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EXHIBIT 4.1
PETE'S BREWING COMPANY
NONSTATUTORY STOCK OPTION AGREEMENT
I. NOTICE OF STOCK OPTION GRANT
Philip A. Marineau
506 Sheridan Road
Kenilworth, IL 60043
You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of this Option Agreement, as
follows:
Date of Grant July 22, 1997
Vesting Commencement Date February 11, 1997
Exercise Price per Share $1.25
Total Number of Shares Granted 12,000
Total Exercise Price $15,000.00
Type of Option: XX Nonstatutory Stock Option
Term/Expiration Date: July 22, 2007
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
1/12th of the Shares subject to the Option shall vest each month after
the Vesting Commencement Date.
Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Common Stock, no par value, of the
Company.
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(d) "Company" means Pete's Brewing Company, a California corporation.
(e) "Committee" means a Committee appointed by the Board.
(f) "Director" means a member of the Board.
(g) "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(j) "Optioned Stock" means the Common Stock subject to this Option.
(k) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 8 of this Agreement.
Termination Period:
This Option may be exercised for three (3) months after termination of
the Optionee's service as a Director. Upon the death or Disability of the
Optionee, this Option may be exercised as provided in Section 7 below. In the
event of the Optionee's change in status from Director to Employee or
Consultant, this Option Agreement shall remain in effect. In no event shall this
Option be exercised later than the Term/Expiration Date as provided above.
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II. AGREEMENT
1. Grant of Option. The Compensation Committee of the Board hereby
grants to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") a nonstatutory stock option (the "Option") to
purchase the number of Shares, as set forth in the Notice of Grant, at the
exercise price per share set forth in the Notice of Grant (the "Exercise
Price").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of this Option Agreement. In the event of Optionee's
death, Disability or other termination of Optionee's services as a Director or
Optionee's employment or consulting relationship, the exercisability of the
Option is governed by the applicable provisions of this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery
of an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company. The Exercise Notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by
such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with all relevant provisions
of law and the requirements of any stock exchange or quotation service upon
which the Shares are then listed. Assuming such compliance, for income tax
purposes the Exercised Shares shall be considered transferred to the Optionee on
the date the Option is exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
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(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Option Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the terms of this Option Agreement.
6. Tax Consequences. Some of the federal and California tax
consequences relating to this Option, as of the date of this Option, are set
forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option. The Optionee may incur regular
federal income tax and California income tax liability upon exercise of the
Option. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an Employee or a former Employee,
the Company will be required to withhold from his compensation or collect from
Optionee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.
(b) Disposition of Shares. If the Optionee holds the Shares
for more than one year but less than eighteen months, any gain realized on
disposition of the Shares will be treated as capital gain for federal income tax
purposes. If the Optionee holds the Shares for more than eighteen months, any
gain realized on disposition of the Shares will be treated as long-term capital
gain for federal income tax purposes
7. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written
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Notice of Exercise from the Optionee, and (ii) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement. Shares issued upon exercise of the Option
shall be issued in the name of the Optionee or, if requested by the Optionee, in
the name of the Optionee and his spouse. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 8 below.
Exercising this Option in any manner shall decrease the
number of Shares thereafter available for sale under the Option by the number of
Shares as to which the Option is exercised.
(b) Rule 16b-3. This Option must comply with the applicable
provisions of Rule 16b-3 promulgated under the Exchange Act or any successor
thereto and contains such additional conditions or restrictions as may be
required thereunder to qualify for the maximum exemption from Section 16 of the
Exchange Act.
(c) Termination of Continuous Status as a Director. In the
event an Optionee's status as a Director terminates (other than upon the
Optionee's death or total and permanent disability (as defined in Section
22(e)(3) of the Code)), the Optionee may exercise his Option, but only within
three (3) months following the date of such termination, and only to the extent
that the Optionee was entitled to exercise it on the date of such termination
(but in no event later than the expiration of its ten (10) year term). To the
extent that the Optionee was not entitled to exercise an Option on the date of
such termination, and to the extent that the Optionee does not exercise such
Option (to the extent otherwise so entitled) within the time specified herein,
the Option shall terminate.
