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Execution Copy
SECURITIES PURCHASE AGREEMENT
by and among
▇▇▇▇▇▇ MATERIAL HANDLING, INC.
(a Delaware corporation),
as Issuer,
THE GUARANTORS NAMED HEREIN,
as Guarantors,
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
and
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.,
as Initial Purchasers
and
INDOSUEZ CAPITAL,
as Financial Advisor
---------------------------------
Dated as of March 23, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I.
DEFINITIONS
Section 1.1. Definitions.....................................................1
Section 1.2. Accounting Terms; Financial Statements..........................7
ARTICLE II.
ISSUE OF SECURITIES; PURCHASE AND SALE OF SECURITIES; RIGHTS OF
HOLDERS OF SECURITIES; OFFERING BY INITIAL PURCHASERS
Section 2.1. Issue of Securities.............................................8
Section 2.2. Purchase, Sale and Delivery of Securities.......................8
Section 2.3. Registration Rights of Holders of Securities....................9
Section 2.4. Offering by the Initial Purchasers..............................9
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; RESALE OF SECURITIES
Section 3.1. Representations and Warranties of the Company and
the Guarantors..................................................9
Section 3.2. Resale of Shares...............................................24
ARTICLE IV.
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the Initial Purchasers..24
ARTICLE V.
COVENANTS
Section 5.1. Covenants......................................................30
ARTICLE VI.
FEES
Section 6.1. Costs, Expenses and Taxes......................................32
ARTICLE VII.
INDEMNITY
Section 7.1. Indemnity......................................................33
Section 7.2. Contribution...................................................36
Section 7.3. Registration Rights............................................37
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Survival of Provisions.........................................38
Section 8.2. Termination....................................................38
Section 8.3. No Waiver; Modifications in Writing............................39
Section 8.4. Information Supplied by the Initial Purchasers and
the Financial Advisor..........................................40
Section 8.5. Communications.................................................40
Section 8.6. Execution in Counterparts......................................41
Section 8.7. Successors.....................................................41
Section 8.8. Governing Law..................................................41
Section 8.9. Severability of Provisions.....................................41
Section 8.10. Headings......................................................41
Schedule I Principal Amount of Notes to be Purchased
Schedule II Subsidiaries
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Opinion of Akin, Gump, Strauss, ▇▇▇▇▇ &
▇▇▇▇, LLP
Exhibit C Form of Opinion of local counsel to the Guarantors
ii
SECURITIES PURCHASE AGREEMENT, dated as of March 23, 1998 (the
"Agreement"), by and among ▇▇▇▇▇▇ MATERIAL HANDLING, INC., a Delaware
corporation (the "Company"), the Guarantors party hereto, CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
("CIBC ▇▇▇▇▇▇▇▇▇▇▇" or an "Initial Purchaser") and ▇▇▇▇▇▇▇, SACHS & CO.
("▇▇▇▇▇▇▇, ▇▇▇▇▇" or an "Initial Purchaser" and, together with CIBC ▇▇▇▇▇▇▇▇▇▇▇,
the "Initial Purchasers") and INDOSUEZ CAPITAL (the "Financial Advisor").
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder.
"Affiliate" means, with respect to any Person, any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Person in question. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided, however, that beneficial ownership of at least 10% of the
voting securities of a Person shall be deemed to be control.
"Agreement" means this Agreement, including its schedules and
exhibits, as the same may be amended, supplemented or modified in accordance
with the terms hereof.
"Basic Documents" means, collectively, the Indenture, the Notes, the
Guarantees, the Registration Rights Agreement and this Agreement and, in each
case, all other agreements, instruments and documents executed and delivered by
the Company or its Subsidiaries in connection therewith.
"Blooma" means ▇▇▇▇▇▇ Blooma Engineering Pte Ltd.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking
institutions in the City of New York are authorized or obligated by law to
close.
"capital interests" has the meaning set forth in Section 3.1(d).
"Closing" has the meaning set forth in Section 2.2(b) of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Act.
"Commonly Controlled Entity" has the meaning set forth in Section
3.1(q) of this Agreement.
"Credit Agreement" means the Credit Agreement, to be dated as of the
date of the Closing, among the Company, MMH Holdings, Inc., Material Handling
LLC, ▇▇▇▇▇▇ Material Handling, Ltd., Mondel ULC, Kaverit Steel and Crane ULC and
Canadian Imperial Bank of Commerce, as Administrative Agent, Credit Agricole
Indosuez, as Syndication Agent, BankBoston, N.A., as Documentation Agent, and
the lending institutions named therein.
"Default" means any event, act or condition which, with notice or
lapse of time or both, would constitute an Event of Default.
"Enforceability Exceptions" has the meaning set forth in Section
3.1(f).
"Environmental Law" has the meaning set forth in Section 3.1(u) of
this Agreement.
"Equity Investment" has the meaning set forth in the Memoranda.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Event of Default" means any event defined as an Event of Default
under the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exchange Guarantees" means the guarantees of the Exchange Notes
issued under the Indenture.
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"Exchange Notes" has the meaning set forth in the Registration
Rights Agreement.
"Final Memorandum" has the meaning set forth in Section 2.1 of this
Agreement.
"Financial Advisor" has the meaning set forth in the introductory
paragraph of this Agreement.
"Financing Documents" means the Credit Agreement, the Working
Capital Facilities and the Surety Arrangement and, in each case, all other
agreements, instruments and documents executed and delivered by the Company or
its Subsidiaries in connection therewith.
"Foreign Plans" has the meaning set forth in Section 3.1(q) of this
Agreement.
"Guarantees" means the guarantees of the Notes issued by the
Guarantors under the Indenture.
"Guarantors" means Birmingham Crane & Hoist, Inc. (formerly Double
S. Enterprises, Inc.); CMH Material Handling, LLC; EPH Material Handling, LLC
(formerly EPH Distribution & Service, LLC); Harnischfeger Distribution &
Service, LLC; HPH Material Handling, LLC (formerly HPH Distribution & Service,
LLC); Material Handling, LLC; MHE Technologies, Inc.; ▇▇▇▇▇▇ Mechanical
Handling, Inc.; MPH Crane, Inc.; NPH Material Handling, Inc. (formerly NPH
Distribution & Service, Inc.); PHME Service, Inc.; PHMH Holding Company;
Hercules S.A. de C.V.; ▇▇▇▇▇▇▇▇▇ ULC; Kaverit Steel and Crane ULC; Mondel ULC;
▇▇▇▇▇▇ Mechanical Handling Pty. Ltd.; Lowfile Limited; Invercoe Engineering
Limited; Butters Engineering Limited; MMH (Holdings) Limited; ▇▇▇▇▇▇ Mechanical
Handling Limited; MMH International Limited; Redcrown, ULC; SPH Crane & Hoist,
Inc.; ▇▇▇▇▇▇ Material Handling, Ltd.; Material Handling Equipment Nevada
Corporation; MHE Canada, ULC; ▇▇▇▇▇▇ Material Handling, LLC; and 3014794 Nova
Scotia ULC.
"HarnCo" means Harnischfeger Corporation, a Delaware corporation.
"Holdings" means MMH Holdings, Inc., a Delaware corporation.
"Inactive Subsidiaries" has the meaning set forth in Section 3.1(d)
of this Agreement.
"Indemnified Party" has the meaning set forth in Section 7.1(c) of
this Agreement.
"Indemnifying Party" has the meaning set forth in Section 7.1(c) of
this Agreement.
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"Indenture" means the indenture dated as of the Time of Purchase by
and among the Company, the Guarantors and the Trustee under which the Notes and
the Guarantees will be issued.
"Initial Purchasers" has the meaning set forth in the introductory
paragraph of this Agreement.
"Lien" means, with respect to any property or assets of any Person,
any mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets, conditional
sales, or other title retention agreement having substantially the same economic
effect as any of the foregoing.
"Material Adverse Effect" means, with respect to the Company and its
Subsidiaries, a material adverse effect on the business (including the MHE
Business), condition (financial or otherwise), results of operations or
prospects of the Company and its Subsidiaries, taken as a whole, after giving
effect to each of the Transactions, or a material adverse effect on the ability
of the Company or a Guarantor to perform its obligations under the Basic
Documents to which it is a party, including this Agreement.
"Material Handling LLC" means Material Handling LLC, a Delaware
limited liability company.
"Memoranda" has the meaning set forth in Section 2.1 of this
Agreement.
"MHE Business" means the Material Handling Equipment Business of
Harnischfeger Industries, Inc.
"MHE Entities" means each Subsidiary of the Company engaged in the
MHE Business after giving effect to the Transactions, as if the Transactions had
occurred as of the date of this Agreement.
"MHE Investments" means MHE Investments, Inc., a Delaware
corporation.
"▇▇▇▇▇▇ Delivered Documents" means, collectively, the Basic
Documents, the Financing Documents and the Recapitalization Documents.
"Notes" means the $200,000,000 aggregate principal amount of 9-1/2%
Senior Notes due 2008 of the Company to be issued under the Indenture.
"October 1997 Drop Down" means the contribution on October 26, 1997
by HarnCo of the assets comprising the MHE
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Business to Material Handling LLC, an indirect Subsidiary of Holdings, pursuant
to the Separation Agreement.
"Offering Materials" has the meaning provided therefor in Section
7.1(a) of this Agreement.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, incorporated or unincorporated association,
joint-stock company, trust, government (or an agency or political subdivision
thereof) or other entity of any kind.
"PORTAL" means the Private Offerings, Resales and Trading through
Automated Linkages Market.
"Preferred Stock" means the preferred stock included in the units
being issued pursuant to the Units Purchase Agreement.
"Preliminary Memorandum" has the meaning set forth in Section 2.1 of
this Agreement.
"Private Exchange Notes" has the meaning set forth in the
Registration Rights Agreement.
"Proceeding" has the meaning set forth in Section 7.1(c) of this
Agreement.
"QIB" has the meaning set forth in Section 3.2 of this Agreement.
"Recapitalization" has the meaning set forth in the Memoranda.
"Recapitalization Agreement" means the Recapitalization Agreement,
dated as of January 28, 1998, among HarnCo, the sellers named therein and MHE
Investments, together with Amendment No. 1 thereto, dated as of March 5, 1998.
"Recapitalization Documents" means the Recapitalization Agreement,
together with all other agreements, instruments and documents executed and
delivered, or to be executed and delivered as of the Time of Purchase, by MHE
Investments, Holdings, the Company or its Subsidiaries in connection therewith,
including, without limitation, the Trademark License Agreement, by and between
Harnischfeger Technologies Inc. and the Company; the Confidentiality and
Non-Competition Agreement, by and between Harnischfeger Industries, Inc. and the
Company; the Component and Manufactured Products Supply Agreement, by and
between HarnCo and the Company; the Transition Services Agreement, by and
between HarnCo and the Company; the Credit Indemnification Agreement, by and
between Harnischfeger Industries, Inc. and the Company; and the Assumption
Agreement, by and between HarnCo and Material Handling LLC.
