THE BOSTON BEER COMPANY, INC.
1996 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
The purpose of The Boston Beer Company, Inc. 1996 Stock
Option Plan for Non-Employee Directors (the "Plan") is to
attract and retain the services of experienced and
knowledgeable independent Directors who are not employees
("Non-Employee Directors") of The Boston Beer Company, Inc.
("Boston Beer") for the benefit of Boston Beer and its
stockholders and to provide additional incentive for Non-
Employee Directors to continue to work in the best interests
of Boston Beer and its stockholders through continuing
ownership of Boston Beer common stock.
2. SHARES SUBJECT TO THE PLAN
The total number of shares of Class A Common Stock, par
value $.01 per share ("Shares"), of Boston Beer for which
options may be granted under the Plan shall not exceed
100,000 in the aggregate, subject to adjustment in
accordance with Section 9 hereof.
3. ELIGIBILITY; GRANT OF OPTION
Each of Pearson C. Cummin III, James C. Kautz, Charles
Joseph Koch and John B. Wing, who are the four current
members of the Board of Directors of Boston Beer (the
"Board") who are not otherwise employees of Boston Beer or
any subsidiary and who were reelected as Directors at the
Boston Beer Annual Meeting held on May 21, 1996, shall be
granted an option to acquire two thousand five hundred
(2,500) Shares under the Plan upon the adoption of the Plan
by the Board and shall be granted a further option for two
thousand five hundred (2,500) Shares upon each subsequent
reelection to the Board. All new Non-Employee Directors
duly elected in the ten year period commencing on the date
of the adoption of the Plan, shall be granted an option to
acquire two thousand five hundred (2,500) Shares under the
Plan upon their election to the Board and upon each
subsequent reelection. The date of grant for such options
granted to the four current Non-Employee Directors named
above shall be the date of adoption of the Plan by the
Board, but such options shall become effective as of such
date of grant only upon approval of the Plan by the holders
of Boston Beer's issued and outstanding Class B Common Stock
in accordance with Section 13 hereof. The date of the first
grant for each subsequently elected Non-Employee Director
shall be the date of election. The options shall be
non-qualified options not intended to meet the requirements
of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
4. OPTION AGREEMENT
Each option granted under the Plan shall be evidenced
by an option agreement (the "Agreement") duly executed on
behalf of Boston Beer and by the Non-Employee Director to
whom such option is granted. Each Agreement shall (i)
comply with and be subject to the terms and conditions of
the Plan, (ii) provide that the optionee agrees to continue
to serve as a Director of Boston Beer during the term for
which he or she was elected and (iii) contain such other
provisions not inconsistent with the provisions of the Plan,
including with respect to obligations of each Non-Employee
Director not to compete with Boston Beer, as the Board may
determine.
5. OPTION EXERCISE PRICE
Subject to the provisions of Section 9 hereof, the
option exercise price for options granted under the Plan
shall be the fair market value of the Shares covered by the
option on the date of grant of the option. For the purposes
hereof and of Section 6(b), the fair market value of Shares
shall be the mean between the high and low sales prices of
the Class A Common Stock of Boston Beer on the New York
Stock Exchange as reported in the Wall Street Journal for
the date of grant, provided that if the Class A Common Stock
of Boston Beer is not listed on or actually trading on the
New York Stock Exchange, fair market value shall be
determined in good faith by the Board.
6. TIME AND MANNER OF EXERCISE OF OPTION
(a) Options granted under the Plan shall, subject to
the provisions of Section 7, be immediately exercisable in
full; provided, however, that no option granted under the
Plan may be exercised prior to approval of the Plan by the
holders of Boston Beer's issued and outstanding Class B
Common Stock, as required by Section 13.
(b) The option may be exercised in full at one time or
in part from time to time by giving written notice to Boston
Beer, signed by the person or persons exercising the option,
stating the number of Shares with respect to which the
option is being exercised, accompanied by payment in full
for such Shares, which payment may be in cash or in whole or
in part in Shares of the Class A Common Stock of Boston Beer
already owned for a period of at least six months by the
person or persons exercising the option, valued at fair
market value, as determined under Section 5 hereof, on the
date of exercise; provided, however, that there shall be no
such exercise at any one time as to fewer than two hundred
fifty (250) Shares or all of the remaining Shares then
purchasable by the person or persons exercising the option,
if fewer than two hundred fifty (250) Shares. Upon such
exercise, delivery of a certificate for paid-up
non-assessable Shares shall be made at the principal
Massachusetts office of Boston Beer to the person or persons
exercising the option at such time, during ordinary business
hours, not more than thirty (30) days from the date of
receipt of the notice by Boston Beer , as shall be
designated in such notice, or at such time, place and manner
as may be agreed upon by Boston Beer and the person or
persons exercising the option.
7. TERM OF OPTIONS
(a) Each option shall expire ten (10) years from the
date of the granting thereof, but shall be subject to
earlier termination as herein provided.
(b) In the event of the death of an optionee, the
option granted to such optionee may be exercised by the
estate of such optionee or by any person or persons who
acquired the right to exercise such option by bequest or
inheritance or otherwise by reason of the death of such
optionee. Such option may be exercised at any time within
one (1) year after the date of death of such optionee, at
which time the option shall terminate, or prior to the date
on which the option otherwise expires by its terms,
whichever is earlier.
(c) In the event that an optionee ceases to be a
Director of Boston Beer the option granted to such optionee
may be exercised by him or her, any time within three (3)
months after the date such optionee ceases to be a Director
of Boston Beer, at which time the option shall terminate,
but in any event prior to the date on which the option
expires by its terms, whichever is earlier, unless
termination as a Director (i) was by Boston Beer for cause,
in which case the option shall terminate immediately at the
time the optionee ceases to be a Director of Boston Beer ,
(ii) was because the optionee has become disabled (within
the meaning of Section 22(e)(3) of the Code), or (iii) was
by reason of the death of the optionee. In the case of
death, see Section 7(b) above. In the case of disability,
the option may be exercised at any time within one (1) year
after the date of termination of the optionee's directorship
with Boston Beer, at which time the option shall terminate,
but in any event prior to the date on which the option
otherwise expires by its terms, whichever is earlier.
8. OPTIONS NOT TRANSFERABLE
The right of any optionee to exercise an option granted
to him or her under the Plan shall not be assignable or
transferable by such optionee otherwise than by will or the
laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the Code or Title I
of the Employee Retirement Income Security Act, or the rules
thereunder. Any option granted under the Plan shall be
exercisable during the lifetime of such optionee only by him
or her. Any option granted under the Plan shall be null and
void and without effect upon the bankruptcy of the optionee,
or upon any attempted assignment or transfer, except as
herein provided, including without limitation any purported
assignment, whether voluntary or by operation of law,
pledge, hypothecation or other disposition, attachment,
trustee process or similar process, whether legal or
equitable, upon such option.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the outstanding shares of the Class A
Common Stock of Boston Beer are changed into or exchanged
for a different number or kind of shares or other securities
of Boston Beer or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares or
dividends payable in capital stock, appropriate adjustment
shall be made in the number and kind of shares as to which
outstanding options, or portions thereof then unexercised,
shall be exercisable, to the end that the proportionate
interest of the optionee shall be maintained as before the
occurrence of such event, and such adjustment in outstanding
options shall be made without change in the total price
applicable to the unexercised portion of such options and
with a corresponding adjustment in the option price per
share.
10. RESTRICTIONS ON ISSUE OF SHARES
Notwithstanding the provisions of Section 6 hereof,
Boston Beer may delay the issuance of Shares covered by the
exercise of any option granted under the Plan and the
delivery of a certificate for such Shares until one of the
following conditions shall be satisfied:
(i) the Shares with respect to which an option
has been exercised are at the time of the issue of such
Shares effectively registered under applicable Federal and
state securities acts now in force or hereafter amended; or
(ii) counsel for Boston Beer shall have given an
opinion, which opinion shall not be unreasonably conditioned
or withheld, that such Shares are exempt from registration
under applicable Federal and state securities acts now in
force or hereafter amended.
It is intended that all exercises of options granted
under the Plan shall be effective. Accordingly, Boston Beer
shall use its best efforts to bring about compliance with
the above conditions within a reasonable time, except that
Boston Beer shall be under no obligation to cause a
registration statement or a post-effective amendment to any
registration statement to be prepared at its expense solely
for the purpose of covering the issue of Shares in respect
of which any option may be exercised, except as otherwise
agreed to by Boston Beer in writing.
