EXHIBIT 99.2
COVENANT AND AGREEMENT NOT-TO-COMPETE
This Covenant and Agreement Not-To-Compete ("Agreement") is entered into as
of this 31st day of August, 1999, by and among Matrix Service Company, a
Delaware corporation ("Matrix"), Georgia Steel Acquisition Corp., an Oklahoma
corporation ("GSAC"), Caldwell Tanks, Inc., a Kentucky corporation ("Caldwell
Tanks"), Caldwell Tanks Alliance, LLC, a Georgia limited liability company
("Caldwell"), and Brown Steel Contractors, Inc., a Georgia corporation
("Brown").
Recitals:
A. Pursuant to the terms of a certain Amended and Restated Stock Purchase
Agreement and Conversion to Asset Purchase Agreement, dated as of August 31,
1999, as amended (the "Purchase Agreement"), among Matrix, GSAC, Caldwell,
Caldwell Tanks and Brown, Caldwell is this day acquiring certain assets and
properties of Brown, and the other parties to the Purchase Agreement are
engaging in certain other transactions as contemplated therein.
B. In connection with those transactions, the parties desire to enter into
this Agreement to provide that Brown, Matrix and GSAC will not engage in certain
activities that are detrimental to or competitive with Caldwell and/or Caldwell
Tanks, and that Caldwell and Caldwell Tanks will not engage in certain other
activities that are detrimental to or competitive with Brown, Matrix and GSAC.
C. It is a condition to the closing of Brown's sale and Caldwell's
purchase of the assets and properties of Brown, and to the other transactions
contemplated in the Purchase Agreement, that Matrix, GSAC, Caldwell, Caldwell
Tanks and Brown enter into this Agreement.
Agreement:
Now, Therefore, in consideration of the premises and for other valuable
consideration, the receipt of which is hereby acknowledged, the parties hereby
agree as follows:
1. Covenants Not-To-Compete.
1.1 Matrix Parties Covenant Not to Compete; Right of First Refusal.
Brown, Matrix and GSAC each hereby covenants and agrees with Caldwell and
Caldwell Tanks that for a period of five (5) years following the date hereof,
Brown, Matrix and GSAC shall not, and shall not cause or permit any of their
Affiliates to, directly or indirectly: (a) construct, fabricate, manufacture,
install, market, sell, design, lease or license, operate, maintain or repair
elevated water tanks, except as a subcontractor for Caldwell or Caldwell Tanks;
or (b) engage in any manner in the business of designing equipment, facilities
or methodologies for, procuring or selling equipment or facilities for,
contracting equipment or facilities for, providing project management regarding
equipment or facilities for, or otherwise consulting or providing other services
in connection with, cooling the air for combustion turbines used in any
industry; in either case anywhere within the "Territory" (as defined in Section
74.), whether for its own account or for the account of any other Person;
provided, that the foregoing covenants and agreements of Brown, Matrix and GSAC
shall not
prohibit them (or any of their Affiliates) from engaging in any of the following
activities at any time within the Territory: (i) providing goods and services to
customers pursuant to any warranty, guaranty or other similar obligations under
contracts or agreements that are Retained Obligations as of the date hereof; or
(ii) serving in the capacity as a general contractor (or its equivalent) in
connection with the design, repair, construction, installation, retrofit or
refurbishment of any cogeneration power production facilities (or any portions
thereof) that include or involve equipment or processes for cooling the air for
combustion turbines used in such facilities. In the event Brown, Matrix, GSAC or
any of their Affiliates serve in the capacity as a general contractor (or its
equivalent) as contemplated in (ii) above, and in the event its duties or
authority include the performances of services and/or the provision of equipment
or other goods in connection with or relating to cooling the air for combustion
turbines used in such facilities, or the retention of one or more subcontractors
to perform those services or provide that equipment or those goods, then Matrix
shall, and shall cause Brown, GSAC, its other relevant Affiliate or the relevant
customer (as applicable) to, first afford Caldwell Tanks or its designated
Affiliate the right and option to perform or provide the same services,
equipment and/or goods for the benefit of Brown, Matrix, GSAC, their Affiliate
or the relevant customer (as applicable) as would be performed or provided by
Brown, Matrix, GSAC, their Affiliate or the relevant subcontractor(s), upon
terms that are no less favorable to Caldwell Tanks (or such Affiliate) than
those available to Brown, Matrix, GSAC, their Affiliate or the relevant
subcontractor(s). Matrix agrees to promptly notify Caldwell Tanks of each
opportunity to provide such services, equipment or goods, and shall include with
such notice a copy of any relevant contract(s) or subcontract(s), and a
description in reasonable detail of the nature of the services, equipment and/or
goods to be provided and the terms and conditions thereof. Caldwell Tanks shall
have a period of ten (10) days following its receipt of all such information to
exercise its right and option upon written notice delivered to Matrix or the
relevant customer (in the case of a right and option directly granted by that
customer).
