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EXHIBIT 10.27
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into effective the
1st day of August, 2000, between Redhook Ale Brewery, Incorporated ("Employer")
and Xxxxx X. Xxxxxxxxx ("Employee").
1. Explanatory Statement
a. Employer is engaged in the business of brewing, packaging,
marketing, and distributing alcoholic malt beverages and other beverages.
b. Employee has specialized expertise in the business of brewing,
packaging, marketing, and distributing alcoholic malt beverages, and other
beverages and is the Executive Vice President, Chief Financial Officer and Chief
Operating Officer of Employer.
c. Employee accepts continued employment with Employer and agrees
to render the services for Employer on the terms and conditions set forth in
this Agreement.
2. Term of Employment. The term of this Agreement commences on August 1,
2000 and, subject to the further provisions of this Agreement, ends on July 31,
2005.
3. Employment. Employer employs Employee as Executive Vice President,
Chief Financial Officer and Chief Operating Officer, and Employee agrees to
render services for and on behalf of Employer under the direction and
supervision of the Chief Executive Officer ("CEO"). Employee shall provide these
services professionally and competently and shall devote substantially all of
Employee's business time to his services hereunder.
4. Compensation.
a. Employer will pay Employee as compensation for services
rendered under this Agreement as follows:
(i) a minimum base salary of One Hundred Seventy One Thousand
Dollars ($171,000) per year in accordance with Employer's normal payroll
policies; and
(ii) bonuses to be determined and paid as set forth on Schedule A
attached hereto.
b. Employee's base salary and incentive compensation shall be
reviewed annually by the Compensation Committee. The Company intends to increase
Employee's base salary and target bonus annually, (and will not unreasonably
withhold increases) if the Company is meeting or exceeding targeted performance,
and Employee is meeting or exceeding agreed upon objectives. Employee agrees and
acknowledges that, in determining whether to increase base salary or incentive
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compensation, the Compensation Committee is required to take into account the
financial condition of the Company, and its short and long term prospects.
5. Vacations and Fringe Benefits.
a. Employer shall provide Employee four (4) weeks vacation,
retirement and other fringe benefits provided other similarly situated executive
employees of Employer.
b. Employer may furnish Employee an automobile, which may be used
by Employee for personal and business use and shall pay the ordinary and
reasonable expenses associated with operation of the automobile; however,
Employee shall account to Employer for the personal use of the automobile which
in turn shall be reported by Employer as income to Employee in accordance with
the regulations of the Internal Revenue Service. If at any time the rules
regarding personal use of business automobiles are changed by the Internal
Revenue Service, this Agreement shall be modified to assure compliance in a
manner that is as favorable to Employee as permitted by such rules. If Employer
does not provide an automobile for Employee, Employee will receive a reasonable
monthly car allowance in an amount to be determined by the Compensation
Committee.
6. Termination of Employment.
a. Employer may at its option terminate the employment of
Employee with no further obligation to compensate Employee through written
notice to Employee for any of the following reasons:
(1) Employee materially breaches any of the provisions of
this Agreement and fails to cure the breach within thirty (30) days
after receiving specific written notice of the breach; or
(2) Employee has engaged in conduct which in the event he
were to remain employed by Employer would substantially and adversely
impair the interests of Employer; or
(3) Employee repeatedly refuses to obey lawful directions
of Employer's Chief Executive Officer or Board of Directors.
b. Employer may at its option terminate the employment of
Employee through written notice to Employee for any other reason; however, in
the event of such termination:
(1) Employer shall pay employee all bonuses calculated in
accordance with the respective formula set-forth on Schedule A,
pro-rated up to and including the effective date of termination;
(2) Employer shall continue to pay Employee for a minimum
of one (1) additional year the salary and benefits then in effect on the
date that
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notice of termination is received (such compensation to be paid in
accordance with standard payroll policies, or in a lump sum within 30
days of termination, at Employees option), provided, that if Employee
has not obtained employment within such one (1) year period, Employee
shall be entitled to the health benefits provided other similarly
situated executive employees of Employer for an additional three (3)
months, and at the conclusion of the three month period, Employee shall
be entitled to the COBRA benefits provided other similarly situated
executive employees for an additional six (6) months;
(3) All outstanding unvested options/shares granted to the
Employee that are scheduled to vest within one (1) year from the date
that notice of termination is received under this Section 6.b., will
continue to vest according to that schedule and all other unvested
options/shares will be canceled;
(4) If Employee violates Sections 7 or 8 of this
Agreement, Employer's obligation to continue to pay Employee's
compensation, as described in this Section 6.b., shall immediately
terminate, and the Employer will have no further obligation to Employee
pursuant to this Agreement, provided that the cessation of the
Employee's compensation under this Section 6.b.(4) shall not limit
Employer's rights to pursue other remedies at law or in equity.
