SEPARATION AND SEVERANCE
AGREEMENT
This Separation and Severance Agreement (the
"Agreement") is effective August 27, 2009 by and between Mendocino
Brewing Company, Inc. a California corporation (the "Company") and
Yashpal Singh (the "Executive").
Recitals
A. The
Company and Executive are parties to that certain Executive
Employment Agreement, effective January 1, 2007 (the "Employment
Agreement") which contains certain provisions relating to the
termination of Executive's employment with the Company.
B. The
Company and Executive wish to supplement the Employment Agreement
with additional terms and conditions and to clarify certain
existing provisions in the Employment Agreement relating to the
termination of Executive's employment with the Company.
C. NOW,
THEREFORE, in consideration of the mutual agreements, covenants and
other promises set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged and accepted, the parties agree as follows.
1.
Termination of Employment by Employee With Good
Reason.
A. Executive
may terminate his employment prior to the end of the employment
term with the Company for Good Reason (as defined below) by
providing the Board of Directors of the Company (the "Board"),
within ninety (90) days of the occurrence of an event described in
Section 1(B) below, with a written notice that specifies
such event and any relevant facts and circumstances that allegedly
justifies termination of employment by Executive. The
Company shall have an opportunity to cure the event specified in
such notice within thirty (30) days following delivery of such
notice. If the Company fails to cure those circumstances in all
material respects by the expiration of the thirty (30) day notice
period, the Executive's employment with the Company shall
cease. The Executive's Termination Date shall be the
earlier of the day that the Executive ceases to provide services to
the Company or the day that the facts and circumstances indicated
that the Executive has permanently reduced the level of services he
provides to the Company to twenty percent (20%) or less than the
average level of bona fide services performed for the Company over
the immediately preceding thirty-six (36) month period (unless
otherwise specified in the Internal Revenue Code of 1986, as
amended, (the "Code"), level of services will be based on hours
worked). Notwithstanding the foregoing, during the time
period that Executive is on any bona fide leave of absence, the
employment relationship is deemed to be continuing
intact. In case of (i) termination by Executive for Good
Reason as set forth in this Section 1(A) or (ii) Executive's
termination from the Company at the end of the term of the
Employment Agreement (which term currently runs until December 31,
2010), Executive shall be entitled to the severance payment and
benefits set forth in Section 7 herein contingent upon
return of all Company property in Executive's possession and
execution of a release in the form attached hereto as Annex
A (the "Release") within ninety (90) days of the Executive's
Termination Date.
B. For
purposes of this Agreement, the term "Good Reason" shall mean the
occurrence of any of the following events without the written
consent of Executive: (i) a material reduction in Executive's base
salary; (ii) relocation of Executive by the Company outside the
fifty (50) mile radius surrounding Executive's then present
location; and (iii) a material diminution in Executive's duties,
authority or responsibilities.
2.
Resignation by Employee Without Good Reason.
A. Executive
may voluntarily terminate his employment with the Company without
Good Reason at any time with one (1) year prior
notice. If Executive provides such notice, the Company,
at the sole discretion of the Board, may accelerate the termination
of Executive's employment to any date after receipt of such notice
from Executive and prior to the date of termination specified in
the notice from Executive. Any acceleration of the
termination of Executive's employment shall be effective on written
notice being delivered to Executive by the Company. On
any such acceleration by the Company, Executive shall not be
entitled to any payment in lieu of notice. If
Executive's employment is terminated pursuant to this Section
2(A) , Executive shall receive payment for all accrued salary,
vacation time, and benefits owed Executive through the Termination
Date. For purposes of this Section 2(A) , the
Termination Date shall be the earlier of the day that the Executive
ceases to provide services to the Company or the day that the facts
and circumstances indicated that the Executive has permanently
reduced the level of services he provides to the Company to twenty
percent (20%) or less than the average level of bona fide services
performed for the Company over the immediately preceding thirty-six
(36) month period (unless otherwise specified in the Code, level of
services will be based on hours worked).
