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EXHIBIT 10.4
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This Agreement (the "Agreement") is made effective this 12th day of
February, 1997, between American Craft Brewing International Limited, a Bermuda
company ("Company"), and Xxxxx X. X. Xxxxxxxx ("Executive").
WHEREAS, the Company is engaged in the business of developing and
operating international micro-breweries; and
WHEREAS, the Company desires to secure the services of Executive as
President and Chief Executive Officer and to maintain the services of Executive
as Chairman of the Board, and Executive desires to perform such services for
the Company, on the terms and conditions as set forth herein;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements set forth below, it is mutually agreed as follows:
1. Effective Date, Term and Duties. The initial term of employment of
Executive by the Company hereunder shall commence upon the date of this
Agreement (the "Commencement Date") and end on the third anniversary of the
Commencement Date, unless extended on terms agreed upon between Executive and
the Company (such term being hereinafter referred to as the "Employment
Period"). The Employment Period may be earlier terminated pursuant to the
provisions of this Agreement. Executive shall have such duties as the Board of
Directors of the Company may from time to time prescribe consistent with his
position as President, Chief Executive Officer and Chairman of the Board of the
Company (the "Services"). Executive shall report directly to the Board of
Directors. Executive shall devote his full time, attention, energies and beat
efforts to the business of the Company, provided however, that during the first
three months of the Employment Period, Executive may devote up to 50% of his
time for the first six weeks and up to 25% of his time thereafter to his former
employer in order to facilitate an orderly transition. The Company shall
maintain an office for the Executive in Metairie, Louisiana.
The Board of Directors shall use its best efforts to have Executive
elected and reelected as Chairman of the Board at each Annual Stockholders
Meeting held during the Employment Period.
2. Compensation. The Company shall pay and Executive shall accept as full
consideration for the Services compensation consisting of the following:
2.1 Base Salary. $200,000 per year in base salary, payable in
installments twice per month, less such deductions or withholdings required by
law.
2.2 Bonus. A target bonus of up to $200,000 per year to be
awarded by the Company's Board of Directors based on the attainment by the
Company of the Company's
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Executive Bonus Plan Objectives for such year, which shall be agreed upon by
the Executive and the Company annually and shall be consistent with the
Company's business plan for the relevant year. For Executive's initial year of
employment, Executive will be guaranteed total base salary and bonus of at
least $300,000. The $100,000 guaranteed bonus payment for such initial year of
employment shall be paid in four equal quarterly installments payable in equal
installments at the end of each fiscal quarter of the Company. In addition,
the Company will loan Executive an amount equal to $200,000 with interest
payable quarterly in arrears at a rate per annum equal to the prime rate of
interest as reported in The Wall Street Journal changing as and when such prime
rate shall change. Executive will be required to repay this amount, including
accrued interest, on the fifth anniversary of the date hereof or upon
termination of the Employment Period for Cause (as defined in Section 4.2) or
upon termination of the Employment Period by the Executive for other than Good
Reason (as defined in Section 4.3).
2.3 Stock Options. As additional compensation for the Services,
Executive shall be entitled to a grant of a stock option for 200,000 shares
under the Company's 1996 Stock Option Plan (the "Stock Option Plan"), awarded
by the Stock Option Committee of the Company's Board of Directors administering
the Stock Option Plan, The terms and amounts of such grants are set forth on
Exhibit A attached hereto. Executive shall also be eligible to receive
additional stock option grants under the Stock Option Plan based upon
achievement of the Company's Executive Bonus Plan objectives, The Company shall
use its best efforts to register the shares issuable under the option on a Form
S-8 registration statement prior to the initial vesting date thereunder and to
keep such registration statement in effect for the entire period the option
thereafter remains outstanding.
2.4 Indemnification. In the event Executive is made, or
threatened to be made, a party to any legal action or proceeding, whether civil
or criminal, by reason of the fact that Executive is or was a director or
officer of the Company or serves or served any other corporation fifty percent
(50%) or more owned or controlled by the Company in any capacity at the
Company's request, Executive shall be indemnified by the Company, and the
Company shall pay Executive's related expenses when and as incurred, all to the
fullest extent permitted by law.