11. RIGHTS OF HOLDER ON PURCHASE FOR INVESTMENT;
SUBSEQUENT REGISTRATION
Unless the Shares to be issued upon exercise of an
option granted under the Plan have been effectively
registered under the Securities Act of 1933 (the
"1933 Act"), as now in force or hereafter amended, Boston
Beer shall be under no obligation to issue any Shares
covered by any option unless the person who exercises such
option, in whole or in part, shall give a written
representation and undertaking to Boston Beer which is
satisfactory in form and scope to counsel to Boston Beer and
upon which, in the opinion of such counsel, Boston Beer may
reasonably rely, that he or she is acquiring the Shares
issued to him pursuant to such exercise of the option for
his or her own account as an 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 any rules and regulations in
force at the time of such transfer under the 1933 Act, or
any other applicable law, and that if Shares are issued
without such registration a legend to this effect may be
endorsed upon the securities so issued. In the event that
Boston Beer shall, nevertheless, deem it necessary or
desirable to register under the 1933 Act or other applicable
statutes any Shares with respect to which an option shall
have been exercised, or to qualify any such Shares for
exemption from the 1933 Act or other applicable statutes,
then Boston Beer shall take such action at its own expense
and may require from each optionee such information in
writing for use in any registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably
necessary for such purpose and may require reasonable
indemnity to Boston Beer and its Officers and Directors from
such holder against all losses, claims, damages and
liabilities arising from such use of the information so
furnished and caused by any untrue statement of any material
fact therein or caused by the omission to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances under which they were made.
12. LOANS PROHIBITED
Boston Beer shall not, directly or indirectly, lend
money to an optionee or to any person or persons entitled to
exercise an option by reason of the death of an optionee for
the purpose of assisting any of them in the acquisition of
Shares covered by an option granted under the Plan.
13. APPROVAL OF STOCKHOLDERS
The Plan shall be subject to approval by the
affirmative vote of the holders of a majority of the issued
and outstanding shares of the Class B Common Stock of Boston
Beer present or represented and entitled to vote at a duly
held stockholders' meeting, or by written consent of all of
the holders of such Class B Common Stock, and shall take
effect immediately as of its date of adoption upon such
approval.
14. EXPENSES OF THE PLAN
All costs and expenses of the adoption and
administration of the Plan shall be borne by Boston Beer ,
and none of such expenses shall be charged to any optionee.
15. TERMINATION AND AMENDMENT OF PLAN
Unless sooner terminated as herein provided, the Plan
shall terminate ten (10) years from the date upon which the
Plan was duly approved by the holders of Boston Beer's
issued and outstanding Class B Common Stock. The Board may
at any time terminate the Plan or make such modification or
amendment thereof as it deems advisable; provided, however,
that, except as provided in Section 9 hereof, no
modification or amendment to the provisions of the Plan may
be made more than once every six (6) months other than to
comport with changes in the Code, the Employee Retirement
Income Security Act, or the rules thereunder, if the effect
of such amendment or modification would be to change (i) the
requirements for eligibility under the Plan, (ii) the timing
of the grants of options to be granted under the Plan or the
exercise price thereof, or (iii) the number of Shares
subject to options to be granted under the Plan either in
the aggregate or to one Director. Any amendment to the
provisions of the Plan which (i) materially increases the
number of Shares which may be subject to options granted
under the Plan, (ii) materially increases the benefits
accruing to Non-Employee Directors under the Plan, or (iii)
materially modifies the requirement for eligibility to
participate in the Plan, shall be subject to approval by the
holders of Boston Beer's Class B Common Stock obtained in
the manner stated in Section 13 hereof. Termination or any
modification or amendment of the Plan shall not, without the
consent of an optionee, affect his or her rights under an
option previously granted to him or her.
16. LIMITATION OF RIGHTS IN THE OPTION SHARES
An optionee shall not be deemed for any purpose to be a
stockholder of Boston Beer with respect to any of the
options except to the extent that the option shall have been
exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered
to the optionee.
17. NOTICES
Any communication or notice required or permitted to be
given under the Plan shall be in writing, and mailed by
registered or certified mail or delivered by hand, if to
Boston Beer , to its principal place of business, Attention:
President, and, if to an optionee, to the address as
appearing on the records of Boston Beer .
18. COMPLIANCE WITH RULE 16b-3.
It is the intention of Boston Beer that the Plan comply
in all respects with Rule 16b-3 promulgated under Section
16(b) of the Securities Exchange Act of 1934 (the
"1934 Act") and that Participants remain disinterested
persons for purposes of administering other employee benefit
plans of Boston Beer and having transactions under such
other plans be exempt from Section 16(b) of the 1934 Act.
Therefore, if any Plan provision is found not to be in
compliance with Rule 16b-3 or if any Plan provisions would
disqualify Participants from remaining disinterested
persons, that provisions shall be deemed null and void, and
in all events the Plan shall be construed in favor of its
meeting the requirements of Rule 16b-3.
ADOPTED BY THE BOARD OF DIRECTORS ON MAY 21, 1996
APPROVED BY THE SOLE HOLDER OF THE CLASS B COMMON STOCK ON
MAY 21, 1996.
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