B. In
case of a resignation without Good Reason by Executive, the Company
shall have no further obligation to pay compensation of any kind
(except for accrued salary, vacation time and benefits as set forth
above) or severance payment of any kind or to make any payment in
lieu of notice. All benefits provided by the Company to
Executive shall cease on the Termination Date. For the
avoidance of doubt, Executive's termination from the Company at the
end of the term of the Employment Agreement (currently December 31,
2010) shall not be deemed a resignation without Good Reason and
Executive shall be entitled to the severance payment and benefits
as set forth in Section 7 .
3.
Termination on Death.
A. If
Executive dies before the term of the Employment Agreement expires,
the Company shall pay Executive's estate the accrued portion of
Executive's salary and vacation time and benefits that Executive is
entitled to receive through the Termination Date. For
purposes of this Section 3(A) , the Termination Date shall
be the date of Executive's death.
B. In
addition to the payments set forth in Section 3(A) above,
the Company shall pay Executive's estate an amount equal to the
product of (i) 2.5 times Executive's average monthly base salary
over the preceding twelve (12) month period multiplied by (ii) each
year of service provided by Executive to the Company prior to
Executive's date of death; provided ,
however , that in no event may the aggregate
payment under this Section 3(B) exceed 30 months of
Executive's average monthly base salary over the preceding twelve
(12) month period. For purposes of calculating the number of years
of Executive's service in this Section 3(B) , a partial year
of service shall be counted but shall be pro rated based on the
actual number of months worked during such partial year of
service. Notwithstanding the foregoing, no payment
under this Section 3(B) shall be paid unless all Company
property in Executive's possession at his death is returned and the
Release is executed by an authorized signatory for the Executive's
estate within ninety (90) days of the Executive's date of
death. All payments shall be made less standard
withholdings for taxes and social security, medicare and state
disability tax purposes and shall be payable over a twenty (20)
month term in pro rata payments commencing on the first day of the
calendar month following the expiration of the ninety (90) days
period provided for returning Company property and executing the
Release.
C. If
Executive predeceases his spouse, the Company shall also pay
Executive's spouse's COBRA premiums until the earlier to occur of
(i) such time as Executive's spouse obtains replacement health
insurance or (ii) eighteen (18) months following Executive's
death.
4.
Termination Due to Disability.
A. The
Company may terminate Executive's employment in case of Executive's
Disability (as defined below). If Executive's employment
is terminated under this Section 4(A) , the Company shall
pay Executive all amounts due as accrued salary, vacation time and
benefits under the Employment Agreement through the Termination
Date. For purposes of this Section 4(A) ,
the Termination Date shall be the date specified by the Board
immediately following a determination by a qualified physician of
Executive's Disability.
B. In
addition to the payments set forth in Section 4(A) above,
the Company shall pay Executive an amount equal to the product of
(i) 2.5 times Executive's average monthly base salary over the
preceding twelve (12) month period multiplied by (ii)
each year of service provided by Executive to the
Company prior to Executive's date of Disability;
provided , however , that
in no event may the aggregate payment under this Section
4(B) exceed 30 months of Executive's average monthly base
salary over the preceding twelve (12) month period. For purposes of
calculating the number of years of Executive's service in this
Section 4(B) , a partial year of service shall be counted
but shall be pro rated based on the actual number of months worked
during such partial year of service. Notwithstanding the
foregoing, no payment under this Section 4(B) shall be paid
unless all Company property in Executive's possession is returned
and the Release is executed by the Executive or his authorized
representative within ninety (90) days of the date that the Board,
in its sole discretion, determines that Executive is
Disabled. All payments shall be made less standard
withholdings for taxes and social security, medicare and state
disability tax purposes and shall be payable over a twenty (20)
month term in pro rata payments commencing on the first day of the
calendar month following the expiration of the ninety (90) days
period provided for returning Company property and executing the
Release.
C. In
addition, the Company shall pay COBRA premiums for Executive and
Executive's spouse until the earlier of (i) the effective date on
which Executive obtains comparable health insurance from a
subsequent employer or (ii) eighteen (18) months following the
Executive's Termination Date. However, if
Executive fails to both (i) return all Company property in his
possession and (ii) execute the Release within the 90 day period,
the Company's obligation to pay COBRA premiums shall cease and
Executive shall reimburse the Company for all COBRA premiums
previously paid by it on Executive's behalf.
