Exhibit 10.3
 

 
 NON-COMPETITION/NON-SOLICITATION AGREEMENT
 
THIS NON-COMPETITION/NON-SOLICITATION AGREEMENT ("Agreement") is made and
entered into as of this 1st day of October, 2010, by and between Craft Brewers
Alliance, Inc. ("CBAI") and Mattson Davis ("Target Principal"). CBAI and Target
Principal are referred to herein separately as a "Party" and collectively as the
"Parties".
 
Recitals
 
WHEREAS, on July 31, 2010, CBAI, 2010 Enterprises LLC ("AcquisitionCo"), and
Kona Brewing Co., Inc. ("Target"), together with the other parties identified
therein, entered into an Agreement and Plan of Merger providing for the merger
of Target with and into AcquisitionCo (the "Merger Agreement"); capitalized
terms not defined herein shall have the meaning given those terms in the Merger
Agreement; and
 
WHEREAS, Target Principal is a principal and major shareholder of Target, and
has knowledge of and access to confidential and proprietary information about
Target which, if used in competition with CBAI, could cause serious and
irreparable harm to CBAI.
 
Agreement
 
NOW, THEREFORE, for purposes of inducing CBAI to consummate the transactions
contemplated by the Merger Agreement, and for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties, each
intending to be legally bound, hereby agree as follows:
 
1.             Covenant Not to Compete. For a period of five (5) years from and
after the Closing Date (the "Restricted Period"), Target Principal shall not,
and shall not permit or cause any of his Affiliates to, directly or indirectly,
engage (except through ownership of less than 0.5% interest in any publicly
reporting company) in the manufacturing, advertising, marketing, sale or
distribution, whether for himself or for third parties, of any malt beverage in
North America (collectively, the "Restricted Business").
 
2.             Covenant Not to Solicit. The Target Principal agrees that during
the Restricted Period, the Target Principal shall not, and shall not permit or
cause any of his Affiliates to, without the prior written consent of CBAI (which
consent may be withheld, delayed or conditioned at CBAI's sole discretion):

2.1           solicit or encourage any employees of CBAI or any of its
Affiliates to (1) leave employment with CBAI or any of its Affiliates, or (2)
enter into an employment or a service arrangement related to the Restricted
Business;
 
2.2           hire, engage, or enter into any service arrangement with any
employees of CBAI or any of its Affiliates; or
 
 
 
 
 

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2.3           with respect to the Restricted Business, solicit or encourage any
customer or potential customer of CBAI or any of its Affiliates to limit,
restrict or cease use of CBAI's or any of its Affiliates' services or products.
 
3.             Consideration. Target Principal acknowledges receiving adequate
consideration for entering into this Agreement, including but not limited to a
portion of the Merger Consideration received by Target Principal pursuant to the
Merger Agreement.
 
4.             Judicial Determinations. Whenever possible, each term or
provision of this Agreement will be interpreted in a manner to be valid and
enforceable, but if any term or provision of this Agreement is held to be
invalid or unenforceable, then such term or provision will be ineffective only
to the extent of such invalidity or unenforceability, without invalidating or
affecting in any manner whatsoever the remainder of such term or provision or
the remaining terms or provisions of this Agreement. If the final judgment of a
court of competent jurisdiction declares that any term or provision of this
Agreement is invalid or unenforceable, the Parties agree that the court making
the determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified.
 
5.             Relief. Target Principal expressly acknowledges and agrees that
CBAI's remedy at law for a breach or threatened breach of any of the provisions
of Sections 1 or 2 would be inadequate. In recognition of that fact, in the
event of a breach or threatened breach by Target Principal of the provisions of
Section 1 or 2, it is agreed that, in addition to its remedy at law and without
posting any bond, CBAI shall be entitled to, and Target Principal agrees, if
CBAI establishes that a breach or threatened breach has occurred, not to oppose
CBAI's request for equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction, or any other
equitable remedy that may then be available. Nothing herein contained shall be
construed as prohibiting CBAI from pursuing any other remedies available to it
for such breach or threatened breach.
 
6.             Miscellaneous.

6.1           Assignment. This Agreement shall inure to the benefit of and shall
be binding upon Target Principal and CBAI, and their respective Affiliates,
subsidiaries, successors and assigns. CBAI may assign this Agreement without the
prior written consent of Target Principal to any entity which owns, operates or
manages the business operations of CBAI that constitute Restricted Business.
Target Principal may not assign his obligations hereunder.
 
6.2           Amendment. This Agreement may not be amended except by the mutual
agreement of the Parties evidenced by a writing signed by each Party.
 
6.3           Notices. All notices, requests and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered by hand or overnight courier against a receipt therefor, or by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Parties at the following addresses (or at such other addresses
as shall be specified by like notice):
 

 
 

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If to CBAI:                      
Craft Brewers Alliance, Inc.
 
929 N. Russell
 
Portland, Oregon 97227
 
Attn: Terry Michaelson
 
Phone: 503-331-7224
 
Fax: 503-281-2761
   
If to Target Principal:     
Mattson Davis
 
78-7234 Puuloa Road
 
Kailua-Kona, Hawaii 96740
 
Fax: 808-334-1884

Any notice or communication so given shall be deemed to have been delivered on
the date of receipt of such delivery at the address set forth above (or such
other address designated pursuant hereto).
 
6.4           Choice of Law. This Agreement and the Parties' rights and
obligations hereunder shall be governed by and construed in accordance with the
internal laws of the State of Washington without giving effect to the choice of
law principles thereunder.
 
6.5           Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the Parties relating to the subject matter hereof, and
supersedes all prior oral and written agreements, arrangements and
understandings relating to the subject matter hereof.
 
[one signature page follows]
 
 
 
 
 

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IN WITNESS WHEREOF, each Party has executed this
Non-Competition/Non-Solicitation Agreement effective as of the day and year
first written above.
 
 
Craft Brewers Alliance, Inc.
 
 
By:    /s/ Terry E. Michaelson                  
       /s/ Mattson Davis                       
Name:  Terry Michaelson
    Mattson Davis
Title:  Chief Executive Officer