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"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date of the Closing by and among the Company, the
Guarantors, the Initial Purchasers and the Financial Advisor, substantially in
the form attached hereto as Exhibit A.
"Regulation S" has the meaning set forth in Section 3.1(ii) of this
Agreement.
"Securities" has the meaning set forth in Section 2.1 of this
Agreement.
"Separation Agreement" means the Separation Agreement, dated as of
October 26, 1997, between HarnCo and Material Handling LLC.
"Solvent" means, with respect to any Person on a particular date (i)
the fair value (or present fair saleable value) of the assets of such Person
will exceed the sum of its stated debts and liabilities (including identified
contingent liabilities); (ii) the Person is able to realize upon its assets and
pay its debts and other liabilities, contingent obligations and commitments as
they mature and become due in the normal course of business; (iii) such Person
is not incurring debts or liabilities beyond its ability to pay as such debts
and liabilities mature; and (iv) such Person is not engaged in any business or
transaction or is not about to engage in any business or transaction (including,
in the case of the Company and the Guarantors, on a consolidated basis, the
issuance of the Notes and the Guarantees and the application of proceeds from
the sale of the Securities by the Company (and the application by Holdings of
such proceeds immediately thereafter), for which at the Time of Purchase as
described in the Memoranda) its property would constitute unreasonably small
capital with which to carry on its business (including the MHE Business) as it
is proposed to be conducted after giving due consideration to the industry in
which the Person is engaged; or (v) such Person is otherwise insolvent. In
computing the amount of such contingent liabilities at any time, it is intended
that such liabilities will be computed at the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"State" means each of the states of the United States, the District
of Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having jurisdiction
to enforce such State's securities laws.
"Subsidiaries" means, with respect to any Person, any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the capital stock entitled
6
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such first-named
Person or any of its Subsidiaries has the power to direct or cause the direction
of the management and policies of such entity by contract or otherwise or if in
accordance with generally accepted accounting principles such entity is
consolidated with the first-named Person for financial statement purposes;
provided, however, that in respect of the Company, both prior to the Time of
Purchase and on and after the Time of Purchase, the term "Subsidiaries" shall
include, for all purposes of this Agreement, all of the MHE Entities as if the
same were Subsidiaries of the Company at the time in question, except in the
case of Sections 3.1(c) and 3.1(d) hereof.
"Surety Arrangement" means the Surety Arrangement, to be dated as of
the Time of Purchase, by and between an affiliate of Reliance Insurance Company
and the Company.
"Taxes" has the meaning set forth in Section 3.1(s) of this
Agreement.
"Time of Purchase" has the meaning set forth in Section 2.2(b) of
this Agreement.
"Transactions" has the meaning provided therefor in the Memoranda.
"Trustee" means United States Trust Company of New York, as trustee
under the Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission thereunder.
"Unit Purchase Agreement" means the Securities Purchase Agreement,
dated as of March 23, 1998, among Holdings, as issuer, and CIBC ▇▇▇▇▇▇▇▇▇▇▇, as
initial purchaser.
"Working Capital Facilities" means the contemplated working capital
facilities to be entered into after the Time of Purchase by the Company and its
Subsidiaries incorporated in South Africa, Singapore and Mexico.
Section 1.2. Accounting Terms; Financial Statements. All accounting
terms used herein and not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with generally accepted
accounting principles in the United States as the same may be in effect from
time to time.
7
ARTICLE II.
ISSUE OF SECURITIES; PURCHASE AND SALE
OF SECURITIES; RIGHTS OF HOLDERS OF SECURITIES;
OFFERING BY INITIAL PURCHASERS
Section 2.1. Issue of Securities. The Company has authorized the
issuance of $200,000,000 aggregate principal amount of Notes and the Guarantors
have authorized the issuance of the Guarantees. The Notes and the Guarantees are
referred to herein collectively as the "Securities."
The Securities have not been registered under the Act, and will be
offered and sold to the Initial Purchasers in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum dated March 5, 1998 (the "Preliminary
Memorandum") and prepared a final offering memorandum dated March 23, 1998 (the
"Final Memorandum" and, together with the Preliminary Memorandum, the
Memoranda") setting forth or including a description of the terms of the
Securities, a description of the Company, its Subsidiaries and the MHE Business
and any material developments relating to the Company, its Subsidiaries and the
MHE Business occurring after the date of the most recent financial statements
included therein.
Section 2.2. Purchase, Sale and Delivery of Securities.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees that it will sell to each Initial Purchaser,
and each Initial Purchaser agrees, acting severally and not jointly, that
it will purchase from the Company at the Time of Purchase the principal
amount of the Notes set forth opposite the name of such Initial Purchaser
on Schedule I hereto at a price equal to 97% of the principal amount
thereof.
(b) The purchase, sale and delivery of the Securities will take
place at a closing (the "Closing") at the offices of Akin, Gump, Strauss,
▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 9:00
A.M., New York time, on March 30, 1998, or such later date and time, if
any, as the Initial Purchasers and the Company shall agree. The time at
which such Closing (and the concurrent closing of the Recapitalization,
the Equity Investment (including, without limitation, the transactions
contemplated pursuant to the Unit Purchase Agreement) and the Credit
Agreement) is concluded is herein called the "Time of Purchase."
8
(c) Certificates in definitive form for the Securities that the
Initial Purchasers have agreed to purchase hereunder, and in such
denominations and registered in such name or names as the Initial
Purchasers request upon notice to the Company at least 48 hours prior to
the Closing, shall be delivered by or on behalf of the Company to the
nominee of The Depository Trust Company for the account of the Initial
Purchasers, against payment by or on behalf of the Initial Purchasers of
the purchase price therefor by wire transfer of immediately available
funds wired in accordance with the written instructions of the Company.
The Company will make such certificates for the Securities available for
inspection by the Initial Purchasers at the offices of CIBC ▇▇▇▇▇▇▇▇▇▇▇,
or such other place as the Initial Purchasers may designate, at least 24
hours prior to the Closing.
Section 2.3. Registration Rights of Holders of Securities. The
Initial Purchasers and their direct and indirect transferees of the Securities
will have such rights with respect to the registration of the Securities and
Exchange Notes and the Exchange Guarantees under the Act as set forth in the
Registration Rights Agreement.
Section 2.4. Offering by the Initial Purchasers. The Initial
Purchasers propose to make an offering of the Securities at the price and upon
the terms set forth in the Final Memorandum, as soon as practicable after this
Agreement is entered into and as in the judgment of the Initial Purchasers is
advisable.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; RESALE OF SECURITIES
Section 3.1. Representations and Warranties of the Company and the
Guarantors. The Company and the Guarantors jointly and severally represent and
warrant to and agree with the Initial Purchasers and the Financial Advisor on
and as of the date hereof and the Time of Purchase as follows:
(a) Each of the Preliminary Memorandum and the Final Memorandum, as
of its respective date and the Final Memorandum as of the Time of
Purchase, did not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this Section 3.1(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the Initial
Purchasers or the Financial Advisor furnished to the Company or a
Guarantor in writing by the Initial Purchasers or the Financial Advisor
expressly for use in the Final Memorandum
9
or any amendment or supplement thereto or relating to the manner of sale
of the Securities by the Initial Purchasers. Each of the Preliminary
Memorandum and the Final Memorandum, as of its respective date and the
Final Memorandum as of the Time of Purchase, contains all the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Act.
(b) Price Waterhouse LLP is an independent public accounting firm
with respect to the Company and the MHE Business within the meaning of the
Act and the rules and regulations promulgated thereunder. The historical
financial statements (including the related notes) contained in the
Memoranda comply in all material respects with the requirements applicable
to a registration statement on Form S-1 under the Act; such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods covered
thereby and fairly present the financial position of the entities
purported to be covered thereby at the respective dates indicated and the
results of their operations and their cash flows for the respective dates
indicated; the summary and selected financial data contained in the
Memoranda present fairly the information shown therein and have been
prepared and compiled on a basis consistent with the financial statements
included therein; and the adjusted and pro forma financial information
contained in the Memoranda has been prepared on a basis consistent with
the historical financial statements contained in the Memoranda (except for
the pro forma adjustments specified therein), includes all material
adjustments to the historical financial information required by Regulation
S-X under the Act and the Exchange Act to reflect the transactions
described in the Memoranda, gives effect to assumptions made on a
reasonable basis and fairly presents the historical and proposed
transactions contemplated by the Memoranda and the ▇▇▇▇▇▇ Delivered
Documents. The statistical and market-related data included in the
Memoranda are based on or derived from sources which the Company and the
Guarantors believe to be reliable and accurate in all material respects or
represents the Company's and the Guarantors' good faith reasonable
estimates that are made on the basis of data derived from such sources.
(c) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. As of the
date hereof, the Company has no direct or indirect Subsidiaries and as of
the Time of Purchase, all the MHE Entities will be direct or indirect
wholly-owned Subsidiaries of the Company except as disclosed in the
Memoranda. As of the date hereof, Holdings has no
10
direct or indirect Subsidiaries other than the MHE Entities and as of the
Time of Purchase, the Company will be the only directly held Subsidiary of
Holdings. Each MHE Entity is (and, as of the Time of Purchase, each
Guarantor will be) a corporation, limited liability company or partnership
duly incorporated or organized, validly existing and in good standing
under the laws of the state or other jurisdiction of its incorporation or
organization and each of the Company and the MHE Entities is (and, as of
the Time of Purchase, the Guarantors will be) duly qualified and in good
standing as a foreign corporation, limited liability company or
partnership and is (or, in the case of the Guarantors, will be) authorized
to do business in each jurisdiction in which the ownership or leasing of
any property or the character of its operations makes such qualification
necessary, except where the failure to be so qualified would not have a
Material Adverse Effect. Each of the Company and the MHE Entities has
(and, as of the Time of Purchase, the Guarantors will have) corporate
power and authority to own and lease its properties and conduct its
business (including the MHE Business) as described in the Memoranda. (i)
Linear Motors Limited, UK Crane Services Limited, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Company
Ltd. and Royce Ltd. (A) are corporations wholly owned by ▇▇▇▇▇▇ Mechanical
Handling Limited, a company organized in the United Kingdom and (B)
conduct no operating activities, (ii) P & H Middle East, Ltd. is a
corporation wholly owned by PHMH Holding Company, a company organized in
the State of Delaware and conducts no operating activities and (iii)
collectively, Linear Motors Limited, UK Crane Services Limited, ▇▇▇▇▇▇▇
▇▇▇▇▇ Company Ltd., Royce Ltd. and P & H Middle East, Ltd. (collectively,
the "Inactive Subsidiaries") do not constitute a One Percent Subsidiary,
as such term is defined in the Indenture.
