Document:

Amendment No. Two to Rights Agreement

 Exhibit 10.3 
  
 AMENDMENT NO. TWO TO THE RIGHTS AGREEMENT 
  
 This Amendment No. Two (this “Amendment”) to the Rights Agreement dated as of November 2, 1999,
as amended by Amendment No. One (“Amendment No. One”) to the Rights Agreement dated as of April 21, 2005 (as amended by Amendment No. One, the “Rights Agreement”), is made by and between Matrix
Service Company, a Delaware corporation (the “Company”), and UMB Bank, N.A., as Rights Agent (the “Rights Agent”), effective as of October 3, 2005; 
  
 WHEREAS, pursuant to the terms and conditions of the Rights Agreement, the
Company and the Rights Agent desire to further amend the Rights Agreement as set forth below; 
  
 WHEREAS, the Company, by its execution of this Amendment, hereby directs the Rights Agent to execute this Amendment; 
  
 WHEREAS, all capitalized terms used, but not otherwise defined, herein shall have the meaning ascribed to them in the Rights Agreement; and 
  
 NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 
  
 Section 1. Amendment to Rights Agreement. 
  
 1.1 Amendment to Section 1. 
  
 a. The third sentence (as previously amended) of the definition of “Acquiring Person” set forth in Section 1(a) of the Rights Agreement is
hereby amended by adding the following after the language “on the Closing Date” in the second line thereof: “and the purchase of Common Shares pursuant to the October Securities Purchase Agreement”. 
  
 b. The definition of “Acquiring Person” set forth in
Section 1(a) of the Rights Agreement is hereby amended by inserting the following text immediately following the third sentence of such definition (as previously amended): 
  
 “Notwithstanding the foregoing or anything to the contrary in this Rights Agreement, “Acquiring Person” shall
not include the Tontine Group, acting individually or with another Person, unless and until such time as the Tontine Group shall increase its Beneficial Ownership of Common Shares to an amount in excess of 25% or more of the then-outstanding Common
Shares; provided, however, that the Tontine Group will not be deemed to be an Acquiring Person solely as a result of (i) stock issuances by the Company to any member of the Tontine Group, which are not part of a broader sale of stock, or
(ii) a reduction in the number of Common Shares outstanding unless and until such time after such reduction as (A) the Tontine Group becomes the Beneficial Owner of additional Common Shares (other than as a result of a stock dividend,
stock split, stock repurchases or similar transaction effected by the Company in which all holders of Common Shares are treated equally, and other than issuances of stock by the Company to 

 
any member of the Tontine Group, which are not part of a broader sale of stock) and after giving effect to such additional Common Shares the Tontine Group is
the Beneficial Owners of an amount in excess of 25% or more of the then-outstanding Common Shares, or (B) any other Person who is a Beneficial Owner of Common Shares thereafter becomes an Affiliate or Associate of the Tontine Group and after
giving effect thereto the Tontine Group is the Beneficial Owner of an amount in excess of 25% or more of the then-outstanding Common Shares.” 
  
 c. The fourth word in the last sentence of the definition of “Acquiring Person” contained in Section 1(a) of the Rights Agreement is hereby
changed from “four” to “five.” 
  
 d. The
definition of “Distribution Date” set forth in Section 1(h) of the Rights Agreement (as such Section may have been re-designated pursuant to Amendment No. One and this Amendment) is hereby amended by inserting the following text
immediately after the period concluding the definition: 
  
 “Notwithstanding the foregoing or anything to the contrary in this Rights Agreement, a “Distribution Date” shall not include, and shall not occur by virtue of: (i) the negotiation, execution, delivery, or preparation of
the October Securities Purchase Agreement; or (ii) the consummation of the transactions contemplated by the October Securities Purchase Agreement” 
  
 e. The definition of “Flip-In Event” set forth in Section 1(l) of the Rights Agreement (as such Section may have been re-designated
pursuant to Amendment No. One and this Amendment) is hereby amended by inserting the following text immediately after the period concluding the definition: 
  
 “Notwithstanding the foregoing or anything to the contrary in this Rights Agreement, a “Flip-In Event” shall not include, and shall not
occur by virtue of: (i) the negotiation, execution, delivery, or preparation of the October Securities Purchase Agreement; or (ii) the consummation of the transactions contemplated by the October Securities Purchase Agreement.”

