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STOCKHOLDERS
AND REGISTRATION RIGHTS AGREEMENT
Dated as of March 30, 1998
by and among
MMH HOLDINGS, INC.
MHE INVESTMENTS, INC.,
AND
HARNISCHFEGER CORPORATION
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TABLE OF CONTENTS
Section 1. Preemptive Rights................................................1
Section 2. Transfer Restrictions............................................1
Section 3. Registration Rights..............................................4
Section 4. Operating Policies..............................................16
Section 5. Legends.........................................................18
Section 6. Specific Performance, Etc.......................................18
Section 7. Termination.....................................................19
Section 8. Miscellaneous...................................................19
Section 9. Definitions.....................................................21
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STOCKHOLDERS AND REGISTRATION RIGHTS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement") is entered into as of
March 30, 1998, by and among (i) MMH Holdings, Inc., a Delaware corporation (the
"Company"), (ii) MHE Investments, Inc., a Delaware corporation ("Investor"), and
(iii) Harnischfeger Corporation, a Delaware corporation ("HarnCo"). HarnCo and
Investor are sometimes collectively referred to herein as the "Stockholders."
Unless otherwise defined herein, capitalized terms shall have the meanings set
forth in Section 8 hereof.
WHEREAS, pursuant to the terms of the Recapitalization Agreement,
dated as of January 28, 1998, among Investor, HarnCo and each of the Sellers
listed therein (the "Recapitalization Agreement"), Investor and HarnCo will own
approximately 77.8% and 22.2%, respectively, of the voting common stock of the
Company and, 88.2% and 11.8%, respectively, of the total voting power of the
Company, and Investors, HarnCo and the other stockholders of the Company will
own approximately 72.6%, 20.8% and 6.6%, respectively, of the total voting and
nonvoting common stock; and
WHEREAS, it is a condition precedent to the obligations of each of
Investor and HarnCo to close the transactions contemplated in the
Recapitalization Agreement that each of Investor and HarnCo shall have entered
into this Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, Investor and HarnCo
hereby agree as follows:
Section 1. Preemptive Rights. The Company shall not be permitted to
issue (an "Issuance") additional shares of Common Stock or Convertible
Securities, other than pursuant to an Exempt Issuance, unless, prior to such
Issuance, the Company notifies HarnCo in writing of the Issuance and grants to
HarnCo the right (the "Right") to subscribe for and purchase such additional
shares of Common Stock or Convertible Securities so issued at the same price and
on substantially the same terms as contemplated by the Issuance such that, after
giving effect to the Issuance and exercise of the Right, the Shares (including,
for purposes of this calculation, the shares of Common Stock issuable upon
conversion, exchange or exercise of any Covered Convertible Security, including
those issued in the Issuance or subject to the Right) owned by HarnCo (rounded
to the nearest whole share) shall represent the same percentage of the Fully
Diluted Shares as was owned by HarnCo prior to the Issuance. The Right may be
exercised by HarnCo by written notice to the Company received by the Company
within 15 days after receipt of notice from the Company of the Issuance, and the
closing of the purchase and sale pursuant to the exercise of the Right shall
occur at least 10 days after the Company receives notice of the exercise of the
Right and prior to or concurrently with the closing of the Issuance.
The provisions of this Section 1 shall terminate as to any Share or
Covered Convertible Security on the date such Share or Covered Convertible
Security is sold or otherwise transferred by HarnCo to any unaffiliated third
party.
Section 2. Transfer Restrictions
(a) Tag-Along Rights. With respect to any proposed transfer, sale or
other disposition (collectively, a "proposed transfer") of shares of Common
Stock, whether now owned or hereafter acquired, by Investor to a Person (such
other Person being hereafter referred to as the "proposed purchaser"), other
than pursuant to an Exempt Transfer, HarnCo shall have the right (the "Tag-Along
Right") to require Investor to require the proposed purchaser to purchase from
HarnCo the number of shares of Common Stock equaling the number derived by
multiplying the total number of shares of Common Stock Investor proposes to
transfer by a fraction, the numerator of which is the total number of shares of
Common Stock owned by HarnCo, and the denominator of which is the total number
of shares of Common Stock owned by Investor plus the number of shares of Common
Stock owned by HarnCo. Any Shares purchased from HarnCo pursuant to this Section
2 shall be at the same price and upon substantially the same terms and
conditions as such proposed transfer by Investor. Investor shall, not less than
30 nor more than 45 days prior to each proposed transfer, notify, or cause to be
notified, HarnCo in writing of each such proposed transfer. Such notice shall
set forth: (i) the name of the transferor and the number of Shares proposed to
be transferred, (ii) the name and address of the proposed purchaser, (iii) the
proposed amount and form of consideration and terms and conditions of payment
offered by such proposed purchaser and (iv) that the proposed purchaser has been
informed of the Tag-Along Right provided for in this Section 2.
