EXHIBIT 2
STOCKHOLDERS AGREEMENT
DATED AS OF JUNE 20, 1996
BETWEEN
MK RAIL CORPORATION
AND
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
STOCKHOLDERS AGREEMENT
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Stockholders Agreement (this "Agreement") dated as of June 20, 1996
between MK Rail Corporation, a Delaware corporation (the "Company"), and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation, an Ohio corporation ("MKO").
RECITALS
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WHEREAS, in connection with the reorganization of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Corporation, a Delaware corporation ("MK"), certain creditors of MK and MKO
will acquire restricted shares Common Stock held by MKO, and the Company has
agreed to provide certain rights to such future holders to cause the shares
so acquired to be registered pursuant to the Securities Act; and
WHEREAS, the Company, at the request of MK and MKO, has, by
execution of a Second Amendment to Rights Agreement (the "Rights Plan
Amendments") of even date herewith, made certain amendments to the Rights
Agreement between MK Rail and Chemical Mellon Shareholder Services, L.L.C.
dated as of January 19, 1996, as amended (the "Rights Plan"), in order to
facilitate the obtaining by MK and MKO of the acceptances required to confirm
a plan of reorganization that MK contemplated filing with the Bankruptcy
Court pursuant to which, amount other things, the restricted shares of Common
Stock are to be transferred to creditors of MK; and
WHEREAS, the parties hereto desire to set forth the rights of such
future holders and the Company's obligations to cause the registration of the
Registrable Securities pursuant to the Securities Act; and
WHEREAS, the Company, MKO and such future holders have agreed upon
certain matters relating to the governance of the Company and to the Rights
Plan Amendment.
NOW, THEREFORE, in consideration of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
Section 1. Definitions and Usage. As used in this Agreement:
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1.1. Definitions.
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Affiliate. "Affiliate" means Affiliate as defined in Rule 12b-2
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promulgated by the Commission under the Exchange Act.
Agent. "Agent" means the principal placement agent on an agented
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placement of Registrable Securities.
Bankruptcy Court. "Bankruptcy Court" shall mean the United States
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Bankruptcy Court for the District of Delaware, in which court the Plan has
been filed.
Certificate Amendment. "Certificate Amendment" shall have the
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meaning set forth in Section 9.5.
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Commission. "Commission" shall mean the United States Securities
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and Exchange Commission.
Common Stock. "Common Stock" shall mean (i) the common stock, par
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value $.01 per share, of the Company, and (ii) shares of capital stock of the
Company issued by the Company in respect of or in exchange for shares of such
common stock in connection with any stock dividend or distribution, stock
split-up, recapitalization, recombination or exchange by the Company
generally of shares of such common stock.
Continuously Effective. "Continuously Effective," with respect to
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a specified registration statement, shall mean that it shall not cease to be
effective and available for Transfers of Registrable Securities thereunder
for longer than either (i) any ten consecutive business days, or (ii) an
aggregate of fifteen business days during the period specified in the
relevant provision of this Agreement.
Demand Registration Request. "Demand Registration Request" shall
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have the meaning set forth in Section 2.1(i).
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Demand Registration Request. "Demand Registration Request" shall
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have the meaning set forth in Section 2.1(i).
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Distribution Date. "Distribution Date" shall mean the date MK Rail
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Common Stock owned by MKO on the date hereof has been distributed to
creditors of MKO in any case under Title 11 of the United States Bankruptcy
Code or through a foreclosure against MKO.
Election Request. "Election Request" shall have the meaning set
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forth in Section 9.6.
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Exchange Act. "Exchange Act" shall mean the Securities Exchange
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Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
Holders. "Holders" shall mean MKO and the Transferees of the
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Common Stock held by MKO or their Transferees in accordance with Section 8.
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Majority Selling Holders. "Majority Selling Holders" means those
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Selling Holders whose Registrable Securities included in a registration
represent a majority of the Registrable Securities of all Selling Holders
included therein.
Market Value. "Market Value" of Registrable Securities as of a
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given date shall mean the average closing price for such securities over the
ten (10) business days immediately preceding said date as quoted on the
NASDAQ National Market System or such other securities exchange on which said
securities are listed.
Note Cancellation Agreement. "Note Cancellation Agreement" shall
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refer to the Note Cancellation and Restructuring Agreement of even date
herewith by and among the Company, MKO and MK.
Outside Director. "Outside Director" shall mean a director of the
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Company who (i) is not and has not been employed by MK, MKC or the Company
or their respective subsidiaries in an executive capacity within the five
years immediately prior to the annual meeting at which the nominees of the
board of directors will be voted upon; (ii) is not (and is not affiliated
with a company or a firm that is) a significant advisor or consultant to the
Company or its subsidiaries; (iii) is not affiliated with a significant
customer or supplier of the Company or its subsidiaries; (iv) does not have
significant personal services contract(s) with the Company or its
subsidiaries; (v) is not affiliated with a tax-exempt entity that receives
significant contributions from the Company or its subsidiaries; and (vi) is
not a spouse, parent, sibling or child or any person described by (i) through
(v) of this definition.
Person. "Person" shall mean any individual, corporation,
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partnership, joint venture, association, joint-stock company, limited
company, trust, unincorporated organization or government or other agency or
political subdivision thereof.
Piggyback Registration Statement. "Piggyback Registration
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Statement" shall have the meaning set forth in Section 3.
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Plan. "Plan" shall mean the plan of reorganization with respect
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to MK, which plan of reorganization shall contain substantially the terms
set forth in Exhibit C to the Note Cancellation Agreement and which plan of
reorganization shall not contain any terms or provisions that are
inconsistent with the Note Cancellation Agreement, this Agreement or the
terms set forth in such Exhibit C.
Register, Registered and Registration. "Register," "registered"
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and "registration" shall refer to a registration effected by preparing and
filing a registration statement or similar document in compliance with the
Securities Act, and the declaration or ordering by the Commission of
effectiveness of such registration statement or document.
Registrable Securities. "Registrable Securities" shall mean,
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subject to Section 8: (i) the Shares owned by the Holders on any date of
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determination, (ii) any shares of Common Stock or other securities issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect
to, or in exchange by the Company generally for, or in replacement by the
Company generally of, such Shares; and (iii) any securities issued in
exchange for Shares in any merger or reorganization of the Company; provided,
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however, that Registrable Securities shall not include any securities which
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have theretofore been registered and sold to the public in a bona fide public
offering pursuant to the Securities Act or which have been sold to the public
pursuant to Rule 144 or any similar rule promulgated by the Commission
pursuant to the Securities Act.
Registrable Securities then outstanding. "Registrable Securities
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then outstanding" shall mean, with respect to a specified determination date,
the Registrable Securities owed by all Holders on such date.
Registration Expenses. "Registration Expenses" shall have the
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meaning set forth in Section 6.1.
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Securities Act. "Securities Act" shall mean the Securities Act of
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1933, as amended, and the rules and regulations promulgated thereunder.
Selling Holders. "Selling Holders" shall mean, with respect to a
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specified registration pursuant to this Agreement, Holders whose Registrable
Securities are included in such registration.
Shares. "Shares" shall mean the shares of Common Stock acquired
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by certain creditors of MK in connection with the reorganization of MK.