3. Benefits. Executive shall be entitled to use of an automobile of his
choice provided by the Company with all operating expenses paid by the Company,
and shall receive such pension, profit sharing and fringe benefits such as
hospitalization, medical, life and other insurance benefits, vacation, sick pay
and short-term disability as the Board of Directors of the Company may, from
time to time, determine to provide for the key Executives of the Company.
Executive shall be provided a country club membership (and dues) for a club of
his choice located in Louisiana. The Company shall not be obliged to pay any
initiation fee.
4. Benefits Upon Termination of Employment Period. Executive's employment
by the Company shall terminate immediately upon Executive's receipt of written
notice by the Company, upon the Company's receipt of written notice by
Executive, or upon Executive's death or permanent disability. Except in
connection with a termination for Cause (as defined in Subsection 4.2) or a
voluntary termination by Executive for other than Good Reason (as defined in
Subsection 4.3), the Company shall provide Executive with termination benefits
upon termination of the Employment Period, as follows:
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4.1 Termination Benefits. During a period of time beginning on
the termination of the Employment Period and ending on the earlier to occur of
eighteen months from such date or the third anniversary of the date of this
Agreement (or such later date as this Agreement may be extended form time to
time), Executive's base salary at the time of termination shall continue to be
paid by the Company in installments twice per month less applicable deductions
or withholdings, and Executive shall also be entitled to quarterly bonus
payments based on a bonus of $100,000 per annum, during the eighteen-month
period. Executive shall also be entitled to the benefits provided and shall be
entitled to participate in any plans or other employee benefit arrangements
which are generally available to employees or executives of the Company during
such period other than the Company's tax-qualified pension or profit-sharing
plans. Under no circumstances shall the Company be obligated to make any
payments or continue benefits beyond such eighteen-month period or the third
anniversary of the date of this Agreement, as the case may be. If the
Employment period is Terminated by the Company other than for Cause (as defined
in Section 4.2) or by the Executive for Good Reason (as defined in Section 4.3)
the unvested portion of any options held by the Executive on the date of such
termination shall immediately vest and become exercisable, Prior to the payment
of any termination benefits under this Section 4 or Section 5, Executive and
the Company will enter into a mutual general release; provided, however, that
such release shall not extend to any subsequent claims Executive may have with
respect to those termination benefits or continued option vesting.
4.2 Circumstances Under Which Termination Benefits Would Not Be
Paid. The Company shall not be obligated to pay Executive the termination
benefits or continue the option vesting described in Subsection 4.1 above if
the Employment Period is terminated for Cause. For purposes of this Agreement,
"Cause" shall be limited to (1) Executive's conviction of any felony under
federal or state law, or any fraud, misappropriation or embezzlement or act of
dishonesty; or (2) Executive's commission of a material violation of this
Agreement. In addition, Executive shall not be entitled to any termination
benefits or continued option vesting under Subsection 4.1 if he voluntarily
terminates his service with the Company other than for Good Reason as
determined under Subsection 4.3.
4.3 Constructive Termination. Notwithstanding anything in this
Section 4 or Section 5 to the contrary, the Employment Period will be deemed to
have been terminated (a "Constructive Termination") and Executive will be
deemed to have Good Reason for voluntary termination of the Employment Period
("Good Reason"), if there should occur:
(A) a material adverse change in Executive's position
causing it to be of materially less stature or responsibility without
Executive's written consent, and such a materially adverse change shall in all
events be deemed to occur if Executive no longer serves as President, Chief
Executive Officer and Chairman of the Board of the Company, unless Executive
consents in writing to such change,
(B) a reduction, without Executive's written consent, in
his level of base compensation (including base salary and fringe benefits) by
more than ten percent (10%) or a reduction by more than ten percent (10%) in
his target bonus formula under any performance-based executive incentive plans
from that provided for herein, or
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(C) a relocation of his principal place of employment by
more than 50 miles without Executive!a consent.