1.2 Caldwell and Caldwell Tanks Covenants Not to Compete. Caldwell
and Caldwell Tanks each hereby covenants and agrees with Brown, Matrix and GSAC
that for a period of five (5) years following the date hereof, neither Caldwell
nor Caldwell Tanks shall, nor shall Caldwell Tanks permit any of its other
Affiliates to, directly or indirectly, construct, fabricate, manufacture,
install, market, sell, design, lease or license, operate, maintain or repair
above-ground petroleum storage tanks for the petro-chemical industry anywhere
within the Territory, whether for its own account or for the account of any
other Person (other than for Matrix or its Affiliates); provided, that the
covenants and agreements of Caldwell and Caldwell Tanks set forth in this
Section 1.2 shall immediately terminate and become null and void in the event,
during the above-described five-year period (a) Caldwell Tanks shall sell,
convey or transfer substantially all of its assets and properties to any
Person(s) that is not presently an Affiliate of Caldwell Tanks or of any of its
current shareholders (each a "Third-Party"), or (b) greater than 50% of the
outstanding voting common stock of Caldwell Tanks becomes owned of record or
beneficially by any one or more Third-Parties, in either case whether pursuant
to one transaction or a series of related transactions with Caldwell Tanks
and/or its current shareholders.
1.3 Certain Covered Activities. The parties each agree that any of
the following actions on the part of Matrix, GSAC, Caldwell, Caldwell Tanks or
Brown shall be deemed to be a violation of their respective covenants and
agreements set forth in Section 1.1 or 1.2 (as applicable);
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provided, that such activities shall not be deemed to be exclusive of any other
actions which may also violate those covenants and agreements:
(a) If such party shall directly or indirectly enter the employ of,
or render any service to (other than services in the ordinary course of that
party's business which do not relate in any material respect to the provision of
services of the type(s) described in Sections 1.1 or 1.2 (as applicable) above),
or act in concert with, any Person engaged in any business or in the rendering
of any service of the type contemplated in Section 1.1 or 1.2, as applicable (a
"Competing Business");
(b) If such party shall directly or indirectly engage in any such
Competing Business for its, his or her own account;
(c) If such party shall become interested, directly or indirectly,
in any such Competing Business as an individual, partner, shareholder, member,
director, officer, principal, agent, consultant or in any other relationship or
capacity (other than as a subcontractor providing services in the ordinary
course of that party's business which do not relate in any material respect to
the provision of services of the type(s) described in Sections 1.1 or 1.2 (as
applicable) above); provided that the purchase of a publicly traded security of
a corporation engaged in such business or service shall not in itself be deemed
violative of this Agreement so long as that party does not own, directly or
indirectly, more than one percent (1%) of the securities of such entity; or
(d) If such party is engaged outside of the Territory in any of the
activities described above, and maintains a business address or telephone
listing with respect to those activities anywhere in the Territory.
2. Confidentiality Covenants.
2.1 Brown, Matrix and GSAC Confidentiality Covenants. Brown, Matrix
and GSAC shall not, and shall not cause or permit any of their Affiliates to, at
any time hereafter, divulge, furnish or make accessible to any Person any know-
how, information, methods, systems or other confidential information or trade
secrets with respect to the business, assets, operations or financial affairs of
Brown or any of its subsidiaries immediately prior to the consummation of the
transactions contemplated in the Purchase Agreement.
2.2 Caldwell and Caldwell Tanks Confidentiality Covenants. Caldwell
and Caldwell Tanks shall not, and Caldwell Tanks shall not cause or permit any
of its other Affiliates to, at any time hereafter, divulge, furnish or make
accessible to any Person any know-how, information, methods, systems or other
confidential information or trade secrets with respect to the business, assets,
operations or financial affairs of Brown (other than the assets and properties
purchased by Caldwell on the date hereof), Matrix or GSAC.
3. Nonsolicitation of Employees by Brown, Matrix and GSAC. Brown, Matrix and
GSAC shall not, nor shall they cause or permit any of their Affiliates to, for a
period of five (5) years following the date hereof, individually or on behalf of
any other Person, entice or induce, directly or indirectly, any employee of
Caldwell or any of its subsidiaries as of the date immediately
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following the date hereof to leave the employment of Caldwell (or such
subsidiary) to work with Brown, Matrix or GSAC, or with any other Person with
whom Brown, Matrix or GSAC is or becomes affiliated; provided, that the
foregoing covenant shall not apply to or prohibit solicitations made by Brown,
Matrix or GSAC to the public generally through print or e-mail solicitations or
advertising.