Shelf Registration Statement. "Shelf Registration Statement" shall
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have the meaning set forth in Section 2.2.
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Standstill Termination Date. "Standstill Termination Date" shall
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have the meaning set forth in Section 9.2.
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Stockholders Meeting. "Stockholders Meeting" shall have the
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meaning set forth in Section 9.7.
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Substantial Stockholder. "Substantial Stockholder" shall mean any
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Person beneficially owning 5% or more of the outstanding Common Stock.
Transfer. "Transfer" shall mean and include the act of selling,
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giving, transferring, creating a trust (voting or otherwise), assigning or
otherwise disposing of (other than pledging, hypothecating or otherwise
transferring as security) (and correlative words shall have correlative
meanings); provided, however, that any transfer or other disposition upon
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foreclosure or other exercise of remedies of a secured creditor after an
event of default under or with respect to a pledge, hypothecation or other
transfer as security shall constitute a "Transfer." "Transferee" shall mean
any Person who acquires Common Stock pursuant to a Transfer.
Underwriters' Representative. "Underwriters' Representative" shall
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mean the managing underwriter, or, in the case of a co-managed underwriting,
the lead manager.
Violation. "Violation" shall have the meaning set forth in Section
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7.1.
1.2. Usage.
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(i) References to a Person are also references to its assigns and
successors in interest (by any means whatever, including merger,
consolidation or sale of all or substantially all the assets of such Person
or otherwise, as the case may be).
(ii) References to Registrable Securities "owned" by a Holder shall
include Registrable Securities beneficially owned by such Person but which
are held of record in the name of a nominee, trustee, custodian, or other
agent, but shall exclude shares of Common Stock held by a Holder (other than
the liquidating trust contemplated by the Plan) in a fiduciary capacity for
customers of such Person.
(iii) References to a document are to it as amended, waived and
otherwise modified form time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified form time to
time (and references to any provision thereof shall include references to any
successor provision).
(iv) References to Sections or to Schedules or Exhibits are to
sections hereof or schedules or exhibits hereto, unless other context
otherwise requires.
(v) The definitions set forth herein are equally applicable not
to the singular and plural forms and the feminine, masculine and neuter forms
of the terms defined.
(vi) The term "including" and correlative terms shall be deemed to
be followed by "without limitation" whether or not followed by such words or
words of like import.
(vii) The term "hereof" and similar terms refer to this Agreement
as a whole.
(viii) The "date of" any notice or request given pursuant to this
Agreement shall be determined in accordance with Section 12.2.
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Section 2. Demand and Shelf Registration Statements.
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2.1. (i) At any time during the period commencing on the date of
the first filing by the Company of its Annual Report on Form 10-K that
follows the effective date of the Plan and ending on the fifth anniversary
thereof, one or more Holders of Registrable Securities may at their option
make a written request (a "Demand Registration Request") to the Company (the
"Demanding Holder") requesting that the Company file with the Commission a
registration statement on an appropriate form under the Securities Act (a
"Demand Registration Statement") to register (subject to Section 2.6) all or
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such number of such Demanding Holder's Registrable Securities as the
Demanding Holder shall request in writing; provided, however, that no request
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may be made pursuant to this Section 2.1 if (A) within twelve months prior
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to the date of such request a Demand Registration Statement pursuant to this
Section 2.1 shall have ben declared effective by the Commission or (B) the
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Registrable Securities that the Demanding Holders request be included in the
Demand Registration Statement do not have a Market Value as of the date the
request is given to the Company of at least $5,000,000. Notwithstanding the
foregoing, in no event shall a Demand Registration Request be effective
unless and until the Registrable Securities that the Demanding Holders
request be included in the Demand Registration and that other Holders request
be included in the Demand Registration pursuant to Section 2.1(iii) hereof
have an aggregate Market Value determined as of the day the last such request
is received of at least $20,000,000. After an effective Demand Registration
Request is made, the Company shall file with the Commission the Demand
Registration Statement. Any Demand Registration Statement shall relate to
an underwritten offering (whether on a "firm," "best efforts" or "all
reasonable efforts" basis or otherwise) or an agented offering. Any Demand
Registration Request made pursuant to this Section 2.1 shall be addressed to
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the attention of the Secretary of the Company and shall specify the number
of Registrable Securities to be registered, the intended methods of
disposition thereof and that the request is for a Demand Registration
Statement pursuant to this Section 2.1.
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(ii) The Company shall be entitled to postpone for up to 120 days
the filing of any Demand Registration Statement otherwise required to be
prepared and filed pursuant to this Section 2.1 if (A) the Board of Directors
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of the company determines, in its good faith reasonable judgment, that such
registration and the Transfer of Registrable Securities contemplated thereby
would materially interfere with, or require the premature disclosure of, any
financing, acquisition or reorganization involving the Company or any of its
subsidiaries or would otherwise require the premature disclosure of any other
material nonpublic information as to which the Company has a bona fide
business purpose for maintaining its confidentiality and (B) the Company
promptly gives the Demanding Holders notice of such determination (which
notice need not disclose the fact, event or information); provided, however,
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that the Company shall not have, within the twelve months prior to the date
of the postponement, postponed pursuant to this Section 2.1(ii) the filing
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of any other Demand Registration Statement that was subsequently abandoned
because the Demand Registration Request relating thereto was withdrawn.
(iii) Whenever the Company receives a demand pursuant to Section
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2.1(i) to effect the registration of any Registrable Securities, the Company
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shall promptly give written notice of such proposed registration to all
Holders. Any such Holder may, within thirty days after receipt of such
notice, request in writing that all of such Holder's Registrable Securities,
or any portion thereof designated by such Holder, be included in the
registration.
2.2. As soon as practicable after the later of (i) the entry by
the Bankruptcy Court of the order approving the assumption of this Agreement
and the transactions contemplated hereby and (ii) July 1, 1996, the Company
shall file with the Commission a registration statement on Form S-3 in
accordance with the Securities Act for an offering on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement"). The Company shall use its reasonable best effort to have the
Shelf Registration Statement declared effective on the effective date of the
Plan. Subject to compliance with the provisions of Section 5, the Holders
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shall be entitled to have all or a portion of such Holders' Registrable
Securities included in Shelf Registration Statement.
2.3. The Company shall be obligated to effect no more than four
Demand Registration Statements pursuant to this Agreement. For purposes of
the preceding sentence, a Demand Registration Statement shall not be deemed
to have been effected (i) unless a registration statement with respect
thereto has become effective, (ii) if after such registration statement has
become effective, such registration or the related offer, sale or
distribution of Registrable Securities thereunder is interfered with by any
stop order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason not attributable to any of
the Selling Holders and such interference is not thereafter eliminated, or
(iii) if the conditions to closing specified in any underwriting agreement
containing usual and customary terms entered into in connection with such
registration are not satisfied or waived, other than by reason of failure on
the part of any of the Selling Holders. The Company's obligation to effect
a given Demand Registration pursuant to Section 2.1 shall be deemed to have
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been satisfied upon the earlier of (x) the date as of which all the
Receivable Securities included therein shall have been disposed of pursuant
to the Demand Registration Statement, and (y) the date as of which such
Demand Registration Statement shall have been Continuously Effective for a
period of 90 days.