  
 f. The definition of “Flip-Over Event” set forth in
Section 1(m) of the Rights Agreement (as such Section may have been re-designated pursuant to Amendment No. One and this Amendment) is hereby amended by inserting the following text immediately after the period concluding the definition:

  
 “Notwithstanding the foregoing or anything to the
contrary in this Rights Agreement, a “Flip-Over Event” shall not include, and shall not occur by virtue of: (i) the negotiation, execution, delivery, or preparation of the October Securities Purchase Agreement; or (ii) the
consummation of the transactions contemplated by the October Securities Purchase Agreement.” 
  
 g. The definition of “Share Acquisition Date” set forth in Section 1(z) of the Rights Agreement (as such Section may have been
re-designated pursuant to Amendment No. One and this Amendment) is hereby amended by inserting the following text immediately after the period concluding the definition: 
  

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 “Notwithstanding the foregoing or anything to the contrary in this Rights Agreement, a “Stock
Acquisition Date” shall not include, and shall not occur by virtue of: (i) the negotiation, execution, delivery, or preparation of the October Securities Purchase Agreement; or (ii) the consummation of the transactions contemplated by
the October Securities Purchase Agreement.” 
  
 h. The
definition of “Triggering Event” set forth in Section 1(cc) of the Rights Agreement (as such Section may have been re-designated pursuant to Amendment No. One and this Amendment) is hereby amended by inserting the following text
immediately after the period concluding the definition: 
  
 “Notwithstanding the foregoing or anything to the contrary in this Rights Agreement, a “Triggering Event” shall not include, and shall not occur by virtue of: (i) the negotiation, execution, delivery, or preparation of
the October Securities Purchase Agreement; or (ii) the consummation of the transactions contemplated by the October Securities Purchase Agreement.” 
  

i. The following definitions are hereby added to Section 1 of the Rights Agreement in their proper alphabetical order and any cross-references to
subsections of Section 1 are modified as appropriate: 
  
 “October Securities Purchase Agreement” means the Securities Purchase Agreement dated as of October 3, 2005, by and among the Company, Tontine and the Investors. 
  
 “Tontine Group” means Jeffrey L. Gendell, Tontine Capital
Partners, L.P., Tontine Capital Management L.L.C. and any of their Affiliates or Associates. 
  
 1.2 Addition of Section 35. The Rights Agreement is hereby further amended by adding a new Section 35 as follows: 
  
 “35. Exception for October Securities Purchase Agreement. Notwithstanding anything to the contrary in this
Rights Agreement, no Person shall be granted or issued any Rights, and no holder of any Rights shall be entitled to exercise such Rights under any of the sections, terms, or provisions of this Agreement, by reason of: (i) the negotiation,
execution, delivery, or preparation of the October Securities Purchase Agreement; or (ii) the consummation of the transactions contemplated by the Securities Purchase Agreement.” 
  
 Section 2. Miscellaneous. 
  
 2.1 Effectiveness. This Agreement shall be deemed effective as of the
date first written above, as if executed by both parties on such date. Except as amended hereby, the Rights Agreement shall remain in full force and effect and shall not be otherwise affected by this Agreement. 
  
 2.2 Further Assurances. Each party agrees that, from time to time upon
the written request of the other party, it will execute and deliver such further documents and do such other acts and things as the other party may reasonably request to effect the purposes of this Agreement. 
  

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 2.3 Governing Law. This Agreement shall be governed by, and construed in accordance with,
the domestic laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other
than the State of Delaware. 
  
 2.4 Severability. Any term
or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term
or provision in any other situation or in any other jurisdiction. 
  
 2.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the parties; provided, however, that neither party shall assign or transfer its rights hereunder
without the prior written consent of the other party. 
  
 2.6
Counterparts. This Agreement may be executed in one or more counterparts and all of such counterparts taken together shall constitute one and the same instrument. 
  
 [THE NEXT PAGE IS THE SIGNATURE PAGE] 
  

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 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above
written. 
  

			
	 MATRIX SERVICE COMPANY

		
	 By:
	 	 /s/ George L. Austin

	 Name:
	 	 George L. Austin

	 Title:
	 	 VP and CFO

	
	 UMB BANK, N.A.

