Exhibit 10.34
Execution Version
NONCOMPETITION
AGREEMENT
This NONCOMPETITION AGREEMENT (the
“ Agreement ”) is entered into as of
March 27, 2009 between Tom T. O’Keefe (“
O’Keefe ”), 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 Tully’s
Coffee Corporation (“ Tully’s ”)
contemporaneously with the execution of this Agreement have entered
into an Asset Purchase Agreement dated as of September 15,
2008 (the “ APA ”), pursuant to which it is
contemplated Tully’s will sell the Acquired Assets to the
Buyer and the Buyer will assume the Assumed Liabilities (the
“ Acquisition ”);
WHEREAS, Tully’s currently
operates in the Coffee Business which includes the Wholesale
Business which the Buyer is acquiring pursuant to the terms of the
APA.
WHEREAS, O’Keefe is the
founder and chairman of the board of directors of Tully’s and
in such capacities has substantial relationships with specific
prospective and existing customers and suppliers in the Coffee
Business that are integral to the operation of the Wholesale
Business in the Territory. The customer goodwill the Company has
built up in the Territory relating to the Coffee Business and the
ability of Buyer to operate and expand the Wholesale Business in
the Territory comprises a substantial portion of the value of the
Acquired Assets. Buyer would not be purchasing the Acquired Assets
and the Wholesale Business pursuant to the terms of the APA but for
such goodwill and the ability to expand in the Coffee
Business.
WHEREAS, O’Keefe has had
access to and there has been disclosed to O’Keefe, and
O’Keefe has detailed knowledge of, information of a
confidential nature regarding the Coffee Business that has great
value to the Wholesale Business and constitutes a substantial basis
upon which the Wholesale Business is predicated. Such information
includes recipes, trade secrets, customer and supplier lists,
referral source lists, pricing information and policies, marketing
arrangements, strategies, business plans and other information
concerning the Wholesale Business (or Buyer as successor to the
Wholesale Business) that is competitively sensitive or confidential
(the “ Confidential Information ”).
WHEREAS, O’Keefe possesses
valuable information regarding the Wholesale Business to be
purchased by Buyer pursuant to the APA and O’Keefe could
threaten the value of Buyer’s investment if he were to
compete within the Coffee Business beyond the extensively
negotiated scope of the Transaction Documents and this
Agreement.
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,
O’Keefe is willing to enter into this Agreement.
WHEREAS, contemporaneously with the
execution of this Agreement O’Keefe has entered into the
Irrevocable Consent Agreement attached hereto in fully executed
form as Exhibit A regarding O’Keefe’s consent to
Seller’s use of the Tully’s name.
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. Acknowledgement.
O’Keefe expressly acknowledges that the covenants of
Section 3 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.
2. 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.
3. 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, O’Keefe
hereby covenants and agrees that for a period of five
(5) years from and after the Closing Date, he will not
directly or indirectly, operate in the Coffee Business in United
States of America, Canada, Mexico and the Islands of the Caribbean
(the “ Territory ”); provided that nothing
herein shall prevent O’Keefe from (i) operating a
Licensed Retail Store (as defined in the License Agreement between
the Buyer and Tully’s dated as of March 27, 2009) in the
Territory pursuant to the terms of the License Agreement or
(ii) serving as an officer, director or employee of
Tully’s or any successor whose sole business is the operation
of Licensed Retail Stores pursuant to the terms of the License
Agreement or being a shareholder thereof.
(i) The prohibition set forth in
clause (a) above does not extend to ownership of less than two
percent (2%) 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 “ Tully’s
Employees ”), O’Keefe will not directly or
indirectly recruit, offer employment to, employ, engage as a
consultant, lure, entice
-2-
away from employment or engagement by the Buyer
any of the Tully’s Employees or in any other manner persuade
or attempt to persuade any of the Tully’s Employees 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 3(b) is invalid or unenforceable, the Buyer and
O’Keefe 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 3, 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,
O’Keefe agrees that, in the event of a breach or threatened
breach by O’Keefe 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 3 by injunction and other equitable
relief, without being required to post bond in connection
therewith.
(d) The parties agree that the
covenants contained in this Section 3 impose a reasonable
restraint on O’Keefe in light of his role as founder and
chairman of the board of directors of Tully’s and the
activities and business of the Buyer, in relation to the Acquired
Assets and the Wholesale Business.
