1
EXHIBIT 10.12
NON-COMPETITION COVENANT
In consideration of the Merger Consideration paid and provided by
XXXXXXXXXX INTERNATIONAL, INC., a Texas corporation, formerly known as "ICO,
Inc." (the "Parent Entity"), to the holders of Wedco Technology, Inc. Common
Stock pursuant to the Merger Agreement dated as of December ___, 1995 ("Merger
Agreement") by and among the Parent Entity, W Acquisition Corp., a New Jersey
corporation, and Wedco Technology, Inc., a New Jersey corporation ("W Corp."),
Six Thousand and 00/100 Dollars ($6,000.00) to be paid to the undersigned by
the Parent Entity in sixty (60) equal monthly installments of One Hundred and
00/100 Dollars ($100.00) beginning _________________, 199__ and ending ______-
___________, 199__, and the mutual agreements, promises, covenants and
conditions set forth in the Merger Agreement, from which the undersigned, as a
holder of Wedco Technology, Inc. Common Stock, has received both direct and
indirect benefits, the undersigned, XXXX X. XXXXX (the "Covenantor"), intending
to be legally bound, hereby covenants and agrees, for the benefit of each of
the Parent Entity and the Surviving Corporation and their respective successors
and assigns, that, for a period of ten (10) years commencing on the date on
which the merger, as contemplated by the Merger Agreement, shall have become
effective pursuant to the laws of the State of New Jersey ("Effective Time")
(the "Restricted Period"), he shall not, directly or indirectly, as an owner,
partner, stockholder, proprietor, officer, director, manager, consultant,
employee or in any other capacity or capacities, (i) engage in any business
activity in which W. Corp. or any of its Subsidiaries or any joint venture in
which W Corp. or any of its Subsidiaries was a joint venturer was engaged
immediately prior to the Effective Time, including the manufacture of plastics
grinding machinery and the provision of plastics grinding services (e.g., size
reduction, classification, blending/mixing, repackaging and processing of
natural, new/prime polymers and other materials) and of color compounding and
related processing services (the "W Corp. Business"); or (ii) engage in any
business activity related to the W. Corp. Business in which the Surviving
Corporation or any of its Subsidiaries or any joint venture in which the
Surviving Corporation or any of its Subsidiaries is a joint venturer engages or
may be engaged at any time during the Restricted Period ("Post-Effective Time
Business Activities"); or (iii) solicit, sell, service, accept, manage or
otherwise seek to acquire the custom or patronage in any Post-Effective Time
Business Activity of any person or entity who is a client, customer or active
prospective client or customer of the Surviving Corporation or of any of its
Subsidiaries or of any joint venture in which the Surviving Corporation or any
of its Subsidiaries is a joint venturer; or (iv) without the prior written
consent of the Parent Entity, solicit the employment, consulting or other
services of any other employee of the Surviving Corporation or of any of its
Subsidiaries or of any joint venture in which the Surviving Corporation or any
of its Subsidiaries is a joint venturer or otherwise induce any of such
employees to leave such employment or to breach an
2
- 2 -
employment agreement therewith. Each of clauses (i) through (iv), inclusive,
above shall constitute a separate and severable covenant of the Covenantor.
The geographic scope of the foregoing restrictive covenants shall be
the territory comprised of the United States of America and its territories and
possessions, Canada, Mexico and (without duplication) all other countries in
which W Corp. or any of its Subsidiaries or any joint venture in which W Corp.
or any of its Subsidiaries was a joint venturer engaged in business at the
Effective Time (the "Restricted Territory"). Nothing in the foregoing
restrictive covenants shall be deemed to prohibit the Covenantor from obtaining
or maintaining beneficial ownership (as defined in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended) of securities of any publicly
traded corporation or other entity if the Covenantor's beneficial ownership is
less than five percent (5%) of the issued and outstanding securities of that
class of that issuer.
The Covenantor acknowledges and agrees that this Non-Competition
Covenant is ancillary to the sale of a business enterprise and therefore is and
shall be entitled to the less stringent rules of judicial interpretation and
enforcement applicable to covenants ancillary to the sale of a business
enterprise. The Covenantor hereby further acknowledges the reasonableness of
both the Restricted Period and the Restricted Territory under all the relevant
facts and circumstances, including (without limitation) the Parent Entity's
need to protect the goodwill acquired by the Surviving Corporation pursuant to
the Merger Agreement, and agrees that this instrument is reasonably necessary
to protect the Parent Entity's legitimate business interests.
