PYRAMID BREWERIES INC. RESTRICTED STOCK AWARD AGREEMENT (Annual Performance Stock Award)
Exhibit 10.38
RESTRICTED STOCK AWARD AGREEMENT
(Annual Performance Stock Award)
(Annual Performance Stock Award)
Pyramid Breweries Inc., a Washington corporation (the “Company”), has granted you an award of
shares of restricted common stock of the Company (the “Stock Award”). This Stock Award is made
under the Company’s 2004 Equity Incentive Plan (the “Plan”) on the following terms, subject to the
terms and conditions of the Plan.
The terms of the Stock Award are as set forth in this Restricted Stock Award Agreement (the
“Agreement”), and to the extent not inconsistent with this Agreement, the Plan. Capitalized terms
that are not defined in this Agreement have the meanings given to them in the Plan. The basic
terms of the Stock Award are summarized as follows:
Grant Date: |
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Number of Shares |
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Fair Market Value Per Share on Grant Date: |
$ | |||
Vesting Commencement Date: |
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1. Performance Results and Vesting
(a) As early as practicable after each Vesting Commencement Date, the Company will notify you
of the results of your performance for that fiscal year; such notification to be made on the form
entitled “Acknowledgement of Results of Performance” attached as Exhibit A.
(b) The Stock Award is subject to forfeiture upon termination of your service with the Company
(or a Parent or Subsidiary) as described below.
(b) Shares that have not vested and remain subject to forfeiture under this Agreement are
referred to herein as “Unvested Shares.” The Unvested Shares will vest (and to the extent so
vested cease to be Unvested Shares remaining subject to forfeiture) on the first anniversary of the
Vesting Commence Date set forth above. Collectively, the Unvested Shares and any vested shares are
referred to herein as the “Shares.”
(c) Early lapse of the forfeiture restrictions may occur under certain circumstances as
described below.
2. Termination of Service
If your Service terminates for any reason, any portion of this Stock Award that has not vested
as provided in Sections 1 and 3 of this Agreement will immediately terminate.
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You will be required to forfeit all Unvested Shares upon such occurrence without the payment
of any further consideration to you, subject to Section 3 below. As security for the faithful
performance by you of the terms of this Agreement and to ensure the availability for delivery of
Unvested Shares upon forfeiture, the Company or its transfer agent shall hold all certificates
representing Unvested Shares, together with an adequate number of undated and otherwise blank stock
powers executed by you. The Company shall have the right to cause transfers of such Unvested
Shares to be effected pursuant to this Section 2.
3. Accelerated Vesting
If your employment is terminated by the Company without “Cause” by you for “Good Reason,” or
as a result of your death or Disability, each as defined in and pursuant to the terms of the Plan
and the Amended 2006 Compensation Package, the forfeiture restriction will lapse on a pro rata
basis, based on the date your employment terminates. In the event of a Company Transaction or
Change in Control, this Stock Award will be governed by the terms of the Plan. In summary, this
generally means that in a Change in Control, or in a Company Transaction in which the surviving
company does not generally assume the Company’s rights and obligations with respect to outstanding
awards under the Plan, the Shares will become fully vested and no longer subject to forfeiture.
4. Consideration
The Company acknowledges your payment of full consideration for this Stock Award in the form
of services previously rendered (in an amount equal to no less than the aggregate par value of the
Shares) and services to be rendered hereafter to the Company.
5. Transfer Restrictions
Unvested Shares may not be sold, transferred, assigned, pledged, encumbered or otherwise
disposed of in contravention of the provisions of this Agreement.
6. Securities Law Compliance
Notwithstanding any other provision of this Agreement, you may not sell the Shares unless they
are registered under the Securities Act of 1933, as amended (the “Securities Act”), or, if such
Shares are not then so registered, the Company has determined that such sale would be exempt from
the registration requirements of the Securities Act. The sale of the Shares must also comply with
other applicable laws and regulations governing the Shares, and you may not sell the Shares if the
Company determines that such sale would not be in material compliance with such laws and
regulations.