(d) Disability of Optionee. In the event Optionee's status as
a Director terminates as a result of total and permanent disability (as defined
in Section 22(e)(3) of the Code), the Optionee may exercise this Option, but
only within twelve (12) months following the date of such termination, and only
to the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise this Option
on the date of termination, or if the Optionee does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option
shall terminate.
(e) Death of Optionee. In the event of Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee
was entitled to exercise it on the date of death (but in no event later than
the expiration
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of its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of death, and to the extent that the Optionee's
estate or a person who acquired the right to exercise such Option does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.
8. Adjustments Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by this Option, and the number of shares of Common Stock which have been
authorized for issuance upon exercise of this Option, as well as the price per
share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to this Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that this Option has
not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, this Option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. If such successor corporation assumes or substitutes an
equivalent option for the Option, the Option or equivalent option shall continue
to become exercisable as provided in Section 2 hereof for so long as Optionee
remains a Director or the Optionee serves as a director of the successor
corporation or a Parent or Subsidiary of the successor corporation. Following
such assumption or substitution, upon the Optionee's termination of status as a
Director of the Company or of the successor (or Parent or Subsidiary thereof),
as applicable, Optionee's outstanding Option(s) shall become fully exercisable,
including as to Shares as to which such Option(s) would not otherwise be
exercisable, and shall remain exercisable in accordance with Sections 7(c)
through (e) above.
In the event that the successor corporation does not agree to assume
the Option or to substitute an equivalent option, this Option shall become fully
vested and exercisable, including as to Shares as to which it would not
otherwise be exercisable. If the Option becomes fully vested and exercisable in
the event of a merger or sale of assets, the Board shall notify the Optionee
that the Option shall be fully exercisable for a period of fifteen (15) days
from the date of such notice, and
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the Option shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the Option confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares).
9. Reservation of Shares. The Company, during the term of this Option
Agreement, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Option Agreement.
10. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of this Option unless the exercise of such Option and
the issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of this Option, the Company may
require the Optionee to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
11. Entire Agreement; Governing Law. This Option Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This agreement is governed by California law
except for that body of law pertaining to conflict of laws.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of this Option Agreement. Optionee has reviewed this
Option Agreement in its entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option Agreement and fully
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understands all provisions of the Option Agreement. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions relating to the Option Agreement. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
OPTIONEE: PETE'S BREWING COMPANY
____________________________________ By:____________________________________
Signature
____________________________________ Title:_________________________________
Philip A. Marineau
506 Sheridan Road, Kenilworth, IL 60043
Residence Address
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CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of this Option Agreement. In consideration of the Company's
granting his spouse the right to purchase Shares as set forth in this Option
Agreement, the undersigned hereby agrees to be irrevocably bound by the terms
and conditions of this Option Agreement and further agrees that any community
property interest shall be similarly bound. The undersigned hereby appoints the
undersigned's spouse as attorney-in-fact for the undersigned with respect to any
amendment or exercise of rights under this Option Agreement.
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Spouse of Optionee
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EXHIBIT A
PETE'S BREWING COMPANY
EXERCISE NOTICE
Pete's Brewing Company
514 High Street
Palo Alto, CA 94301
Attention: Secretary
1. Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Pete's Brewing Company (the "Company")
under and pursuant to the Stock Option Agreement dated July 22, 1997 (the
"Option Agreement"). The purchase price for the Shares shall be $1.25 per share,
as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Option Agreement and agrees to abide by
and be bound by its terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all
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prior undertakings and agreements of the Company and Purchaser with respect to
the subject matter hereof, and may not be modified adversely to the Purchaser's
interest except by means of a writing signed by the Company and Purchaser. This
agreement is governed by California law except for that body of law pertaining
to conflict of laws.
Submitted by: Accepted by:
PURCHASER: PETE'S BREWING COMPANY
__________________________________ By: _________________________________
Signature
__________________________________ Its: ________________________________
Print Name
Address: Address:
__________________________ 514 High Street
__________________________ Palo Alto, CA 94301
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