Exhibit (c)(6)
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT, dated as of February 10, 1998, by and between MTL
Inc. (the "Company") and Xxxxx X. Xxxxxxx (the "Shareholder");
WHEREAS, the Shareholder is a principal shareholder of the Company;
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company and Sombrero Acquisition Corp. ("Sub") are entering into an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of the date
hereof, providing for the merger (the "Merger") of Sub with and into the
Company;
WHEREAS, upon the date (the "Effective Date") of the closing of the Merger,
the Shareholder will receive in exchange for his shares of common stock, par
value $.01 per share, of the Company, a certain number of shares in the
surviving corporation in the Merger and a certain amount of cash, which
represents part of the consideration for the Shareholder's obligations under
this Agreement;
WHEREAS, the Shareholder has substantial experience and significant
business relationships in the bulk transportation services business;
WHEREAS, the Company would suffer damages, including the loss of profits,
if the Shareholder disclosed any confidential information of the Company or its
subsidiaries, engaged in any business that is competitive with the Company or
its subsidiaries or solicited the termination of the Company's or its
subsidiaries' relationships with their suppliers, customers or employees;
WHEREAS, the Company would not have entered into the Merger Agreement
absent the execution by the Shareholder of this Agreement;
WHEREAS, it is the interest of the Shareholder that the transactions
contemplated by the Merger Agreement be consummated; and
WHEREAS, this Agreement has been reached in good faith in arms-length
negotiations.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
2. Confidential Information. The Shareholder recognizes and acknowledges
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that he has had access to certain information of members of the Company Group
(as defined below) and that such information is confidential and constitutes
valuable, special and unique property of such members of the Company Group. The
Shareholder shall not at any time after the date hereof, disclose, divulge,
publish or otherwise communicate to anyone, nor retain, copy or permit to be
copied, or make use of for personal purposes or for the benefit of any person,
firm, corporation or other entity (other than the Company Group) any
Confidential Information (as defined below) of any member of the Company Group
(regardless of whether developed by the Shareholder) without the prior written
consent of the Company.
As used herein, "Company Group" means the Company (including its
subsidiaries), and any entity that directly or indirectly controls, is
controlled by, or is under common control with, the Company and its
subsidiaries. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such entity, whether through the ownership of voting
securities, by contract or otherwise. In addition, "Company Group" shall mean
any entity that is part of the Company's "Affiliate Program" (as defined in the
Merger Agreement) and any other independent owner/operator with whom the Company
has a contractual relationship.
The term "Confidential Information" with respect to any person means any trade
secrets and any other secret or confidential information or knowledge and shall
include, but shall not be limited to, the plans, customers, suppliers, costs,
prices, uses and applications of products and services, results of
investigations, studies or experiments known to or used by such person,
information relating to employees, customers and suppliers, and all apparatus,
products, processes, compositions, samples, formulas, computer programs, and
servicing, marketing or business methods and techniques at any time used,
developed, investigated or otherwise known to such person, all financial matters
and all information relating to mergers and acquisitions, in all such cases
before or during the term of this Agreement, that are not readily available to
the public or that are maintained as confidential by such person.
3. No Competition. Commencing upon the consummation of the transactions
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contemplated by the Merger Agreement and continuing until the fifth anniversary
thereof, the Shareholder shall not, without the express written consent of the
Company, directly or indirectly, within any geographic area in which any member
of the Company Group conducts its business, engage in the bulk transportation
services business or in any related business (the "BTS Business"). For purposes
of this Section 2, the Shareholder shall be deemed to engage in a business if
he, directly or indirectly, engages or invests in, owns, manages, operates,
controls or participates in the ownership, management, operation or control of,
is employed by, associated or in any manner connected with, or renders services
or advice to, any business engaged in the BTS Business; provided, however, that
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the Shareholder may invest in the securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if (x) such
securities are listed on any national or regional securities exchange or have
been registered under Section 12(g) of the Securities Exchange Act of 1934 and
(y) the Shareholder does not beneficially own (as
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defined Rule 13d-3 promulgated under the Securities Exchange Act of 1934) in
excess of 2% of the outstanding equity of such enterprise.
