Document:

Exhibit 10.2

 

 

CBA Executive Officer Employment Agreement

April 27, 2015

Joseph Vanderstelt

Craft Brew Alliance, Inc.

929 North Russell Street

Portland, OR 97227

Dear Joe:

 

This letter sets forth our understanding about your employment with Craft Brew Alliance, Inc. (the "Company"), as its Chief Financial Officer, effective April 27, 2015 (the "Effective Date").  This letter supersedes and replaces any prior offer letter or other agreement regarding your employment by the Company as of the Effective Date, other than the Employee Confidentiality/ Proprietary Information and Non-Competition Agreement of even date, which will also be binding and effective in accordance with its terms.

 

Your employment is "at-will," which means you or the Company may end the employment relationship at any time.  Our mutual agreement regarding your salary, severance, and other benefits and obligations is set forth below.

 

Compensation and Benefits

 

As of the Effective Date, your annual base salary rate is $250,000 (before standard tax withholdings and other payroll deductions).  Your base salary level will be reviewed annually for adjustment by the Compensation Committee of the Company's Board of Directors (the "Board"), with salary adjustments, if any, generally made effective as of January 1.  In addition, you are entitled to participate in all of the Company's employee benefit programs for which you are eligible, including long-term incentive awards approved by the Compensation Committee for executive officers from time to time.

 

You will be eligible for an annual bonus payable following certification of the Company's financial results for the prior fiscal year under the Company's Annual Cash Incentive Plan.  Your target bonus amount for 2015 is 55% of your base salary rate and will be prorated based on the period from the Effective Date through December 31, 2015.  The bonus target amount in future years will be determined by the Compensation Committee.  All or a portion of target bonus amounts may be conditioned upon achieving certain performance targets approved by the Compensation Committee or the Board.  You must remain employed through the payment date to be eligible for a bonus; except that, solely for your 2015 target annual bonus, if you are terminated by the Company, other than for cause, at any time prior to the date of payment of annual bonuses for 2015 to executive officers of the Company, you will receive the portion of your annual bonus that the Compensation Committee determines in good faith to have been earned based on your achievement of such performance targets, prorated based on your days of service during the 2015 calendar year, and payable at such time as the annual bonus is paid to other participants in the Annual Cash Incentive Plan, and in no event later than March 15 of the year after the year of termination.

 

Joseph Vanderstelt

Craft Brew Alliance, Inc.

929 North Russell Street

Portland, OR 97227

 

You will also be eligible to participate in the Long Term Incentive Program under the terms and conditions of that program.  Your target incentive potential for the awards granted in 2015 is 75% of your base salary rate.

 

You will be paid a relocation reimbursement at the executive level package in the fixed amount of $59,000, payable within 60 days following the Effective Date.  If you voluntarily terminate your employment with the Company before April 27, 2017, for any reason other than a "good reason" (as defined below), you will repay the full amount of relocation reimbursement.  You will provide copies of invoices and other statements showing your actual relocation expenses, up to $59,000, to the Company.

 

You will be paid a signing bonus of $50,000, grossed-up for taxes, in two installments as follows:  $25,000 paid on the first payroll date on or after July 27, 2015, and $25,000 paid on the first payroll date on or after April 27, 2016, provided that you remain employed through each date.

 

You will accrue 25 days of Paid Time Off ("PTO") at a rate of 7.69 hours bi-weekly in addition to the 10 assigned paid holidays observed by the Company.

 

Severance

 

In the event that your employment with the Company is terminated by the Company for any reason other than "for cause" or terminated by you due to "good reason," the Company will provide you with severance benefits payable based on your weekly base salary rate in effect at the date of termination for a period of time (the "Severance Period") as follows:  Commencing on the day following termination, two weeks' severance will be payable in accordance with the Company's normal payroll schedule for each full year of service with the Company; provided that in no event shall the Severance Period be less than 6 months or more than 12 months.

 

In addition, the Company will promptly make a cash payment to you in an amount equal to 100% of your unused PTO hours accrued through the date of termination in accordance with the provisions of the Company's PTO Plan then in effect.

 

If you become entitled to severance benefits under this agreement, the Company will also continue to provide you, for the Severance Period, payment in an amount equal to the premiums payable under COBRA for the same or equivalent health benefits as were being provided to you at the time of termination; provided, however, that such payments shall terminate in the event you find new employment.

