Item 1.01. Entry into a Material Definitive Agreement.
On June 10, 2020,
Craft Brew Alliance, Inc., a Washington corporation (“Seller”), Kona Brewery LLC, a Hawaii limited liability
company (the “Company”), and PV Brewing Partners, LLC, a Delaware limited liability company (“Buyer”,
and together with Seller and the Company, the “Parties”), entered into a Membership Interest Purchase Agreement
(the “Purchase Agreement”), pursuant to which, among other things, Buyer agreed to purchase from Seller 100%
of the outstanding membership interests of the Company (the “Equity Interests”). The Parties entered into the
Purchase Agreement in connection with the previously announced Agreement and Plan of Merger, dated as of November 11, 2019, by
and among Seller, Anheuser-Busch Companies, LLC, a Delaware limited liability company (“ABC”), and Barrel Subsidiary,
Inc., a Washington corporation and wholly owned subsidiary of ABC (“Merger Sub”), providing for the merger
of Merger Sub with and into Seller, with Seller surviving as a wholly owned subsidiary of ABC (the “ABC Merger”).
Subject to the terms
and conditions set forth in the Purchase Agreement, at the closing (the “Kona Closing”) of the transactions
contemplated by the Purchase Agreement (the “Kona Transaction”), Seller has agreed to sell to Buyer the Equity
Interests for an aggregate purchase price of $16 million in cash, of which $5 million will be payable at the Kona Closing and the
remaining $11 million to be paid by Buyer upon Seller’s achievement of certain construction and production milestones
with respect to the New Brewery (as defined in the Purchase Agreement), with an option for Buyer to defer up to $6 million of such
payment for a year following the Kona Closing, subject to the terms and conditions set forth in the Purchase Agreement. Any deferred
amounts will be subject to interest. Buyer expects to fund the purchase price with a combination of debt and equity financing.
In connection with
the Purchase Agreement, following the Kona Closing, Seller, or an affiliate of Seller, will enter into certain ancillary agreements
with Buyer or the Company, including (a) a transition services agreement under which Buyer will receive certain transitional
services, (b) an intellectual property license agreement providing for certain licensing arrangements regarding certain Company-related
intellectual property related to the “Kona” brand, (c) a brewing and packaging agreement under which Seller and
certain of its affiliates will brew, bottle and package certain Company-branded beer products for Buyer on a transitional basis
and (d) a distribution agreement under which Anheuser-Busch Sales of Hawaii, Inc., a Delaware corporation and an affiliate
of ABC, will provide certain sales, promotion and distribution services to Buyer in the State of Hawaii.
The Purchase Agreement
contains certain customary representations, warranties and covenants of Seller regarding the Company, including a covenant to operate
the Company in the ordinary course of business consistent with past practice. The Purchase Agreement also contains certain customary
representations, warranties and covenants of both Seller and Buyer relating to the Kona Transaction. Closing of the Kona Transaction
is conditioned upon, and will not occur in the absence of, completion of the ABC Merger. The Kona Closing will take place upon
the later of (a) August 3, 2020 or (b) immediately following, or on the business day of, the closing of the ABC Merger or such
later date as required by the Department of Justice (the “DOJ”), in each case, following the satisfaction or
waiver of all of the closing conditions to the Kona Transaction (other than conditions that by their nature are to be satisfied
at the Kona Closing, but subject to the fulfillment or waiver of those conditions at such time). The Purchase Agreement provides
for certain termination rights, including the right of either party to terminate the Purchase Agreement if Seller is notified by
the DOJ that (i) Buyer is not an acceptable purchaser of the Company, (ii) the Purchase Agreement is not an acceptable manner
of divesting the Company (provided, however, in the case of (ii), only after the Parties have reasonably sought to
modify the Purchase Agreement to satisfy DOJ staff, consistent with their obligations under the Purchase Agreement) or (iii) a
divestiture is not an acceptable remedy in order to obtain regulatory clearance of the ABC Merger.
The foregoing description
of the Purchase Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the
full text of the Purchase Agreement, a copy of which is attached to this report as Exhibit 2.1 and is incorporated herein by reference.
The Purchase Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide
any other factual information about Seller or the Company. In particular, the assertions embodied in the representations and warranties
contained in the Purchase Agreement are qualified by information in confidential disclosure schedules provided by Seller in connection
with the signing of the Purchase Agreement. These confidential disclosure schedules contain information that modifies, qualifies
and creates exceptions to the representations and warranties and certain covenants set forth in the Purchase Agreement. Moreover,
certain representations and warranties in the Purchase Agreement were used for the purpose of allocating risk between Seller and
Buyer rather than establishing matters as facts. Accordingly, the representations and warranties in the Purchase Agreement should
not be relied upon as characterizations of the actual state of facts about Seller or the Company.