awards under this Section 5 intended to be “performance-based compensation,”
the grant of the Awards and the establishment of the performance measures shall
be made during the period required under Code section 162(m).


 


SECTION 6


 


RESTRICTED STOCK


 


Subject to the following
provisions, the Committee may grant Awards of Restricted Stock to an Eligible
Individual in such form and on such terms and conditions as the Committee may
determine and specify in a Restricted Stock Award Agreement entered into
between the Company and the Eligible Individual:


 


(a)           The Restricted Stock Award shall specify the
number of shares of Restricted Stock to be awarded, the price, if any, to be
paid by the Eligible Individual and the date or dates on which, or the
conditions upon the satisfaction of which, the Restricted Stock will vest. The
grant and/or the vesting of Restricted Stock may be conditioned upon the
completion of a specified period of service with the Company or a Related
Company, upon the attainment of specified performance objectives or upon such
other criteria as the Committee may determine.


 


(b)           Stock certificates representing the
Restricted Stock awarded to an Eligible Individual shall be registered in the
Eligible Individual’s name, but the Committee may direct that such certificates
be held by the Company or its designee on behalf of the Eligible Individual.
Except as may be


 





















 


permitted by the Committee,
no share of Restricted Stock may be sold, transferred, assigned, pledged or
otherwise encumbered by an Eligible Individual until such share has vested in
accordance with the terms of the Restricted Stock Award. At the time the
Restricted Stock vests, a certificate for such vested shares shall be delivered
to the Eligible Individual (or his or her designated beneficiary in the event
of death), free from the restrictions imposed thereon except that any
restrictions under federal or state securities laws shall continue to apply.


 


(c)           The Committee may provide that the Eligible
Individual shall have the right to vote or receive dividends on Restricted
Stock. Unless the Committee provides otherwise, Stock received as a dividend
on, or in connection with a stock split of, Restricted Stock shall be subject
to the same restrictions as the Restricted Stock.


 


(d)           Except as may be provided by the Committee,
in the event of an Eligible Individual’s termination of employment or
relationship with the Company prior to all of his or her Restricted Stock
becoming vested, or in the event any conditions to the vesting of Restricted
Stock have not been satisfied prior to any deadline for the satisfaction of
such conditions as set forth in the Restricted Stock Award, the shares of
Restricted Stock which have not vested shall be forfeited, and the Committee
may provide that (i) any purchase price paid by the Eligible Individual be
returned to the Eligible Individual or (ii) a cash payment equal to the
Restricted Stock’s fair market value on the date of forfeiture, if lower, be
paid to the Eligible Individual.


 


(e)           The Committee may waive, in whole or in part,
any or all of the conditions to receipt of, or restrictions with respect to,
any or all of the Eligible Individual’s Restricted Stock.


 


SECTION 7


 


TAX OFFSET PAYMENTS


 


The Committee may provide
for a Tax Offset Payment to be made by the Company to an Eligible Individual
with respect to one or more Awards granted under the Plan. The Tax Offset
Payment shall be in an amount specified by the Committee, which shall not
exceed the amount necessary to pay the federal, state, local and other taxes
payable with respect to the applicable Award, assuming that the Eligible Individual
is taxed at the maximum tax rate applicable to such income. The Tax Offset
Payment shall be paid solely in cash. No Eligible Individual shall be granted a
Tax Offset Payment in any fiscal year with respect to more than the number of
shares of Stock covered by Awards granted to such Eligible Individual in such
fiscal year. The terms and conditions of a Tax Offset Payment Award shall be
set forth in an Award Agreement entered into between the Company and the
Eligible Individual.


 


SECTION 8


 


OPERATION AND ADMINISTRATION


 


8.1           General. The operation and administration of this
Plan, including any Awards granted under this Plan, shall be subject to the
provisions of Section 8.


 


8.2           Effective Date. Subject to the approval of the shareholders
of the Company, the Plan shall be effective as of July 12, 2002 (the “Effective
Date”) provided, however, that to the extent that Awards are granted under the
Plan prior to its approval by the shareholders of the Company, the Awards shall
be subject to the approval of the Plan by the shareholders of the Company. The
Plan shall be unlimited in duration and, in the event of Plan termination,
shall remain in effect as long as any Awards under it are outstanding;
provided, however, that, to the extent required by the Code, no ISO may be
granted under the Plan on a date that is more than ten years from the date the
Plan is adopted or, if earlier, the date the Plan is approved by shareholders
and, further, no ISO may be exercised after the expiration of ten years from
the date the Award is granted, or, in the case of


 





















 


options granted to 10% or
greater shareholders of the Company, after the expiration of five years from
the date the option is granted.