 

Joseph Vanderstelt

Craft Brew Alliance, Inc.

929 North Russell Street

Portland, OR 97227

 

For purposes of this letter, "for cause" means that (i) you have engaged in conduct which has substantially and adversely impaired the interests of the Company, or would be likely to do so if you were to remain employed by the Company; (ii) you have engaged in fraud, dishonesty or self-dealing relating to or arising out of your employment with the Company; (iii) you have violated any criminal law relating to your employment or to the Company; (iv) you have engaged in conduct which constitutes a material violation of a significant Company policy or the Company's Code of Ethics, including, without limitation, violation of policies relating to discrimination, harassment, use of drugs and alcohol and workplace violence; or (v) you have repeatedly refused to obey lawful directions of the Board or the Company's Chief Executive Officer.

 

For purposes of this letter, "good reason" means the occurrence of one or more of the following events without your consent: (a) a material reduction in your authority, duties, or responsibilities as the Company's Chief Financial Officer; (b) a material reduction in the authority, duties, or responsibilities of the person or persons to whom you report (including, if applicable, a requirement that you report to a Company officer or employee instead of reporting directly to the Board); or (c) a relocation of your principal office to a location that is more than 100 miles from Portland, Oregon; provided, however, that "good reason" shall only be deemed to have occurred if: (i) within 90 days after the initial existence of the circumstances constituting "good reason," you provide the Company with a written notice describing such circumstances, (ii) the Company fails to cure the circumstances within 30 days after the Company receives your notice, and (iii) you terminate your employment with the Company and all the members of the Company's controlled group within 90 days following the date of your notice.

 

For purposes of this letter, a termination of your employment will be deemed to occur only when or if there has been a "separation from service" as such term is defined in Treasury Regulation Section 1.409A-1(h).

 

If, during the Severance Period, you become employed or associated with a brewing or other company that the Company determines, in its reasonable discretion, is a competitor of the Company or Anheuser-Busch, Inc., your severance payments and benefits under this letter agreement will terminate as of the effective date of such employment or association.

 

The total amount of severance payments and benefits (except benefits designated as "short-term deferral" payments or as described in Treasury Regulation Sections 1.409A-1(a)(5) or 1.409A-1(b)(9)(v)) provided to you pursuant to this letter agreement shall not exceed two times the lesser of (i) the sum of your annualized compensation based upon your annual salary in the year preceding the year in which your employment is terminated (adjusted for any increase during that year that was expected to continue indefinitely if your employment had not terminated) or (ii) the applicable dollar limit under Section 401(a)(17) of the Internal Revenue Code for the calendar year in which your employment is terminated.

 

Joseph Vanderstelt

Craft Brew Alliance, Inc.

929 North Russell Street

Portland, OR 97227

 

The severance payments and other benefits under this letter are intended to be exempt from the requirements of Section 409A of the Internal Revenue Code by reason of all payments under this letter agreement being either "short-term deferrals" within the meaning of Treasury Regulation Section 1.409A-1(b)(4) or separation pay due to involuntary separation from service under Treasury Regulation Section 1.409A-1(b)(9)(iii).  All provisions of this letter shall be interpreted in a manner consistent with preserving these exemptions.

 

The Company will require you to execute an appropriate general release of claims that you may have relating to your employment at the Company and termination of your employment as a condition to your receipt of any severance payments or other benefits other than those required by law or provided to employees generally.  If such general release of claims is not executed within 30 days following the date your employment with the Company is terminated, all severance payments and other benefits payable after such 30‐day period will be forfeited, and you agree to repay any severance payments, and the value of other benefits, paid to you during such period.

 

Code of Conduct

 

By your signature below, you agree to comply with the Company's Code of Conduct and Ethics as in effect from time to time, and to be subject to the Company's policies and procedures in effect from time to time for senior executives of the Company.

 

We appreciate your continued efforts on behalf of the Company and look forward to having you as a member of our team for years to come.

