THE BOSTON BEER COMPANY, INC. STOCK OPTION AGREEMENT
EXHIBIT 10.63
| Option No. 987 | Xxxxx |
THE BOSTON BEER COMPANY, INC.
AGREEMENT entered into effective as of January 1, 2008, by and between THE BOSTON BEER
COMPANY, INC., a Massachusetts corporation (the “Company”), and Xxxxxx X. Xxxxx, the Company’s
President and Chief Executive Officer (“Xx. Xxxxx”).
IN CONSIDERATION OF services rendered and to be rendered by Xx. Xxxxx to the Company and of
the mutual covenants and agreements contained herein, the Company and Xx. Xxxxx hereby agree as
follows:
1. Grant of Option. The Company hereby irrevocably grants to Xx. Xxxxx an option (the
“Option”) to purchase all or any part of an aggregate of Seven Hundred Fifty-Three Thousand Eight
Hundred Sixty-Four (753,864) shares (the “Shares”) of the Company’s Class A Common Stock, on the
terms and conditions hereinafter set forth.
2. Exercise Price and Vesting of Exercisability.
(a) Exercise Price. Subject to the provisions of Sections 2(b) and 2(c), the Exercise Price
(“Exercise Price”) for the Shares shall be determined by multiplying (i) $42.00 by (ii) the
aggregate change in the DJ Wilshire 5000 Index or in a successor broad market index selected by the
Compensation Committee of the Company’s Board of Directors, if the DJ Wilshire 5000 Index ceases to
exist (in either case, the “Index”) from and after January 1, 2008 through the close of business on
the trading date next preceding each date on which Xx. Xxxxx exercises the Option (the
“Determination Date”). The aggregate change in the Index shall be determined by dividing the Index
as of the Determination Date by the Index as of the close of business on December 31, 2007.
(b) Minimum Exercise Price. Notwithstanding the provisions of Section 2(a), the Exercise Price
shall in all events be not less than $37.65.
(c) Cap on Option Value. Notwithstanding the provisions of Section 2(a), if the excess of (i)
the closing price of the Company’s Class A Common Stock on the New York Stock Exchange or on any
other exchange on which such shares may be traded, on the day next preceding a date on which Xx.
Xxxxx exercises the Option over (ii) the Exercise Price determined in accordance with Section 2(a)
is greater than $70.00, the Exercise Price shall be increased to the extent necessary to reduce
such excess (i.e., the excess as of the close of business on the trading date next preceding the
date on which Xx. Xxxxx exercises the Option) to $70.00.
(d) Vesting Schedule. So long as Xx. Xxxxx continues to be employed by the Company or an
affiliate of the Company, the Option shall become exercisable as follows:
| Incremental | Cumulative | |||||||
| Shares Vested | Shares Vested | |||||||
January 1, 2014 |
150,772 | 150,772 | ||||||
January 1, 2015 |
150,773 | 301,545 | ||||||
January 1, 2016 |
150,773 | 452,318 | ||||||
January 1, 2017 |
150,773 | 603,091 | ||||||
January 1, 2018 |
150,773 | 753,864 | ||||||
(e) Vesting on Change in Control. Notwithstanding the provisions of subsection 2(d), in the
event that C. Xxxxx Xxxx and/or members of his family cease to control a majority of the Company’s
issued and outstanding Class B Common Stock (a “Change in Control”), the Option shall become
immediately exercisable to the extent provided below.
If a Change in Control occurs while the Option remains in effect:
(i)
|
Prior to January 1, 2011 | No accelerated vesting | ||
(ii)
|
On or after January 1, 2011 but prior to January 1, 2014 | Vesting as to 200,000 Shares | ||
(iii)
|
On or after January 1, 2014 but prior to January 1, 2015 | Vesting as to 50% of the Shares
remaining unvested |
||
(iv)
|
On or after January 1, 2015 | Vesting as to all of the Shares
remaining unvested |
3. Manner of Exercise of Option. To the extent exercisable, the Option may be exercised in
full at one time or in part from time to time, by giving written notice, signed by the person or
persons exercising the Option, to the Company, stating the number of Shares with respect to which
the Option is being exercised, accompanied by payment in full of the Exercise Price for such Shares
in cash. There shall be no exercise at any one time as to fewer than two thousand (2,000) Shares
or all of the remaining Shares then purchasable by the person or persons exercising the Option, if
fewer than two thousand (2,000) Shares.
