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Sample Business Contracts

1996 Stock Option Plan for Non-Employee Directors - The Boston Beer Co. Inc.

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                         THE BOSTON BEER COMPANY, INC.

                            1996 STOCK OPTION PLAN
                          FOR NON-EMPLOYEE DIRECTORS
                       (As Amended on December 19, 1997)



     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
<PAGE>

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.
<PAGE>

     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
<PAGE>

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) years 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
<PAGE>

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
<PAGE>

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
<PAGE>

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,
<PAGE>

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.
AMENDED BY THE BOARD OF DIRECTORS AND THE SOLE HOLDER OF THE CLASS B COMMON
STOCK EFFECTIVE DECEMBER  19, 1997.