(d) As of the Time of Purchase (after giving effect to the
Transactions), the Company will have the authorized, issued and
outstanding capitalization as set forth in the Final Memorandum. All of
the issued and outstanding shares of capital stock, membership interests
or partnership interests (collectively, "capital interests"), as the case
may be, of the Company and the MHE Entities are validly issued (and, in
the case of capital stock, all of such capital stock is fully paid and
nonassessable), and none of such capital interests were issued in
violation of any preemptive or similar rights. As of the Time of Purchase,
the Company will have no Subsidiaries other than the Guarantors, the
Inactive Subsidiaries and Blooma. Schedule II hereto sets forth the name
of each Subsidiary of the Company after giving effect to the Transactions,
as of the Time of Purchase, the type of each class of outstanding capital
interests of each such Subsidiary as of such date and the number and
percentage of such capital interests to be held by the Company or its
Subsidiaries, identifying the
11
name of the Person holding such capital interests. Except as set forth in
the Final Memorandum, after giving effect to the Transactions, (i) at the
Time of Purchase (A) all of the issued and outstanding capital interests
of the Company will be owned by Holdings, all of the issued and
outstanding capital interests of Holdings will be owned as set forth under
"The Transactions-The Recapitalization" and "Security Ownership of Certain
Beneficial Owners and Management," in the Final Memorandum, and all of the
issued and outstanding capital interests of Material Handling LLC and each
other MHE Entity will be wholly owned directly or indirectly by the
Company, free and clear of any Liens, except, in each case, as created in
connection with the Credit Agreement and (B) there will be no outstanding
subscriptions, options, warrants, rights, convertible securities or other
binding agreements or commitments of any character obligating the Company
or any MHE Entity to issue any securities and (ii) as of the date hereof
there is, and at the Time of Purchase there will be, no agreement,
understanding or arrangement among the Company or any MHE Entity and their
respective capital interest holders or any other Person (other than with
another MHE Entity) relating to the ownership or disposition of any
capital interests in the Company or any MHE Entity, the election of
directors of the Company or any MHE Entity or the governance of the
Company's or any MHE Entity's affairs, except for the Stockholders'
Agreement (as defined in the Memoranda), the Common Stock Registration
Rights and Stockholders' Agreement, the stockholders' agreement relating
to Blooma, and employment agreements, employee stock purchase agreements
and option grants, in each case, between the Company and the executives
named in the Final Memorandum, and such agreements will not be breached or
violated as a result of the execution and delivery of, or the consummation
of the transactions contemplated by, this Agreement and ▇▇▇▇▇▇ Delivered
Documents or the consummation of the Transactions.
(e) Each of the Company, its Subsidiaries and Holdings has, or at
the Time of Purchase will have, the full right, power and authority to
enter into the ▇▇▇▇▇▇ Delivered Documents (in each case, to the extent a
party thereto) and to carry out their respective obligations thereunder,
including, without limitation, issuing the Notes and the Guarantees in the
manner and for the purpose contemplated by this Agreement and to
consummate each of the Transactions to which it is a party. The execution,
delivery and performance of the ▇▇▇▇▇▇ Delivered Documents and the
consummation of the transactions contemplated thereby have been, or at the
Time of Purchase will have been, authorized by the Company, each of its
Subsidiaries and Holdings (in each case, to the extent a party thereto),
and no other proceeding or approval on the part of the Company, such
Subsidiaries, Holdings or the shareholders of any of the
12
foregoing is necessary, or will be necessary, at the Time of Purchase, to
authorize the execution and delivery of the ▇▇▇▇▇▇ Delivered Documents or
the performance of any of the transactions contemplated thereby.
(f) This Agreement has been duly authorized by the Company and at
the Time of Purchase, will have been duly authorized by each of the
Guarantors, and this Agreement has been duly executed and delivered by the
Company and each of the Guarantors and (assuming the due authorization,
execution and delivery by the Initial Purchasers and the Financial
Advisor) is a valid and legally binding agreement of each of the Company
and the Guarantors, enforceable in accordance with its terms except (i)
that the enforcement hereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally, and to
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought (the "Enforceability Exceptions")
and (ii) as any rights to indemnity or contribution hereunder may be
limited by federal and state securities laws and public policy
considerations.
(g) The Indenture, when duly executed and delivered by each of the
Company and the Guarantors (assuming the due authorization, execution and
delivery by the Trustee), will constitute a valid and legally binding
agreement of each of the Company and the Guarantors, enforceable in
accordance with its terms, subject to the Enforceability Exceptions. At
the Time of Purchase, the Indenture will conform in all material respects
to the requirements of the Trust Indenture Act and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder.
(h) The Notes and the Guarantees, when issued and delivered by the
Company and the Guarantors in accordance with the terms of this Agreement
(and, in the case of the Notes, against payment therefor by the Initial
Purchasers and assuming the due authentication thereof by the Trustee in
accordance with the Indenture), will constitute valid and binding
obligations of the Company and the Guarantors, respectively, entitled to
the benefits of the Indenture, enforceable in accordance with their
respective terms, subject to the Enforceability Exceptions. The Exchange
Notes and Private Exchange Notes have been duly authorized by the Company
and, when executed, issued and delivered by the Company in accordance with
the terms of the Indenture and the Exchange Offer contemplated by the
Registration Rights Agreement (and assuming the due authentication thereof
by the Trustee in accordance with the Indenture), will constitute valid
and binding obligations of the Company, enforceable in accordance with
their respective
13
terms, entitled to the benefits of the Exchange Indenture, subject to the
Enforceability Exceptions. The Securities satisfy the eligibility
requirements of Rule 144A(d)(3) under the Act.
(i) The Registration Rights Agreement, when duly executed and
delivered by each of the Company and the Guarantors (assuming the due
authorization, execution and delivery thereof by the Initial Purchasers
and the Financial Advisor), will constitute a valid and legally binding
agreement of each of the Company and the Guarantors, enforceable in
accordance with its terms, subject to the Enforceability Exceptions and
except as any rights to indemnity or contribution hereunder may be limited
by federal and state securities laws and public policy considerations. No
holder of securities of the Company or any Subsidiary will be entitled to
have such securities registered under the Registration Rights Agreement
other than as expressly permitted thereby.
(j) Each other ▇▇▇▇▇▇ Delivered Document, when duly executed and
delivered by each of the Company, its Subsidiaries, Holdings and MHE
Investments, in each case, to the extent a party thereto (assuming the due
authorization, execution and delivery thereof by the other parties
thereto), will constitute a valid and legally binding agreement of each of
the Company, its Subsidiaries, Holdings and MHE Investments, as
applicable, enforceable in accordance with its terms, subject to the
Enforceability Exceptions and except as any rights to indemnity or
contribution thereunder may be limited by federal and state securities
laws and public policy considerations.
(k) The execution, delivery and performance by the Company, its
Subsidiaries, Holdings and MHE Investments of the ▇▇▇▇▇▇ Delivered
Documents to which they are a party, the issuance and sale by the Company
and the Guarantors of the Securities to be issued by them, the execution,
delivery and performance by the Company, its Subsidiaries, Holdings and
MHE Investments of all other agreements and instruments to be executed by
them and delivered pursuant hereto or thereto or in connection herewith or
therewith or in connection with any of the transactions contemplated
hereby or thereby, and compliance by the Company, its Subsidiaries,
Holdings and MHE Investments with the terms and provisions hereof and
thereof, and consummation of the other Transactions (as defined in the
Final Memorandum) do not and will not (i) violate any provision of any
law, rule or regulation (including, without limitation, Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System), order,
writ, judgment, decree, determination or award presently in effect or in
effect at the Time of Purchase having applicability to the Company, any of
its
14
Subsidiaries, Holdings or MHE Investments, (ii) violate or conflict with
or result in a breach of or constitute a default under the certificate of
incorporation or by-laws (or similar organizational document) of the
Company, any of its Subsidiaries, Holdings or MHE Investments, or, as of
the Time of Purchase, any indenture or loan or credit agreement
(including, without limitation, the Financing Documents), or any other
material agreement or instrument which, if the Company were a reporting
company pursuant to Section 13(d) or 15 of the Exchange Act, would be
required to be filed pursuant to Item 601 of Regulation S-K, to which the
Company, any of its Subsidiaries, Holdings or MHE Investments is or will
at such time be a party or by which the Company, any of its Subsidiaries,
Holdings or MHE Investments or any of their respective properties or
assets may be bound or affected, other than such violations, conflicts or
defaults which would not reasonably be likely to have a Material Adverse
Effect or (iii) except as expressly contemplated by the Indenture and the
Financing Documents, result in, or require the creation or imposition of,
any Lien upon or with respect to any of the properties or assets now owned
or hereafter acquired by the Company, any of its Subsidiaries, Holdings or
MHE Investments, except, in each case, where such violation, conflict,
default or creation or imposition of any Lien would not (individually or
in the aggregate) be reasonably likely to have a Material Adverse Effect.
(l) Immediately before and after the consummation of the
Transactions, including those contemplated by this Agreement and the other
▇▇▇▇▇▇ Delivered Documents (including the application of proceeds by the
Company, and the application immediately thereafter by Holdings, from the
issuance and sale of the Securities by the Company at the Time of Purchase
as described in the Memoranda), the Company and its Subsidiaries, on a
consolidated basis, will be Solvent.
(m) Subsequent to the date as of which information is given in the
Final Memorandum to the date hereof, except as contemplated in the Final
Memorandum, there has not been (i) any event or condition that has had or
that could reasonably be expected to have a Material Adverse Effect, (ii)
any transaction entered into by the Company or any of its Subsidiaries
that is material to the Company or its Subsidiaries, taken as a whole,
other than in the ordinary course of business, or (iii) any dividend,
redemption or distribution of any kind declared, paid or made by the
Company on its common stock.
(n) There is no action, suit, investigation or proceeding,
governmental or otherwise, in law or in equity, or before any commission
or other administrative authority,
15
in any jurisdiction in which the Company or its Subsidiaries conducts
business, pending or, to the knowledge of the Company and the Guarantors,
threatened to which the Company or any of its Subsidiaries is or would be
a party or of which the properties or assets of the Company or its
Subsidiaries are or may be subject, that (i) seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance and sale
of the Securities by the Company or any of the other transactions
contemplated by the ▇▇▇▇▇▇ Delivered Documents or any of the Transactions,
(ii) questions the legality or validity of any such transactions or seeks
to recover damages or obtain other relief in connection with any such
transactions or (iii) could reasonably be expected to have a Material
Adverse Effect. There are no legal or governmental proceedings that would
be required by the Act to be described in a prospectus relating to the
Securities that are not described in the Final Memorandum.
(o) Neither the Company nor any of its Subsidiaries is currently or,
after giving effect to the consummation of the transactions contemplated
by this Agreement and the other Transactions, will be (i) in violation of
its respective certificate of incorporation or by-laws (or similar
organizational document), (ii) in default (nor will an event occur which
with notice or passage of time or both would constitute such a default)
under or in violation of any indenture or loan or credit agreement or any
other material agreement or instrument to which it is a party or by which
it or any of its properties or assets may be bound or affected, (iii) in
violation of any order of any court, arbitrator or governmental body, or
(iv) in violation of or will have violated any statute, rule or regulation
of any governmental authority, except in each case, which default or
violation (individually or in the aggregate) could not reasonably be
expected to (x) affect the legality, validity or enforceability of any of
the ▇▇▇▇▇▇ Delivered Documents in any material respect or (y) have a
Material Adverse Effect.
(p) There are no material licenses, franchises, permits and other
governmental authorizations held by the Company or any of its Subsidiaries
with respect to the conduct of their respective businesses that are not
accurately described in the Memoranda, each, as of their respective dates.
No authorization, consent, approval, license, qualification or formal
exemption from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority or any securities
exchange is required in connection with the execution, delivery or
performance by the Company or any of its Subsidiaries (to the extent they
are a party thereto) of any of the ▇▇▇▇▇▇ Delivered Documents or
consummation of any
16
of the transactions contemplated thereby or consummation of any of the
other Transactions, except (i) as may be required under state securities
or "blue sky" laws or the laws of any foreign jurisdiction, (ii) such as
have been obtained or made, (iii) as may be required under the Act, the
Exchange Act and the Trust Indenture Act in connection with the
performance of obligations under the Registration Rights Agreement, (iv)
as may be required under the Exchange Act after the Time of Purchase or
(v) as would not (individually or in the aggregate) be reasonably likely
to have a Material Adverse Effect. All such authorizations, consents,
approvals, licenses, qualifications, exemptions, filings, declarations and
registrations set forth in the Final Memorandum (other than as disclosed
therein) which are required to have been obtained by the date hereof have
been obtained or made, as the case may be, and are in full force and
effect and not the subject of any pending or, to the best knowledge of the
Company and the Guarantors, threatened attack by appeal or direct
proceeding or otherwise except as would not reasonably be likely to have a
Material Adverse Effect.
(q) Neither the execution and delivery of this Agreement or the
▇▇▇▇▇▇ Delivered Documents, the sale of the Securities to the Initial
Purchasers, nor the consummation of the Transactions will involve any
non-exempt prohibited transaction within the meaning of Section 406 of
ERISA, or Section 4975 of the Code on the part of the Company or any of
its Subsidiaries. The representation made by the Company and the
Guarantors in the preceding sentence is made in reliance upon and subject
to the accuracy of, and compliance with, the representations and covenants
made or deemed made by the purchasers of Notes from the Initial Purchasers
as set forth in the Final Memorandum under "Notice to Investors." The
present value of all benefits vested under each Employee Benefit Plan
maintained by the Company or its Subsidiaries or any person or entity
treated with any such Person as a single employer under Section 414 of
ERISA (a "Commonly Controlled Entity") (based on the current liability,
interest rate and other assumptions used in preparation of the plan's Form
5500 Annual Report) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the
value of the assets of such plan allocable to such accrued benefits.
Neither the Company, any of its Subsidiaries, nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer
Plan (as defined in ERISA), and neither the Company, any of its
Subsidiaries, nor any Commonly Controlled Entity would become subject to
any liability under ERISA if the Company, any Subsidiary, or any such
Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the
date on which such
17
representation is made or deemed made. No such Multiemployer Plan is in
reorganization or insolvent. There are no material liabilities of the
Company, any of its Subsidiaries, or any Commonly Controlled Entity for
post-retirement benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as described in
Section 3(l) of ERISA). The Company and each of its Subsidiaries are
substantially and in all material respects in compliance with all
applicable laws with respect to all employee benefit plans maintained or
contributed to in respect of employees other than those employed in the
United States ("Foreign Plans"). There are no material unfunded
liabilities of the Company or its Subsidiaries in respect of the Foreign
Plans.
(r) Each of the Company and its Subsidiaries has good and marketable
title to all real property described in the Final Memorandum as being
owned by it and good and valid title to, or valid and enforceable
leasehold interests in, all properties and assets identified in the Final
Memorandum as owned or leased, respectively, by each of them (including,
without limitation, all those transferred to Material Handling LLC in the
October 1997 Drop-Down), free and clear of all material Liens, except (i)
such Liens as are described in the Final Memorandum or (ii) Liens created
in the ordinary course of business which are Permitted Liens (as defined
in the Indenture). All material leases, contracts and agreements,
including those referred to in the Memoranda, to which the Company or any
of the Subsidiaries is a party or by which any of them are bound are in
full force and effect and are valid and enforceable in accordance with
their terms, except for the Enforceability Exceptions. There is not under
any such material lease, contract or agreement any default by the Company
or any such Subsidiary, or any default that with notice or lapse of time
or both would constitute such a default by the Company or any such
Subsidiary and with respect to which the Company or such Subsidiary has
not taken adequate steps to prevent such default from occurring. To the
knowledge of the Company and its Subsidiaries, there is not under any such
material lease, contract or agreement any default by any other party
thereto or any event that with notice or lapse of time or both would
constitute such a default thereunder by such party.
(s) All tax returns required to be filed by the Company or any of
its Subsidiaries in any jurisdiction (including foreign jurisdictions)
have been duly filed, neither the Company nor any Subsidiary is in default
in the payment of any taxes, assessments, fees and other charges
including, without limitation, withholding taxes, penalties, and interest
("Taxes") with respect thereto, except where the failure to so pay could
not reasonably be expected to
18
have a Material Adverse Effect. There are no actual or, to the knowledge
of the Company and its Subsidiaries, proposed additional tax assessments
for any fiscal period against the Company or any of its Subsidiaries that,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect.
(t) Giving effect to the Transactions, there are no material
copyrights, patents, trade names, service marks or domain names, whether
registered or at common law, or applications therefor that are pending or
in the process or preparation (collectively, the "Intellectual Property
Rights") that are directly or indirectly owned, licensed, used, required
for use or controlled in whole or in part by the Company or its
Subsidiaries, and no material licenses or other agreements allowing the
Company or its Subsidiaries to use Intellectual Property Rights of third
parties that, in any such case, are not accurately described in the Final
Memorandum. Except as otherwise described in the Final Memorandum, the
Company and its Subsidiaries are the sole and exclusive owners of the
Intellectual Property Rights described therein, free and clear of any Lien
(other than Permitted Liens) and such Intellectual Property Rights have
not been and are not being challenged in any way or involved in any
pending or threatened unfair competition proceeding. There has been and is
no claim challenging the scope, validity or enforceability of any of the
Intellectual Property Rights. To the knowledge of the Company and its
Subsidiaries neither the Company nor any of its Subsidiaries has
infringed, or is infringing or is subject to any unfair competition claim
with respect to any Intellectual Property Rights, or any other proprietary
or other intellectual property right of any person or entity and neither
the Company nor any of its Subsidiaries has received or has any knowledge,
after due inquiry, of any such claim or other notice of any such violation
or infringement.
(u) Except as described in the Final Memorandum, each of the Company
and its Subsidiaries is in compliance with all federal, state, local and
foreign laws, and any rules, regulations, orders, decrees, judgments or
injunctions issued or promulgated thereunder relating to pollution and
protection of public and employee health and the environment
("Environmental Law") and with the terms and conditions of any permit,
license or approval required thereunder in connection with the ownership,
operation or use of its business, property and assets where the failure to
be in such compliance could reasonably be expected to have, individually
or in the aggregate, a Material
19
Adverse Effect; none of the Company or any of its Subsidiaries is subject
to any liability, absolute or contingent, under any Environmental Law
which liability would, individually or in the aggregate, be reasonably
likely to result in a Material Adverse Effect; and there is no civil,
criminal or administrative action, suit, demand, hearing, notice of
violation or deficiency, investigation, proceeding or notice of potential
responsibility or liability or demand letter or request for information
pending or, to the best knowledge of the Company and the Guarantors,
threatened against the Company or any of its Subsidiaries under any
Environmental Law which, if determined adversely to the Company or any
such Subsidiary, would, individually or in the aggregate, be reasonably
likely to result in a Material Adverse Effect.
(v) There has been no resignation or termination of employment of
any officer or key employee of the Company or any Subsidiary and neither
the Company nor any Guarantor has any knowledge of any impending or
threatened resignation or termination of employment in any case that would
have a Material Adverse Effect. Except as set forth in the Memoranda,
neither the Company nor any Subsidiary has entered into any severance or
similar arrangement in respect of any present or former employees that
would be required to be disclosed in a prospectus relating to the
Securities under the Act. There is no strike, labor dispute, slowdown or
work stoppage with the employees of the Company or any of its Subsidiaries
which is pending or, to the best knowledge of the Company and the
Guarantors, threatened.
(w) Neither the Company nor any Subsidiary has, since the date of
the latest audited financial statements contained in the Memoranda,
sustained any loss or interference with its business from fire, explosion,
flood, accident or other calamity, whether or not covered by insurance, or
from any labor dispute, or has become a party to or the subject of any
litigation, court or governmental action, investigation, order or decree,
in any case otherwise than as set forth in the Final Memorandum, which in
any case has had, or would reasonably be expected to have, a Material
Adverse Effect.
(x) Each of the Company and its Subsidiaries carries insurance
(including self insurance) in such amounts and covering such risks as in
its reasonable determination is adequate for the conduct of its business
(including the MHE Business) and the value of its properties.
(y) On or prior to the date hereof, there were transferred by HarnCo
to Material Handling LLC all of the assets described in the Separation
Agreement required to be so transferred thereunder. After giving effect to
such transfers, Material Handling LLC has good and marketable title to all
such assets, and none of such assets are subject to any Lien except
Permitted Liens. At the Time of Purchase, Material Handling LLC will be a
wholly-owned
20
direct Subsidiary of the Company, and the Company will own valid title to
all of the membership interests of Material Handling LLC free and clear of
any Liens except Permitted Liens and all of the assets relating to the MHE
Business will be owned directly or indirectly by the Company as
contemplated in the Recapitalization Agreement except as disclosed under
"Certain Relationships and Related Transactions" in the Memoranda.
(z) Each of the ▇▇▇▇▇▇ Delivered Documents conform in all material
respects to the descriptions thereof in the Final Memorandum to the extent
such ▇▇▇▇▇▇ Delivered Documents would be required by the Act to be
described in a prospectus relating to the Securities. There are no
contracts or other documents that would be required by the Act to be
described in a prospectus relating to the Securities that are not
described in the Final Memorandum.
(aa) The Company has delivered to the Initial Purchasers a true and
correct copy of the Recapitalization Agreement, together with all related
agreements or forms of agreement and all schedules and exhibits thereto
(including the Recapitalization Documents), and as of the date hereof
there have been no amendments, alterations, modifications or waivers of
any of the provisions thereof since its applicable date of execution or
from the form in which any such agreement has been delivered to the
Initial Purchasers, except for any such amendment, modification or waiver
a copy of which has been delivered to the Initial Purchasers. There exists
as of the date hereof no event or condition that would constitute a breach
or default by any of the parties to the Recapitalization Agreement or such
other agreement that would result in a Material Adverse Effect or
materially adversely affect the ability to consummate any of the
Transactions.