2.4. Whenever the Company receives request for a Demand
Registration Statement pursuant to Section 2.1, the Company shall have the
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right to register in any such Demand Registration Statement and to include
in any related offering shares of authorized by unissued Common Stock. The
Company may exercise the foregoing option to include additional shares by
written notice delivered to each of the Selling Holders within 30 days
following the Company's receipt of the request for a Demand Registration
Statement pursuant to Section 2.1(i).
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2.5. In any Demand Registration Statement, the managing or lead
underwriter or underwriters (of an underwritten offering) or the lead agent
(for an agented offering) shall be a nationally recognized firm
selected by the Majority Selling Holders with the approval of the Company,
which approval shall not be unreasonably withheld.
2.6. Whenever the Company effects a Demand Registration Statement
pursuant to Section 2.1, if the Underwriters' Representative or Agent advises
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the Company and each Selling Holder in writing that, in its opinion, the
amount of securities requested to be included in such offering (whether by
the Company or the Selling Holders) exceeds the amount which can be sold in
such offering within a price range acceptable to the Majority Selling
Holders, the securities to be included in such offering and the related
registration shall be reduced in the following order to an amount which can
be sold within such price range: first, the amount of securities, if any,
that the Company has requested be included in the offering and registration
shall be reduced until no such securities are included therein; and second,
the amount of Registrable Securities that the Selling Holders have requested
be included in the offering and registration shall be reduced on a pro rata
basis among all Selling Holders based on the relative number of securities
each has requested be included in such offering.
2.7. Notwithstanding anything in this Agreement to the contrary,
neither MK nor MKO shall have the right to dispose of any Registrable
Securities pursuant to any registration statement effected pursuant to
Section 2 or 3.
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Section 3. Piggyback Registration Statements.
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3.1. If at any time the Company proposes to register (including
for this purpose a registration effected by the Company for stockholders of
the Company other than the Holders) equity securities or securities
convertible or exchangeable into equity securities under the Securities Act
in connection with a public offering solely for cash (other than by a
registration on Form S-4 or S-8 or any successor or similar forms or filed
in connection with an exchange offer or any offering of securities solely to
the Company's existing stockholders or otherwise pursuant to a dividend
reinvestment plan or a dividend reinvestment and stock purchase plan, and
other than pursuant to Section 2), the Company shall promptly give each
Holder of Registrable Securities written notice of such registration (a
"Piggyback Registration Statement"). Upon the written request of each Holder
given within fifteen days following the date of such notice, the Company
shall cause to be included in such registration statement and use its
reasonable best efforts to be registered under the Securities act all the
Registrable Securities that each such Holder shall have requested to be
registered; provided, however, that such right of inclusion shall not apply
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to any registration statement covering an underwritten offering of
convertible or exchangeable securities or equity securities other than Common
Stock if the Underwriters' Representative or Agent shall advise the Company
in writing (with a copy to each Selling Holder) that in its opinion, the kind
of Registrable Securities requested to be included in the Piggyback
Registration Statement would adversely affect the offering of the convertible
or exchangeable securities or equity securities or the timing thereof. The
Company shall have the absolute right at any time to withdraw or cease to
prepare or file any registration statement for any offering referred to in
this Section 3 without any obligation or liability to any Holder.
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3.2. If the Underwriters' Representative or Agent shall advise the
Company in writing (with a copy to each Selling Holder) that, in its opinion,
the amount of securities requested to be included in such offering (whether
by the Company, the Selling Holders or other selling stockholders) exceeds
the amount which can be sold in such offering within a price range acceptable
to the Company, the securities to be included in such offering and the
related registration shall be reduced in the following order to amount which
can be sold within such price range: first the amount of securities to be
included in the offering and registration by any selling stockholder other
than the Selling Holders shall be reduced until no such securities are
included therein; second, the amount of Registrable Securities that the
Selling Holders have requested be included in the offering and registration
shall be reduced on a pro rata basis among all Selling Holders based on the
relative number of securities each has requested be included in such
offering; and third, the amount of securities to be included in the offering
and registration by the Company shall be reduced.
3.3. During the term of this Agreement, each Holder shall be
entitled to have its Registrable Securities included in an unlimited number
of Piggyback Registration Statements pursuant to this Section 3.
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3.4. If the Company has previously filed a registration statement
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with respect to Registerable Securities pursuant to Section 2.1 or pursuant
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to this Section 3, and if such previous registration statement has not been
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withdrawn or abandoned, the Company will not file or cause to be effected any
other registration of any of its equity securities or securities convertible
or exchangeable into or exercisable for its equity securities under the
Securities Act (except on Form S-8 or any successor form),whether on its own
behalf or at the request of any holder or holders of such securities, until
a period of 180 days has elapsed from the effective date of such a previous
registration statement.
Section 4. Registration Procedures. Whenever required under
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Section 2 or Section 3 to effect the registration of any Registrable
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Securities, the Company shall, as expeditiously as practicable:
4.1. Prepare and file with the Commission a registration statement
with respect to such Registrable Securities, subject to Subject 2.2, and use
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the Company's reasonable best efforts to cause such registration statement
to become effective, in each instance giving due regard to the need to
prepare current financial statements, conduct due diligence and complete
other actions that are reasonably necessary to effect a registered public
offering; provided, however, that before filing a registration statement or
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prospectus or any amendments or supplements thereto, including documents
incorporated by reference after the initial filing of the registration
statement and prior to effectiveness thereof, the Company shall use its
reasonable efforts to furnish to one firm of legal counsel for the Selling
Holders (selected by the Majority Selling Holders) copies of all such
documents in the form substantially as proposed to be filed with the
Commission at least five business days prior to filing for review and comment
by such counsel.
4.2. (i) Use the Company's reasonable best efforts to keep the
relevant registration statement Continuously Effective (x) if a Demand
Registration Statement, for up to 90 days or until such earlier date as of
which all the Registrable Securities under the Demand Registration Statement
shall have been disposed of in the manner described in the Demand
Registration Statement, and (y) if a Shelf Registration Statement, subject
to the immediately following sentence, for three years. As soon as
reasonably practicable after the occurrence of any fact or event that makes
untrue any statement of a material fact made in the Shelf Registration
Statement or that requires the making of any additions to or changes in the
Shelf Registration Statement in order to make the statements therein, in
light of the circumstances in which they were made, not misleading, the
Company shall prepare and file a supplement or amendment to the Shelf
Registration Statement or related prospectus, or a document incorporated
therein by reference, so that such Shelf Registration Statement and related
prospectus shall not contain any such untrue statement of a material fact or
any such omission of a material fact; provided, however, that if the Board
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of Directors of the company determines, in its good faith reasonable
judgment, that the Transfer of Registrable Securities pursuant to the Shelf
Registration Statement would materially interfere with, or require the
premature disclosure of, any financing, acquisition or reorganization
involving the Company or any of its subsidiaries or otherwise would require
premature disclosure of any other material nonpublic information as to which
the Company has a bona fide business purpose for maintaining its
confidentiality, then for so long as such circumstances or such business
purpose continues to exist (provided that the number of days of any such
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suspension may not exceed an aggregate of 120 days in any calendar year), the
Company shall not be required to prepare or file any such supplement,
amendment or document.