 


8.3           Shares Subject to Plan. The shares of Stock for which Awards may be
granted under this Plan shall be subject to the following:


 


(a)           The shares of Stock with respect to which
Awards may be made under the Plan shall be shares currently authorized but
unissued or currently held or subsequently acquired by the Company, including
shares purchased in the open market or in private transactions.


 


(b)           Subject to the following provisions of this
Section 8.3, the maximum aggregate number of shares of Stock that may be issued
and sold under the Plan shall be 600,000 shares. The number of shares of Stock
so reserved for issuance shall be subject to adjustment pursuant to Sections
8.3 (b) and 8.3(d). The shares of Stock may be authorized, but unissued, or
reacquired Stock.


 


(c)           On January 1st of each year, commencing with
year 2003, the aggregate number of shares of Stock that may be awarded under
the Plan shall automatically increase by the greater of (a) 80,000 shares of
Stock or (b) 2.0% of the outstanding shares of Stock on such date.


 


(d)           To the extent an Award terminates without
having been exercised, or shares awarded are forfeited, such shares shall again
be available issue under the Plan. Shares of Stock surrendered in payment of
the Exercise Price and shares of Stock which are withheld in order to satisfy
federal, state or local tax liability, shall not count against the maximum
aggregate number of shares authorized to be issued pursuant to this Plan, and
shall again be available for issuance pursuant to the terms of the Plan.


 


(e)           If the exercise price of any stock option
granted under the Plan is satisfied by tendering shares of Stock to the Company
(by either actual delivery or by attestation), only the number of shares of
Stock issued net of the shares of Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of Stock available for
delivery under the Plan.


 


(f)            Options granted hereunder shall be treated as
ISOs under Code Section 422 only to the extent that the aggregate fair market
value (determined at the time of grant) of Shares exercisable for the first
time by the Participant during any calendar year, in combination with shares
first exercisable under all other plans of the Company and its Subsidiaries or
affiliates, does not exceed $100,000, with any options or portions of options
in excess of such limit (according to the order in which they were granted)
being treated as NQOs.


 


(g)           For Awards that are intended to be “performance-based
compensation” (as that term is used for purposes of Code section 162(m)), no
more than 150,000 shares of Stock may be subject to such Awards granted to any
one individual during any one-calendar-year period.


 


(h)           In the event of any merger, reorganization,
consolidation, sale of substantially all assets, recapitalization, stock
dividend, stock split, combination or reverse stock split, spin-off, split-up,
split-off, distribution of assets or other change in corporate structure
affecting the Stock, a substitution or adjustment, as may be determined to be
appropriate by the Committee or the Board in its sole discretion, shall be made
in the aggregate number of shares reserved for issuance under the Plan.
However, no such adjustment shall exceed the aggregate value of any outstanding
Award prior to such substitution or adjustment. The Board or Committee may make
such other adjustments as it deems appropriate.


 


8.4           Securities Laws
Restrictions. Issuance of
shares of Stock or other amounts under the Plan shall be subject to the
following:


 


(a)           If at any time the Committee determines that
the issuance of Stock under the Plan is or may be unlawful under the laws of
any applicable jurisdiction (including, without limitation, the


 





















 


requirements of the
Securities Act of 1933), or the applicable requirements of any securities
exchange or similar entity, the right to exercise any Stock Option or receive
any Restricted Stock shall be suspended until the Committee determines that
such issuance is lawful. The Company shall have no obligation to effect any
registration of qualification of the Stock under federal or state laws.


 


(b)           Any person exercising a Stock Option or
receiving Restricted Stock shall make such representations (including
representations to the effect that such person will not dispose of the Stock so
acquired in violation of federal and state securities laws) and furnish such
information as may, in the opinion of counsel for the Company, be appropriate
to permit the Company to issue the Stock in compliance with applicable federal
and state securities laws. The Committee may refuse to permit the exercise of a
Stock Option or issuance of Restricted Stock until such representations and
information have been provided.


 


(c)           The Company may place an appropriate legend
evidencing any transfer restrictions on all shares of Stock issued under the
Plan and may issue stop transfer instructions in respect thereof.


 


(d)           To the extent that the Plan provides for
issuance of stock certificates to reflect the issuance of shares of Stock, the
issuance may be effected on a non-certificated basis, to the extent not
prohibited by applicable law or the applicable rules of any stock exchange.


 


8.5           Tax Withholding. All distributions under the Plan are subject
to withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the
occurrence of such withholding, may permit such withholding obligations to be
satisfied through cash payment by the Participant, through the surrender of
shares of Stock which the Participant already owns, or through the surrender of
shares of Stock to which the Participant is otherwise entitled under the Plan.