4. No Disparagement.
4.1 No Disparagement by Brown, Matrix and GSAC. Brown, Matrix and
GSAC shall not at any time publicly disparage Caldwell or Caldwell Tanks or
their respective business, operations, financial condition, reputation, products
or services, or any of their respective directors, officers, employees or
Affiliates.
4.2 No Disparagement by Caldwell or Caldwell Tanks. Neither
Caldwell nor Caldwell Tanks shall at any time publicly disparage Brown, Matrix
or GSAC or its business, operations, financial condition, reputation, products
or services, or any of its directors, officers, employees or Affiliates.
5. Reasonableness of Scope and Duration. Matrix, GSAC, Caldwell,
Caldwell Tanks and Brown acknowledge and agree that the covenants and agreements
contained in this Agreement are, taken as a whole, fair and reasonable in their
geographic scope and duration, and neither Matrix, GSAC, Caldwell, Caldwell
Tanks nor Brown shall raise any issue of the reasonableness of the scope or
duration of any such covenants or agreements in any proceeding to enforce any
such covenants or agreements.
6. Cumulative Remedies. The parties each acknowledge that Matrix, GSAC,
Brown, Caldwell Tanks and Caldwell have consummated the transactions
contemplated in the Purchase Agreement in reliance, among other things, upon the
fulfillment by the other parties hereto of their respective covenants and
agreements made in this Agreement. Each party understands and agrees that the
others may not be adequately compensated by damages for a breach of any of the
covenants and agreements contained herein, and that such other parties shall
each, in addition to all other remedies, be entitled to injunctive relief and
specific performance. Each party hereby affirmatively waives the requirement
that any other party post any bond, demonstrate the likelihood of irreparable
damage or demonstrate that any actual damages will be suffered as a result of
such party's breach of any provision of this Agreement. Nothing contained
herein shall be construed as prohibiting any party from pursuing any other
remedies available to it, for such breach or threatened breach, including,
without limitation, the recovery of money damages, and each party shall also be
entitled to the payment of any and all reasonable fees, disbursements, and other
charges of the attorneys and collection agents, court costs, and all other costs
incurred in enforcing its rights and remedies under this Agreement.
7. Definitions. The following terms, when used in this Agreement, shall
have the meanings set forth below:
7.1 Affiliate. Any Person controlled by, controlling or under common
control with such Party. For the purposes of this definition of Affiliate,
"control" of a Person means the power,
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direct or indirect, to direct or cause the direction of the management and
policies of such Person, whether by ownership of securities, contract, law or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
7.2 Governmental Body. Any (i) nation, state, county, city, town,
village, district or other jurisdiction of any nature; (ii) federal, state,
local, municipal, foreign or other government; (iii) governmental or quasi-
governmental authority of any nature (including, without limitation, any
governmental agency, branch, department, official or entity and any court or
other tribunal); (iv) multi-national organization or body; or (v) body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory or taxing authority or power of any nature; or
(vi) any other Person.
7.3 Person. Any individual, corporation (including, without
limitation, any non-profit corporation), general or limited partnership, limited
liability partnership or company, joint venture, estate, trust, association,
unincorporated organization, labor union, or other entity or Governmental Body.
7.4 Territory. All of the Continental United States.
8. Miscellaneous.
8.1 Binding Effect. All of the terms, provisions and conditions of
this Agreement shall be binding on Matrix, GSAC, Caldwell, Caldwell Tanks and
Brown, and their respective successors and permitted assigns, and shall inure to
the benefit of and be enforceable by Matrix, GSAC, Caldwell, Caldwell Tanks,
Brown and their respective successors and permitted assigns.
8.2 Limitation or Invalidation of Provisions; Severability.
(a) The covenants and agreements contained in this Agreement
shall be construed as separate covenants and agreements, and if any court shall
finally determine that the restraints provided for in any such covenants and
agreements are too broad as to the area, activity or time covered, said area,
activity or time covered shall be reduced to whatever extent the court deems
reasonable, and such covenants and agreements shall be enforced as to such
reduced area, activity or time.
(b) If any provision of this Agreement is limited as described
in Section 8.2(a) above, or the application of any provision of this Agreement
to any Person or circumstance shall to any extent be held in any proceeding to
be invalid, illegal or unenforceable, the remainder of this Agreement, or the
application of such provision to Persons or circumstances other than those to
which it was held to be invalid, illegal or unenforceable, shall not be affected
thereby, and shall be valid, legal and be enforceable to the fullest extent
permitted by law, but only if and to the extent such enforcement would not
materially and adversely frustrate the parties' essential objectives as
expressed herein.
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8.3 Construction and Interpretation of Agreement.