c. Employee may at his option terminate his employment with
Employer under this Agreement through written notice to Employer for the
following reasons:
(1) Employer materially breaches any of the provisions of
this Agreement and fails to cure the breach within thirty (30) days
after receiving specific written notice of the breach and action
required to cure the breach;
(2) Employer is declared bankrupt or a receiver is
appointed.
(3) Employer liquidates or otherwise ceases business
operations;
d. In the event that Employee elects to terminate his
employment under Section 6.c.(1)
(1) Employer shall pay Employee all bonuses calculated in
accordance with the respective formula set-forth on Schedule A,
pro-rated up to and including the effective date of termination
(2) Employer shall continue to pay Employee for one (1)
additional year the compensation, other than the annual performance
bonus, then in effect on the date that notice of termination is
received;
(3) All outstanding unvested options/shares granted to the
Employee that are scheduled to vest within one (1) year from the date
that notice
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of termination is received under this Section 6.d., will continue to
vest according to that schedule and all other unvested options/shares
will be canceled;
(4) If Employee materially violates Sections 7 or 8 of
this Agreement, Employer's obligation to continue to pay Employee's
compensation, as described in this Section 6.d., shall immediately
terminate, and the Employer will have no further obligation to Employee
pursuant to this Agreement, provided that the cessation of Employee's
compensation under this Section 6.d.(4) shall not limit Employer's
rights to pursue other remedies at law or in equity.
e. Employee's termination of employment for any other reason
shall constitute a material breach of this Agreement, and shall terminate
Employer's obligations under this Agreement, without limiting Employer's rights
to pursue other remedies at law or in equity; and
f. Employee shall continue to be subject to the restrictions in
Sections 7 and 8 of this Agreement following termination of employment for any
reason.
7. Confidential Information and Goodwill.
a. Employee will acquire knowledge of Employer's confidential
information. Confidential information is information which is of a unique nature
relating to the Employer's business operations, internal structure, financial
affairs, programs, recipes, formulations, brewing methods, systems, procedures,
manuals, confidential reports, lists of customers and prospective customers,
sales and marketing methods, as well as the amount, nature and type of product,
equipment and methods used and preferred by Employer's customers and the prices
paid by Employer's customers or any other information which is confidential or
proprietary or otherwise not available to the general public. Disclosure of
material confidential information could cause substantial loss to the Employer.
Employee agrees that Employee will not for any purpose disclose any confidential
information obtained by Employee during employment with the Employer to any
person or entity.
b. Employee may have access to records of the Employer. Records
are all contracts, agreements, financial books, instruments and documents,
client lists, memoranda, data, reports, recipes, formulations, brewing records,
tapes, rolodexes, telephone and address books, letters, research, card decks,
listings, programming, and any other instruments, records or documents relating
or pertaining to manufacturing or customer sales by Employer or Employee, the
services rendered by Employee, or the business of the Employer. Records will
remain in Employer's property. When Employee's employment terminates, Employee
will return to Employer all records and will neither make nor retain any copies
of any records after termination of employment.
c. During the term of this Agreement and thereafter, Employee
shall diligently, legally and freely perform his duties as set forth in this
Agreement and shall take no action that would materially damage the goodwill of
the Employer. During the term of this Agreement and thereafter, Employee agrees
that he will not make any oral
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or written statement to any third party that is intended to, or does, call into
question the (1) conduct, business practices or business judgment of the
Employer or any of its officers, directors or business partners; or (2) quality
of the Employer's products or services.
