Exhibit 1
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 best
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 Metarie, Louisiana.
The Board of Directors shall use its best efforts to have Executive
elected and re-elected 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 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:
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
(C) a relocation of his principal place of employment by more
than 50 miles without Executive's 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 options 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) becoming the beneficial owner (as defined in Rule 13d-3 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 securities and whose shareholders constituted. at the
time such company became such holding company, substantially all the
shareholders of the Company (an "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 judgment 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.
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.
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.
10. General.
10.1 Waiver. Neither party shall, by mere lapse of time, without
giving notice or taking other action hereunder, be deemed to have waived any
breach by the other party of any of the provisions of this Agreement. Further,
the waiver by either party of a particular breach of this Agreement by the other
shall neither be construed as, nor constitute a, continuing waiver of such
breach or of other breaches by the same or any other provision of this
Agreement.
10.2 Severability. If for any reason a court of competent
jurisdiction or arbitrator finds any provision of this Agreement to be
unenforceable, the provision shall be deemed amended as necessary to conform to
applicable laws or regulations, or if it cannot be so amended without materially
altering the intention of the parties, the remainder of the Agreement shall
continue in full force and effect as if the offending provision were not
contained herein.
10.3 Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
considered effective upon personal service or upon depositing such notice in the
U.S. Mail, postage prepaid, return receipt requested and addressed to the
Chairman of the Compensation Committee of the Company as its principal corporate
address, and to Executive at his most recent address shown on the Company's
corporate records, or at any other address which he may specify in any
appropriate notice to the Company.
10.4 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original and all of which
taken together constitutes one and the same instrument and in making proof
hereof it shall not be necessary to produce or account for more than one such
counterpart.
10.5 Entire Agreement. The parties hereto acknowledge that each
has read this Agreement, understands it, and agrees to be bound by its terms.
The parties further agree that this Agreement and the referenced stock option
agreement constitute the complete and exclusive statement of the agreement
between the parties and supersedes all proposals (oral or written),
understandings, representations, conditions, covenants, and all other
communications between the parties relating to the subject matter hereof.
10.6 Governing Law. This Agreement shall be governed by the law
of the State of New York.
10.7 Assignment and Successors. The Company shall have the right
to assign its rights and obligations under this Agreement to an entity which
acquires substantially all of the assets of the Company. The rights and
obligation of the Company under this Agreement shall inure to the benefit and
shall be binding upon the successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
AMERICAN CRAFT BREWING EXECUTIVE
INTERNATIONAL, LTD.
By: s/s Xxxx X. Xxxxxxxxx s/s Xxxxx X. X. Xxxxxxxx
---------- ------------------ ---------------------------
Xxxxx X. X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxxx
----------------------------
Title: Director and Attorney in Fact
-----------------------------
Annex A
Non-Qualified Option Grant
Number of Shares: 200,000
Date of Grant: February 12, 1997
Exercise Price: $5.50
Vesting: 33.3% as of the date hereof; 33.3% on the
first and second anniversary of date of
grant; provided that, if the Employment
Period is terminated by the Company other
than for Cause or by the Executive for Good
Reason, the unvested portion of the option
shall immediately vest and become
exercisable.
Option grant will be evidenced by standard American Craft Brewing International
Limited stock option agreement