7. Section 83(b) Election for Stock Award
You understand that under Section 83(a) of the Code, the excess of the Fair Market Value of
the Unvested Shares on the date the forfeiture restrictions lapse over the purchase price, if any,
paid for such Shares will be taxed, on the date such forfeiture restrictions lapse, as ordinary
income subject to payroll and withholding tax and tax reporting, as applicable. For this purpose,
the term “forfeiture restrictions” means the right of the Company to receive
back any Unvested Shares upon termination of your Services. You understand that you may elect
under Section 83(b) of the Code to be taxed at the time the Unvested Shares are acquired, rather
than when and as the Unvested Shares cease to be subject to the forfeiture restrictions. Such
election (an “83(b) Election”) must be filed with the Internal Revenue Service within 30 days from
the Grant Date of the Stock Award. Even if the Fair Market Value of the Unvested Shares on the
Grant Date equals the purchase price, if any, (and thus no tax is payable), you must file the
election within the 30-day period to avoid the risk of adverse tax consequences in the future.
You understand that (a) you will not be entitled to a deduction for any ordinary income
previously recognized as a result of the 83(b) Election if the Unvested Shares are subsequently
forfeited to the Company and (b) the 83(b) Election may cause you to recognize more ordinary income
than you would have otherwise recognized if the value of the Unvested Shares subsequently declines.
YOU UNDERSTAND THAT FAILURE TO FILE SUCH AN 83(B) ELECTION WITHIN THE 30-DAY PERIOD MAY RESULT
IN THE RECOGNITION OF ORDINARY INCOME BY YOU AS THE FORFEITURE RESTRICTIONS LAPSE. You further
understand that an additional copy of such election form should be filed with your federal income
tax return for the calendar year in which the date of this Agreement falls. You acknowledge that
the foregoing is only a summary of the federal income tax laws that apply to the purchase of the
Unvested Shares under this Agreement and does not purport to be complete. YOU FURTHER ACKNOWLEDGE
THAT THE COMPANY HAS DIRECTED YOU TO SEEK INDEPENDENT ADVICE REGARDING THE APPLICABLE PROVISIONS OF
THE CODE AND THE INCOME TAX LAWS OF ANY MUNICIPALITY OR STATE IN WHICH YOU MAY RESIDE.
You agree to execute and deliver to the Company with this Agreement a copy of the
Acknowledgment and Statement of Decision Regarding Section 83(b) Election (the “Acknowledgment”)
attached hereto as Exhibit B. You further agree that you will execute and deliver to the
Company with this Agreement a copy of the 83(b) Election attached hereto as Exhibit C if
you choose to make such an election.
You agree to deliver a Stock Power and Assignment Separate from Certificate in the form
attached as Exhibit D (with the name of the transferee, number of shares, certificate
number and date left blank), executed by you and your spouse, if any, along with any certificate(s)
evidencing shares of Restricted Stock issued to you, to the Secretary of the Company or its
designee (“Escrow Holder”). YOU HEREBY APPOINT THE ESCROW HOLDER TO HOLD SUCH STOCK POWER AND ANY
SUCH CERTIFICATE(S) IN ESCROW AND TO TAKE ALL SUCH ACTIONS, AND TO EFFECTUATE ALL SUCH TRANSFERS
AND/OR RELEASES OF SUCH SHARES, AS ARE REQUIRED TO EFFECTUATE THE TERMS OF THIS AWARD. The
foregoing appointment is a power coupled with an interest and may not be revoked by you. You and
the Company agree that any Escrow Holder will not be liable to any party to any person for any
actions or omissions, unless Escrow Holder is grossly negligent relative thereto. Escrow Holder may
rely on any letter, notice or other document executed by any signature purported to be genuine and
may rely on advice of counsel and obey any order of any court with respect to the transactions by
this Agreement. Shares of Restricted Stock subject to this Award shall be released to you
from escrow as they Vest.
8. Legends
You understand and agree that the Shares are subject to forfeiture as set forth in this
Agreement. You understand that the certificate(s) representing the Shares may bear legends in
substantially the following form:
“The securities represented by this certificate are subject to certain forfeiture rights held
by the issuer and/or its assignee(s) and may not be sold, assigned, transferred, encumbered or in
any way disposed of except as set forth in a stock award agreement between the issuer and the
original purchaser of these shares, a copy of which may be obtained at the principal office of the
issuer. Such transfer restrictions and/or forfeiture rights are binding on transferees of these
shares.”