5. Change in Control Benefits.
Should there occur a Change in Control (as defined below), then the
following provisions shall become applicable:
(A) During the period (if any) following a Change in
Control that Executive shall continue to provide the Services, then the terms
and provisions of this Agreement shall continue in full force and effect, and
Executive shall continue to vest in his outstanding stock options;
(B) in the event of (x) a termination of the Employment
Period by the Company other than for Cause at any time after a Change in
Control (y) a Constructive Termination of the Employment Period at any time
after a Change in Control or (z) the voluntarily termination of the Employment
Period for any reason by the Executive within one hundred eighty (180) days
following a Change in Control, the following benefits shall become due and
payable:
(i) Executive's base salary in effect immediately
prior to termination of the Employment Period shall continue to be paid for a
eighteen-month period by the Company or the successor entity in installments
twice per month less applicable deductions or withholdings, and Executive shall
also be entitled to quarterly bonus payments based on a bonus of $200,000 per
annum, during that eighteen-month period. Executive shall also be entitled to
the benefits provided under this Agreement and shall be entitled to participate
in any plans or other employee benefit arrangements which are generally
available to employees or executives of the Company during such period other
than the Company's tax-qualified pension or profit-sharing plans or the
employee stock purchase plan.
(ii) Executive's opinions shall immediately vest
and become exercisable to the extent those options would have otherwise vested
over the eighteen (18) month period immediately following the effective date of
the Change in Control had Executive continued his employment under this
Agreement. The options as so accelerated shall remain exercisable until their
expiration date.
For purposes of this Section 5, a Change of Control shall be deemed to
occur upon:
(i) the sale, lease, conveyance or other disposition of
all or substantially all of the Company's assets as an entirety or
substantially as an entirety to any person, entity or group of persons acting
in concert other than in the ordinary course of business.
(ii) any transaction or series of related transactions (as
a result of a tender offer, merger, consolidation or otherwise) that results in
any Person (as defined in Section 13(h)(8)(E) under the Securities Exchange Act
of 1934), directly or indirectly, of more than 50% of the aggregate voting
power of all classes of common equity of the Company, except if such Person is
(a) a subsidiary of the Company, (b) an employee stock ownership plan for
employees of the Company or (c) a company formed to hold the Company's common
equity
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securities and whose shareholders constituted at the time such company became
such holding company, substantially all the shareholders of the Company (the
"AmBrew Holding Company).
(iii) individuals who are members of the Incumbent Board
cease for any reason (other than death) to constitute at least a majority of
the members of the board of directors of the company or an Ambrew Holding
Company. A person shall be a member of the Incumbent Board if he or she was a
member of the Board of Directors of the Company on February 1, 1997 or if the
election, or nomination for election by the holders of common equity securities
of the Company or an Ambrew Holding Company of such Person was approved by a
vote of at least a majority of the members of the Incumbent Board.
6. Arbitration.
6.1 Except for proceedings seeking injunctive relief, including,
without limitation, allegations of misappropriation of trade secrets, copyright
or patent infringements, or breach of any anti-competition provisions of this
Agreement, any controversy or claim arising out of or in relation to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the Commercial Arbitration rules of the American Arbitration Association
("AAA"), and judgement upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. Arbitration of this Agreement shall
include claims of fraud or fraud in the inducement relating to this Agreement,
Arbitration further includes all claims, regardless of whether the dispute
arises during the term of the Agreement, at the time of termination or
thereafter.
6.2 Either party may initiate the arbitration proceedings, for
which the provision is herein made, by notifying the opposing party, in
writing, of its demand to arbitrate. In any such arbitration there shall be
appointed one arbitrator who shall be selected in accordance with the AAA
Commercial Arbitration Rules. The place of arbitration shall be New Orleans,
Louisiana.
6.3 The parties agree that the award of the arbitrator shall be
the sole and exclusive remedy between them regarding any claims, counterclaims,
issues or accountings presented or plead to the arbitrator; that the arbitrator
shall be the final judge of both law and fact in arbitration of disputes
arising out of or relating to this Agreement, including the interpretation of
the terms of this Agreement. The parties further agree it shall be the sole
and exclusive duty of the arbitrator to determine the arbitrability of issues
in dispute and that neither party shall have recourse to the court for such a
determination.
7. Cooperation with the Company After Termination of the Employment
Period. Following any notice of termination of Employment Period (as it may be
extended from time to time) by the Executive, the Executive shall fully
cooperate with the Company in all matters relating to the winding up of his
pending work on behalf of the Company and the orderly transfer of any such
pending work to other employees of the Company as may be designated by the
Company.