(e) The covenants in this
Section 3 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 3 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 3 shall thereby be reformed.
(f) Each of the covenants contained
in this Section 3 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 O’Keefe 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 3 shall be computed by excluding
from such computation any time during which O’Keefe (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 3.
(h) O’Keefe acknowledges and
agrees that the covenants set forth in this Section 3 are a
material and substantial part of the Acquisition.
-3-
(i) Confidentiality .
O’Keefe agrees that he will not, for a period of five
(5) years after the date hereof, (a) use or divulge any
Confidential Information, except (i) to Buyer’s
personnel on a “need-to-know” basis and other Persons
designated in writing by Buyer; (ii) to the extent disclosure
may be required by Law; or (iii) if such information becomes
lawfully obtainable from other sources; or (b) use or permit
to be used any Confidential Information for the gain or benefit of
any Person outside of Buyer or for its own personal gain or
benefit. Notwithstanding the foregoing, nothing herein shall
prevent O’Keefe from (i) operating a Licensed Retail
Store (as defined in the License Agreement between the Buyer and
Tully’s dated as of
[ ],
2008) in the Territory pursuant to the terms of the License
Agreement or (ii) serving as an officer, director or employee
of Tully’s or any successor whose sole business is the
operation of Licensed Retail Stores pursuant to the terms of the
License Agreement or being a shareholder thereof.
4. Other
Provisions.
(a) Notices . All notices,
demands or communications required or permitted hereunder shall be
in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) upon
confirmation of facsimile, (ii) one business day following the
date sent when sent by overnight delivery by recognized overnight
courier service for delivery on the next business day and
(iii) five business days following the date mailed when mailed
by registered or certified mail return receipt requested and
postage prepaid at the following address:
If to the Buyer, addressed to it
at:
Green Mountain Coffee Roasters,
Inc.
33 Coffee Lane
Waterbury, VT 05676
Attention: Frances Rathke
Phone.:
(802) 244-5621
Fax: (802) 244-6566
with a copy to:
Ropes & Gray LLP
One International Place
Boston, Massachusetts
02110-2624
Phone:
(617) 951-7000
Fax: (617) 235-0376
Attention: Jane D.
Goldstein
If to O’Keefe, addressed to
him at:
Tully’s Coffee
Corporation
3100 Airport Way South,
Seattle, Washington 98134
Phone:
(206) 233-2070
Fax:
Attention: Tom T.
O’Keefe
-4-
with a copy to:
Carney Badley Spellman,
P.S.
701 Fifth Avenue, Suite
3600
Seattle, Washington 98104
Phone:
(206) 622-8020
Fax: (206) 467-8215
Attention: Patrick R.
Lamb
(b) Successors and Assigns .
This Agreement and the rights of the parties hereunder may not be
assigned (except by operation of law) and shall be binding upon and
shall inure to the benefit of the parties hereto, their successors
and permitted assigns and the heirs and legal representatives of
any individual party hereto. Notwithstanding the foregoing, the
Buyer may (i) assign any or all of its rights and interests
under this Agreement to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its
obligations under this Agreement. Except as expressly provided
herein, this Agreement is for the sole benefit of the parties and
their permitted successors and assignees and nothing herein
expressed or implied will give or be construed to give any Person,
other than the parties and such successors and assignees, any legal
or equitable rights hereunder.
(c) Entire Agreement;
Amendment . This Agreement constitutes the entire agreement and
understanding among O’Keefe and the Buyer with respect to the
subject matter hereof and supersedes all prior and current
understandings and agreements, whether written or oral, with
respect to the subject matter hereof. This Agreement may be
modified or amended only by a written instrument executed by
O’Keefe and the Buyer.
(d) Exercise of Rights and
Remedies . No delay of or omission in the exercise of any
right, power or remedy accruing to any party as a result of any
breach or default by any other party under this Agreement shall
impair any such right, power or remedy, nor shall it be construed
as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver
of any single breach or default be deemed a waiver of any other
breach or default occurring before or after that waiver.
(e) Headings . The headings
used in this Agreement are for convenience only and will not in any
way affect the interpretation of this Agreement.
(