4. No Solicitation. During the same period as the restrictions of
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Section 2 hereof shall apply, the Shareholder shall not (a) request, induce,
attempt to influence or have any other business contact with any distributor or
supplier of goods or services to any member of the Company Group to curtail or
cancel any business they may transact with any member of the Company Group; (b)
request, induce, attempt to influence or have any other business contact with
any customers of any member of the Company Group that have done business with or
potential customers which have been in contact with any member of the Company
Group to curtail or cancel any business they may transact with any member of the
Company Group, (c) request, induce, attempt to influence or have any other
business contact with any employee of any member of the Company Group to
terminate his or her employment with such member of the Company Group or (d)
request, induce, attempt to influence or have any other business contact with
any governmental entity or regulatory authority to terminate, revoke or
materially and adversely alter or impair any license, authority or permit held,
owned, used or reserved for the Company Group.
5. Business Goodwill. During the same period as the restrictions of
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Section 2 hereof shall apply, the Shareholder will make only positive comments
about the Company Group and its directors, officers, employees and agents, and
shall make no comments or take any other actions, direct or indirect, that will
reflect adversely on any of the foregoing or adversely affect their business
reputation or good will.
6. Enforceability. The Shareholder agrees that if a court of competent
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jurisdiction determines that the length of time or any other restriction, or
portion thereof, set forth in this Agreement is overly restrictive and
unenforceable, the court may reduce or modify such restrictions to those which
it deems reasonable and enforceable under the circumstances, and as so reduced
or modified, the parties hereto agree that the restrictions of this Agreement
shall remain in full force and effect. The Shareholder further agrees that if a
court of competent jurisdiction determines that any provision of this Agreement
is invalid or against public policy, the remaining provisions of this Agreement
and the remainder of this Agreement shall not be affected thereby, and shall
remain in full force and effect.
The Shareholder acknowledges that the restrictions imposed by the Agreement
are legitimate, reasonable and necessary to protect the Company Group's
investment in its businesses and the goodwill thereof. The Shareholder
acknowledges that the scope and duration of the restrictions contained herein
are reasonable in light of the time that the Shareholder has been engaged in the
BTS Business, the Shareholder's reputation in the markets for the BTS Business
and the Shareholder's relationship with the suppliers, customers and clients of
the Company Group. The Shareholder further acknowledges that the restrictions
contained herein are not burdensome to the Shareholder in light of the
consideration paid therefor and the other opportunities that remain open to the
Shareholder. Moreover, the Shareholder acknowledges that he has other means
available to him for the pursuit of his livelihood.
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7. Remedies. The Shareholder acknowledges that money damages or other
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remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or default under, this Agreement, but the Shareholder agrees that
in addition to all other remedies available to the Company, the Company shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or threatened breach, violation or default and
to any other equitable relief, including, without limitation, restraining
orders, injunctive relief and specific performance, without the posting of a
bond or other security interest being required.
8. Shareholder Agreement. The parties hereto shall use good reasonable
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efforts to enter into a Shareholders Agreement effective as of the Effective
Date hereof substantially in accordance with the terms attached hereto as
9. Intent of Parties. Each of the parties hereto recognizes and agrees
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that this Agreement is necessary and essential to enable the Company to realize
and derive all of the benefits, rights and expectation of the Merger Agreement;
that the area and duration of the covenants herein are in all things, under the
circumstances of the Merger Agreement, reasonable; and that good and valuable
consideration exists for Shareholder's agreeing to be bound by such covenants.
10. Successors and Assigns. This Agreement shall inure to the benefit of
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and the successors and assigns of the Company. The Company may assign its
rights under this Agreement in connection with any sale, transfer of other
disposition of all or a substantial portion of the stock or assets of the
Company. The Shareholder may not assign his duties or obligations hereunder,
but this Agreement shall be enforceable against the Shareholder's heirs and
estate to the extent of any violation hereof by the Shareholder.
11. Effectiveness. This Agreement shall become effective upon
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consummation of the transactions contemplated by the Merger Agreement and prior
thereto shall be of no force and effect. If the Merger Agreement shall be
terminated in accordance with its terms, this Agreement shall automatically be
deemed to have been terminated and shall thereafter be of no force or effect.
12. Governing Law. This Agreement and the rights and obligations of the
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parties hereto shall be governed, construed and enforced in accordance with the
laws of the State of Florida.
13. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, but only one of which need be produced.
14. Headings. The headings of this Agreement are for convenience of
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reference only and shall not limit or otherwise affect the meaning of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
MTL INC.
By: /s/ Xxxxxxx X. X'Xxxxx, Xx.
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Xxxxxxx X. X'Xxxxx, Xx.