4. Term of Option. The Option shall terminate on the first to occur of (i) the expiration of
twelve (12) months after Xx. Xxxxx ceases to be an employee of the Company, regardless of the
reason therefore, (ii) the consummation of a Change in Control, subject to Xx. Xxxxx’x right to
participate in the transaction giving rise to the Change in Control, to the extent exercisability
of the Option is accelerated pursuant to Section 2(e), (iii) the close of business on December 31,
2017 as to the 603,091 Shares theretofore vested and (iv) the close of business on December 31,
2018 as to the 150,773 Shares that vest on January 1, 2018.
5. Non-Transferability. The right of Xx. Xxxxx to exercise the Option shall not be assignable
or transferable by Xx. Xxxxx otherwise than by will or the laws of descent and distribution, and
the Option may be exercised during the lifetime of Xx. Xxxxx only by him or her. The Option shall
be null and void and without effect upon the bankruptcy of Xx. Xxxxx or upon any attempted
assignment or transfer, except as hereinabove provided, including without limitation any purported
assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition
contrary to the provisions hereof, or levy of execution, attachment, trustee process or similar
process, whether legal or equitable, upon the Option.
6. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Section 3 hereof, the Company may delay the issuance of
Shares covered by the exercise of the Option until one of the following conditions shall be
satisfied:
(i) The Shares with respect to which the Option has been exercised are at the time of
the issuance of such Shares effectively registered under applicable federal and state
securities acts, as now in force or hereafter amended; or
(ii) Counsel for the Company shall have given an opinion, which opinion shall not be
unreasonably conditioned or withheld, that the issuance of such Shares is exempt from
registration under applicable federal and state securities acts, as now in force or
hereafter amended.
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(b) In the event that for any reason the Shares to be issued upon exercise of the Option shall
not be effectively registered under the Securities Act of 1933 (the “1933 Act”), upon any date on
which the Option is exercised in whole or in part, the Company shall be under no further obligation
to issue Shares covered by the Option, unless the person exercising the Option shall give a
written representation to the Company that such person is acquiring the Shares issued to him or her
pursuant to such exercise of the Option for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares, and that he or she will make no transfer of
the same except in compliance with the 1933 Act and the rules and regulations promulgated
thereunder and then in force, and in such event, the Company may place an “investment legend”,
so-called, upon any certificate for the Shares which may be issued by reason of such exercise.
7. Adjustments Upon Changes in Capitalization. In the event that shares of the Company’s
Class A Common Stock are changed into or exchanged for a different number or kind of securities of
the Company or of another entity by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares or dividend payable in
capital stock or other securities, appropriate adjustment shall be made in the number and kind of
securities as to which the Option, or any part thereof then unexercised, shall be exercisable, to
the end that the proportionate interest of Xx. Xxxxx shall remain as before the occurrence of such
event; such adjustment in the Option shall be made without change in the total price applicable to
the unexercised portion of the Option and with a corresponding adjustment in the Option price per
share or other security unit.
8. Compliance with Post-Employment Obligations. Xx. Xxxxx understands and agrees that his
rights hereunder are conditioned on continued compliance with all of his obligations to the
Company, including obligations to protect the confidentiality of the Company’s proprietary
information and the proprietary information of any of the Company’s affiliates and not to compete
with the Company or any of its affiliates after Xx. Xxxxx’x employment with the Company or any of
its affiliates has terminated. In furtherance of Xx. Xxxxx’x understanding and agreement, Xx. Xxxxx
further agrees that, if Xx. Xxxxx breaches any post-employment confidentiality covenants or
covenants not to compete with the Company or any of its affiliates, the Company shall be entitled,
in addition to any other remedies it may then have available to it, to recover all profit realized
by Xx. Xxxxx as a result of exercises of the Option during Xx. Xxxxx ‘s last twelve (12) months of
employment with the Company or any of its affiliates or at any time following termination of such
employment.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and its corporate
seal to be hereto affixed by its officer thereunto duly authorized, and Xx. Xxxxx has hereunto set
his hand and seal, all as of the day and year first above written.
| THE BOSTON BEER COMPANY, INC. |
||||
| By: | /s/ XXXXXXX X. XXXXX | |||
| Xxxxxxx X. Xxxxx, Chief Financial Officer | ||||
| /s/ XXXXXX X. XXXXX | ||||
| Xx. Xxxxx’x Signature | ||||
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