Acknowledging that the Parent Entity and the Surviving Corporation
would be injured irreparably in a manner not adequately compensated by money
damages in the event of a breach or threatened breach by the Covenantor of this
Non- Competition Covenant, the Covenantor agrees that, in the event of such
breach or threatened breach, the Parent Entity and/or the Surviving Corporation
shall be entitled, without limiting or other prejudice to its or their other
rights and remedies, to a temporary restraining order, a preliminary injunction
and other equitable relief, all without the need to post bond or other
security. Except as provided below, Covenantor hereby agrees that any actions
or proceedings brought against Covenantor by Parent Entity or the Surviving
Corporation arising out of or relating to this Non-Competition Covenant shall
be venued in the courts of the State of New Jersey or of any federal court
located in said state.
Notwithstanding the foregoing, Covenantor shall not be prohibited from
engaging in (a) following the termination of his employment relationship with
Parent Entity, the research and development of equipment; and (b) following the
termination of his employment relationship and any applicable severance period
during which he is receiving a salary, benefits or other compensation in
accordance with the terms of his Employment Agreement
3
- 3 -
with Parent Entity, the manufacture and sale of equipment; provided, however,
that any such equipment may not incorporate any Proprietary Information (as
hereinafter defined). Covenantor hereby agrees to submit to Parent Entity the
design information for any equipment he proposes to develop, manufacture and
sell for Parent Entity's prior determination and consent that such equipment
does not incorporate any Proprietary Information, which consent shall not be
unreasonably withheld. Parent Entity shall be deemed to have consented to
Covenantor's ability to develop, manufacture and sell such equipment if it does
not provide written notice to Covenantor within thirty (30) days of receiving
the design information of its intent to withhold such consent. In the event
Parent Entity withholds its consent, Covenantor, at his option, may revise and
resubmit the design for Parent Entity's consent in accordance herewith. For
purposes hereof, "Proprietary Information" shall mean confidential information
of a special and unique nature and value relating to such matters as Parent
Entity's trade secrets, know-how, systems, programs, developments, designs,
procedures, manuals, confidential reports and communications, lists of
customers and clients and any information and materials received by Parent
Entity from third parties in confidence (or subject to nondisclosure or similar
covenants). Any controversy or dispute concerning whether the design of any
equipment incorporates any Proprietary Information shall be settled by binding
arbitration in accordance with the rules of the American Arbitration
Association that are in effect at the time of the arbitration. The arbitration
proceedings shall be conducted in ____________________, New Jersey. The
arbitrator(s) shall have the authority to award any remedy or relief a court
could order or grant including, without limitation, specific performance of any
obligation created under this Non- Competition Covenant and the issuance of an
injunction. A judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Notwithstanding the
foregoing, any party hereto may seek injunctive relief under this
Non-Competition Covenant in any of the state or federal courts of the State of
New Jersey solely to preserve the status quo hereunder pending the initiation
and completion of any arbitration proceedings instituted in accordance with
this Non-Competition Covenant.
Capitalized terms used in this instrument without specific definition
shall have the meanings respectively set forth in the Merger Agreement. This
Non-Competition Covenant shall be construed under and governed by the internal
substantive laws of the State of New Jersey applicable to contracts negotiated,
executed, delivered and wholly performed within the State of New Jersey. The
Covenantor hereby instructs any court or other tribunal of competent
jurisdiction that may find any provision of this Non-Competition Covenant to be
unenforceable as written: (i) to sever the unenforceable provision from the
other enforceable provisions of this instrument; (ii) to reform the
unenforceable provision to the extent necessary (but no more) to make it
enforceable and to give effect to the mutual intentions of the Covenantor, the
Parent Entity and the Surviving Corporation that the good will acquired
pursuant to the Merger Agreement should be protected; and (iii) to enforce the
Non-Competition Covenant as reformed. The prevailing party in any legal action
4
- 4 -
initiated to interpret or to enforce this Non-Competition Covenant shall be
entitled to recover from the non-prevailing party its or his reasonable
attorneys' fees and disbursements as well as all costs of suits.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand
effective as of the _____ day of ____________, 199__.
Witnesses:
______________________________
XXXX X. XXXXX
____________________________
Print Name:
____________________________
Print Name:
