Document:

ex10_2.htm

Exhibit 10.2

 

June 1, 2011

 

 

Andrew J. Thomas

Craft Brewers Alliance, Inc.

929 North Russell Street

Portland, OR 97227

Dear Andy:

 

Subject:                   Employment

 

This letter sets forth our understanding about your employment as the President of Commercial Operations of Craft Brewers Alliance, Inc. (the "Company"), effective June 1, 2011.  This letter supersedes and replaces any prior offer letter or other agreement regarding your employment by or consulting relationship with the Company as of its effective date.

 

Your employment will be "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

 

Your annual base salary rate will initially be $300,000 (before standard tax withholdings and other payroll deductions).  Your base salary level will be reviewed annually for adjustment beginning January 1, 2012, by the Compensation Committee of the Company's Board of Directors (the "Board"), with salary adjustments, if any, generally made effective as of April 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 a yearly bonus payable following certification of the Company's financial results for the prior fiscal year, such bonus to be approved by the Compensation Committee.  The target amount of your bonus for the balance of 2011 is 40% of your total salary accrued for the seven-month period ending December 31, 2011.  All or a portion of such bonus 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.

 

  

  

  

 

Andrew J. Thomas

May 27, 2011

Page 2

 

 

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 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 six months or more than 12 months.  Severance will be payable based on your weekly base salary rate in effect at the date of termination.

 

In addition, the Company will promptly (in no event later than March 15 of the calendar year after the year in which your employment terminated) make a cash payment to you in an amount equal to 100% of your unused Paid Time Off ("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, the same health benefits as were being provided to you at the time of termination; provided, however, that such benefits shall terminate in the event you find new employment with comparable health coverage.

 

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 Company's Board of Directors, including failing to maintain your primary residence no further than 50 miles from the Company's principal office within six months after the Board makes such a direction, provided that such direction may not be made prior to January 1, 2013.

 

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 President of Commercial Operations; or (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 Company's Board of Directors); 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 of the date of your notice.

 

  

  

  

 

Andrew J. Thomas

May 27, 2011

Page 3

 

 

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 the portion of Anheuser-Busch, Inc.'s business relating to alcoholic beverages, 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 other benefits (except benefits 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.

 

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.

 

  

  

  

 

Andrew J. Thomas

May 27, 2011

Page 4

 

 

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 look forward to having you as a member of our team for years to come.

 

	 	 	
Sincerely,

	 
	 	 	 	 
	
 

	 	
/s/Terry E. Michaelson

	 
	 	 	 	 
	 	 	
Terry Michaelson

	 
	 	 	Chief Executive Officer	 
	 	 	 	 
	Acknowledged and Agreed:	 	 	 
	 	 	 	 
	/s/ Andrew J. Thomas	 	Date: May 31                                          , 2011	 
	Andrew J. Thomasex10_3.htm

Exhibit 10.3

 

STOCK APPRECIATION RIGHT

 

AGREEMENT

 

 

This STOCK APPRECIATION RIGHT AGREEMENT (this "Agreement"), effective as of October 12, 2010, is made by and between CRAFT BREWERS ALLIANCE, INC., a Washington corporation ("Corporation"), and ANDREW J. THOMAS, an independent contractor ("Contractor"):

 

RECITALS

 

A.           Corporation and Contractor are parties to a Consulting Agreement dated May 1, 2010.

 

B.           Corporation wishes to offer certain incentive compensation to Contractor to compensate Contractor for his efforts in increasing Corporation's stock price.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants in this Agreement and other good and valuable consideration, receipt of which is acknowledged, the parties agree as follows:

 

1.           DEFINITIONS

 

1.1           "Board" means the Board of Directors of Corporation.

 

1.2           "Code" means the Internal Revenue Code of 1986, as amended.

 

1.3           "Committee" means Compensation Committee of the Board, or such other committee designated by the Board to oversee this Agreement.

 

1.4           "Common Stock" means the common stock, par value $0.005 per share of Corporation.

 

1.5           "Date of Grant" means October 12, 2010, the date on which Corporation took appropriate action expressly granting the SAR Award to Contractor.

 

1.6           "Exchange Act" means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any successor statute.

 

1.7           "Fair Market Value" means, on any given day, the fair market value per share of the Common Stock determined as follows:

 

(a)           If the Common Stock is admitted to trading on an established securities exchange, the closing sale price of Common Stock as reported for such day by the principal exchange on which Common Stock is traded or, if Common Stock was not traded on such day, on the next preceding day on which Common Stock was traded;

 

  

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(b)           If trading activity in Common Stock is reported on the OTC Bulletin Board, the average of the closing bid and asked prices for such day as reported on the OTC Bulletin Board or, if there are no such quotes for Common Stock for such day, on the next preceding day for which bid and asked price quotes for Common Stock were reported on the OTC Bulletin Board; or

 

(c)           If there is no market for Common Stock or if trading activities for Common Stock are not reported in one of the manners described above, the fair market value will be as determined by the Committee.

 

1.8           "Grant Price" is $6.50, which is the Fair Market Value of one share of Common Stock on the Date of Grant.

 

1.9           "SAR Award" means the right to receive the SAR Value from Corporation.

 

1.10         "SAR Value" means an amount equal to the excess, if any, of the Settlement Price over the Grant Price, multiplied by the number of SARs with respect to which the SAR Award is being settled.

 

1.11         "Securities Act" means the Securities Act of 1933, as amended.

 

1.12         "Settlement Price" is the Fair Market Value of one share of Common Stock on the Settlement Date.

 

1.13         "Stock Appreciation Right" or "SAR" means a measurement unit corresponding to one share of Common Stock used for purposes of measuring the benefits payable to Contractor under this Agreement.

 

2.           SECTION 409A

 

2.1           Exemption from Section 409A  Awards granted under this Agreement are intended to be exempt from Section 409A of the Code ("Code Section 409A"), and ambiguous provisions, if any, shall be construed in a manner that causes each Award to be exempt from Code Section 409A.

 

3.           GRANT OF STOCK APPRECIATION RIGHT

 

3.1           Grant of Stock Appreciation Right  In consideration of Contractor's agreement to provide certain consulting services to Corporation and for other good and valuable consideration, Corporation grants to Contractor a SAR Award covering 10,000 SARs as of the Date of Grant upon the terms and conditions set forth in this Agreement.

 

  

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4.           PERIOD OF EXERCISABILITY

 

4.1           Commencement of Exercisability  The SAR Award is exercisable immediately on the Date of Grant.

 

4.2           Expiration of SAR Award  The SAR Award may not be exercised to any extent by anyone after the expiration of three years from the Date of Grant.

 

5.           SETTLEMENT OF STOCK APPRECIATION RIGHT

 

5.1           Settlement  The SAR Award may be exercised in whole at any time prior to the time when the SAR Award becomes unexercisable under Section 4.2.  In no event may the SAR Award be partially exercised or settled.

 

5.2           Method of Settlement  The SAR Award will be settled by delivery to Corporation of a settlement notice stating the election to settle the SAR Award (the "Settlement Notice").  The SAR Award will be deemed to be exercised upon the date of receipt by Corporation of a fully executed Settlement Notice (the "Settlement Date"), provided that such date is prior to the date the SAR Award expires pursuant to Section 4.2, and the SAR Award will be settled in cash by payment of the SAR Value within 30 days from the Settlement Date.  Notwithstanding the foregoing, if
Contractor dies before the Settlement Date, the SAR Award will be deemed to be exercised on the date of Contractor's death, provided that such date is prior to the date the SAR Award expires pursuant to Section 4.2, and the SAR Award will be settled in cash within 30 days from the date Corporation receives written notice of Contractor's death.

 

6.           ADJUSTMENTS ON CHANGES IN CAPITALIZATION

 

6.1           Agreement Does Not Restrict Corporation  The existence of this Agreement will not affect or restrict in any way the right or power of the Board or the shareholders of Corporation to make or authorize any adjustment, recapitalization, reorganization, or other change in Corporation's capital structure or its business, any merger or consolidation of Corporation, any issue of bonds, debentures, preferred or prior preference shares ahead of or affecting Corporation's Common Stock, the dissolution or liquidation of Corporation, or any sale or transfer of any part of its assets or
business, or any other corporate act or proceeding.

 

6.2           Adjustment to or Cancellation of the SAR Award  Neither (i) the issuance of additional shares of stock of Corporation in exchange for adequate consideration (including services), nor (ii) the conversion of outstanding preferred shares of Corporation into Common Stock, will be deemed to require an adjustment in the SARs covered by the SAR Award or in the purchase price of SARs subject to the SAR Award.  In the event of any change in capitalization affecting the Common Stock, such as a distribution,
split, recapitalization, merger, consolidation, split-up, spin-off, combination or exchange of shares, or other form of reorganization, or any other change affecting the Common Stock, such proportionate adjustments, if any, as the Committee, in its sole discretion, may deem appropriate to reflect such changes will be made with respect to the aggregate number of SARs granted under the Agreement and the Grant Price.  The Committee may also make such adjustments in the number of SARs covered by and the Grant Price of the SARs in the event of a spin-off or other distribution (other than normal cash distributions) of Corporation assets to shareholders.  In the event the Committee determines that an event will occur affecting Corporation such that an adjustment to the SARs should be made but that it is not practical or feasible to make such an adjustment, the Committee
will give notice to Contractor, whereupon Contractor will have the right for a period of 15 days following the notice to exercise the SAR Award in full.  Upon the expiration of this 15-day period, the SAR Award will expire.

 

  

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7.           OTHER PROVISIONS

 

7.1           Conformity to Securities Laws  Contractor acknowledges that the Agreement is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder.  To the extent permitted by applicable law, this Agreement will be deemed amended to the extent necessary to conform to such laws, rules and regulations.

 

7.2           Construction  This Agreement will be administered, interpreted and enforced under the internal laws of the State of Oregon without regard to conflicts of laws thereof.

 

7.3           Nonassignability of Benefits  The SAR Award and the right to receive payment of the SAR Value may not be sold, transferred, anticipated, assigned, pledged, hypothecated, seized by legal process, subjected to claims of creditors in any way, or otherwise disposed of, except as explicitly set forth in this Agreement.

 

7.4           Notices  Any notice to be given under the terms of this Agreement to Corporation must be addressed to Corporation in care of its Secretary, and any notice to be given to Contractor will be addressed to him at the address given beneath his signature.  By a notice given pursuant to this Section 7.4, either party may designate a different address for notices to be given.  Any notice which is required to be given to Contractor will, if Contractor is then deceased, be given to Contractor's personal representative if such representative has previously
informed Corporation of his status and address by written notice under this Section 7.4.  Any notice will be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as pursuant to this Section and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.

 

7.5           Tax Withholding  Contractor is responsible for all withholding related to payment of the SAR Value pursuant to this Agreement, and Contractor will comply with all reporting, payment, and withholding obligations arising from payment of the SAR Value.  Notwithstanding the foregoing, in the event that a determination is made that Corporation is responsible for such withholding obligations, Corporation will comply with all reporting, payment, and withholding obligations arising from payment of the SAR Value.

 

7.6           Titles  Titles are provided in this Agreement for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

 

  

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7.7           Unfunded Obligation  Corporation will not be required to segregate any assets that may at any time be represented by SAR Value.  Any liability of Corporation to any person with respect to any SAR Award under this Agreement will be based solely upon any contractual obligations that may be effected pursuant to this Agreement.  No such obligation of Corporation will be deemed to be secured by any pledge of, or other encumbrance on, any property of
Corporation.

 

	 	 	
CRAFT BREWERS ALLIANCE, INC.

	 	 	 	 	 
	
 

	 	
By: 

	/s/Terry E. Michaelson      	 
	 	 	Name:	   Terry E. Michaelson    	 
	 	 	Title:	  CEO	 
	 	 	 	 	 
	 /s/Andrew J. Thomas  	 	 	 	 
	Andrew J. Thomas	 	 	 	 

 

 

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