9. Stop-Transfer Notices
You understand and agree that, in order to ensure compliance with the restrictions referred to
in this Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records. The Company will not be required to (a) transfer
on its books any Shares that have been sold or transferred in violation of the provisions of this
Agreement or (b) treat as the owner of the Shares, or otherwise accord voting, dividend or
liquidation rights to, any transferee to whom the Shares have been transferred in contravention of
this Agreement.
10. Independent Tax Advice
You acknowledge that determining the actual tax consequences to you of receiving or disposing
of the Shares may be complicated. These tax consequences will depend, in part, on your specific
situation and may also depend on the resolution of currently uncertain tax law and other variables
not within the control of the Company. You are aware that you should consult a competent and
independent tax advisor for a full understanding of the specific tax consequences to you of
receiving or disposing of the Shares. Prior to executing this Agreement, you either have consulted
with a competent tax advisor independent of the Company to obtain tax advice concerning the Shares
in light of your specific situation or have had the opportunity to consult with such a tax advisor
but chose not to do so.
11. Withholding and Disposition of Shares
You agree to make arrangements satisfactory to the Company for the payment of any federal,
state, local or foreign withholding tax obligations that arise either upon the Grant Date or as the
forfeiture restrictions on any Shares lapse, and you acknowledge that the Company shall not have
any obligation to deliver the Shares until you have made such arrangements. Notwithstanding the
previous sentence, you acknowledge and agree that the Company and any Parent or Subsidiary has the
right to deduct from payments of any kind
otherwise due to you any federal, state or local taxes of any kind required by law to be
withheld with respect this Stock Award.
12. General Provisions
12.1 Assignment. The Company may assign its rights under this Agreement at any time, whether
or not such rights are then exercisable, to any person or entity selected by the Company’s Board of
Directors, including, without limitation, one or more stockholders of the Company.
12.2 Notices. Any notice required in connection with this Agreement will be given in writing
and will be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or
certified, postage prepaid and addressed to the party entitled to such notice by 10 days’ advance
written notice under this Section 12.2 to all other parties to this Agreement.
12.3 No Waiver. No waiver of any provision of this Agreement will be valid unless in writing
and signed by the person against whom such waiver is sought to be enforced, nor will failure to
enforce any right hereunder constitute a continuing waiver of the same or a waiver of any other
right hereunder.
12.4 Undertaking. You hereby agree to take whatever additional action and execute whatever
additional documents the Company may deem necessary or advisable in order to carry out or effect
one or more of the obligations or restrictions imposed on either you or the Shares pursuant to the
express provisions of this Agreement.
12.5 Agreement Is Entire Contract. This Agreement constitutes the entire contract between the
parties hereto with regard to the subject matter hereof.
12.6 Successors and Assigns. The provisions of this Agreement will inure to the benefit of,
and be binding on, the Company and its successors and assigns and you and your legal
representatives, heirs, legatees, distributees, assigns and transferees by operation of law,
whether or not any such person will have become a party to this Agreement and agreed in writing to
join herein and be bound by the terms and conditions hereof.
12.7 No Employment or Service Contract. This Agreement does not confer upon you any right
with respect to continuance of employment by the Company or any Parent or Subsidiary, nor does it
interfere in any way with the right of your employer to terminate your employment or services at
any time.
12.8 Stockholder of Record. As of the Grant Date, you will be recorded as a stockholder of
the Company and will have, subject to the provisions of this Agreement, all the rights of a
stockholder with respect to the Shares.
12.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which
will be deemed an original, but which, upon execution, will constitute one and the same instrument.
