Exhibit 10.59
NON-COMPETITION AGREEMENT
This
Non-Competition Agreement (the "Agreement") is made and entered
into
as of August 23, 2005, by and between The
Hain Celestial Group, Inc., a Delaware
corporation ("Parent") and Jethren Phillips
("Equity Holder").
RECITALS
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A. This
Agreement is entered into in connection with that certain
Agreement
and Plan of Merger dated as of August 23,
2005 (the "Merger Agreement"), by and
between Parent and Spectrum Organic
Products, Inc., a California corporation
(the "Company"). Pursuant to and subject to
the terms of the Merger Agreement,
at the Effective Time (as defined in the
Merger Agreement) the Company will be
merged with and into a limited liability
company ("Merger Sub") whose sole
member is Parent (the "Merger"), the
separate corporate existence of the Company
shall cease and Merger Sub shall continue
as the surviving company.
B. In order to
induce Parent to consummate the transactions contemplated by
the Merger Agreement (including but not
limited to acquisition by Parent of the
Company and the settlement of all of Equity
Holder's stock and other equity
interests in the Company comprising, as of
the date hereof, 26,950,000 shares of
common stock of the Company and stock
options to acquire an additional 75,000
shares of common stock of the Company), to
protect for Parent all of the
goodwill associated with the business of
the Company and to be acquired by
Parent and in consideration of the transfer
by the Company to Equity Holder of
the Company's life insurance policy on the
life of Equity Holder, Equity Holder
is willing to enter into this
Agreement.
C. This
Agreement is a material inducement to the willingness of the
parties to enter into the Merger Agreement
and consummate the transactions
contemplated thereby.
AGREEMENT
The parties
hereby agree as follows:
1. Experience
and Skill of Equity Holder. As an owner, founder, former
chief executive officer, and current
Chairman of the Board of Directors of the
Company, Equity Holder has been actively
involved in the management, development
and strategic direction of the Company's
business, has thereby acquired
considerable experience and skill and has
contributed to the goodwill of the
Company's business. Parent wishes to
protect its investment in the business
acquired pursuant to the Merger Agreement
by restricting the activities of
Equity Holder which might compete with or
otherwise harm such business, and, as
part of the consideration and inducement to
Parent for acquiring the business,
Equity Holder is willing to agree to and
abide by such restrictions as
hereinafter provided.
2.
Non-Competition and Non-Solicitation of Employee Covenants.
2.1 General. Equity Holder acknowledges that he holds a
substantial
number of shares of the Common Stock of the
Company. Equity Holder further
acknowledges that the value of the
consideration paid by Parent in connection
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with its acquisition of the Company
pursuant to the Merger Agreement is
substantial and that preservation of the
goodwill associated with the Company is
a part of the consideration which Parent is
receiving in the Merger Agreement.
Parent desires that Equity Holder enter
into a non-competition agreement with
Parent as set forth in this section, and
Equity Holder is willing to agree to
such non-competition provisions as set
forth below. The Company and Equity
Holder agree that such non-competition
provisions are separately bargained-for
consideration and are material inducements
to Parent to enter into the Merger
Agreement. Accordingly, Equity Holder and
the Company agree to the
non-competition and non-solicitation
provisions set forth in this Section 2.
2.2 Non-Competition.
(a) During the period beginning at the Effective Time and ending on
the
date that is (1) with respect to the
Restricted Business (as defined below), two
years following the Effective Time (the
"Restricted Period") and (2) with
respect to the Branded/Private Label
Restricted Business (as defined below),
three years following the Effective Time
(the "Branded/Private Label Restricted
Period"), Equity Holder covenants and
agrees that he will not, directly or
indirectly either for Equity Holder or for
any other person or business entity,
do any of the following:
(i) engage (as defined
below) (A) during the Restricted Period, in the
Restricted
Business and (B) during the Branded/Private Label Restricted
Period, in the
Branded/Private Label Restricted Business, in each case
anywhere
(without regard to the distribution channel used) the Company
sells products
or services at the time of the Merger and is then providing
such products
and services; however, nothing in this agreement shall
prevent Equity
Holder from serving as an employee, consultant or contractor
of any entity
that engages in a Restricted Business or Branded/Private
Label Restricted
Business, as the case may be, so long as Equity Holder
does not
directly or indirectly engage or participate in the Restricted
Business or
Branded/Private Label Restricted Business, as the case may be,
or otherwise
assist that entity in engaging or participating in the
Restricted
Business or Branded/Private Label Restricted Business, as the
case may be;
(ii) solicit, induce
or attempt to solicit or induce any then current
employee,
temporary worker or independent contractor of the Company to
discontinue
employment or engagement with the Company for the purpose of
seeking or
commencing employment or engagement with any third party; or
(iii) persuade or attempt to persuade any person accepting products
and
services from
the Company or providing services, products or facilities to
the Company not
to do business with the Company or to reduce the amount of
business it does
with the Company.
(iv) For purposes of this agreement, the term:
(A) "Branded/Private Label Restricted Business" shall mean that
portion of the Restricted Business relating to any branded or
private
label finished products including, without limitation, the
Spectrum
Naturals or Spectrum Essentials portions of the Company's
business;
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(B) "engage" in a business shall include, without limitation,
any
relationship as an officer, director, stockholder, owner,
investor,
salesperson, affiliate, co-owner, partner, member, trustee,
promoter,
founder, technician, engineer, analyst, employee, agent,
representative, distributor, re-seller, sublicensor, supplier,
investor
or lender, consultant or contractor, advisor or manager of or to
the
particular business, or otherwise acquiring or holding any interest
in,
or otherwise engaging in the provision of service to, any person
or
entity that engages in the particular business; and
(C) "Restricted Business" shall mean the business of
developing,
producing, purchasing, selling, marketing, sourcing or
otherwise
distributing or providing (i) consumer packaged oils
(including,
without limitation, bottled cooking oils, sprays and
shortenings),
mayonnaises, vinegars, salad dressings, crackers or non-dairy
buttery
spreads, (ii) essential fatty acid nutritional supplements, (iii)
flax
seeds for retail consumption, (iv) expeller pressed
conventional
non-GMO canola, hi-oleic safflower, hi-oleic sunflower, and
hi-oleic
canola oils, certified organic flax seed, olive, canola, soy,
palm
fruit, coconut, sesame, and hi-oleic