 


8.6           Use of Shares. In the discretion of the Committee, a
Participant may be granted any Award permitted under the provisions of the
Plan, and more than one Award may be granted to a Participant. Awards may be
granted as alternatives to or replacement of awards granted or outstanding under
the Plan, or any other plan or arrangement of the Company or a Subsidiary
(including a plan or arrangement of a business or entity, all or a portion of
which is acquired by the Company or a Subsidiary). Subject to the overall
limitation on the number of shares of Stock that may be delivered under the
Plan, the Committee may use available shares of Stock as the form of payment
for compensation, grants or rights earned or due under any other compensation
plans or arrangements of the Company or a Subsidiary, including the plans and
arrangements of the Company or a Subsidiary assumed in business combinations.


 


8.7           Dividends and Dividend
Equivalents. An Award may
provide the Participant with the right to receive dividend payments or dividend
equivalent payments with respect to Stock subject to the Award (both before and
after the Stock subject to the Award is earned, vested, or acquired), which
payments may be either made currently or credited to an account for the
Participant, and may be settled in cash or Stock as determined by the
Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish, including
the reinvestment of such credited amounts in Stock equivalents.


 


8.8           Payments. Awards may be settled in any of the methods
described in Section 4.2(c). Any Award settlement, including payment deferrals,
may be subject to such conditions, restrictions and contingencies as the
Committee shall determine. The Committee may permit or require the deferral of
any Award payment, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest, or
dividend equivalents, including converting such


 





















 


credits into deferred Stock
equivalents. Each Related Company shall be liable for payment of cash due under
the Plan with respect to any Eligible Individual to the extent that such
benefits are attributable to the services rendered for that Related Company by
the Eligible Individual. Any disputes relating to liability of a Related
Company for cash payments shall be resolved by the Committee.


 


8.9           Transferability. Except as otherwise provided by the Committee,
Awards under the Plan may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by beneficiary
designation, will or by the laws of descent and distribution. If the Committee
makes an Award transferable, the Award Agreement shall set forth such
additional terms and conditions regarding transferability as the Committee
deems appropriate.


 


8.10         Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Eligible Individual or other
person entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.


 


8.11         Agreement With Company. Any Award under the Plan shall be subject to
such terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any Award
shall be reflected in an Award Agreement. A copy of the Award Agreement shall
be provided to the Eligible Individual, and the Committee may, but need not
require, the Eligible Individual to sign the Award Agreement.


 


8.12         Action by Company or
Subsidiary. Any action
required or permitted to be taken by the Company or any Subsidiary shall be by
resolution of its Board, or by action of one or more members of the Board
(including a committee of the Board) who are duly authorized to act for the
Board, or (except to the extent prohibited by applicable law or applicable
rules of any stock exchange) by a duly authorized officer of such company.


 


8.13         Limitation of Implied
Rights.


 


(a)           Neither an Eligible Individual nor any other
person shall, by reason of participation in the Plan, acquire any right in or
title to any assets, funds or property of the Company or any Related Company
whatsoever, including, without limitation, any specific funds, assets, or other
property which the Company or any Related Company, in its sole discretion, may
set aside in anticipation of a liability under the Plan. An Eligible Individual
shall have only a contractual right to the Stock or amounts, if any, payable
under the Plan, unsecured by any assets of the Company or any Related Company,
and nothing contained in the Plan shall constitute a guarantee that the assets
of the Company or any Related Company shall be sufficient to pay any benefits
to any Eligible Individual.


 


(b)           This Plan does not constitute a contract of
employment, and selection as a Eligible Individual will not give the Eligible
Individual the right to be retained in the employ of the Company or any Related
Company, nor any right or claim to any future grants or to any benefit under
the Plan, unless such right or claim has specifically accrued under the terms
of the Plan. Except as otherwise provided in the Plan, no Award under the Plan
shall confer upon an Eligible Individual any rights of a shareholder of the
Company prior to the date on which the Eligible Individual fulfills all
conditions for receipt of such rights.


 


8.14         Termination for Cause. If the employment of an Eligible Individual
is terminated by the Company or a Related Company for “cause,” then the
Committee shall have the right to cancel any Options granted to the Eligible
Individual under the Plan. The term “cause” shall mean (1) the Eligible
Individual’s violation of any provision of any non-competition agreement or
confidentiality agreement with the Company; (2) an illegal or negligent action
by the Eligible Individual that materially and adversely affects the Company;
(3) the Eligible Individual’s failure or refusal to perform his/her duties


 





















 


(except when prevented by
reason of illness or disability); or (4) conviction of the Eligible Individual
of a felony involving moral turpitude.