8. Restrictive Covenants.
a. Employee will perform services which have a unique value to
Employer which if used in competition with Employer could cause serious and
irreparable harm to Employer. Employee will develop goodwill for Employer
through personal contact with customers and others who have business
relationships with Employer. This goodwill, which is a proprietary asset of
Employer, may follow Employee after the employment with Employer terminates.
Employee agrees that for a period of one (1) year following the termination of
this Agreement, Employee will not, unless given prior written consent by
Employer:
(1) solicit for employment or employ any other person or
entity any person who is employed by Employer during the same time as
Employee. Employee will not persuade or attempt to persuade any
customer, supplier, distributor, retailer, person or entity which is a
customer or supplier to Employer during the time of Employee's
employment with Employer, to discontinue business with Employer and its
affiliates or modify the terms of business between itself and Employer
or its affiliates.
(2) engage or act, either as a consultant, independent
contractor, proprietor, partner, employee, officer, or in any other
capacity, in any business which brews, packages, markets or distributes
alcoholic malt beverages in any state of the continental United States
or in any foreign country where Employer brewed, packaged, marketed or
distributed alcoholic malt beverages during the term of this Agreement,
provided however that this Subsection 8(a)(2) shall not apply to
Employee if Employee's employment is terminated pursuant to 6(a), 6(c)
or 6(e), above.
b. If any provision or portion of this section of the Agreement
is held unreasonable, unlawful, or unenforceable by a court of competent
jurisdiction, the provision will be deemed to be modified to the extent
necessary for the provision to be legally enforceable to the fullest extent
permitted by applicable law. Any court of competent jurisdiction may enforce any
provision of this section or modify any provision in order that the provision
will be enforced by the court to the fullest extent permitted by applicable law.
c. Violation by Employee of the provisions of Sections 7 or 8 of
this Agreement could cause irreparable injury to Employer and there is no
adequate remedy at law for violation of those provisions. Employer has, in
addition to other legal or equitable remedies, the right to enjoin Employee in a
court of equity from violating those provisions. The cessation of Employee's
compensation under Section 6 shall in no way
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limit the damages available to the Employer upon violation by Employee of
Sections 7 or 8 of this Agreement.
9. Employee's Death or Disability. In the event that Employee dies or
becomes disabled during the period that Employee is employed by Employer under
this Agreement, Employer shall pay for a period of six (6) months the
compensation including all bonuses calculated in accordance with the respective
formula set-forth on Schedule A and pro-rated up to and then in effect on the
date of Employee's death, or date that notice of Employee's disability is
received, to Employee or to Employee's estate or legal guardian. In the event
that Employee dies within one year after Employee's employment has been
terminated pursuant to Section 6.b. or Section 6.c. Employer shall continue to
pay Employee's estate the compensation, other than the annual performance bonus,
then in effect on the date of Employee's death until the first anniversary of
the date Employee's employment terminated, whereupon Employer's obligation to
pay compensation under Section 6 shall cease. In addition, the options/shares
granted to the Employee that are scheduled to vest during the twelve (12) month
period under Section 6.b.(3) and Section 6.d.(3) shall vest immediately and be
exercisable for a period of one year from the date of Employee's death. Employee
shall continue to be subject to the restrictions in Sections 7 and 8 of this
Agreement following termination of employment due to disability.
10. Notices. All notices and other communications required or permitted
to be given by this Agreement must be in writing and must be given and will be
deemed received if and when either hand delivered and a signed receipt is given
or mailed by registered or certified U.S. mail, return receipt requested,
postage prepaid, and if to Employer to:
Secretary of the Board of Directors
Redhook Ale Brewery, Incorporated
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
and if to Employee to:
Xxxxx X. Xxxxxxxxx
00000 00xx XX
Xxxxxxx, XX 00000
or at any other address as either party notifies the other of in writing.