(ii) Each Holder agrees by acquisition of a Registrable Security
that, upon receipt of any notice from the Company of the existence of any
fact or event of the kind described in Section 2.1(ii) or 4.2(i) (which
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notice need not disclose the fact, event or information), such Holder will
forthwith discontinue the disposition of any Registrable Securities pursuant
to the Shelf Registration Statement until such Holder's receipt of the copies
of a supplemented or amended prospectus as contemplated by Section 4.2(i),
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or until it is advised in writing by the Company that the use of the
prospectus related to the Shelf Registration Statement may be resumed, and,
has received copies of any additional or supplemental filings that are
incorporated by reference in such prospectus. If so directed by the Company,
each Holder will deliver to the Company all copies, other than permanent file
copies then in such Holder's possession, of the prospectus covering such
Registrable Securities that was current at the time of receipt of such
notice.
(iii) Notwithstanding the foregoing, if, in the case of a Demand
Registration Statement, the filing of a registration statement is postponed
as permitted by Section 2.1(ii), or, in the case of a Shelf Registration
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Statement, the preparation and filing of a supplement, amendment or
incorporated document is postponed as permitted by Section 4.2(i) or Section
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4.2(ii), the five-year period for filing a Demand Registration Statement or
the three-year period of effectiveness of the Shelf Registration Statement,
as the case may be, shall be extended by the aggregate number of days of such
postponement.
4.3. Subject to Section 4.2(i), prepare and file the Commission
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such amendments,supplements or incorporated documents to such registration
statement and the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement. If the registration statement is for an underwritten
offering, the Company shall amend the registration statement or supplement
the prospectus whenever required by the terms of the underwriting agreement
entered into pursuant to Section 4.6. In the event that any Registrable
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Securities included in a registration statement subject to, or required by,
this Agreement remain unsold at the end of the period during which the
Company is obligated to use its reasonable best efforts to maintain the
effectiveness of such registration statement, the Company may file a post-
effective amendment to the registration statement for the purpose of removing
such securities from registered status.
4.4. Furnish to each Selling Holder of Registrable Securities
copies of the registration statement, any pre-effective or post-effective
amendment thereto, the prospectus, including each preliminary prospectus and
any amendments or supplements thereto, in each case in conformity with the
requirements of the Securities Act.
4.5. Use the Company's reasonable best efforts (i) to register and
qualify the securities covered by such registration statement under the
securities or Blue Sky laws of such states or jurisdictions as shall be
reasonably requested by the Underwriters' Representative or Agent (as
applicable, or if inapplicable, the Majority Selling Holders), and (ii) to
obtain the withdrawal of any order suspending the effectiveness of a
registration statement, or the lifting of any suspension of the qualification
(or exemption from qualification) of the offer and transfer of any of the
Registrable Securities in any jurisdiction, at the earliest practicable
moment; provided, however, that the Company shall not be required in
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connection therewith or as a condition thereto to qualify to do business,
subject itself to taxation or to file a general consent to service of process
in any states or jurisdictions where it is not now so subject.
4.6. In the event of Demand Registration Statement, enter into and
perform the Company's obligations under an underwriting or agency agreement
(including indemnification and contribution obligations of underwriters or
agents), in usual and customary form, with the managing underwriter or
underwriters of or agents for such offering. The Company shall also
cooperate with the majority Selling Holders and the Underwriters'
Representative or Agent for such offering in the marketing of the Registrable
Securities, including making reasonably available the Company's officers,
accountants, counsel, premises, books and records for such purpose.
4.7. Promptly notify each Selling Holder of any stop order issued
or threatened to be issued by the Commission in connection therewith (and
take all reasonable actions required to prevent the entry of such stop order
or to remove it if entered).
4.8. Make generally available to the Company's security holders
an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act no later than 90 days following the end of the 12-month period
beginning with the first month of the Company's first fiscal quarter
commencing after the effective date of each registration statement filed
pursuant to this Agreement.
4.9. Make reasonably available for inspection by any Selling
Holder, any underwriter participating in such offering and the
representatives of such Selling Holder and Underwriter (but not more than
one firm of legal counsel to such Selling Holders), all financial and other
information as shall be reasonably requested by them, and provide the
Selling Holder, any underwriter participating in such offering and the
representatives of such Selling Holder and Underwriter the opportunity to
discuss the business affairs of the Company with its principal executives
and independent public accountants who have certified the audited financial
statements included in such registration statement, in each case to the
extent necessary to enable them to exercise their due diligence
responsibility under the Securities Act; provided, however, that information
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that the Company determines, in good faith, to be confidential and which the
Company advises such Person in writing, is confidential shall not be
disclosed unless such Person signs a confidentiality agreement reasonably
satisfactory to the Company.
4.10. In the event of a Demand Registration Statement, use the
Company's reasonable best efforts to obtain a "comfort letter" from its
independent public accountants and legal opinions of counsel to the Company
addressed to the Selling Holders, in customary form and covering such matters
of the type customarily covered by such letters and in a form that shall be
reasonably satisfactory to the Majority Selling Holders. The Company shall
furnish to each Selling Holder a signed counterpart of any such comfort
letter or legal opinion. Delivery of any comfort letter shall be subject to
the recipient furnishing such written representations or acknowledgments as
are customarily provided by selling stockholders who receive such comfort
letters under SAS No. 72. Nothing in the immediately preceding sentence
shall be deemed to require a Selling Holder to make representations and
warranties if the Selling Holder is willing to receive a letter in the form
to be provided to selling stockholders not making representations and
warranties under SAS No. 76.
4.11. Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement.
4.12. Use all reasonable efforts to cause the Registrable
Securities covered by such registration statement, if the Common Stock is
then listed on a securities exchange or included for quotation in a
recognized trading market, to continue to be so listed or included for a
reasonable period of time after the offering.
Section 5. Holders' Obligations.
--------------------
5.1. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to the
Registrable Securities of any Selling Holder of Registrable Securities that
such Selling Holder shall:
(i) furnish to the Company such information regarding such Selling
Holder and its affiliates, the number of Registrable Securities owned and
proposed to be sold by it, the intended method of disposition of such
securities and any other information as shall be required to effect the
registration of such Selling Holder's Registrable Securities, and cooperate
with the Company in preparing such registration statement and in complying
with the requirements of the Securities Act;
(ii) agree to sell their Registrable Securities to the
underwriters at the same price and on substantially the same terms and
conditions as the Company or the other Persons on whose behalf the
registration statement was being filed have agreed to sell their securities,
and execute the underwriting agreement agreed to by the Company and the
Majority Selling Holders and customary custody arrangements, lock-up letters,
indemnities, questionnaires and other documents reasonably required by the
underwriters or agents and agreed to by the Majority Selling Holders.
5.2. In the event that a Demand Registration Statement or a
Piggyback Registration Statement becomes effective, if and to the extent
requested by the managing underwriter or lead agent for the offering relating
thereto, no Holder shall offer, sell or agree to sell or otherwise dispose
of or transfer any Registrable Securities or securities convertible into or
exchangeable or exercisable for any Registrable Securities (other than, in
the case of the Selling Holders under the Demand Registration Statement or
Piggyback Registration Statement, pursuant to such Demand Registration
Statement or Piggyback Registration Statement, as the case may be), or
exercise any right to register any such securities, during the period
commending ten days prior to the anticipated effective date of such
registration statement and ending 120 days from the effective date of such
registration statement. In order to enforce the foregoing agreement, the
Company shall be entitled to impose stop-transfer instructions with respect
to the Registrable Securities of each Holder until the end of such period.