 


8.15         Evidence. Evidence required of anyone under the Plan
may be by certificate, affidavit, document or other information which the
person acting on it considers pertinent and reliable, and signed, made or
presented by the proper party or parties.


 


SECTION 9


 


CHANGE IN CONTROL


 


In the event of a Change in
Control, if specifically documented in either a special form of Award Agreement
at the time of grant or amendment to an existing Award Agreement, in each case
on an individual-by-individual basis:


 


(a)           all or a portion (as determined by the
Committee) of outstanding Stock Options awarded to such individual under the
Plan shall become fully exercisable and vested; and


 


(b)           the restrictions applicable to all or a
portion (as determined by the Committee) of any outstanding Restricted Stock
awards under the Plan held by an Eligible Individual shall lapse and such
shares shall be deemed fully vested.


 


Notwithstanding the
foregoing, no acceleration of vesting or termination of restrictions on
Restricted Stock shall occur if (a) all Awards are assumed by a surviving
corporation or its parent or (b) the surviving corporation or its parent
substitutes Awards with substantially the same terms for such Awards. The
Committee shall have the right to cancel Awards in the event of a Change in
Control, provided that in exchange for such cancellation, the Eligible
Individual shall receive a cash payment equal to the Change in Control
consideration less the exercise price of the Awards.


 


SECTION 10


 


COMMITTEE


 


10.1         Administration. The Plan shall be administered by the
Compensation Committee of the Board or such other committee of Directors as the
Board shall designate, which shall consist of not less than two Non-Employee
Directors. The members of the Committee shall be Non-Employee Directors and
shall serve at the pleasure of the Board. To the extent that the Board
determines it to be desirable to qualify Awards granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more “outside directors” within the
meaning of Section 162(m) of the Code. To the extent that the Board determines
it to be desirable to qualify Awards as exempt under Rule 16b-3, the Award
transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3. All determinations made by the
Committee pursuant to the provisions of the Plan shall be final and binding on
all persons, including the Company and Eligible Individuals. The Board may
administer the Plan or exercise any or all of the administration duties of the
Committee at any time when a Committee meeting the requirements of this Section
has not been appointed, and the Board may exempt Awards pursuant to Rule
16b-3(d)(1) of the Exchange Act.


 


10.2         Powers of Committee. The Committee shall have the following
authority with respect to Awards under the Plan: to grant Awards; to adopt,
alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall deem advisable; to interpret the terms and provisions of
the Plan and any Award granted under the Plan; and to otherwise supervise the


 





















 


administration of the Plan.
In particular, and without limiting its authority and powers, the Committee
shall have the authority:


 


(a)           to determine whether and to what extent any
Award or combination of Awards will be granted hereunder;


 


(b)           to select the Eligible Individuals to whom
Awards will be granted;


 


(c)           to determine the number of shares of Stock to
be covered by each Award granted hereunder subject to the limitations contained
herein;


 


(d)           to determine the terms and conditions of any
Award granted hereunder, including, but not limited to, any vesting or other
restrictions based on such performance objectives and such other factors as the
Committee may establish, and to determine whether the performance objectives
and other terms and conditions of the Award are satisfied;


 


(e)           to determine the treatment of Awards upon the
Eligible Individual’s retirement, disability, death, termination for cause or
other termination of employment or service;


 


(f)            to determine that amounts equal to the amount
of any dividends declared with respect to the number of shares covered by an
Award (i) will be paid to the Eligible Individual currently or (ii) will be
deferred and deemed to be reinvested or (3) will otherwise be credited to the
Eligible Individual or that the Eligible Individual has no rights with respect
to such dividends;


 


(g)           to amend the terms of any Award,
prospectively or retroactively; provided, however, that no amendment shall
impair the rights of the Eligible Individual without his or her written
consent; and


 


(h)           to substitute new Stock Options for
previously granted Stock Options, or for options granted under other plans or
agreements, in each case including previously granted options having higher
option prices.


 


Determinations by the
Committee under the Plan relating to the form, amount, and terms and conditions
of Awards need not be uniform, and may be made selectively among Eligible
Individuals who receive Awards under the Plan, whether or not such Eligible
Individuals are similarly situated. The Committee shall have the power to
accelerate the time at which an Award may first be exercised or the time during
which an Award or any part thereof will vest in accordance with the Plan,
notwithstanding any provisions in an Award Agreement stating the time at which
the Award may first be exercised or the time during which the Award will vest.