President
SHAREHOLDER
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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EXHIBIT A
TERM SHEET FOR SHAREHOLDERS' AGREEMENT
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. Parties:
- Apollo Entities ("Apollo")
- Management Shareholders ("Management Shareholders")
- Xxxxxxx Shareholders (the Management Shareholders and the Xxxxxxx
Shareholders, collectively, the "Shareholders")
. Board of Directors:
- The parties agree that, if employed by the Company, Xxxxx X. Xxxxxxx,
Xxxxxxx X. Xxxxxxxxx, Xxxxxx Xxxxxx and Xxxxxxx X. X'Xxxxx, Xx. shall be
appointed to serve as directors of the Company if they so choose.
. Affiliate Transactions:
- Any transactions between the Company and any affiliate (including
Apollo) shall be on an arms-length basis as determined in good faith by the
board of directors of the Company in their reasonable business judgment. The
parties agree and acknowledge that the Company will pay the management fees to
Apollo as set forth in the Management Agreement between Apollo and the Company.
The parties further agree that Apollo shall be entitled to a transaction fee of
up to one point per transaction as determined in the sole discretion of Apollo.
Except as set forth above, no other fees shall be payable to Apollo, except as
approved by a majority of the disinterested directors of the Company.
. Restrictions on Transfer:
- Common Stock, Options, and, to the extent applicable, Preferred Stock
will be restricted securities under the Securities Act.
- Certificates shall contain standard legends.
- Tag-Along Rights: If Apollo transfers shares (i) in a public
offering (as provided below under Registration Rights including, without
limitation, underwriters' cutbacks) or (ii) individually, or in any series of
related transactions, greater than 10% of the class of securities outstanding,
Shareholders can tag-along their pro rata share on the
same terms and conditions as Apollo as set forth in the tag-along notice
required to be given by Apollo to the Shareholders.
- Drag-Along Rights: If Apollo proposes to sell 50% or more of its
initial ownership or 50% or more of the outstanding capital stock of the
Company, Apollo may require Shareholders to sell their pro rata portion of their
shares (including requiring the exercise of Options held by Shareholders and the
sale of such shares) on the same terms and conditions as Apollo as set forth in
the drag-along notice. If the drag-along sale would include a prohibition on
Shareholders from competing in any line of business or geographic area, the
Shareholders shall not be required to sell to such third party, but shall be
obligated to sell their pro rata portion directly to Apollo. The drag-along
rights shall not apply to a sale to an affiliate of Apollo.
- No Sale Period: Shareholders will not sell their shares or options
for a period of two and one-half years, subject to the rights contained herein
under the headings "Tag-Along Rights," "Drag-Along Rights," "Registration
Rights" and "Other Liquidity Events."
- Right of First Refusal: Following the end of the no sale period, if
any Shareholder proposes to sell its shares (other than to a permitted
transferee), such Management Shareholder shall submit to Apollo a right of first
refusal notice which shall state the terms of the proposed transaction. Apollo
shall give notice of its intention to purchase all, but not less than all of
such shares at the price and on the terms set forth in the right of first
refusal notice. Any transferee shall be required to execute the Shareholders
Agreement.
. Registration Rights:
- Shareholders will have unlimited piggy-back registration rights other
than with respect to an initial public offering. The Company will give at least
five days notice prior to the anticipated filing date, and the Shareholders will
have two business days to notify the Company of its desire to be included in
such registration statement. The Company will use its reasonable best efforts
to include the Shareholders shares in such registration statement; provided that
if such registration involves an underwritten public offering, such Shareholders
agree to sell their shares to the underwriters on the same terms as the Company.
In addition, Shareholders' piggy-back rights shall be subject to certain public
offering limitations, including pro rata cut-backs of Shareholders shares due to
underwriter market limitations and non-pro rata cut-backs at the underwriter's
request. Each shareholder will agree not to sell any shares during the black-
out period prior to a public offering by the Company and during the period after
the effective date of a registration statement equal to the lesser of 180 days
and such shorter period as the Company and the lead managing underwriter agree.
Registration expenses shall be the responsibility of the Company and selling
expenses relating to the underwriting shall be the responsibility of the selling
Shareholders. It is expressly understood that the rights of any selling
shareholder to include shares in a piggy-back registration shall be subordinate
to those of the Company.
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. Indemnification:
- The Company shall provide standard indemnification to all Shareholders
against liability arising out of untrue statements of material facts in the
registration statement or prospectus (except for information provided by such
Shareholders, in their capacity as a Shareholder.)