11. Arbitration.
a. In the event of any dispute between the parties arising out of
or related to the enforcement or interpretation this Agreement or concerning
this Agreement, the subject matter hereof or thereof, the making, performance,
breach or termination of this Agreement or the rights and duties of the parties
in relation hereto or
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thereto, the parties agree that, in lieu of initiating judicial proceedings, the
dispute shall be submitted to and resolved by binding arbitration before a
single arbitrator under the commercial arbitration rules of the American
Arbitration Association ("AAA") then existing, selected in accordance with AAA
rules, with the exception that, to the extent available, such arbitrator must
have worked in the beverage industry for a period of at least two (2) years. The
place of arbitration shall be agreed to by the parties or in the absence of such
agreement shall be King County, Washington. The parties agree that judgment upon
the award may be entered in any court where the arbitration takes place or any
court having jurisdiction. The arbitrator may order specific performance or
other equitable relief or remedies to the extent they deem it appropriate, in
any situation in which a court could so order. Each party hereby waives personal
service of any process in connection with any such action or proceeding and
agrees that the service thereof may be made by certified or registered mail
directed to such party at the address designated below, and shall be deemed
effective as provided in that paragraph, hereof or in any other manner permitted
by law. The decision of the arbitrator shall be final and binding upon the
parties, their successors and assigns, and they shall comply with such decision
in good faith, and each party hereby submits itself to the jurisdiction of the
courts of the place where the arbitration is held, but only for the entry of
judgment with respect to and to enforce the decision of the arbitrators
hereunder, which judgment may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. This provision shall not
preclude the filing of a lawsuit or other judicial action to enable the
recording of a notice of pending action, or for attachment, receivership,
injunction or other provisional remedies. Judgment on the arbitration award may
be entered in any court having jurisdiction over the subject matter of the
controversy.
b. By agreeing to arbitration under this paragraph, both Employee
and Employer understand that they are agreeing to have any dispute relating to
Employee's employment decided by a neutral arbitrator, and as to those disputes
decided by the neutral arbitrator, Employee and Employer FULLY AND FOREVER WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL OF ANY ACTION OR PROCEEDING ARISING OUT OF
THIS AGREEMENT BY JURY. THIS WAIVER MEANS JUDGMENT MAY BE ENTERED BY A NEUTRAL
ARBITRATOR.
12. Miscellaneous.
a. This Agreement binds and benefits Employer and its successors
and assigns. This Agreement binds and benefits Employee and Employee's heirs,
personal and legal representatives, and guardians. No portion of this Agreement
or interest in it may be assigned by Employee.
b. The terms and provisions of this Agreement may not be modified
except by written instrument duly executed by Employer and Employee.
c. This Agreement will be governed by and enforced and construed
in accordance with the laws of the State of Washington.
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d. In any dispute arising out of this Agreement, the prevailing
party shall be entitled to recover its reasonable attorneys' fees and costs.
e. In the event of a breach of this Agreement, the non-breaching
party may maintain an action for specific performance against the party who is
alleged to have breached any of the terms of the Agreement. This subsection will
not be construed to limit in any manner any other rights or remedies an
aggrieved party may have by virtue of any breach of this Agreement.
f. Each of the parties has the right to waive compliance with any
obligation of this Agreement, but a waiver by any party of any obligation will
not be deemed a waiver of compliance with any other obligation or of its right
to seek redress for any breach of any obligation on any subsequent occasion, nor
will any waiver be deemed effective unless in writing and signed by the party so
waiving.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first set forth above.
"EMPLOYER"
Redhook Ale Brewery, Incorporated
By /s/ Xxxx X. Xxxxxxx Date: August 1, 2000
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Its President and Chief Executive Officer
"EMPLOYEE"
By /s/ Xxxxx X. Xxxxxxxxx Date: August 1, 2000
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Xxxxx X. Xxxxxxxxx
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SCHEDULE A
BONUS
The total bonus target is $35,000.00. Of that, $17,500.00 is based upon
the EBITDA improvement formula, $8,750.00 is based upon the breweries
performance formula, and $8,750.00 is the sum of the discretionary components
set forth below. The discretionary portion is to be paid quarterly as determined
by the CEO.
[factors that determine discretionary payments]
The quarterly payments shall be paid on the first payroll of the
subsequent quarter, which generally lies on the 20th.
The non-discretionary components are based on the target performance; if
the performance exceeds target, the non-discretionary amounts will exceed the
target amounts.
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