 


10.3         Delegation by Committee. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities
and powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.


 


10.4         Information to be Furnished
to Committee. The Company
and any Related Company shall furnish the Committee with such data and
information as it determines may be required for it to discharge its duties.
The records of the Company and any Related Company as to an Eligible Individual’s
employment, termination of employment, leave of absence, reemployment and
compensation shall be conclusive on all persons unless determined to be
incorrect. Eligible Individuals and other persons entitled to benefits under
the Plan must furnish the Committee such evidence, data or information as the
Committee considers desirable to carry out the terms of the Plan.


 


10.5         Non-Liability of Board and
Committee. No member of the
Board or the Committee, nor any officer or employee of the Company acting on
behalf of the Board or the Committee, shall be personally liable for any
action, determination or interpretation taken or made with respect to the Plan,


 





















 


and all members of the Board
or the Committee and all officers or employees of the Company acting on their
behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination or
interpretation.


 


SECTION 11


 


AMENDMENT AND TERMINATION


 


The Board may, at any time,
amend or terminate the Plan, provided that no amendment or termination may, in
the absence of written consent to the change by the affected Eligible
Individual (or, if the Eligible Individual is not then living, the affected
beneficiary), adversely affect the rights of any Eligible Individual or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board; provided that adjustments made pursuant to
Subsection 8.3(d) shall not be subject to the foregoing limitations of this
Section 11. An amendment shall be subject to approval by the Company’s
shareholders only to the extent required by applicable laws, regulations or
rules.


 


SECTION 12


 


GENERAL PROVISIONS


 


12.1         Award Agreements. No Eligible Individual will have rights under
an Award granted to such Eligible Individual unless and until an Award
Agreement has been duly executed on behalf of the Company and the Eligible
Individual.


 


12.2         No Limit on Other
Compensation Arrangements.
Nothing contained in the Plan shall prevent the Company or any Related Company
from adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.


 


12.3         Headings. The headings of the sections and subsections
of this Plan are intended for the convenience of the parties only and shall in
no way be held to explain, modify, construe, limit, amplify or aid in the
interpretation of the provisions hereof.


 


12.4         Beneficiaries. An Eligible Individual may, from time to
time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan may be paid or transferred in
case of death. Each designation will revoke all prior designations, shall be in
a form prescribed by the Committee, and will be effective only when filed by
the Eligible Individual in writing with the Committee during his or her
lifetime. In the absence of any such designation, benefits outstanding at the
Eligible Individual’s death shall be paid or transferred to his or her estate.
There shall be no third party beneficiaries of or to this Plan. Any beneficiary
of the Eligible Individual shall have only a claim to such benefits as may be
determined to be payable hereunder, if any, and shall not, under any
circumstances other than the right to claim such benefits, be deemed a third
party beneficiary of or to this Plan.


 


12.5         Repurchase Option. The terms of any repurchase option shall be
specified in the Award Agreement.


 


12.6         Governing Law. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
Minnesota, except to the extent preempted by federal law, without regard to the
principles of comity or the conflicts of law provisions of any jurisdiction.


 





















 


GRANITE CITY FOOD & BREWERY LTD.


 


AMENDMENT NO. 1


TO


2002 EQUITY INCENTIVE PLAN


 


Pursuant to
the amendment authority retained by the Board of Directors of Granite City Food
& Brewery Ltd. (the “Company”) in Section 11 of the Granite City Food &
Brewery Ltd. 2002 Equity Incentive Plan (the “Plan”) adopted by the board on
July 12, 2002 and approved by the shareholders on August 27, 2002, and subject
to shareholder approval of this Amendment No. 1, the first sentence of Section
8.3(b) of the Plan is hereby amended to read as follows:


 


Subject to the
following provisions of this Section 8.3, the maximum aggregate number of
shares of Stock that may be issued and sold under the Plan shall be 1,062,287
shares.


 


This Amendment
No. 1 shall be effective as of the date approved by the Company’s
shareholders.  But for this change, the
Plan adopted by the board of July 12, 2002 and approved by the shareholders on
August 27, 2002, shall remain in full force and effect.


 


IN WITNESS
WHEREOF, an authorized representative of the Company hereby signs and executes
this Amendment No. 1 as of this 30th day of September, 2004.


 


	
   

  	
  GRANITE CITY
  FOOD & BREWERY LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Monica
  A. Underwood

  	
   

  
	
   

  	
   

  	
  Monica A. Underwood

  
	
   

  	
   

  	
  Interim Chief Financial Officer and

  
	
   

  	
   

  	
  Corporate Controller