(bb) The Company and its Subsidiaries (i) make and keep accurate
books and records and (ii) maintain internal accounting controls which
provide reasonable assurance that (A) transactions are executed in
accordance with management's specific authorization, (B) transactions are
recorded as necessary to permit preparation of their consolidated
financial statements and to maintain accountability for their assets, (C)
access to their assets is permitted only in accordance with management's
specific authorization and (D) the reported accountability for their
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(cc) None of the Company, any of its Subsidiaries, nor, to the
Company's and the Guarantors' knowledge, any
21
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of the Subsidiaries, has (i) used
any funds of the Company or any of its Subsidiaries during the last five
years for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity, (ii) made any unlawful payment to
any foreign or domestic government official or employee from corporate
funds, (iii) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977, or (iv) made any bribe, rebate, influence
payment, kickback or other unlawful payment which, in each instance, could
reasonably be expected to have a Material Adverse Effect on the Company
and its Subsidiaries. Neither the Company nor any of its Subsidiaries does
business with the government of Cuba or any person or affiliate thereof
located in Cuba within the meaning of Florida Statutes Section 517.075.
(dd) Neither the Company nor any Subsidiary is, or at the Closing
Date will be, (i) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" thereof, within the meaning of the
Public Utility Holding Company Act of 1935, as amended or (ii) an
"investment company" or a company "controlled by" an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder.
(ee) Assuming the accuracy of the Initial Purchasers'
representations and warranties set forth in Section 3.2 hereof and the due
performance by the Initial Purchasers of the covenants and agreements set
forth in Section 3.2 hereof, no form of general solicitation or general
advertising was used by the Company, any of its Subsidiaries or any of
their respective representatives in connection with the offer and sale of
the Securities or any other similar securities of the Company or any of
its Subsidiaries. Neither the Company, any of its Subsidiaries nor any
Person authorized to act for any of them has, either directly or
indirectly, sold or offered for sale any of the Securities, or solicited
any offers to buy any thereof from, or has otherwise approached or
negotiated in respect thereof with, any Person or Persons other than with
or through the Initial Purchasers; and assuming the accuracy of the
Initial Purchasers' representations and warranties set forth in Section
3.2 hereof and the due performance by the Initial Purchasers of the
covenants and agreements set forth in Section 3.2 hereof, and the Company
agrees that neither it, any of its Subsidiaries nor any Person acting on
its or their behalf will sell or offer for sale any Securities to, or
solicit any offers to buy any Securities from, or otherwise approach or
negotiate in respect thereof with, any Person or Persons so as thereby to
bring the issuance or
22
sale of any of the Securities within the provisions of Section 5 of the
Act.
(ff) Assuming the accuracy of the Initial Purchasers'
representations and warranties set forth in Section 3.2 hereof, and the
due performance by the Initial Purchasers of the covenants and agreements
set forth in Section 3.2 hereof, it is not necessary, in connection with
the issuance and sale of the Securities to the Initial Purchasers and the
offer, resale and delivery of the Securities by the Initial Purchasers in
the manner contemplated by this Agreement and the Memoranda to register
them under the Act or to qualify the Indenture under the Trust Indenture
Act.
(gg) No securities of the Company or any of its Subsidiaries are of
the same class (within the meaning of Rule 144A under the Act) as any of
the Securities and listed on a national securities exchange registered
under Section 6 of the Exchange Act, or quoted in a U.S. automated
inter-dealer quotation system. Neither the Company nor any of its
Subsidiaries have, directly or indirectly or through any agent, sold,
offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Act), which is or will be
integrated with the sale of the Securities in a manner that would require
registration of the Securities under the Act.
(hh) Neither the Company nor any of its Subsidiaries has taken, nor
will any of them take, directly or indirectly, any action designed to, or
that might be reasonably expected to, cause or result in stabilization or
manipulation of the price of any of the Securities or that is prohibited
by Regulation M under the Exchange Act.
(ii) None of the Company, its Subsidiaries, any of their respective
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers) has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Act ("Regulation S") with
respect to any of the Securities and the Company, its Subsidiaries and
their respective Affiliates and any person acting on its or their behalf
(other than the Initial Purchasers) have acted in accordance with the
offering restrictions requirement of Regulation S.
(jj) No forward-looking statement (within the meaning of Section 27A
of the Act and Section 21E of the Exchange Act) contained in the
Preliminary Memorandum or the Final Memorandum has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good faith.
23
(kk) Except as stated in the Final Memorandum, the Company does not
know of any claims for services, either in the nature of a broker's
commission, finder's fee or financial advisory fee, with respect to the
offering of the Securities and the transactions contemplated by the Final
Memorandum.
Any Certificate signed by any officer of the Company or any Guarantor and
delivered to the Initial Purchasers or to counsel for the Initial Purchasers
shall be deemed a joint and several representation by the Company and the
Guarantors to the Initial Purchasers as to the matters covered thereby.
Section 3.2. Resale of Shares. Each Initial Purchaser and the
Financial Advisor represents and warrants (as to itself only) that it is a
"qualified institutional buyer" as defined in Rule 144A under the Act ("QIB").
Each Initial Purchaser and the Financial Advisor, severally and not jointly,
agrees with the Company and the Guarantors that (a) it has not and will not,
directly or indirectly, solicit offers for, or offer or sell, any of the
Securities by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act; (b) has not and
will not, directly or indirectly, engage in any "directed selling efforts" (as
defined in Regulation S under the Act); and (c) it has and (except in the case
of the Financial Advisor, which will not solicit offers for the Securities or
offer the Securities) will solicit offers for the Securities only from, and will
offer the Securities only to (i) in the case of offers inside the United States,
Persons whom it reasonably believes to be QIBs or, if any such Person is buying
for one or more institutional accounts for which such Person is acting as
fiduciary or agent, only when such Person has represented to it that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A and (ii) in the case of offers outside the United States, to Persons
other than U.S. Persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)). The
Company acknowledges and agrees that the Initial Purchasers may sell Securities
to any Affiliate of an Initial Purchaser or of the Financial Advisor and that
any such Affiliate may sell Securities purchased by it to an Initial Purchaser
or the Financial Advisor.
ARTICLE IV.
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the Initial
Purchasers. The obligation of each Initial Purchaser
24
to purchase the Securities to be purchased by it hereunder is subject to the
satisfaction of the following conditions:
(a) At the Time of Purchase, the Initial Purchasers shall have
received (i) an opinion, addressed to the Initial Purchasers and the
Financial Advisor in form and substance satisfactory to counsel to the
Initial Purchasers and the Financial Advisor and dated the Time of
Purchase, from each of (A) Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, LLP, counsel
to the Company, in substantially the form set forth in Exhibit B hereto,
and (B) local counsel to the Company in each jurisdiction in which the
Guarantors are incorporated other than Delaware, Pennsylvania, New York
and Texas, in substantially the form set forth in Exhibit C hereto and
(ii) a reliance letter, addressed to the Initial Purchasers and the
Financial Advisor, in form and substance satisfactory to counsel to the
Initial Purchasers and the Financial Advisor and dated the Time of
Purchase, from each of (A) Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, LLP, counsel
to the Company, entitling the Initial Purchasers and the Financial Advisor
to rely upon their opinion being issued to the lenders under the Credit
Facilities relating to the Financing Documents and dated the Time of
Purchase and (B) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to HarnCo, entitling the
Initial Purchasers and the Financial Advisor to rely upon their opinion
being issued to the Company relating to the Recapitalization Documents and
dated the Time of Purchase, which opinion shall be substantially in the
form attached as Exhibit H to the Recapitalization Agreement.
(b) The Initial Purchasers and the Financial Advisor shall have
received an opinion, addressed to the Initial Purchasers and the Financial
Advisor in form and substance satisfactory to the Initial Purchasers and
the Financial Advisor and dated the Time of Purchase, of ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, counsel to the Initial Purchasers and the Financial Advisor, as
to such matters as the Initial Purchasers and the Financial Advisor shall
reasonably request.
In rendering such opinions in accordance with Sections 4.1(a) and
(b), each such counsel may rely as to factual matters upon certificates or
other documents furnished by officers and directors of the Company or the
Guarantors and representations of the Initial Purchasers and by government
officials, and upon such other documents as such counsel deem appropriate
as a basis for their opinion. Each such counsel may specify the
jurisdictions in which it is admitted to practice and that it is not
admitted to practice in any other jurisdiction or an expert in the law of
any other jurisdiction. To the extent such opinion concerns the laws of
any other such jurisdiction such counsel may rely upon the opinion of
counsel (satisfactory to the Initial
25
Purchasers) admitted to practice in such jurisdiction. Any opinion relied
upon by such counsel as aforesaid shall be delivered to the Initial
Purchasers together with the opinion of such counsel, which opinion shall
state that such counsel believes that their and the Initial Purchasers'
reliance thereon is justified.
(c) The Initial Purchasers shall have received from Price Waterhouse
LLP a comfort letter or letters dated the date hereof and the Time of
Purchase in form and substance satisfactory to counsel to the Initial
Purchaser.
(d) The Initial Purchasers shall have received a report from
Valuation Research Corporation, in form and substance satisfactory to
counsel to the Initial Purchasers, indicating that the Company and its
Subsidiaries, on a consolidated basis, is Solvent, before and after giving
effect to the Transactions, including those contemplated by this Agreement
and the other ▇▇▇▇▇▇ Delivered Documents (including the application of
proceeds by the Company, and the application immediately thereafter by
Holdings, from the issuance and sale of the Notes by the Company and the
issuance of the Guarantees by the Guarantors at the Time of Purchase as
described in the Final Memorandum).
(e) The representations and warranties made by the Company and the
Guarantors herein shall be true and correct in all material respects
(except for changes expressly provided for in this Agreement) on and as of
the Time of Purchase with the same effect as though such representations
and warranties had been made on and as of the Time of Purchase, after
giving effect to the consummation of all of the Transactions; the Company
and the Guarantors shall have complied in all material respects with all
agreements as set forth in or contemplated hereunder and in the other
Basic Documents required to be performed by the Company and the Guarantors
at or prior to the Time of Purchase.
(f) Subsequent to the date of the Final Memorandum, there shall not
have been any change which has had or could be reasonably likely to have a
Material Adverse Effect.
(g) At the Time of Purchase, after giving effect to the consummation
of the transactions contemplated by this Agreement, the other ▇▇▇▇▇▇
Delivered Documents and the other Transactions, there shall exist no
Default or Event of Default on the part of the Company or its
Subsidiaries.
(h) The purchase of and payment for the Securities by the Initial
Purchasers hereunder shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation (including,
without limitation,
26
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System).
(i) At the Time of Purchase, the Initial Purchasers shall have
received a certificate, dated the Time of Purchase, and executed by the
President and the Vice President - Finance of the Company, to the effect
that:
(i) All of the representations and warranties of the Company
and the Guarantors set forth in this Agreement are true and correct
as if made on and as of the Time of Purchase and the Company and
each of the Guarantors have complied in all material respects with
all agreements and satisfied all conditions on their part to be
performed or satisfied at or prior to the Time of Purchase.
(ii) The issuance and sale of the Securities pursuant to this
Agreement and the Final Memorandum and the consummation of the
Transactions have not been enjoined (temporarily or permanently) and
no restraining order or other injunctive order has been issued and
there has not been any legal action, order, decree or other
administrative proceeding instituted or threatened against the
Company or any of the Guarantors relating to the issuance of the
Securities or in connection with any of the other Transactions.