 

	
Sincerely,

	 
	 	
	
/s/Andrew J. Thomas

	 
	
Andrew J. Thomas

	 
	
Chief Executive Officer

	 
	 	 
	
Acknowledged and Agreed:

	 
	 	
	
/s/Joseph K. Vanderstelt

	 
	
Joseph Vanderstelt

	 
	
Date: April 27, 2015Exhibit 10.3

 

 

EMPLOYEE CONFIDENTIALITY/PROPRIETARY INFORMATION AND NONCOMPETITION AGREEMENT

 

In consideration of and as a condition of the granting of employment to Joseph Vanderstelt ("Employee") with Craft Brew Alliance, Inc. ("Company"), Employee agrees as follows:

1.             Covenant Not to Compete.  At all times during Employee's employment and for a period of six (6) months from the date of Employee's voluntary termination of employment or termination of employment by Company for cause (as defined in Employee's CBA Executive Officer Employment Agreement dated April 27, 2015), Employee will not:

 

a.            Directly or indirectly engage either individually or in any capacity for any other person or entity in the manufacture, distribution, or sale of beer or malt beverages or in any other business that competes in any way with the business of Company anywhere in the United States;

 

b.            Directly or indirectly solicit, divert, or accept orders for products or services that are substantially competitive with the products or services offered by Company from any customer of Company; or

 

c.            Directly or indirectly induce or attempt to induce any supplier of Company to cease doing business with Company or to do business with any other person or entity engaged in any business that competes in any way with the business of Company;

provided, however, that the restrictions set forth in this paragraph shall not prevent Employee from engaging in any of the above-listed activities (other than to divert orders for products or services directed to Company or to induce or attempt to induce any supplier of Company to cease doing business with Company) for any manufacturer of beer or malt beverage products that has an annual production of such products exceeding 1,000,000 barrels in the full calendar year (or its fiscal year if different) immediately preceding Employee's termination.

 

2.             Covenant Not To Hire Or Solicit Other Employees.  Subject to applicable state law requirements, Employee will not during Employee's employment and for a period of two (2) years after termination of Employee's employment employ in any business competitive with or otherwise similar to that of Company's any current employee of Company or any employee of Company whose employment with Company terminated within the previous thirty (30) days, nor will Employee otherwise solicit or induce or attempt to solicit or induce any current employee of Company to terminate his or her employment with Company for any reason.

 

3.             Confidentiality. Employee agrees, both during Employee's employment and after termination of Employee's employment, to protect and preserve as confidential and to not disclose to any person or entity or use any and all Confidential Information, as defined below, acquired during Employee's employment with Company. "Confidential Information" is defined as: financial information related to the operation of Company's business; all formulas, recipes, and procedures relating to the brewing of Company's beer, ales, and malt beverage products and all information related to such brewing; Company's unique marketing plans; and the preferences of Company's customers, but does not include information considered part of the public domain, information that Employee knew before receiving it from Company, or information that is required to be disclosed by judicial or administrative proceedings after Employee diligently tries to avoid each disclosure and notifies and affords Company the opportunity to obtain assurance that compelled disclosures will receive confidential treatment.

 

4.             No Violation of Other Obligations. Employee certifies that working for Company does not violate any contractual obligations Employee owes to any third party. Employee agrees to not disclose to Company or use during Employee's employment any trade secrets or other confidential information of any third party without that party's consent. Employee acknowledges that Company wishes Employee to abide strictly by the terms of valid and enforceable obligations Employee has to prior employers. Employee agrees to inform Employee's manager/supervisor whenever Employee believes a task Employee is to perform for Company could jeopardize Employee's ability to abide by those obligations.

 

5.             Indemnification of Defense Costs and Payment in Case of Injunction. If Employee is made a party or threatened to be made a party to any action, suit, or proceeding, initiated by Employee's prior employer, MILLERCOORS LLC, alleging that Employee has violated any contractual obligation that Employee owes to MILLERCOORS LLC, Company will indemnify Employee or will advance on Employee's behalf, as relevant, any legal fees and other reasonable costs of defense of such action, suit, or proceeding.  If Employee is enjoined from continuing to provide services to Company during the pendency of such action, suit, or proceeding, Company will pay Employee his monthly base salary, together with an amount equal to  premiums for the same or equivalent health benefits as were being provided to Employee at the time such injunction was initiated, for a period of time equal to the lesser of three (3) months or the duration of such injunction, payable monthly in arrears.