(a) Section titles or captions used in this Agreement are included
for purposes of convenience only, and shall not be considered a part of the
Agreement in construing or interpreting any of its provisions. All references in
this Agreement to Sections shall refer to Sections of this Agreement unless the
context clearly otherwise requires.
(b) When used in this Agreement, the word "including" shall have
its common meaning and any list of items that may follow such word shall not be
deemed to represent a complete list of the contents of the referent of the
subject.
(c) The parties have participated jointly in the negotiation and
drafting of this Agreement. If any ambiguity or question of intent or
interpretation arises, no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
(d) Unless the context otherwise requires, when used in this
Agreement, the singular shall include the plural, the plural shall include the
singular, and all nouns, pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, as the identity of the person or
persons may require.
(e) The parties do not intend that this Agreement shall confer on
any third party any right, remedy or benefit or that any third party shall have
any right to enforce any provision of this Agreement.
8.4 Exclusive Forum. Any action to enforce any provision of this
Agreement shall be instituted exclusively in the United States District Court
for the Western District of Kentucky or, if such Court does not have
jurisdiction to adjudicate such action, in the courts of the Commonwealth of
Kentucky located in Jefferson County. The parties irrevocably and
unconditionally waive and shall not plead, to the fullest extent permitted by
law, any objection that they may now or hereafter have to the jurisdiction of
such courts over the parties, the laying of venue or the convenience of the
forum of any action related to this Agreement that is brought in the United
States District Court for the Western District of Kentucky or in the Courts of
the Commonwealth of Kentucky located in Jefferson County.
8.5 Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties with respect to the subject matter herein
contained, and supersedes all prior agreements, correspondence, arrangements and
understandings relating to the subject matter hereof. No representation,
promise, inducement or statement of intention has been made by any party which
has not been embodied in this Agreement, and no party shall be bound by or be
liable for any alleged representation, promise, inducement or statement of
intention not so set forth. This Agreement may be amended, modified, superseded,
or canceled only by a written instrument signed by all of the parties, and any
of the terms, provisions, and conditions hereof may be waived, only by a written
instrument signed by the waiving party. Failure of any party at any time or
times to require performance of any provision hereof shall not be considered to
be a waiver of any succeeding breach of such provision by any party.
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8.6 Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Kentucky without giving effect to any conflict of law rule
or principle that might require the application of the laws of another
jurisdiction.
8.7 Notices.
(a) Giving of Notices. All notices, requests, consents,
approvals, waivers, demands and other communications required or permitted to be
given, made or delivered hereunder (collectively, "Notices") shall be deemed to
have been given if in writing and (1) personally delivered against a written
receipt, or (2) sent by confirmed telephonic facsimile, or (3) delivered to a
reputable express messenger service (such as Federal Express, DHL Courier and
United Parcel Service) for overnight delivery, addressed as follows (or to such
other address as a party shall have given Notice to the others):
If to Brown, Matrix or GSAC: c/o Matrix Service Company
10701 East Ute Street
Tulsa, Oklahoma 74116
Attn: Chief Financial Officer
Fax: 918/838-8810
With a copy (which shall not
constitute notice) to: Larry W. Sandel, Esq.
Hall, Estill, Hardwick, Gable,
Golden & Nelson
320 South Boston Avenue, Suite 400
Tulsa, Oklahoma 74103-3708
Fax: 918/594-0505
If to Caldwell or Caldwell Tanks: c/o Caldwell Tanks, Inc.
4000 Tower Road
Louisville, Kentucky 40219
Attn: President
Fax: 502/966-8732
With a copy (which shall not
constitute notice) to: Patrick R. Northam, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, Kentucky 40202
Fax: 502/587-3695
(b) Time Notices Deemed Given. All Notices shall be effective
upon being properly personally delivered, or upon confirmation of a telephonic
facsimile, or upon the delivery to a reputable express messenger service. The
period in which a response to any such Notice must be given shall commence to
run from the date on the receipt of a personally delivered Notice, or the date
of confirmation of a telephonic facsimile or two days following the proper
delivery of the Notice to a reputable express messenger service, as the case may
be.
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8.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which, when taken together, shall be deemed to constitute
one and the same agreement.
In Witness Whereof, the parties have entered into this Agreement as of the
date first written above.
Matrix Service Company
By:____________________________
Title:_________________________
("Matrix")
Georgia Steel Acquisition Corp.
By:____________________________
Title:_________________________
("GSAC")
Caldwell Tanks, Inc.
By:____________________________
Title:_________________________
("Caldwell Tanks")
Caldwell Tanks Alliance, LLC
By:____________________________
Title:_________________________
("Caldwell")
Brown Steel Contractors, Inc.
By:____________________________
Title:_________________________
("Brown")
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