12.10 Governing Law. This Agreement will be construed and administered in accordance with and
governed by the laws of the State of Washington.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year indicated
above on the first page of this Agreement as the Grant Date.
| COMPANY | PYRAMID BREWERIES INC. | |||||||
| By: | ||||||||
| Print Name: | ||||||||
| Title: | ||||||||
GRANTEE |
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| Print Name: | ||||||
| Address: | ||||||
| Social Security No.: | ||||||
EXHIBIT A
ACKNOWLEDGEMENT OF RESULTS OF PERFORMANCE
FOR FISCAL YEAR END
EXHIBIT B
ACKNOWLEDGMENT AND STATEMENT OF DECISION REGARDING SECTION 83(b) ELECTION
The undersigned, a recipient of shares of common stock of Pyramid Breweries Inc.,
a Washington corporation (the “Company”), pursuant to a Stock Award, hereby states as follows:
1. The undersigned acknowledges receipt of a copy of the Stock Award Agreement (the
“Agreement”) which the undersigned has carefully reviewed.
2. The undersigned either (check and complete as applicable):
| (a) | has consulted, and has been fully advised by, the undersigned’s own tax advisor regarding the federal, state and local tax consequences of receiving the Stock Award and particularly regarding the advisability of making an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), and pursuant to the corresponding provisions, if any, of applicable state law, or | ||
| (b) | has knowingly chosen not to consult such a tax advisor. |
3. The undersigned hereby states that the undersigned has decided (check as applicable)
| (a) | to make an election pursuant to Section 83(b) of the Code, and is submitting to the Company, together with the undersigned’s executed Stock Award Agreement, an executed form entitled “Election Under Section 83(b) of the Internal Revenue Code of 1986”, or | ||
| (b) | not to make an election pursuant to Section 83(b) of the Code. |
4. Neither the Company nor any representative of the Company has made any warranty or
representation to the undersigned with respect to the tax consequences of the undersigned’s receipt
of the shares or of the making or failure to make an election pursuant to Section 83(b) of the Code
or the corresponding provisions, if any, of applicable state law.
Dated: |
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EXHIBIT C
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue
Code, to include in taxpayer’s gross income for the current taxable year the amount of any
compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described
below:
| 1. | The name, address, taxpayer identification number and taxable year of the undersigned are as follows: | |
| NAME OF TAXPAYER: | ||
| ADDRESS: | ||
| IDENTIFICATION NO. OF TAXPAYER: | ||
| TAXABLE YEAR: | ||
| 2. | The property with respect to which the election is made is described as follows: shares of the common stock of Pyramid Breweries Inc., a Washington corporation (the “Company”). | |
| 3. | The date on which the property was transferred is: | |
| 4. | The property is subject to the following restrictions: | |
| 5. | The aggregate fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: $ . | |
| 6. | The amount (if any) paid for such property is: $0 |
The undersigned has submitted a copy of this statement to the person for whom the services
were performed in connection with the undersigned’s receipt of the above-described property. The
undersigned is the person performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked except with the
consent of the Commissioner.
Dated: |
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EXHIBIT D
STOCK POWER AND ASSIGNMENT
SEPARATE FROM CERTIFICATE *
SEPARATE FROM CERTIFICATE *
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
, shares of the common stock of Pyramid Breweries Inc., a Washington
corporation, standing in the undersigned’s name on the books of said corporation represented by
Certificate(s) No. delivered herewith, and does hereby irrevocably
constitute the Secretary of said corporation as attorney-in-fact, with full power of substitution,
to transfer said stock on the books of said corporation.
Dated:
| Taxpayer | ||||
| Print Name: | ||||
| Spouse | ||||
| Print Name: | ||||
| * | GRANTEE AND HIS SPOUSE SHOULD SIGN THIS STOCK POWER AND ASSIGNMENT SEPARATE FROM CERTIFICATE, BUT LEAVE BLANK THE NAME OF THE TRANSFEREE, NUMBER OF SHARES, CERTIFICATE NUMBER AND DATE. |
DISTRIBUTION OF COPIES
| 1. | File original with the Internal Revenue Service Center where the taxpayer’s income tax return will be filed. Filing must be made by no later than 30 days after the date the property was transferred. | |
| 2. | Attach one copy to the taxpayer’s income tax return for the taxable year in which the property was transferred. | |
| 3. | Mail one copy to the Company at the following address: |