The Tag-Along Right may be exercised by HarnCo by delivery of a
written notice to Investor (the "Tag-Along Notice") within 30 days following its
receipt of the notice specified in the last sentence of the preceding paragraph.
The Tag-Along Notice shall state the amount of Shares that HarnCo proposes to
include in such transfer to the proposed purchaser determined as aforesaid. In
the event that the proposed purchaser does not purchase Shares from HarnCo on
the same terms and conditions as specified in the notice referred to in the last
sentence of the preceding paragraph to the extent required by the preceding
paragraph, then Investor shall not be permitted to sell any Shares to the
proposed purchaser in the proposed transfer unless Investor or its designee so
purchases such Shares from HarnCo. If no Tag-Along Notice is received during the
30-day period referred to above (or if the number of Shares included in such
Tag-Along Notice is less than the aggregate number of Shares that HarnCo could
have elected to sell to the proposed purchaser), Investor shall have the right,
for a 30-day period after the expiration of the 30-day period referred to above,
to transfer the Shares specified in the notice referred to in the last sentence
of the preceding paragraph (less the amount, if any, of Shares included in any
Tag-Along Notice) on terms and conditions no more favorable than those stated in
such notice and in accordance with the provisions of this Section 2.
The Tag-along Right shall also apply to any Convertible Securities
which Investor or HarnCo may acquire in the future, and the calculations under
this Section 2(a) shall be made on the basis of Fully Diluted Shares (but
excluding Convertible Securities which are "out-of-the-money").
The Company agrees not to effect any transfer of Common Stock by
Investor until it has received evidence reasonably satisfactory to it that the
Tag-Along Right, if applicable to such transfer, has been complied with.
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(b) Drag-Along Rights.
(i) If Investor proposes to make a bona fide sale of at least
85% of its Shares and Convertible Securities to an Independent Third Party,
Investor shall have the right (a "Drag-Along Right"), exercisable upon 10 days'
prior written notice to HarnCo, to require HarnCo to sell the same percentage of
its Shares and Convertible Securities to the Independent Third Party on the same
financial terms as Investor. Notwithstanding anything to the contrary, to the
extent Investor exercises its Drag-Along Right pursuant to this Section 2(b),
the provisions of Section 2(a) hereof shall not be applicable to the transaction
that triggered such Drag-Along Right.
(ii) Investor shall deliver a written notice to HarnCo setting
forth the identity of, and the consideration per share to be paid by, the
Independent Third Party (the "Drag-Along Notice"). Not later than 10 days
following the delivery of the Drag-Along Notice, HarnCo shall deliver to
Investor certificates representing all of the Shares and Convertible Securities
owned by it to be sold pursuant to this Section 2(b), accompanied by all
necessary documents and instructions to effect such transfer. HarnCo hereby
appoints Investor as its attorney-in-fact for the purpose of effectuating the
sale to the Independent Third Party, including the execution and delivery of
customary documents (including agreements containing customary representations,
warranties and indemnifications on terms no less favorable to HarnCo than
Investor; provided, that, in no event shall HarnCo be required to indemnify the
buyer (or other parties) for any amount in excess of the proceeds received by
HarnCo) necessary or proper to effectuate the sale to the Independent Third
Party. The power of attorney represented by such appointment shall be coupled
with an interest and shall be irrevocable.
(iii) If HarnCo should fail to deliver certificates
representing all of the Shares and Convertible Securities owned by it to be sold
pursuant to this Section 2(b), Investor shall cause the books and records of the
Company to show that such Shares and Convertible Securities are bound by the
provisions of this Section 2 and that such Shares and Convertible Securities
shall be transferred only to the Independent Third Party upon surrender for
transfer by the holder thereof.