(iii) Subsequent to the date of this Agreement and since the
date of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), there has not occurred (A) any change, or any development
involving a prospective change, in or affecting the general affairs,
management, business, condition (financial or other), properties,
prospects or results of operations of the Company or the
Subsidiaries or the MHE Business, both before and after giving
effect to the Recapitalization and the other Transactions, not
contemplated by the Final Memorandum that would materially adversely
affect the market for the Securities, or (B) any event or
development relating to or involving any of the Company or the
Subsidiaries that makes any statement made in the Final Memorandum
untrue or that requires the making of any addition to or change in
the Final Memorandum in order to state a material fact required by
any applicable law, rule or regulation to be stated therein or
necessary in order to make the statements therein not misleading.
(iv) There has not been any change in the capital stock of the
Company or any of its Subsidiaries nor any
27
material increase in the consolidated short-term or long-term debt
of the Company from that set forth in or contemplated in the Final
Memorandum and the Company and the Subsidiaries have no liabilities
or obligations, contingent or otherwise (whether or not in the
ordinary course of business), that are material to the Company, its
Subsidiaries and the MHE Business, taken as a whole, both before and
after giving effect to the Recapitalization and the other
Transactions, other than those reflected in the Final Memorandum.
(j) At the Time of Purchase, each of the ▇▇▇▇▇▇ Delivered Documents
and the other material documents pertaining to the Transactions shall have
been executed and delivered by the respective parties thereto and shall be
in full force and effect.
(k) Contemporaneously with the Time of Purchase, the
Recapitalization and each other transaction contemplated in the
Recapitalization Documents shall be consummated on the terms set forth in
the Recapitalization Agreement and such other Recapitalization Documents
as in effect as of the date hereof.
(l) Contemporaneously with the Time of Purchase, the Company shall
have received at least $55 million aggregate cash proceeds from borrowings
under the Credit Agreement.
(m) Contemporaneously with the Time of Purchase, the transactions
contemplated under the Unit Purchase Agreement shall have been consummated
and Holdings shall have received at least $60 million aggregate gross cash
proceeds (less applicable commissions) from the unit offering contemplated
therein.
(n) HarnCo shall have received at least $54 million aggregate cash
proceeds from MHE Investments, and all other transactions contemplated in
connection with the Equity Investment (including the retention by HarnCo
of capital interests in Holdings with aggregate implied value of not less
than $12 million) shall have been consummated.
(o) The Company shall have redeemed or repurchased 100 shares,
representing 50% of its issued and outstanding shares, of common stock
from Holdings for aggregate cash consideration of $225 million.
(p) Holdings shall have redeemed or repurchased 1,512.317 shares of
its Series C Preferred Stock and 88,319.182 shares of its common stock,
representing 75% of its issued and outstanding shares of capital stock
from HarnCo for aggregate cash consideration of $282 million.
28
(q) Each of the ▇▇▇▇▇▇ Delivered Documents and the other material
documents pertaining to the Transactions shall be reasonably satisfactory
in form and substance to the Initial Purchasers and shall have been
executed and delivered by all the respective parties thereto and shall be
in full force and effect.
(r) All proceedings taken in connection with the issuance of the
Securities (including the due authentication thereof by the Trustee) and
the transactions contemplated by this Agreement, the other ▇▇▇▇▇▇
Delivered Documents and the other material documents pertaining to the
Transactions and all documents and papers relating thereto shall be
satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers. The Initial Purchasers and counsel to the Initial Purchasers
shall have received copies of such papers and documents as they may
reasonably request in connection therewith, including, without limitation,
true and correct copies of each of the ▇▇▇▇▇▇ Delivered Documents
certified as such by an officer of the Company, all in form and substance
reasonably satisfactory to them.
(s) The issuance and sale of the Securities hereunder shall not have
been enjoined (temporarily or permanently) at the Time of Purchase.
(t) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of
Rule 436(g) under the Act, that (A) it is downgrading its rating assigned
to the Notes of the Company or the Preferred Stock included within the
units being issued by Holdings pursuant to the Unit Purchase Agreement, or
(B) it is reviewing its rating assigned to such securities of the Company
or Holdings with a view to possible downgrading, or with negative
implications, or direction not determined.
(u) The Securities shall have been approved by the NASD for trading
in the PORTAL Market and accepted by The Depository Trust Company for
clearance and settlement through The Depository Trust Company.
On or before the Time of Purchase, the Initial Purchasers and counsel to
the Initial Purchasers shall have received such further documents, opinions,
certificates and schedules or other instruments relating to the business,
corporate, legal and financial affairs of the Company and its Subsidiaries as
they may reasonably request.
29
ARTICLE V.
COVENANTS
Section 5.1. Covenants. The Company and the Guarantors, as the case
may be, covenant and agree with the Initial Purchasers and the Financial Advisor
that:
(a) The Company will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchasers shall
not previously have been advised and furnished a copy for a reasonable
period of time prior to the proposed amendment or supplement and as to
which the Initial Purchasers shall not have given their consent, which
consent shall not be unreasonably withheld. The Company will promptly,
upon the reasonable request of the Initial Purchasers or counsel to the
Initial Purchasers, make any amendments or supplements to the Preliminary
Memorandum or the Final Memorandum that may be necessary or advisable in
the opinion of the Initial Purchasers or counsel to the Initial Purchasers
to make the statement therein not misleading or in connection with the
resale of the Securities by the Initial Purchasers.
(b) The Company will cooperate with the Initial Purchasers in
arranging for the qualification of the Securities for offering and sale
under the securities or "blue sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such qualifications in
effect for as long as may be reasonably necessary to complete the resale
of the Securities; provided, however, that in connection therewith, the
Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or
subject itself to service of process in suits or taxation in excess of a
nominal dollar amount in any such jurisdiction where it is not then so
subject.
(c) If, at any time prior to the completion of the distribution by
the Initial Purchasers of the Securities, any event occurs or information
becomes known as a result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material fact, or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
or if for any other reason it is necessary at any time to amend or
supplement the Final Memorandum to comply with applicable law, the Company
will immediately notify the Initial Purchasers thereof (who thereafter
will not use such Final Memorandum until appropriately amended or
supplemented) and will prepare, at the expense of the Company, an
amendment or supplement to the Final Memorandum that corrects such
30
statement or omission or effects such compliance; provided, however, that
the Company's obligation hereunder shall not be applicable to the extent
resale by the Initial Purchasers may be accomplished pursuant to a
registration statement filed by the Company pursuant to the Registration
Rights Agreement.
(d) The Company will, without charge, provide to the Initial
Purchasers and the Financial Advisor and to counsel to the Initial
Purchasers and the Financial Advisor as many copies of the Preliminary
Memorandum and the Final Memorandum or any amendment or supplement thereto
as they may reasonably request.
(e) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use Of Proceeds" in the Final Memorandum.
(f) For and during the period ending on the date no Securities are
outstanding, the Company will furnish to the Initial Purchasers and the
Financial Advisor copies of all reports and other communications
(financial or otherwise) furnished by the Company to the holders of its
securities generally and, promptly after available, copies of any reports
or financial statements furnished to or filed by the Company with the
Commission or any national securities exchange on which any class of
securities of the Company may be listed.
(g) None of the Company or any of its Affiliates will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale
of any of the Securities in a manner which would require the registration
under the Act of any of the Securities.
(h) The Company will not, and will not permit any of its
Subsidiaries to, solicit any offer to buy or offer to sell the Securities
by means of any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Act.
(i) For so long as any of the Securities remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the Act
and not salable in full under Rule 144 under the Act (or any successor
provision), the Company will make available, upon request, to any seller
of such Securities the information specified in Rule 144A(d)(4) under the
Act, unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.
31
(j) The Company will use its reasonable best efforts to (i) permit
the Securities to be included for quotation on PORTAL and (ii) permit the
Securities to be eligible for clearance and settlement through The
Depository Trust Company.
(k) During the period beginning from the date hereof and continuing
until the Time of Purchase, the Company will not offer, sell, contract to
sell or otherwise dispose of, except as provided in this Agreement, any
securities of the Company that are substantially similar to the
Securities, without the prior written consent of the Initial Purchasers.
(l) The Company and the Guarantors will use their reasonable best
efforts to do and perform all things required to be done and performed by
them under this Agreement and the other Basic Documents prior to or after
the Closing and to satisfy all conditions precedent on their part to the
obligations of the Initial Purchasers to purchase and accept delivery of
the Securities.
ARTICLE VI.
FEES
Section 6.1. Costs, Expenses and Taxes. The Company and the
Guarantors agree, jointly and severally, to pay all costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 8.2 hereof, including, but not limited to, all costs and
expenses incident to (i) its negotiation, preparation, printing, typing,
reproduction, execution and delivery of this Agreement and each of the other
Basic Documents, any amendment or supplement to or modification of any of the
foregoing and any and all other documents furnished pursuant hereto or thereto
or in connection herewith or therewith, (ii) any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto (iii) all arrangements relating to the delivery to the Initial
Purchasers of copies of the foregoing documents, (iv) the fees and disbursements
of the counsel, the accountants and any other experts or advisors retained by
the Company, (v) preparation (including printing), issuance and delivery to the
Initial Purchasers of the Securities, including transfer agent fees, (vi) the
qualification of the Securities under state securities and "blue sky" laws,
including filing fees and reasonable fees and disbursements in connection with
such counsel's preparation of "blue sky" memoranda, not to exceed $5,000, of
counsel to the Initial Purchasers and the Financial Advisor relating thereto,
(vii) its respective expenses and the cost of any private or chartered jets in
connection with any meetings with prospective investors in the Securities,
(viii) fees and expenses of the Trustee, including fees and expenses of
32
counsel to the Trustee, (ix) all expenses and listing fees incurred in
connection with the application for quotation of the Securities on PORTAL, (x)
any fees charged by investment rating agencies for the rating of the Securities
and (xi) except as limited by Article VII, all costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses), if any, in
connection with the enforcement of this Agreement, the Securities or any other
agreement furnished pursuant hereto or thereto or in connection herewith or
therewith. In addition, the Company and the Guarantors shall pay, jointly and
severally, any and all stamp, transfer and other similar taxes (but excluding
any income, franchise, personal property, ad valorem or gross receipts taxes)
payable or determined to be payable in connection with the execution and
delivery of this Agreement, any of the other Basic Documents or the issuance of
the Securities, and shall save and hold the Initial Purchasers and the Financial
Advisor harmless from and against any and all liabilities with respect to or
resulting from any delay in paying, or omission to pay, such taxes (other than
if such delay is caused by the Initial Purchasers).
ARTICLE VII.
INDEMNITY
Section 7.1. Indemnity.