 

6.             Company Materials. All notes, files, data, disks, tapes, reference items, sketches, drawings, memoranda, records, and other materials in whatever form in any way relating to any of the information referred to in paragraph 3 above or otherwise to Company's business shall belong exclusively to Company. Employee agrees to immediately turn over to Company, without retaining any copies, all such materials in Employee's possession or under Employee's control at any time at the request of Company or, in any event, upon the termination of Employee's employment with Company for any reason.

 

7.             Work Made For Hire. All creative work, including but not limited to computer programs or models, templates, marketing plans, designs, graphics, techniques, processes, documentation, formulae, products, and technical information prepared or originated by Employee for Company at any time during Employee's employment with Company, constitutes work made for hire. All rights to this work, as well as enhancements and modifications to it, are owned by Company; and, in any event, Employee hereby assigns to Company all rights, title, and interest whether by way of copyright, trade secret, or otherwise, in all such work, whether or not subject to protection by copyright laws or other intellectual property laws. Employee shall take all actions reasonably requested by Company to vest ownership of such creative work in Company and to permit Company to obtain copyright, trademark, patent, or similar protection in its name.

 

8.             Accounting for Profits. If Employee violates any of the provisions of this Agreement, Company shall be entitled to an accounting and repayment of all profits, compensation, royalties, commissions, remunerations or benefits which Employee directly or indirectly shall have realized or may realize relating to, growing out of, or in connection with any such violation; provided, however, that for any violation of the noncompetition obligations set forth in paragraph 1 above, the remedy provided under this paragraph will  be limited to the six (6) month noncompetition period. The remedies set forth in this paragraph shall be in addition to and not in lieu of any injunctive relief or other rights or remedies to which Company is or may be entitled at law or in equity or otherwise under this Agreement.

 

9.             Injunctive Relief. Employee understands and agrees that Company shall suffer irreparable harm in the event that Employee breaches any the provisions of this Agreement and that monetary damages shall be inadequate to fully compensate Company for such breach. Accordingly, Employee agrees that, in the event of a breach or threatened breach by Employee of any of the provisions of this Agreement, Company, in addition to and not in lieu of any other rights, remedies or damages available to Company at law or in equity, shall be entitled to a temporary restraining order, preliminary injunction and permanent injunction in order to prevent or restrain any such breach or threatened breach by Employee, or by any or all of Employee's partners, co-venturers, employers, employees, servants, agents, representatives, and any and all persons directly or indirectly acting for, on behalf of or with Employee.

 

10.           Remedies in General. If Employee fails to abide by this Agreement or any provision of it, Company will be entitled to specific performance, including immediate issuance of a temporary restraining order or preliminary injunction enforcing this Agreement, and to judgment for damages caused by Employee's breach, and to any other remedies provided by applicable law. Subsequent employers shall have this covenant disclosed to them either by Employee or by Company at the discretion of Company. The provisions of this Agreement are in addition to and not in lieu of any rights or obligations of Company or Employee under any applicable statute, regulation, or common law.

 

11.          Attorney Fees. In the event this Agreement is placed in the hands of any attorney or in any action at law or in equity, administrative proceeding, or arbitration instituted to enforce or interpret the terms of this Agreement, including proceedings before any bankruptcy court of the United States, the prevailing party shall be entitled to recover from the other party reasonable attorney fees, costs, and necessary disbursements at trial and on any appeal there from, in addition to any other relief to which such party may be entitled.

 

12.          Severability. If any provision, or portion thereof, in this Agreement is invalid or legally unenforceable, it shall be enforced to the extent possible, and all other provisions hereof shall remain in full force and effect.

 

13.          Waiver. The waiver by either the Company or Employee of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party and shall in no way affect the enforcement of all the other provisions of this Agreement.

 

14.          Survival. The terms of this Agreement survive the termination of Employee's employment.

 

15.          Acknowledgment. Employee acknowledges that Employee entered into this Agreement after receiving a copy of it in a written offer of employment provided two weeks or more before Employee began employment.

 

 

	
Company:

		
Employee:              

	
	Craft Brew Alliance, Inc.			
	 			
	
By:

	
/s/Andrew J. Thomas

		
/s/Joseph K. Vanderstelt

	
	
Name:

	
Andrew J. Thomas

	 	
Joseph Vanderstelt

	
	
Title:

	
Chief Executive Officer

	 	
Date:

	
April 27, 2015

	
	
Date:

	
April 27, 2015

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