- All Shareholders shall indemnify the Company against liability arising
out of untrue statements of material facts in connection with information
provided by such Shareholders, in their capacity as a Shareholder, for inclusion
in the registration statement or prospectus.
. Contribution:
- If indemnification is unavailable, then each indemnifying party shall
contribute such amount payable as a result of such liability in proportion to
reflect the relative benefits and relative faults of the Company and the
Shareholders.
. Public Offerings:
- Shareholders may not participate in any underwritten public offering,
unless they agree to sell their shares on the basis provided in the underwriting
arrangements and comply with the covenants and agreements contained in such
underwriting agreement.
- All Shareholders shall maintain the confidentiality of information
made available in connection with their investment in the Company.
- Expiration of Registration Rights: The rights of Shareholders to
registration rights shall expire on the date which is the earlier of (i) the
date upon which all such securities may be resold under Rule 144 without
limitation and (ii) four years from the date of the Shareholders' Agreement.
. Other Liquidity Events:
- Upon termination of any Management Shareholder under the conditions
specified, the parties shall have the following put/call options with respect to
the Stock and Options held by such terminating Management Shareholder:
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For Cause (other Voluntary Without Cause
than Special Cause): For Special Cause: Termination or Good Reason
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Stock: Company or Apollo can Company or Apollo can Company or Apollo can Management Shareholder
call at Fair Market call at cost, purchase call at Fair Market may put Stock with a
Value, purchase price price payable Value, purchase price Fair Market Value equal
payable immediately. immediately. payable immediately. to the Management
Shareholder's original
investment in the
Stock, purchase price
payable promptly (after
allowing the Company a
reasonable time period
to finance such
purchase), subject to
debt and legal
requirements. Apollo
may, but shall not be
required to, honor the
Company's obligations
with respect to the put.
Vested Company or Apollo can Company or Apollo can Company or Apollo can No put or call.
Options: call at Fair Market call at cost. call at Fair Market Options will continue
Value, purchase price Value, purchase price throughout the exercise
payable immediately. payable immediately. If period.
not purchased, Options
will continue
throughout the exercise
period.
- If a Management Shareholder remains employed after four years he shall
be entitled to put Stock with a Fair Market Value equal to such Management
Shareholder's original investment in the Stock. The purchase price shall be
paid promptly (after allowing the Company a reasonable time period to finance
such purchase), subject to debt and legal requirements. Apollo may, but shall
not be required to, honor the Company's obligations with respect to the put.
- For the purposes of the foregoing "Cause" and "Good Reason" shall be
defined as set forth in the relevant Employment Agreement of the Management
Shareholder and "Special Cause" shall mean a Cause event which results in damage
to the business, reputation or financial condition of the Company. In each
case, if not purchased pursuant to the put or call, the Shareholder can continue
to hold the Stock
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- The Fair Market Value of a share of Stock will be calculated on the same
basis as "Per share equity" as set forth under the heading "Performance Vesting"
in the Option Plan term sheet of today's date.
- All puts and calls above must be exercised and closed within 180 days of
the date on which they are triggered.
- The Company will use commercially reasonable efforts to cause the
covenants in its debt agreements to allow exercise of the put/call options in
the event of Management Shareholder termination. However, decision to call
remains at the Company's sole discretion.
- The foregoing provisions under the heading "Other Liquidity Events"
replace the provisions relating to "Repurchase Rights" set forth in the draft
Options Plan term sheet and only apply to the Management Shareholders.
. Financial Reporting:
- The Company shall provide each Shareholder with copies of its quarterly
(unaudited) and annual audited financial statements promptly upon their
completion in any period during which a Shareholder remains a Shareholder, but
is not an officer of the Company.
. Preemptive Rights:
- The Shareholders shall be entitled to customary preemptive rights with
respect to the sale of Common Stock or other equity convertible into Common
Stock of the Company; provided, that (i) the Shareholder remains an employee (or
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consultant) and a Shareholder at the time he exercises such right and (ii) such
Shareholder must act within the time frame presented by the Company with respect
to the exercise of such preemptive rights..
. Public Offering:
- If the Company is a public company, this agreement shall be of no
further force and effect, except the provisions under the headings "Registration
Rights," "Tag-Along Rights" and "Drag-Along Rights" shall survive
notwithstanding the Company being a public company.
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