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8. Confidentiality: Return of Property. The Executive acknowledges that
during the Employment Period he will receive confidential information from the
Company and subsidiaries of the Company and the respective clients thereof
(each a "Relevant Entity"). Accordingly, the Executive agrees that during the
Employment Period (as it may be extended from time to time) and thereafter for
a period of two years, the Executive and his affiliates shall not, except in
the performance of his obligations to the Company hereunder or as may otherwise
be approved in advance by the Company, directly or indirectly, disclose or use
(except for the direct benefit of the Company) any confidential information
that he may learn or has learned by reason of his association with any Relevant
Entity. Upon termination of this Agreement, the Executive shall promptly
return to the Company any and all properties, records or papers of any Relevant
Entity, that may have been in his possession at the time of termination,
whether prepared by the Executive or others, including, but not limited to,
confidential information and keys. For purposes of this Agreement,
"confidential information" includes all data, analyses, reports,
interpretations, forecasts, documents and information concerning a Relevant
Entity and its affairs, including, without limitation with respect to clients,
products, policies, procedures, methodologies, trade secrets and other
intellectual property, systems, personnel, confidential reports, technical
information, financial information, business transactions, business plans,
prospects or opportunities, (i) that the Company reasonably believes are
confidential or (ii) the disclosure of which could be injurious to a Relevant
Entity or beneficial to competitors of a Relevant Entity, but shall exclude any
information that the Executive is required to disclose under any applicable
laws, regulations or directives of any government agency, tribunal or authority
having jurisdiction in the matter or under subpoena or other process of law.
For purposes of this Agreement, "affiliate" means any entity that, directly or
indirectly, is controlled by, or under common control with, the Executive. For
purposes of this definition, the terms "controlled" and "under common control
with" means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of such person, whether through
the ownership of voting stock, by contract or otherwise.
9. Non-Competition. The provisions of this Section 9.1 shall not apply if
the Employment Period is terminated by the Company without Cause (as defined in
Section 4.2 hereof) or by the Executive for Good Reason (as defined in Section
4.3 hereof).
9.1 Non-Competition. During the Employment Period (as it may be
extended from time to time) and, subject to the limitation described above,
thereafter for a period of two years the Executive agrees that he and his
affiliates shall not, at any location defined by the Company as an area in
which the Company or any of its subsidiaries (the "AmBrew Companies") has
operations, directly or indirectly, (i) engage in any activity competitive with
the business of any of the AmBrew Companies for or on behalf of himself or any
other person or entity engaged in a line of business which competes with the
AmBrew Companies in developing and operating international micro-breweries;
(ii) solicit or attempt to solicit the business of any clients or customers of
any of the AmBrew Companies for products that are the same or similar to those
offered, sold or produced at any time by any of the AmBrew Companies; (iii)
hire or attempt to hire for any business endeavor any employee or prior
employee with which the Executive has had direct contact during the two year
period proceeding termination of Services (except those employees whose salary
is below $25,000) from any of the AmBrew Companies; or (iv) interfere with any
business relationship between any of the AmBrew Companies and any other person
or entity.
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9.2 Severability and Reform. If any portion of Section 9.1 shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or enforceability shall not affect any other provisions
in Section 9.1, but Section 9.1 shall be construed as if such invalid, illegal
or unenforceable provision had never been contained therein. It is the
intention of the parties hereto that if any of the restrictions or covenants
contained in Section 9.1 is held to cover a geographic area or to be for a
length of time not permitted by applicable law, or in any way construed to be
too broad or invalid, such provision shall not be construed to be null, void
and of no enforceable effect, but to the extent such provision would be valid
or enforceable under applicable law, a court of competent jurisdiction shall
construe and interpret or reform Section 9.1 to provide for a covenant having
the maximum enforceable geographic area, time period and other provisions (not
greater than those contained herein) as shall be valid and enforceable under
such applicable law.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
AMERICAN CRAFT BREWING EXECUTIVE
INTERNATIONAL, LTD.
By: /s/ Xxxx X. Xxxxxxxxx /s/ Xxxxx X. X. Xxxxxxxx
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Xxxxx X. X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxxx
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Title: Director and Attorney in Fact
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