- 11 -
purchase from other sources or manufacture and sell
such products without Seller being deemed to have
breached this Agreement. The ownership of an interest
in or the involvement in the management of Mattel at a
time when Mattel owns or operates any extrusion units,
finishing range ovens, carpet backing ovens, twist, ply
or heat set equipment, dying equipment or tufting
equipment shall be deemed to constitute an intentional
breach hereof by Seller for purposes of Section 4
hereof. The ownership of an interest in or the
involvement in the management of Mattel at a time when
Mattel engages in the manufacture or sale of one or
more new products (except as permitted by clause (c)
above) or enters into one or more new markets in
competition with the Business of the Company shall be
deemed to constitute an unintentional breach hereof by
Seller.
When the stock acquisition and noncompete agreements were
signed, Mattel was equally owned by Jerry and his brother Ronald
(Ronald). In the fall of 1989, M.E. Ralston (Ralston), an
officer and a 50-percent owner of Conquest, purchased Ronald’s
interest in Mattel.2 A clause in the purchase agreement
provided:
I [Ralston] will cause Jerry Thomas’s noncompete
agreement with Conquest Carpet Mills, Inc. to be
modified in such a manner that neither his
participation in Specialty [Mattel] nor the loaning of
money by him to Specialty [Mattel], Turftcraft, or you
[Ronald] will be in violation of such agreement.
After Ralston purchased an interest in Mattel, Conquest did
not enforce the provisions of Jerry’s noncompete agreement as to
2 After Ralston’s purchase, the company changed its name to
Specialty Carpets, Inc. The right to use the Mattel name was
retained by Ronald, who continued to sell carpet in the
hospitality market. For clarity, we refer to the company as
Mattel throughout this opinion.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011