D. For
purposes of this Agreement "Disability" means that Executive is (i)
unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can
be expected to result in death or last for a continuous period of
at least twelve (12) months; or (ii) receiving income replacement
benefits for a period of not less than three months under a Company
health or accident plan because of any medically determinable
physical or mental impairment that can be expected to result in
death or last for a continuous period of at least twelve (12)
months.
5.
Involuntary Termination
A. The
Company may terminate Executive's employment without Cause (as
defined in Section 6(B) , with 365 days prior written
notice; provided ,
however , that the Company reserves the right
to terminate Executive's employment immediately and provide
Executive with a lump sum payment equal to twelve (12) months of
Executive's base salary at the rate in place on the Termination
Date (the "Notice Payment") within ninety (90) days of the
Termination Date provided all Company property in Executive's
possession is returned and the Release is executed by the Executive
within this ninety (90) day period. Notwithstanding the foregoing,
the Company shall have the authority to delay the payment of the
Notice Payment to the extent it reasonably deems necessary to
comply with Section 409A(a)(2)(B)(i) of the Code (relating to
payments made to certain "key employees" of publicly-traded
companies); in such event, any such amount or benefit to which
Employee would otherwise be entitled during the six (6) month
period following his Termination Date will be provided or paid on
the first business day following the expiration of such six (6)
month period, or if earlier, the date of death. If
Executive's employment is terminated pursuant to this Section
5(A) , Executive shall receive all accrued salary, vacation
time and benefits under the Employment Agreement through the
Termination Date. For purposes of this Section
5(A) , the Termination Date shall be the date determined by the
Board as set forth in the notice delivered to Executive.
B. In
the case of a termination of Executive's employment without Cause
as set forth in Section 5A , the Company shall also pay to
Executive the severance payment and pay COBRA premiums in
accordance with Section 7 of this
Agreement. However, if Executive fails to both (i)
return all Company property in his possession and (ii) execute the
Release within the 90 day period, the Company's obligation to pay
COBRA premiums shall cease and Executive shall reimburse the
Company for all COBRA premiums previously paid by it on Executive's
behalf.
6.
Termination for Cause.
A. The
Company may terminate Executive's employment upon the
recommendation of the Board (excluding the vote of Executive on
such matter) at any time for Cause (as defined in Section
6(B) immediately on written notice to the Executive of the
circumstances leading to termination for Cause. If
Executive's employment is terminated under this Section 6(A)
, the Company shall pay Executive all accrued salary, vacation time
and benefits under the Employment Agreement through the Termination
Date. For purposes of this Section 6(A), the Termination
Date shall be the date on which the termination notice is given by
the Board to Executive. If the Board terminates
Executive without at least 12 months' prior notice, the Company
shall pay to Executive the Notice Payment within ninety (90) days
of the Termination Date provided all Company property in
Executive's possession is returned and the Release is executed by
the Executive within the ninety (90) day period. Notwithstanding
the foregoing, the Company shall have the authority to delay the
payment of the Notice Payment to the extent it reasonably deems
necessary to comply with Section 409A(a)(2)(B)(i) of the Code
(relating to payments made to certain "key employees" of
publicly-traded companies); in such event, any such amount or
benefit to which Employee would otherwise be entitled during the
six (6) month period following his Termination Date will be
provided or paid on the first business day that is six (6) months
after the Termination Date, or if earlier, the date of
death. Except for the accrued salary, vacation time and
benefits and the Notice Payment, the Company shall have no further
obligation to pay any compensation of any kind, any severance
payment of any kind and/or any additional notice payment of any
kind.
B. For
purposes of this Agreement, "Cause" means the occurrence or
existence of any of the following with respect to Executive, as
determined by a majority of the Board (excluding Executive): (i) a
material breach by Executive of the terms of the Employment
Agreement or of his duty not to engage in any transaction that
represents, directly or indirectly, self-dealing with the Company
or any of its affiliates (which for purposes of this Agreement,
means any individual, corporation, partnership, association,
limited liability company, trust, estate or other entity or
organization directly or indirectly controlling, controlled by, or
under direct or indirect common control with the Company) that has
not been approved by a majority of disinterested directors of the
Board, if such material breach remains uncured after thirty (30)
days following the date the