Section 6. Expenses of Registration. Expenses in connection with
------------------------
registrations pursuant to this Agreement shall be allocated and paid as
follows:
6.1. With respect to the Shelf Registration Statement, MKO shall
bear and pay or shall reimburse the Company for, and with respect to each
Demand Registration Statement, the Company shall bear and pay, all of the
expenses incurred in connection with the registration and offering of
Registrable Securities with respect to such Shelf Registration Statement or
Demand Registration Statement, as the case may be, including, but not limited
to, all registration, filing and National Association of Securities Dealers,
Inc. fees, all fees and expenses of complying with securities or blue sky
laws, all word processing and duplicating expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company, the fees and
disbursements of the Company's independent public accountants, including the
expenses of "cold comfort" letters required by or incident to such
performance and compliance, and all printing expenses (including the printing
of certificates evidencing the Registrable Securities and the printing of the
registration statement and any related prospectus, or any amendment or
supplement thereto) (collectively, the "Registration Expenses"); provided,
--------
however, that, the Selling Holders shall pay (i) underwriting discounts and
- -------
commissions relating to the Registrable Securities sold by them pursuant to
any such registration statement and (ii) all fees and disbursements of
counsel and any other advisors to the Selling Holders. Notwithstanding the
foregoing, in no event shall the obligations of MKO under this Section 6.1
-----------
exceed $75,000 in the aggregate. In no event shall MKO be responsible for
the expenses of a Demand Registration Statement. To the extent MKO is not
required by this Section to pay or reimburse the Company for expenses
incurred in connection with a Shelf Registration Statement, those expenses
shall be borne and paid by the Company, except as expressly otherwise
provided in the first sentence of this Section.
6.2. The Company shall bear and pay all Registration Expenses
incurred in connection with any Piggyback Registration Statements pursuant
to Section 3, other than (i) underwriting discounts and commissions relating
---------
to Registrable Securities, (ii) the portion of any filing fees allocable to
the Registrable Securities included in such registration by the Holders and
(iii) the fees and disbursements of any counsel and other advisors to the
Selling Holders (each of which expenses in clauses (i) and (ii) shall be paid
on a pro rata basis by the Selling Holders of Registrable Securities included
in such Piggyback Registration Statement and which expenses in clause (iii)
shall be paid on a pro rata basis by the Selling Holders for which the
expenses are incurred).
Section 7. Indemnification; Contribution. If any Registrable
-----------------------------
Securities are included in a registration statement under this Agreement:
7.1. To the extent permitted by applicable law, the Company shall
indemnify and hold harmless each Selling Holder, its directors, officers,
shareholders, employees, investment advisors, agents and Affiliates, either
direct or indirect (and each such Affiliate's directors, officers,
shareholders, employees, investment advisors and agents) and each other
Person, if any, who controls such Selling Holder within the meaning of the
Securities Act against any and all losses, claims, damages, liabilities and
expenses, including attorneys' fees and disbursements and expenses of
investigation, incurred by such party pursuant to any actual or threatened
action, suit, proceeding or investigation, to which any of the foregoing
Persons may become subject under the Securities Act, the Exchange Act or
other federal or state laws, insofar as such losses, claims, damages,
liabilities and expenses arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein, or any amendments or supplements thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading (collectively, a
"Violation"); provided, however, that the indemnification required by this
-------- -------
Section 7.1 shall not apply to amounts paid in settlement of any such loss,
- -----------
claim, damage, liability or expense if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such
loss, claim, damage, liability or expense to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished to the Company by the
indemnified party expressly for use in connection with such registration.
7.2. To the extent permitted by applicable law, each Selling
Holder shall indemnify and hold harmless the Company, its directors,
officers, shareholders, employees, investment advisors, agents and
Affiliates, either direct or indirect (and each such Affiliate's directors,
officers, shareholders, employees, investment advisors and agents) and each
other Person, if any, who controls the Company within the meaning of the
Securities act, any other Selling Holder and any controlling Person or any
such other Selling Holder against any and all losses, claims, damages,
liabilities and expenses, including attorneys' fees and disbursements and
expenses of investigation, incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, to which any of the
foregoing Persons may otherwise become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Holder expressly for use in connection with such
registration statement; provided, however, that (x) the indemnification
-------- -------
required by this Section 7.2 shall not apply to amounts paid in settlement
-----------
of any such loss, claim, damage, liability or expense if settlement is
effected without the consent of the relevant Selling Holder of Registrable
Securities, which consent shall not be unreasonably withheld, (y) in no event
shall the amount of any indemnity under this Section 7.2 and of the
-----------
contribution obligation of a Selling Holder under Section 7.4 exceed the net
-----------
proceeds from the applicable offering received by such Selling Holder, and
(z) the obligation to provide indemnification hereunder shall be several, and
not joint and several, among the indemnifying parties.
7.3. Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit, proceeding,
- ---------
investigation or threat thereof made in writing for which such indemnified
party may make a claim under this Section 7, such indemnified party shall
---------
deliver to the indemnifying party a written notice of the commencement
thereof. The failure to deliver written notice to the indemnifying party
within a reasonable time following the commencement of any such action , if
and to the extent materially prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7 but shall not relieve the indemnifying
---------
party of any liability that it may have to any indemnified party otherwise
than pursuant to this Section 7. Any fees and expenses incurred by the
---------
indemnified party (including any fees and expenses incurred in connection
with investigating or preparing to defend such action or proceeding) shall
be paid to the indemnified party, as incurred, within thirty days of written
notice thereof to the indemnifying party (regardless of whether it is
ultimately determined that an indemnified party is not entitled to
indemnification hereunder). Any such indemnified party shall have the right
to employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless(i) the indemnifying
party shall have failed to promptly assume the defense of such action, claim
or proceeding or (ii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified
party and the indemnifying party, and such indemnified party shall have been
advised by its counsel that there may be one or more legal defenses available
to it which are different from or in addition to those available to the
indemnifying party and that the assertion of such defenses would create a
conflict of interest such that counsel employed by the indemnifying party
could not represent the indemnified party (in which case, if such
indemnified party notifies the indemnifying party in writing that it elects
to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action, claim or proceeding on behalf of such indemnified party; it being
understood, however, that the indemnifying party shall not, in connection
with any one such action, claim or proceeding or separate but substantially
similar or related actions, claims or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the reasonable fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all such
indemnified parties, unless the indemnified party shall have been advised by
its counsel that a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such action,
claim or proceeding such that the counsel could not represent the indemnified
party and any other of such indemnified parties, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels). No indemnifying party shall be liable to
an indemnified party for any settlement of any action, proceeding or claim
without the written consent of the indemnifying party, which consent shall
not be unreasonably withheld.
7.4. If the indemnification required by this Section 7 from the
---------
indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
in this Section 7:
---------
(i) The 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, liabilities
or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the actions which resulted in such loses, claims, damages, liabilities or
expense, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any Violation has
been committed by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such Violation.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 7.1 and Section 7.2,
----------- -----------
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.4 were determined
-----------
by pro rata allocation or by any other method of allocation which does not
take into account the equitable considerations referred to in Section 7.4(i).
--------------
No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
7.5. The obligations of the Company and the Selling Holders of
Registrable Securities under this Section 7 shall survive the completion of
---------
any offering of Registrable Securities pursuant to a registration statement
under this Agreement.
Section 8. Transfer of Common Stock. Notwithstanding anything in
------------------------
this Agreement to the contrary, no Holder may Transfer any shares of Common
Stock to any Person, except as set forth in the last paragraph of this
Section 8, unless prior to any such Transfer such Person has executed an
- ---------
agreement (in the form of Exhibit A hereto) to be bound by the provisions of
---------
this Agreement. The Company shall place the following legend on any
certificate representing shares of Common Stock held by a Holder:
"This security is subject to certain restrictions on transfer
contained in a stockholders Agreement dated as of ____, 1996 between MK Rail
Corporation and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation to which the holder of this
certificate is bound, a copy of which agreement is on file with the Secretary
of MK Rail Corporation."
In order to enforce the foregoing transfer restriction, without
limiting any other rights or remedies available to the Company, the Company
shall be entitled to impose stop-transfer instructions with respect to the
Registrable Securities of each Holder. The foregoing transfer restrictions
and legend shall be removed in connection with any sale of Common Stock to
the public pursuant to an effective registration statement or pursuant to
Rule 144 or any similar rule promulgated by the Commission under the
Securities Act, in each case so long as the specific identities of the
Transferees are not known to the Holders selling such shares prior to such
sale.
Section 9. Corporate Governance Agreement.
------------------------------
9.1. Until either the second anniversary of the Distribution Date
(or, if an effective Election Request, as defined in Section 9.6 hereof, is
-----------
made and the Stockholders Meeting, as defined in Section 9.7 hereof, is held
prior thereto, the date of the Stockholders Meeting), each Holder (i) shall
vote all of its shares of Registrable Securities and any other voting
securities of the Company over which such Holder exercises voting power (or
execute written consents in lieu of meetings) in favor of the election of
the Company's nominees for director and against the removal of any of the
Company's directors (other than a removal for cause) at any meeting of
stockholders or in any action by written consent and (ii) shall take all
other necessary or desirable actions within such Holder's control
(including, but not limited to, attendance at annual or special stockholder
meetings of the Company in person or by proxy for purposes of obtaining a
quorum) to elect such nominees and to vote against such removal of
any of the Company's directors; provided, however, that the total number
-------- -------
of directors on the Company's Board of Directors shall not be fewer than
seven and a majority of such directors shall at all times consist of Outside
Directors. Notwithstanding the foregoing, a Holder shall not be required to
vote any voting securities of the Company over which such Holder exercises
voting power that are not Registrable Securities (or execute written
consents in lieu of meetings with respect to such voting securities) as
otherwise required by this Section to the extent the voting securities are
held or controlled by the Holder as an agent, custodian, trustee or
executor, in all cases for or on behalf of parties that are not Holders of
Registrable Securities or their Affiliates or associates (as defined in the
rules promulgated under the Exchange Act), or are controlled by the Holder
as an investment advisor for an investment company registered under the
Investment Company Act of 1940, as amended, or as an investment advisor for
any other person or group; provided that in all cases, the arrangement
--------
whereby the Holder owns or controls the voting securities has not been
entered into for the purpose of circumventing this Section; and further
-------
provided, in the case of securities controlled by the Holder as an
- --------
investment advisor for a person or group that is not an investment company
registered under the Investment Company Act, that no Holder or Holders has a
direct economic beneficial interest in the person or group for which the
Holder so acts as an investment advisor.
9.2. Without the prior written consent of the Company, until
either (i) ninety (90) days prior to the scheduled date of the Stockholders
Meeting (if an effective Election Request is made pursuant to Section 9.6
hereof) or (ii) the second anniversary of the Distribution Date (if no
effective Election Request is made) (in either case, the "Standstill
Termination Date"), no Holder may (i) solicit proxies (as such terms are
defined in Rule 14a-1 under the Exchange Act), whether or not such
solicitation is exempt under 14a-2 under the Exchange Act, with respect to
any matter from holders of any shares of common or preferred stock of the
Company, or any securities convertible into or exchangeable for or
exercisable (whether currently or upon the occurrence of any contingency) for
the purchase of any such capital stock, or make any communication exempted
from the definition of solicitation by Rule 14a-1(I)(2)(iv) under the
Exchange Act, or (ii) initiate, or induce or attempt to induce any other
Person or group (as defined in Section 13(d)(3) of the Exchange Act) to
initiate, any stockholder proposal or tender offer for securities of the
Company or any subsidiary thereof, any change of control of the Company or
any subsidiary thereof or the convening of a stockholders' meeting of the
Company or any subsidiary thereof; or (iii) otherwise seek or propose (or
request permission to propose) to influence or control the management or
policies of the Company or any subsidiary thereof. Nothing herein shall be
deemed to apply to a Holder to the extent the Holder is acting solely in its
capacity as an agent, custodian, trustee or executor holding securities that
are not Registrable Securities for persons that are not Holders or Affiliates
of Holders, provided that the Holder's actions are (a) at the direction of
--------
a person or persons that are not Holders that are the beneficial owners of
the securities so held by the Holder or (b) arise from the fiduciary duties
of the Holder acting in such capacity ascertained in good faith after
consulting with and based on advice of counsel as described in reasonable
detail in a written notice given the Company at least thirty (30) days prior
to taking such action; and further provided that in all cases the arrangement
--------------------
whereby the Holder holds the securities has not been entered into, and the
action by the Holder has not been taken, for the purpose of circumventing
this Section.
9.3. Notwithstanding anything herein to the contrary, the
provisions of Sections 9.1 and 9.2 hereof shall terminate at such time prior
------------ ---
to the second anniversary of the Distribution Date, if ever, that all of the
Registrable Securities held by all Holders constitutes less than 15% of the
outstanding Common Stock.
9.4. For so long as the provisions of Section 9.1 hereof are in
-----------
force and effect, the Company shall not amend the Rights Plan (i) to change
the percentage used in the definition of "Acquiring Person" therein so that
it is less than fifteen percent (15%) or (ii) in any other manner that would
deprive the Holders of the Registrable Securities of the intended benefits
of the Rights Plan Amendment.
9.5. At the first annual meeting of the stockholders of the
Company scheduled to occur at least seventy-five (75) days after the
effective date of this Agreement, the Board of Directors of the Company shall
propose to the stockholders of the Company, shall recommend approval of, and
shall solicit proxies voting to approve an amendment (the "Certificate
Amendment") to the Amended and Restated Certificate of Incorporation of the
Company, as amended, that, if adopted and approved by the requisite vote of
the stockholders of the Company, would amend the first sentence of Section
3 of the Seventh Article thereof in its entirety so it states as follows:
Subject to the rights, if any, of the holders of any series
of Preferred Stock to elect additional directors under circumstances
specified in a Preferred Stock Designation, newly created directorships
resulting from any increase in the number of Directors and any vacancies on
the Board resulting from death, resignation, disqualifications, removal or
other cause, will be filled solely by the affirmative vote of the majority
of the remaining Directors, then in office, even though less than a quorum
of the Board, or by a sole remaining Director; provided, however, that at the
sole option of the Board, effected by resolution of the Board of Directors,
one or more such vacancies or newly created directorships may be filled by
the stockholders at a meeting of the stockholders called by the Board of
Directors.