		
	 By:
	 	  

	 Name:
	 	  

	 Title:
	 	  

  

 5Side Letter

 Exhibit 10.4 
  
  
 October 3, 2005 
  
 Matrix Service Company 
 10701 East Ute Street 
 Tulsa, Oklahoma 74116 
 Attention: George L. Austin 
  

	Re:	Proposed Investment by Tontine Capital Partners, L.P. (“Purchaser”) 

  
 Dear Les: 
  
 As you are aware, Purchaser has agreed to purchase 1,153,846 shares of common stock (the “Shares”) of Matrix Service Company (the
“Company”) on the terms and conditions set forth in that certain Securities Purchase Agreement dated October 3, 2005 (the “Purchase Agreement”), among the Company, Purchaser and the additional
signatories thereto. Capitalized terms used but not defined herein have the meanings set forth in the Purchase Agreement. 
  
 The Company represents and warrants to Purchaser that the Company’s Board of Directors has (i) approved the purchase of the Shares by Purchaser,
including for purposes of rendering inapplicable the provisions of Section 203 of the Delaware Business Corporation Act, as amended, (ii) has approved the Amendment in the same form as Exhibit B to the Purchase Agreement with the effect
that Purchaser shall not be deemed an Acquiring Person (as defined in the Rights Agreement), the Distribution Date (as defined in the Rights Agreement) shall not be deemed to occur and the Rights (as defined in the Rights Agreement) will not
separate from the Common Stock of the Company, as a result of entering into the Purchase Agreement or consummating the transactions contemplated by the Purchase Agreement and providing further that Purchaser shall not be deemed to be an Acquiring
Person under the Rights Agreement unless and until Purchaser (or is Affiliates or Associates) has acquired in excess of 25% of the then outstanding Common Stock of the Company, and (iii) has adopted resolutions in the form attached as
Exhibit A to this letter agreement. 
  
 In connection with
the foregoing and as a condition to Purchaser’s purchase of the Shares, Purchaser and the Company hereby agree as follows: 
  
 (a) Subject to paragraphs (b) and (c) below, the Purchaser agrees that until the earlier to occur of (A) the second
anniversary of the Closing Date and (B) such time as Michael J. Hall no longer serves as either the Chief Executive Officer of the Company or as an active regular member of the Company’s board of directors, without the prior approval of
the Company, the Purchaser will not, directly or indirectly, through its affiliates or associates or any other persons, or in concert with any person, (i) purchase or otherwise acquire beneficial ownership (as defined in Rule 13d-3 and Rule
13d-5 under the 1934 Act) that would result in the “Tontine Group” becoming an “Acquiring Person”, each as defined in the Rights Agreement as amended by the Amendment, (ii) enter into or publicly propose to enter into,
directly or indirectly, any merger or other business combination, acquisition of assets or similar transaction or change of control involving the Company or any Subsidiary, (iii) make, or in any way participate, directly or indirectly, in any
“solicitation” of “proxies” (as such terms are used in the proxy rules of the SEC) to vote, or seek to advise or influence any person with respect to the voting of, any securities of the Company or any Subsidiary, (iv)

 
call, or seek to call, a meeting of the Company’s stockholders or initiate any stockholder proposal for action by stockholders of the Company,
(v) bring any action or otherwise act to contest the validity of this letter agreement or seek a release of the restrictions contained herein, (vi) form, join or in any way participate in a “group” (within the meaning of Sections
13(d)(3) of the 1934 Act) with respect to any securities of the Company or any Company Subsidiary with any outside third party other than affiliates of Purchaser, (vii) seek the removal of any directors from the Board of Directors of the
Company or a change in the size or composition of the Board of Directors (including, without limitation, voting for any directors not nominated by the Board of Directors), (viii) take, or solicit, propose to or agree with any other person to
take, any similar actions designed to influence the management or control of the Company, (x) advise, assist or encourage any other persons in connection with any of the foregoing or (xi) make, or take any action that would reasonably be
expected to cause, the Company to make a public announcement regarding any intention of the Purchaser to take an action that would be prohibited by the foregoing. 
  
