Exhibit 10.33
NONCOMPETITION
AGREEMENT
This NONCOMPETITION AGREEMENT (the
“ Agreement ”) is entered into as of
March 27, 2009 between Tully’s Coffee Corporation, a
Washington corporation (the “ Seller ”), and
Green Mountain Coffee Roasters, Inc., a Delaware corporation (the
“ Buyer ”), each of the foregoing individually a
“ Party ” and collectively the “
Parties ”).
RECITALS
WHEREAS, the Buyer and the Seller
have entered into an Asset Purchase Agreement dated as of
September 15, 2008 (the “ APA ”), pursuant
to which it is contemplated that Seller will sell the Acquired
Assets to the Buyer and the Buyer will assume the Assumed
Liabilities of the Seller (the “ Acquisition
”);
WHEREAS, the Seller currently
operates the Coffee Business which includes the Wholesale Business
which the Buyer is acquiring pursuant to the terms of the
APA.
WHEREAS, in order to induce the
Buyer to enter into the APA and to cause the consummation of the
transactions contemplated by the APA to be consummated, the Seller
is willing to enter into this Agreement; and
WHEREAS, the Seller will receive the
Purchase Price on the Closing Date and the Noncompete
Payment.
NOW, THEREFORE, in consideration of
the covenants, promises and representations set forth herein and in
the APA, and for other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the Parties
hereto, intending to be legally bound, hereby agree as
follows:
1. Noncompete Payment . In
consideration for the promises and representations and warranties
of Seller set forth herein, on the Closing Date, the Buyer will pay
aggregate cash consideration of Three Hundred Thousand Dollars
($300,000) to the Seller in the manner set forth in
Section 2.4 for the APA. The Buyer’s obligation to make
this payment is conditional on the occurrence of the Closing and,
should the Closing not occur, the Buyer will have no obligations
under this Agreement.
2. Acknowledgement. The
Seller expressly acknowledges that the covenants of Section 4
of this Agreement (the “ Covenants ”) are
supported by good and adequate consideration, and that such
covenants are reasonable and necessary to protect the legitimate
business interests of the Buyer in connection with the
Acquisition.
3. References and Capitalized
Terms. All words used in this Agreement shall be construed to
be of such number and gender as the context requires or permits.
Capitalized terms used herein and not otherwise defined shall have
the respective meanings ascribed thereto in the APA.
4. Noncompetition; Non-Solicitation
.
(a) Noncompetition. Subject to the
Closing, and as an inducement to the Buyer to execute the APA and
complete the Contemplated Transactions, and in order to preserve
the goodwill associated with the Acquired Assets, the Seller hereby
covenants and agrees that for a period of nine (9) years from
and after the Closing Date, it will not, and will cause its
respective subsidiaries and Affiliates not to, directly or
indirectly, operate in the Coffee Business in United States of
America, Canada, Mexico and the Islands of the Caribbean provided;
however, that nothing herein shall prohibit the Seller or its
subsidiaries or Affiliates from operating a Licensed Retail Store
(as defined in the License Agreement).
(i) The prohibition set forth in
clause (a) above does not extend to passive ownership of less
than five percent (5%) of the outstanding stock of any entity
whose stock is traded on an established stock exchange. The Parties
intend that this covenant not to compete shall be construed as
separate covenants, one for each state, county and subdivision to
which the covenant applies. In the event a court of competent
jurisdiction determines that the provisions of this covenant not to
compete are excessively broad as to duration, geographic scope or
activity, it is expressly agreed that this covenant not to compete
shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such
over broad provisions shall be deemed, without further action on
the part of any Person, to be modified, amended or limited, but
only to the extent necessary to render the same valid and
enforceable in such jurisdiction.
(b) Non-Solicitation. For a period
of two (2) years in the case of each individual listed on
Schedule I attached hereto (the “ Seller
Employees ”), the Seller will not, and will cause its
subsidiaries and Affiliates not to, directly or indirectly recruit,
offer employment to, employ, engage as a consultant, lure, entice
away from employment or engagement by the Buyer any Seller Employee
or in any other manner persuade or attempt to persuade any Seller
Employee to leave the employ of the Buyer. If the final judgment of
a court of competent jurisdiction declares that any term or
provision of this Section 4(b) is invalid or unenforceable,
the Buyer and the Seller agree that the court making the
determination of invalidity or unenforceability will 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 will be enforceable as so modified after the
expiration of the time within which the judgment may be
appealed.
(c) Specific Enforcement;
Injunction. Because of the difficulty of measuring economic losses
to the Buyer as a result of the breach of the covenants set forth
in this Section 4, and because of the immediate and
irreparable damage that would be caused to the Buyer and its
affiliates for which they would have no other adequate remedy, the
Seller agrees that, in the event of a breach or threatened breach
by the Seller of any of such covenants, the Buyer may, at its sole
option, in addition to obtaining any other remedy or relief
available to it (including damages at law), enforce the provisions
of this Section 4 by injunction and other equitable relief,
without being required to post bond in connection
therewith.
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(d) The parties agree that the
covenants contained in this Section 4 impose a reasonable
restraint on the Seller in light of the activities and business of
the Buyer, in relation to the Acquired Assets and the Wholesale
Business.
(e) The covenants in this
Section 4 are severable and separate, and the unenforceability
of any specific covenant shall not affect the provisions of any
other covenant. In the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions
set forth in this Section 4 are unreasonable, then it is the
intention of the parties that such restrictions be enforced to the
fullest extent which the court deems reasonable, and the provisions
of this Section 4 shall thereby be reformed.
(f) Each of the covenants contained
in this Section 4 shall be construed as a covenant independent
of any other provision of this Agreement, and the existence of any
claim or cause of action of the Seller against the Buyer or any of
its affiliates, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Buyer of
such covenants.
(g) The term of the covenants
contained in this Section 4 shall be computed by excluding
from such computation any time during which the Seller (as
evidenced by a final, non-appealable judgment issued by a court of
competent jurisdiction) has been determined to be in violation of
any provision of this Section 4, or in which the Seller
contests the validity or enforceability of any such covenant or
seeks to avoid the performance or enforcement of any such
covenant.
(h) The Seller acknowledges and
agrees that the covenants set forth in this Section 4 are a
material and substantial part of the Acquisition.
5. Other Provision