(iv) If, within 120 days after the delivery of the Drag-Along
Notice, such sale to the Independent Third Party is not completed, Investor
shall return to HarnCo all certificates representing Shares and Convertible
Securities that HarnCo delivered for sale pursuant hereto.
(c) Right of First Refusal.
(i) Except for a transfer pursuant to Section 2(a) or (b)
above, if HarnCo desires to make a transfer of all or any portion of its Shares
to a bona fide prospective purchaser for value in a transaction, HarnCo shall
give a written notice ("First Refusal Notice") signed by HarnCo to the Company
and Investor of HarnCo's desire to do so. The Notice shall set forth in
reasonable detail the terms and provisions of the proposed transfer, including,
without limitation, (A) the Shares to be transferred (the "Offered Shares"), (B)
the identity and
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the address of the Person to whom HarnCo proposes to transfer the Offered Shares
and (C) the price, terms and conditions of the proposed transfer.
(ii) The Investor and the Company shall have the irrevocable
and exclusive option, but not the obligation, to purchase some or all of the
Offered Shares, at the same price and upon terms and conditions substantially
equivalent to those offered by the prospective purchaser (as evidenced by a copy
of such offer to purchase which shall accompany the First Refusal Notice). If
the Company elects to purchase some or all of the Offered Shares, it shall give
notice of such election to HarnCo and Investor within 45 days after the receipt
of the First Refusal Notice. If the Company has not elected to purchase all of
the Offered Shares, the Investor may elect to purchase all of the remaining
Offered Shares which the Company has not elected to purchase, to be transferred
upon the same terms and conditions as those set forth in the First Refusal
Notice by delivering a written notice of such election to HarnCo and the Company
within 45 days after the receipt of the First Refusal Notice.
(iii) If the Company and/or Investor give notice of their
election to purchase pursuant to the foregoing provisions, they shall be
obligated to purchase from HarnCo, and HarnCo shall be obligated to sell to the
Company and/or Investor, the Offered Shares stated therein, at the price and on
the terms and conditions determined pursuant to the foregoing provisions within
45 days after their election.
(iv) If HarnCo gives the First Refusal Notice and the Company
and Investor, together, do not elect, pursuant to the foregoing provisions, to
purchase all of the Offered Shares, HarnCo may, at any time or times after the
45th day following receipt of the First Refusal Notice by the Company and
Investor (or such earlier date that the Company and Investor shall notify HarnCo
of their intent not to elect to purchase the Offered Shares) and for 30 days
thereafter (the "Disposition Period"), transfer the Offered Shares to the Person
or Persons specified in the First Refusal Notice, at the price and on the terms
and conditions therein, and any Offered Shares not so transferred by HarnCo
during the Disposition Period may not thereafter be transferred, except in
compliance with the foregoing provisions.
(v) For purposes of this Section 2(c), Investor may designate
any Person to exercise its right to acquire the Offered Shares.
(vi) The Company agrees not to effect any transfer of Offered
Shares by HarnCo until it has received evidence reasonably satisfactory to it
that the right of first refusal described above, if applicable to such transfer,
has been complied with.
(d) The restrictions in this Agreement shall not apply to any
transfer of Shares or Convertible Securities by HarnCo to any of its Affiliates
(an "Affiliate Transferee"). Any such Affiliate Transferee shall be entitled to
all of the rights of HarnCo, and shall be subject to all of the obligations of
HarnCo, under this Agreement. Any such Affiliate Transferee shall execute and
deliver to the Company a written agreement to be bound by the terms hereof as a
condition to such transfer.
Section 3. Registration Rights.
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(a) Piggyback Registration Rights.