 (b) Nothing in paragraph (a) shall (i) prohibit or restrict Purchaser from responding to any
inquiries from any shareholders of the Company as to such person’s intention with respect to the voting of Common Stock beneficially owned by the Purchaser so long as such response is consistent with the terms of this Agreement,
(ii) prohibit or restrict the Purchaser from participating in any process initiated by the Company with respect to the sale of any assets or securities of the Company or any Subsidiary, (iii) prohibit or restrict any agreement,
arrangement, understanding, negotiation, discussion, disclosure or other action exclusively involving the Purchaser, its affiliates and any employee, officer or director thereof, (iv) prohibit or restrain any sale or other disposition by the
Purchaser or of any affiliate of the Purchaser of any securities owned by them (or any proposals or discussions related thereto), or (v) prohibit or restrict Purchaser from exercising in its sole discretion its voting rights with respect to any
of the Common Stock or other voting securities of the Company owned by Purchaser at any time (except as restricted in paragraph (a)(vii) above), provided that Purchaser will not exercise such voting rights to vote against the re-election of any
member of the Company’s board of directors although Purchaser may abstain from voting on any such re-election. 
  
 (c) Purchaser acknowledges and agrees that it has no current intention to seek representation on the Company’s Board of Directors nor
is it Purchaser’s historical practice to seek representation on the board of directors of companies in which Purchaser invests. Notwithstanding the foregoing or anything to the contrary in paragraph (a) above, however, the Company
acknowledges and agrees that, at the written request of Purchaser made on or after the first anniversary of the date of this Agreement but prior to the termination of the restrictions set forth in paragraph (a) above, the Company will take all
necessary steps to assist Purchaser in obtaining representation on the Company’s board in a reasonably expeditious time-frame, which may include (i) causing one or more of Purchaser’s representatives to be nominated for seats on the
Company’s Board of Directors and to support their election at the next annual or special meeting of stockholders at which the election of directors will be considered, or (ii) increasing the number of Company directors and the appointment
of Purchaser’s representatives to fill the vacancies created by such increase, provided that (x) the number of representatives requested by Purchaser shall not be higher in proportion to the total number of directors on the board
(including Purchaser’s representatives as if elected) than the proportion that the number of shares of Common Stock then held by Purchaser bears to the total number of shares of Common Stock then 

  

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outstanding, (y) Purchaser’s representatives must meet the qualifications for directors set forth in the charter for the Company’s Nominating
and Corporate Governance Committee and the Company’s Corporate Governance Guidelines, in each case as determined in the reasonable discretion of the Company’s Nominating and Corporate Governance Committee, and (z) the Company’s
Nominating and Corporate Governance Committee may, in their reasonable discretion require that one or more of Purchaser’s representatives must satisfy the then applicable standards for “director independence” set forth in the Nasdaq
corporate governance rules, and any additional independence requirements included in the Company’s Corporate Governance Guidelines and board committee charters, in each case as determined in the reasonable discretion of the Nominating and
Corporate Governance Committee. The Company acknowledges and agrees that the limitations set forth in subsections (x), (y) and (z) in the prior sentence shall not be applied in such a manner as to intentionally frustrate the purpose and
intent of this paragraph (c) to allow Purchaser to designate representatives of its choosing to the Company’s Board of Directors. Notwithstanding the foregoing, even though made prior to the first anniversary of the date of this letter
agreement, Purchaser may make a request for board representation to be considered at the Company’s 2006 annual meeting of stockholders, provided that the Company receives such notice at least 80 days prior to such meeting. Notwithstanding the
provisions of this paragraph (c) or the provisions of paragraph (a) above, Purchaser may engage in the activities restricted under paragraph (a)(iii) and (iv) solely in connection with its efforts to cause its representatives to be
elected to the Company’s Board of Directors. 
  
 If the
foregoing represents your understanding of our agreements, please sign a copy of this letter in the space provided below and return it to my attention. 
  
 Sincerely, 
  
 /s/ Jeffrey L. Gendell 
 Jeffrey L. Gendell 
 Tontine Capital Partners, L.P. 
  
 Agreed as of the date set forth above: 
  

			
	 Matrix Service Company

		
	 By:
	 	 /s/ George L. Austin

	 	 	George L. Austin
	 	 	Vice President

  
  

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