If the Certificate Amendment is effectively adopted and approved by the
stockholders of the Company, the Board of Directors shall make a conforming
amendment to the first sentence of By-Law 11 of the By-Laws of the Company.
9.6. The Holders shall have the right at their option to request
that the Company hold a meeting of the stockholders as provided herein by
delivery of a written request (the "Election Request") to the Secretary of
the Company at its principal executive offices not more than one hundred
twenty (120) nor less than ninety (90) days prior to the second anniversary
of the Distribution Date, which Election Request shall identify each of the
Holders making the Election Request and shall include the information they
would be required to give under By-Law 13 of the By-Laws of the Company as
in effect on the date hereof as if they were making nominations for positions
as directors at an annual meeting or the stockholders of the Company. An
Election Request shall be ineffective if it has not been executed by Holders
owning Registrable Securities constituting at least fifteen percent (15%) of
the outstanding Common Stock of the Company as of the ninetieth (90th) day
prior to the second anniversary of the Distribution Date and shall cease to
be effective if prior to the second anniversary of the Distribution Date the
Holders executing the Election Request cease to own registrable securities
constituting at least fifteen percent (15%) of the outstanding Common Stock
of the Company. If no effective Election Request is delivered to the
Secretary of the Company at the Company's principal executive offices not
more than on hundred twenty (120) nor less than ninety (90) days prior to
said second anniversary of the Distribution Date or if, prior to the second
anniversary of the Distribution Date, the Election Request ceases to be
effective, the Holders shall have no further rights under this Section.
9.7. Provided the Certificate Amendment has been adopted and
approved, upon receipt of an effective Election Request, unless and until it
becomes ineffective, the Board of Directors of the Company shall call a
meeting of the stockholders of the Company to beheld as closely as
practicable to the second anniversary of the Distribution Date (which meeting
may be the annual meeting of stockholders) (the "Stockholders Meeting"), at
which meeting the stockholders of the Company shall be entitled to vote to
fill vacancies and/or newly-created positions on the Board of Directors of
the Company, which vacancies and/or newly created positions, when filled,
will constitute a majority of the Company's Board of Directors.
9.8. Nothing in Section 9.6 or 9.7 hereof shall be deemed to
----------- ---
amend, modify or waive any provisions of the By-Laws of the Company,
including, without limitation, those regarding the manner in which
stockholders of the Company may make proposals or nominations at meetings of
such stockholders, all of which shall continue to be in full force and effect
with respect to the Stockholders Meeting, if it is held. The provisions
of By-Law 13 of the Company's By-Laws shall be in full force and effect with
respect to all nominations to fill vacancies at the Stockholders Meeting, if
it is held.
Section 10. Amendment, Modification and Waivers; Further
--------------------------------------------
Assurances.
- ----------
10.1. This Agreement may be amended with the consent of the
Company, and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent of Holders owning Registrable
Securities possessing a majority in number of the Registrable Securities than
outstanding to such amendment, action or omission to act.
10.2. No waiver of any terms or conditions of this Agreement shall
operate as a waiver of any other breach of such terms and conditions or any
other term or condition, nor shall any failure to enforce any provision
hereof operate as a wavier of such provision or of any other provision
hereof. No written waiver hereunder, unless it by its own terms explicitly
provides to the contrary, shall be construed to effect a continuing waiver
of the provisions being waived and no such waiver in any instance shall
constitute a waiver in any other instance or for any other purpose or impair
the right of the party against whom such waiver is claimed in all other
instances or for all other purposes to require full compliance with such
provision.
10.3. Each of the parties hereto shall execute all such further
instruments and documents and take all such further action as any other party
hereto may reasonably require in order to effectuate the terms and purposes
of this Agreement.
Section 11. Assignment; Benefit. This Agreement and all of the
-------------------
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, permitted assigns, executors,
administrators or successors; provided, however, that except as specifically
-------- -------
provided herein with respect to certain matters, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned or
delegated by the Company without the prior written consent of Holders owning
Registrable Securities possessing a majority in number of Registrable
Securities then outstanding on the date as of which such delegation or
assignment is to become effective. A Holder may Transfer its rights
hereunder to a successor in interest to the Registrable Securities owned by
such assignor only as permitted by Section 8.
---------
Section 12. Miscellaneous.
-------------
12.1. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
GIVING REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
12.2. Notices. All notices and requests given pursuant to this
-------
Agreement shall be in writing and shall be made by hand-delivery, first-class
mail (registered or certified, return receipt requested), confirmed facsimile
or overnight air courier guaranteeing next business day:
(a) If to MK Rail, to:
MK Rail Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Deopken Keevican & ▇▇▇▇▇
37th Floor, USX Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) If to MKO or MKC, to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇
Attention: President
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
Suite 4600
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(c) and if to any other Holder, to:
the address set forth in the relevant
agreement in the form of Exhibit A
---------
whereby such party became bound by
the provisions of this Agreement.
Except as otherwise provided in this Agreement, the date of each such notice
and request shall be deemed to be, and the date on which each such notice and
request shall be deemed given shall be: at the time delivered, if personally
delivered or mailed; when receipt is acknowledged, if sent by facsimile; and
the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next business day delivery.
12.3. Entire Agreement; Integration. This Agreement supersedes
-----------------------------
all prior agreements between or among any of the parties hereto with respect
to the subject matter contained herein, and this agreement embodies the
entire understanding among the parties relating to such subject matter.
12.4. Injunctive Relief. Each of the parties hereto acknowledges
-----------------
that in the event of a breach by any of them of any material provision of
this Agreement, the aggrieved party may be without an adequate remedy at law.
Each of the parties therefore agrees that in the event of such a breach
hereof the aggrieved party may elect to institute and prosecute proceedings
in any court of competent jurisdiction to enforce specific performance or to
enjoin the continuing breach hereof. By seeking or obtaining any such
relief, the aggrieved party shall not be precluded from seeking or obtaining
any other relief to which it may be entitled.
12.5. Section Headings. Section headings are for convenience of
----------------
reference only and shall not affect the meaning of any provision of this
Agreement.
12.6. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be an original, and all of which shall
together constitute one and the same instrument. All signatures need not be
on the same counterpart.
12.7. Filing. A copy of this Agreement and of all amendments
------
thereto shall be filed at the principal executive office of the Company with
the Secretary of the Company.
12.8. Termination. This Agreement may be terminated at any time
-----------
by a written instrument signed by the parties hereto. Unless sooner
terminated in accordance with the immediately preceding sentence, the
parties' obligations under this Agreement (other than Section 7 hereof) shall
---------
terminate in their entirety on the fifth anniversary of the Distribution
Date.
12.9. Attorneys' Fees. In any action or proceeding brought to
---------------
enforce any provision of this Agreement, the successful party shall be
entitled to recover reasonable attorneys' fees (including any fees incurred
in any appeal) in addition to its costs and expenses and any other available
remedy.