(a) Indemnification by the Company and the Guarantors. The Company
and the Guarantors agree and covenant to jointly and severally hold
harmless and indemnify the Initial Purchasers, the Financial Advisor and
any director, officer, employee, agent or controlling Person of any of the
foregoing from and against any losses, claims, damages, liabilities and
expenses (including expenses of investigation) to which the Initial
Purchasers, the Financial Advisor and such Affiliates of the Initial
Purchasers or the Financial Advisor may become subject arising out of or
based upon any untrue statement or alleged untrue statement of any
material fact contained in the Memoranda and any amendments or supplements
thereto, any documents filed with the Commission or any State Commission
(collectively, the "Offering Materials") or arising out of or based upon
the omission or alleged omission to state in any of the Offering Materials
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company and
the Guarantors shall not be liable under this paragraph (a) to the extent
that such losses, claims, damages or liabilities arose out of or are based
upon an untrue statement or omission or alleged untrue statement or
omission made in any of the documents referred to in this paragraph (a) in
reliance upon and in conformity with the information relating to the
Initial Purchasers or the Financial Advisor
33
furnished in writing by the Initial Purchasers or the Financial Advisor
for inclusion therein (or to the extent such losses, claims, damages or
liabilities arose out of or are based upon a breach by an Initial
Purchaser or the Financial Advisor for any representation or warranty
contained in Section 3.2 of this Agreement); provided, further, that the
Company and the Guarantors shall not be liable under this paragraph (a) to
the extent that such losses, claims, damages or liabilities arose out of
or are based upon an untrue statement or omission or alleged untrue
statement or omission made in any Memoranda that is corrected in the Final
Memorandum (or any amendment or supplement thereto) if the person
asserting such loss, claim, damage or liability purchased Securities from
the Initial Purchasers in reliance on such Memoranda but was not given the
Final Memorandum (or any amendment or supplement thereto) on or prior to
the confirmation of the sale of such Securities. The Company and the
Guarantors further agree jointly and severally to reimburse the Initial
Purchasers and the Financial Advisor for any reasonable legal and other
expenses as they are incurred by it in connection with investigating,
preparing to defend or defending any lawsuits, claims or other proceedings
or investigations for which indemnification may be sought under this
paragraph (a); provided that if the Company and the Guarantors reimburse
an Initial Purchaser or the Financial Advisor hereunder for any expenses
incurred in connection with a lawsuit, claim or other proceeding for which
indemnification is sought, such Initial Purchaser or the Financial
Advisor, as the case may be, hereby agrees to refund such reimbursement of
expenses to the extent that the losses, claims, damages or liabilities
arise out of or are based upon an untrue statement or omission or alleged
untrue statement or omission made in any of the documents referred to in
this paragraph (a) in reliance upon and in conformity with the information
relating to such Initial Purchaser or the Financial Advisor furnished in
writing by such Initial Purchaser or the Financial Advisor for inclusion
therein (or for a breach by such Initial Purchaser of any representation
or warranty contained in this Agreement). The Company and the Guarantors
further agree that the indemnification, contribution and reimbursement
commitments set forth in this Article VII shall apply whether or not an
Initial Purchaser or the Financial Advisor is a formal party to any such
lawsuits, claims or other proceedings. The indemnity, contribution and
expense reimbursement obligations of the Company and the Guarantors under
this Article VII shall be in addition to any liability the Company may
otherwise have.
(b) Indemnification by the Initial Purchasers and the Financial
Advisor. Each of the Initial Purchasers and the Financial Advisor agrees
and covenants, severally and not jointly, to hold harmless and indemnify
the Company and the
34
Guarantors and any director, officer, employee, agent or controlling
Person of any of the foregoing from and against any losses, claims,
damages, liabilities and expenses insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the Offering Materials, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or omission was made in
reliance upon and in conformity with the information relating to an
Initial Purchaser or the Financial Advisor furnished in writing by such
Initial Purchaser or the Financial Advisor for inclusion therein. The
indemnity, contribution and expense reimbursement obligations of the
Initial Purchasers and the Financial Advisor under this Article VII shall
be in addition to any liability the Initial Purchasers or the Financial
Advisor may otherwise have.
(c) Procedure. If any Person shall be entitled to indemnity (each an
"Indemnified Party"), such Indemnified Party shall give prompt written
notice to the party or parties from which such indemnity is sought (each
an "Indemnifying Party") of the commencement of any action, suit,
investigation or proceeding, governmental or otherwise (a "Proceeding"),
with respect to which such Indemnified Party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure so to
notify the Indemnifying Parties shall not relieve the Indemnifying Parties
from any obligation or liability except to the extent that the
Indemnifying Parties have been prejudiced materially by such failure. The
Indemnifying Parties shall have the right, exercisable by giving written
notice to an Indemnified Party promptly after the receipt of written
notice from such Indemnified Party of such Proceeding, to assume, at the
Indemnifying Parties' expense, the defense of any such Proceeding, with
counsel reasonably satisfactory to such Indemnified Party; provided,
however, that an Indemnified Party or Parties (if more than one such
Indemnified Party is named in any Proceeding) shall have the right to
employ separate counsel in any such Proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or parties unless: (1) the Indemnifying
Parties agree to pay such fees and expenses; or (2) the Indemnifying
Parties fail promptly to assume the defense of such Proceeding or fail to
employ counsel reasonably satisfactory to such Indemnified Party or
Parties; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party or Parties and the
Indemnifying Party or an Affiliate of the
35
Indemnifying Party and such Indemnified Parties, and the Indemnified
Parties shall have been advised in writing by counsel that there may be
one or more legal defenses available to such Indemnified Party or Parties
that are different from or additional to those available to the
Indemnifying Parties and in the reasonable judgment of such counsel it is
advisable for such Indemnified Parties to employ separate counsel, in
which case, if such Indemnified Party or Parties notifies the Indemnifying
Parties in writing that it elects to employ separate counsel at the
expense of the Indemnifying Parties, the Indemnifying Parties shall not
have the right to assume the defense thereof with respect to the
Indemnified Parties and such counsel shall be at the expense of the
Indemnifying Parties, it being understood, however, that the Indemnifying
Parties shall not, in connection with any one such Proceeding or separate
but substantially similar or related Proceedings in the same jurisdiction,
arising out of the same general allegations or circumstances, be liable
for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such Indemnified
Party or Parties (which firm (and local counsel, if any) shall be
designated in writing by such Indemnified Party or Parties), or for fees
and expenses that are not reasonable. No Indemnified Party or Parties will
settle any Proceeding without the consent of the Indemnifying Party or
Parties (but such consent shall not be unreasonably withheld). Each
Indemnified Party shall use its best efforts to cooperate with the
Indemnifying Parties in the defense of any such Proceeding. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending or threatened
Proceeding in respect of which any Indemnified Party is or could have been
or a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement (i) includes an unconditional
release of such Indemnified Party from all liability or claims that are
the subject of such Proceeding and (ii) does not include a statement as
to, or an admission of, fault, culpability or a failure to act, by or on
behalf of any Indemnified Party.
Section 7.2. Contribution. If for any reason the indemnification
provided for in Section 7.1 of this Agreement is unavailable to an Indemnified
Party, or insufficient to hold it harmless, in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other from
the offering of the Securities, but also the relative fault of the
36
Indemnifying and Indemnified Parties in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Indemnifying and Indemnified Parties shall be deemed to be in the same
proportion as the total proceeds from the offering of the Securities (net of
discounts but before deducting expenses) received by the Company bear to the
total discounts and commissions received by the Initial Purchasers (including
the amount thereof paid by the Initial Purchasers to the Financial Advisor). The
relative fault of the Indemnifying and Indemnified Parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Indemnifying or Indemnified
Parties and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any such claim.
The Company and the Guarantors, on the one hand, and the Initial
Purchasers and the Financial Advisor, on the other hand, agree that it would not
be just and equitable if contribution pursuant to the immediately preceding
paragraph were determined pro rata or per capita or by any other method of
allocation which does not take into account the equitable considerations
referred to in such paragraph. Notwithstanding any other provision of this
Section 7.2, neither the Initial Purchasers nor the Financial Advisor shall be
obligated to make contributions hereunder that in the aggregate exceed the total
discounts, commissions and other compensation received by the Initial Purchasers
under this Agreement (or any such compensation received by the Financial Advisor
from the Initial Purchasers), less the aggregate amount of any damages that such
Initial Purchaser or the Financial Advisor, as the case may be, has otherwise
been required to pay by reason of the untrue or alleged untrue statements or a
breach of a representation or warranty or the omissions or alleged omissions to
state a material fact. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
Section 7.3. Registration Rights. Notwithstanding anything to the
contrary in this Article VII, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim with respect thereto.
37
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Survival of Provisions. The representations, warranties
and covenants of the Company, the Guarantors and their respective officers and
the Initial Purchasers and the Financial Advisor made herein, the indemnity and
contribution agreements contained herein and each of the provisions of Articles
VI, VII and VIII shall remain operative and in full force and effect regardless
of (a) the investigation made by or on behalf of the Company or a Guarantor, the
Initial Purchasers or the Financial Advisor or any Indemnified Party, (b)
acceptance of any of the Securities and payment therefor, (c) any termination of
this Agreement or (d) disposition of the Securities by an Initial Purchaser
whether by redemption, exchange, sale or otherwise.
Section 8.2. Termination. (a) This Agreement may be terminated in
the sole discretion of the Initial Purchasers and the Financial Advisor by
notice to the Company given prior to the Time of Purchase in the event that the
Company or any Guarantor shall have failed, refused or been unable to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Closing:
(i) the Company or any of its Subsidiaries shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor
dispute, slow down or work stoppage or any legal or governmental
proceeding, which loss or interference, in the sole judgment of the
Initial Purchasers and the Financial Advisor, has had or has a
Material Adverse Effect, or there shall have been any event or
development that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including
without limitation a change in control of the Company or any of its
Subsidiaries), except in each case as described in the Final
Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or the Nasdaq National Market
shall have been suspended or minimum or maximum prices shall have
been established on any such exchange or market;
38
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B)
an outbreak or escalation of any other insurrection or armed
conflict involving the United States or any other national or
international calamity or emergency, or (C) any material change in
the financial markets of the United States which, in the case of
(A), (B) or (C) above and in the sole judgment of the Initial
Purchasers and the Financial Advisor, makes it impracticable or
inadvisable to proceed with the offering or the delivery of the
Securities as contemplated by the Final Memorandum; or
(v) the Notes shall have been downgraded or placed on any
"watch list" for possible downgrading by any nationally recognized
statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 8.2 shall
be without liability of any party to any other party except as provided in
Section 8.1 hereof. If for any reason the Securities are not delivered by
or on behalf of the Company as provided herein (other than by reason of a
failure by the Initial Purchasers to purchase the Securities after
satisfaction of all the conditions set forth in Section 4.1 hereof), in
addition to any liability the Company may have as provided in Section 8.1
hereof, the Company will reimburse the Initial Purchasers for all
out-of-pocket expenses approved in writing by them including fees and
disbursements of counsel, reasonably incurred by the Initial Purchasers in
making preparations for the purchase, sale and delivery of the Securities.
Section 8.3. No Waiver; Modifications in Writing. No failure or
delay on the part of the Company, a Guarantor or the Initial Purchasers or the
Financial Advisor in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company, a Guarantor or the Initial Purchasers or the Financial
Advisor at law or in equity or otherwise. No waiver of or consent to any
departure by the Company, a Guarantor or the Initial Purchasers or the Financial
Advisor from any provision of this Agreement shall be effective unless signed in
writing by the party entitled to the benefit thereof, provided that notice of
any such waiver shall be given to each party hereto as set forth below. Except
as
39
otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by or on
behalf of each of the Company, the Guarantors, the Initial Purchasers or the
Financial Advisor. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company, a Guarantor, the Initial Purchasers
or the Financial Advisor from the terms of any provision of this Agreement,
shall be effective only in the specific instance and for the specific purpose
for which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on the Company or a Guarantor in any case
shall entitle the Company or a Guarantor to any other or further notice or
demand in similar or other circumstances.
Section 8.4. Information Supplied by the Initial Purchasers and the
Financial Advisor. The statements set forth in the third paragraph, the second
and third sentences of the fourth paragraph, the fourth sentence of the sixth
paragraph and the ninth, tenth, eleventh and twelfth paragraphs under the
heading "Plan of Distribution" in the Final Memorandum (to the extent such
statements relate to such Initial Purchaser or the Financial Advisor) constitute
the only information furnished by the Initial Purchasers and the Financial
Advisor to the Company for the purposes of Sections 3.1(a) and 7.1(a) and (b)
hereof.
Section 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if to the
Initial Purchasers or the Financial Advisor, shall be given by registered or
certified mail, return receipt requested, telex, telegram, telecopy, courier
service or personal delivery, addressed to CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, with a
copy to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, One Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., and (b) if to the
Company or a Guarantor, shall be given by similar means to ▇▇▇▇▇▇ Material
Handling, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel, with a copy to Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq. In each case notices,
demands and other communications shall be deemed given when received.
Section 8.6. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
40
Section 8.7. Successors. This Agreement shall inure to the benefit
of and be binding upon the Initial Purchasers, the Financial Advisor, the
Company, the Guarantors and their respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other Person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such Persons and
for the benefit of no other Person except that (i) the indemnities of the
Company and the Guarantors contained in Section 7.1(a) of this Agreement shall
also be for the benefit of the directors, officers, employees and agents of the
Initial Purchasers and the Financial Advisor and any Person or Persons who
control the Initial Purchasers or the Financial Advisor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act and (ii) the indemnities
of the Initial Purchasers and the Financial Advisor contained in Section 7.1(b)
of this Agreement shall also be for the benefit of the Company, the Guarantors,
their respective directors, officers, employees and agents and any Person or
Persons who control the Company or a Guarantor within the meaning of Section 15
of the Act or Section 20 of the Exchange Act. No purchaser of any Securities
from the Initial Purchasers will be deemed a successor because of such purchase.
Section 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 8.9. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Headings. The Article and Section headings and Table
of Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
▇▇▇▇▇▇ MATERIAL HANDLING, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
BIRMINGHAM CRANE & HOIST, INC.
CMH MATERIAL HANDLING, LLC
EPH MATERIAL HANDLING, LLC
HARNISCHFEGER DISTRIBUTION & SERVICE, LLC
HPH MATERIAL HANDLING, LLC
MATERIAL HANDLING, LLC
MHE TECHNOLOGIES, INC.
▇▇▇▇▇▇ MECHANICAL HANDLING, INC.
MPH CRANE, INC.
NPH MATERIAL HANDLING, INC.
PHME SERVICE, INC.
PHMH HOLDING COMPANY
HERCULES S.A. de ▇.▇.
▇▇▇▇▇▇▇▇▇ ULC
KAVERIT STEEL AND CRANE ULC
MONDEL ULC
▇▇▇▇▇▇ MECHANICAL HANDLING PTY. LTD.
LOWFILE LIMITED
INVERCOE ENGINEERING LIMITED
BUTTERS ENGINEERING LIMITED
MMH (HOLDINGS) LIMITED
▇▇▇▇▇▇ MECHANICAL HANDLING LIMITED
MMH INTERNATIONAL LIMITED
REDCROWN, ULC
SPH CRANE & HOIST, INC.
▇▇▇▇▇▇ MATERIAL HANDLING, LTD.
MATERIAL HANDLING EQUIPMENT NEVADA
CORPORATION
MHE CANADA, ULC
▇▇▇▇▇▇ MATERIAL HANDLING, LLC
3014794 NOVA SCOTIA ULC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
42
The foregoing Agreement is hereby confirmed
and accepted as of the date first written
above:
INITIAL PURCHASERS:
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇▇, SACHS & CO.
By: /s/ ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
---------------------------------
Name: ▇▇▇▇▇▇▇, Sachs & Co.
Title:
FINANCIAL ADVISOR:
INDOSUEZ CAPITAL
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
43
SCHEDULE I
PRINCIPAL AMOUNT
INITIAL PURCHASER OF NOTES TO BE PURCHASED
----------------- ------------------------
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP. 170,000,000
▇▇▇▇▇▇▇, SACHS & CO. 30,000,000
-------------
Total $200,000,000
SCHEDULE II
--------------------------------------------------------------------------------
Outstanding
Capital Percentage of
Subsidiaries Interests Holder Class Held
------------ --------- ------ ----------
--------------------------------------------------------------------------------
3016674 Nova Scotia ▇▇▇▇▇▇ Material
ULC Handling, LLC
--------------------------------------------------------------------------------
Birmingham Crane & 10,000 PHMH Holding Company
Hoist, Inc.
--------------------------------------------------------------------------------
Butters Engineering 100,000 Invercoe
Services Limited Engineering Limited
--------------------------------------------------------------------------------
▇▇▇▇▇▇ Material MHE Canada, ULC
Handling, LLC
--------------------------------------------------------------------------------
CMH Material Harnischfeger 99%
Handling, LLC Distribution &
Service, LLC
PHME Service, Inc. 1%
--------------------------------------------------------------------------------
EPH Material Handling, Harnischfeger 99%
LLC Distribution &
Service, LLC
PHME Service, Inc. 1%
--------------------------------------------------------------------------------
Harnischfeger Material Handling 99%
Distribution & Equipment Nevada
Service, LLC Corporation
PHME Service, Inc. 1%
--------------------------------------------------------------------------------
Hercules S.A. de C.V. 8,000 common ▇▇▇▇▇▇ Material
28,610 variable Handling, Inc.
3,624,390 unlimited PHME Holding
Company
--------------------------------------------------------------------------------
HPH Material Harnischfeger 99%
Handling, LLC Distribution &
Service, LLC
PHME Service, Inc. 1%
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ ULC 1 3014794 Nova Scotia
ULC
--------------------------------------------------------------------------------
Invercoe Engineering 100,000 ordinary Lowfile Limited
Ltd. 14,286A ordinary
--------------------------------------------------------------------------------
Kaverit Steel & Crane 20 common 3014794 Nova Scotia
ULC ULC
--------------------------------------------------------------------------------
Linear Motors Limited 100 ▇▇▇▇▇▇ Mechanical
Handling Ltd.
--------------------------------------------------------------------------------
Lowfile Limited 100 RedCrown, ULC
--------------------------------------------------------------------------------
Material Handling 100 common PHMH Holding Company
Equipment Nevada
Corporation
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Outstanding
Capital Percentage of
Subsidiaries Interests Holder Class Held
------------ --------- ------ ----------
-------------------------------------------------------------------------------
Material Handling, LLC ▇▇▇▇▇▇ Material 100%
Handling, Inc.
-------------------------------------------------------------------------------
MHE Technologies, Inc. 1,000 common PHMH Holding Company 100%
-------------------------------------------------------------------------------
MHE Canada ULC ▇▇▇▇▇▇ Material 100%
Handling, Inc.
-------------------------------------------------------------------------------
▇▇▇▇▇▇ Material ▇▇▇▇▇▇ Material 100%
Handling, Ltd. Handling, Inc.
-------------------------------------------------------------------------------
MMH (Holdings) Ltd. 175,000 ordinary Lowfile Limited 100%
775,000 A ordinary
37,975,000 B ordinary
10,725,000 C Harnischfeger
preferred.. Holdings Ltd.
-------------------------------------------------------------------------------
MMH International Ltd. 3,776,471 MMH (Holdings) Ltd. 100%
-------------------------------------------------------------------------------
Mondel ULC 8,600 common 3014794 Nova Scotia 100%
ULC
-------------------------------------------------------------------------------
▇▇▇▇▇▇ Blooma Pte Ltd. 37,500 PHMH Holding Co. 85%
56,250 Soh Heng Keow
56,250 Tan ▇▇▇ ▇▇▇▇
-------------------------------------------------------------------------------
▇▇▇▇▇▇ Material MMH Holdings, Inc. 100%
Handling, Inc.
-------------------------------------------------------------------------------
▇▇▇▇▇▇ Mechanical 1,000 MMH International 100%
Handling, Inc. Limited
-------------------------------------------------------------------------------
▇▇▇▇▇▇ Mechanical 9,949,678 ordinary MMH (Holdings) Ltd. 100%
Handling, Ltd. 300,000 cum preferred
-------------------------------------------------------------------------------
▇▇▇▇▇▇ Mechanical 200 MMH International 100%
Handling, Pty Ltd. Ltd.
-------------------------------------------------------------------------------
MPH Crane, Inc. 450 non-voting PHMH Holding Co. 100%
50 voting
-------------------------------------------------------------------------------
NPH Material Handling, 98 Material Handling 100%
Inc. Equipment Nevada
Corp.
2 PHME Service, Inc.
-------------------------------------------------------------------------------
P&H Middle East Ltd. 1 PHMH Holding Co. 100%
-------------------------------------------------------------------------------
PHME Service, Inc. 100 common PHMH Holding Co. 100%
-------------------------------------------------------------------------------
PHMH Holding Co. 350 class A voting ▇▇▇▇▇▇ Material 100%
250 class B Handling, Inc.
non-voting
-------------------------------------------------------------------------------
RedCrown, ULC ▇▇▇▇▇▇ Material 99.9%
Handling, Ltd.
▇▇▇▇▇▇ Material
Handling, Inc. 0.1%
-------------------------------------------------------------------------------
Royce Ltd. 2 ordinary ▇▇▇▇▇▇ Mechanical 100%
Handling Limited
-------------------------------------------------------------------------------
SPH Crane & Hoist, Inc. PHMH Holding Company 100%
-------------------------------------------------------------------------------
2
--------------------------------------------------------------------------------
Outstanding
Capital Percentage of
Subsidiaries Interests Holder Class Held
------------ --------- ------ ----------
-------------------------------------------------------------------------------
Inc. Company
--------------------------------------------------------------------------------
U.K. Crane Services 2 ordinary ▇▇▇▇▇▇ Mechanical 100%
Ltd. Handling Limited
------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ Co. 2 ordinary ▇▇▇▇▇▇ Mechanical 100%
Handling Limited
--------------------------------------------------------------------------------
3