12.10. No Third Party Beneficiaries. Nothing herein expressed or
----------------------------
implied is intended to confer upon any person, other than the parties hereto
or their respective permitted assigns, successors, heirs and legal
representative and other than parties entitled to indemnification under
Section 7 hereof, any rights, remedies, obligations or liabilities under or
- ---------
by reason of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
MK RAIL CORPORATION
By:___________________________
▇▇▇▇ ▇. ▇▇▇▇, Chairman
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
By:___________________________
Name:
Title:
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
MK RAIL CORPORATION
By:___________________________
▇▇▇▇ ▇. ▇▇▇▇, Chairman
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
By:___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive Vice President,
Chief Legal Officer and
Secretary
EXHIBIT A
AGREEMENT TO BE BOUND
BY THE STOCKHOLDERS AGREEMENT
-----------------------------
The undersigned, being the proposed transferee of ____ shares of
the common stock, $.01 par vale per share (the "Common Stock"), of MK Rail
Corporation, a Delaware corporation (the "Company"), as a condition to the
receipt of such Common Stock, acknowledges that matters pertaining to the
registration, voting and transfer of such Common Stock, acknowledges that
matters pertaining to the registration, voting and transfer of such Common
Stock is governed by the Stockholders Agreement dated as of _______, 1996
(the "Agreement") initially among the Company and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Corporation, an Ohio corporation, and the undersigned hereby (1) acknowledges
receipt of a copy of the Agreement, and (2) agrees to be bound as a Holder
by the terms of the Agreement, as the same has been or may be amended from
time to time.
Agreed to this __ day of __________, ______.
_________________________
______________________________*
______________________________*
*Include address for notices.
DRAFT - 7/24/96
AMENDMENT TO STOCKHOLDERS AGREEMENT
-----------------------------------
This Amendment to Stockholders Agreement (the "Amendment"), dated as of
July __, 1996, between MK Rail Corporation, a Delaware corporation ("MK
Rail"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation, an Ohio corporation ("MKO").
WHEREAS, in connection with the reorganization of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Corporation, a Delaware corporation ("MK"), in a case filed under Title 11
of the United States Bankruptcy Code, as amended (the "Bankruptcy Code"), MK
Rail and MKO executed and delivered a Stockholders Agreement (the
"Agreement") dated as of June 20, 1996; and
WHEREAS, the Agreement contains certain agreements regarding the
registration and voting of restricted shares of common stock of MK Rail held
by MKO which stock it was contemplated would be distributed to certain
creditors of MK and MKO; and
WHEREAS, as a result of negotiations between MK and equity holders of
MK, it is contemplated that MK's plan of reorganization will be amended so
that it provides for rights or options to be granted to equity holders of MK
which will permit them, subject to satisfaction of certain conditions, to
receive a portion of the restricted shares of common stock of MK Rail held
by MKO; and
WHEREAS, MK has made a motion (an "1145 Motion") requesting that the
Bankruptcy Court having jurisdiction over MK's bankruptcy proceeding issue
an order (an "1145 Order") providing that the offering, issuance, sale and
distribution by MKO of the common stock of MK Rail qualifies for the
exemption (the "1145 Exemption"), available under Section 1145(a) of the
Bankruptcy Code, from the registration requirements of the Securities Act of
1933, as amended; and
WHEREAS, the Securities and Exchange Commission has stated that it will
not object to the 1145 Motion; and
WHEREAS, the parties wish to amend the Agreement as set forth herein to
make certain changes thereto necessitated by the possibility that equity
holders of MK may acquire some restricted shares of Common Stock and that the
1145 Motion has been made;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. The term "Rights Plan Amendments" is hereby amended and restated in
its entirety so it means the Second Amendment to Rights Agreement dated as
of June 20, 1996 and the Third Amendment to Rights Agreement of even date
herewith between MK Rail and ▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder Services, L.L.C.,
formerly known as Chemical Mellon Shareholders Services, L.L.C.
2. The following language is added at the end of the last sentence of
the definition of "Registrable Securities" in Section 1.1 of the Agreement:
or in "ordinary trading transaction" within the meaning of Section
1145(b)(1) of the United States Bankruptcy Code, as amended (the "Bankruptcy
Code").
3. The reference to "creditors of MK" in the definition of "Shares" in
Section 1.1 of the Agreement is hereby changed to a reference to "persons."
4. The first sentence of Section 8 of the Agreement is hereby amended
in its entirety to read as follows:
Notwithstanding anything in this Agreement to the contrary, no
Holder may Transfer any shares of Common Stock to any Person, except as set
forth in the last paragraph of this Section 8, unless prior to any
---------
such Transfer such Person has executed an agreement (in the form
of Exhibit A hereto) to be bound, or has otherwise been effectively bound
---------
pursuant to the Plan, by the provisions of this Agreement.
5. The last sentence of Section 8 of the Agreement is hereby amended,
restated and replaced in its entirety by the following sentences:
MKO may distribute shares of Common Stock to equity holders of MK
provided that (a) the 1145 Order has been issued and is in full force and
effect and is not the subject of a pending appeal at the time the Common
Stock is distributed and (b) each equity holder receiving such Common Stock
has executed an agreement (in the form of Exhibit A hereto) to be bound, or
---------
has otherwise been effectively bound pursuant to the Plan, by the provisions
of this Agreement. No distribution of Common Stock to equity holders or any
other party in a distribution that qualifies for the 1145 Exemption shall
excuse any party from or be deemed to constitute a release of the transfer
restrictions and legending requirements set forth in this Section 8, except
---------
as set forth in the last sentence of this paragraph, and all Common Stock so
distributed shall after such distribution be subject to said transfer
restrictions and legend requirements as well as all other terms and
conditions hereof. The foregoing transfer restrictions and legend shall be
removed in connection with any sale of Common Stock to the public pursuant
to an effective registration statement or pursuant to Rule 144 or any
similar rule promulgated by the Commission under the Securities Act, or in
"ordinary trading transactions" within the meaning of Section 1145(b)(1) of
the Bankruptcy Code, in each case so long as the specific identities of the
Transferees are not known to the Holders selling such shares prior to such
sale and so long as the Transferees are not assigned and do not receive any
rights under this Agreement. The Company may also put following legend on
certificates of stock held by Transferees of MKO and their Transferees that
are bound to the terms of this Agreement:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS. SUCH SHARES OF STOCK MAY NOT BE TRANSFERRED
EXCEPT (1) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS, (2) PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAW,
OR (3) IF THE STOCK HAS BEEN RECEIVED BY THE HOLDER HEREOF IN A DISTRIBUTION
THAT QUALIFIES FOR THE EXEMPTION, AVAILABLE UNDER ▇▇▇▇▇▇▇ ▇▇▇▇(▇) ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ BANKRUPTCY CODE, AS AMENDED (THE "BANKRUPTCY CODE"), TO THE
REGISTRATION REQUIREMENTS OF THE ACT, IN ORDINARY TRADING TRANSACTIONS WITHIN
THE MEANING OF SECTION 1145(b)(1) OF THE BANKRUPTCY CODE.
6. All terms and provisions of the Agreement, as amended hereby, shall
continue to be in full force and effect.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the day and year first set forth above.
MK RAIL CORPORATION
By:_________________________________
Title:_______________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORPORATION
By:_________________________________
Title:_______________________________