(1) Right to Piggyback. Subject to the last sentence of this
subsection (1), whenever the Company proposes to register any Common Stock under
the Act and the registration form to be used may be used for the registration of
the Registrable Securities (other than a registration statement on Forms S-4 or
S-8 or any similar successor forms) (a " Piggyback Registration"), the Company
will give written notice to all holders of Registrable Securities, at least 30
days prior to the anticipated filing date, of its intention to effect such a
registration, which notice will specify the proposed offering price, the kind
and number of securities proposed to be registered, the distribution
arrangements and such other information that at the time would be appropriate to
include in such notice, and will, subject to subsection (a)(2) below, include in
such Piggyback Registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within 20 business
days after the delivery of the Company's notice; provided, however, that if, at
any time after giving written notice of its intention to register any securities
and prior to the effective date of the Registration Statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each holder and,
thereupon, (A) in the case of a determination not to register, the Company shall
be relieved of its obligation to register any Registrable Securities under this
Section 3(a)(1) in connection with such registration (but not from its
obligation to pay the registration expenses incurred in connection therewith)
and (B) in the case of a determination to delay registering, the Company shall
be permitted to delay registering any Registrable Securities under this Section
3(a)(1) during the period that the registration of such other securities is
delayed. The Company further agrees to supplement or amend a Registration
Statement if required by applicable laws, rules or regulations or by the
instructions applicable to the registration form used by the Company for such
Registration Statement. Each holder shall be permitted to withdraw all or any
part of such holder's Registrable Securities from a registration at any time
prior to the effective date of the Registration Statement by notifying the
Company of such withdrawal not later than two business days prior to such
effective date. Any holder of Registrable Securities who withdraws any such
securities from a registration shall pay to the Company any incremental expenses
of such registration specifically attributable to the withdrawal of such holder.
Except as may otherwise be provided in this Agreement, Registrable Securities
with respect to which such request for registration has been received will be
registered by the Company and offered to the public in a Piggyback Registration
pursuant to this Section 3 on the terms and conditions at least as favorable as
those applicable to the registration of shares of Common Stock to be sold by the
Company and by any other Person selling under such Piggyback Registration.
(2) Priority on Piggyback Registrations. If the managing underwriter
or underwriters, if any, advise the holders of Registrable Securities in writing
that in its or their reasonable opinion or, in the case of a Piggyback
Registration not being underwritten, the Company shall reasonably determine (and
notify the holders of Registrable Securities of such determination), after
consultation with an investment banker of nationally recognized standing, that
the number or kind of securities proposed to be sold in such registration
(including Registrable Securities to be included pursuant to subsection (a)(1)
above) will adversely affect
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the success of such offering, the Company will include in such registration the
number of securities, if any, which, in the opinion of such underwriter or
underwriters, or the Company, as the case may be, can be sold as follows: (A) if
such registration was initiated by the Company, (i) first, the shares the
Company proposes to sell and (ii) second, the Registrable Securities and other
shares of Common Stock requested to be included in such registration by the
holders thereof entitled to participate in such registration and (B) if such
registration was initiated as the result of the exercise of a demand
registration right of holders of Common Stock other than HarnCo (i) first, the
shares of Common Stock requested to be included in such registration by the
demanding holders pro rata among those requesting such registration on the basis
of the number of shares of Common Stock requested to be included and (ii)
second, shares to be issued and sold by the Company and shares held by Persons
other than the demanding holders and requested to be included in such
registration (including Registrable Securities). To the extent that the
privilege of including Registrable Securities or other shares of Common Stock in
any Piggyback Registration must be allocated among the holders thereof pursuant
to clause (A)(ii) or (B)(ii) above, the allocation shall be made pro rata based
on the number of shares of Common Stock that each such participant shall have
requested to include therein.
(3) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the Company will select a managing underwriter or
underwriters to administer the offering, which managing underwriter or
underwriters will be of nationally recognized standing.
(4) Expenses. In each Piggyback Registration, the Company shall pay
up to $25,000 in fees and expenses of one counsel for all holders of Registrable
Securities included therein.
(b) Demand Registration Rights.
(1) Right to Demand by HarnCo. On any two occasions after 270 days
after the first registration of shares of Common Stock under the Act (other than
any registrations on Forms S-4 or S-8 or any similar successor form) HarnCo may
make a written request of the Company for registration with the Securities and
Exchange Commission (the "SEC"), under and in accordance with the provisions of
the Act, of all or part of its Registrable Securities (a "Demand Registration");
provided, however, that (x) the Company need not effect a Demand Registration
unless such Demand Registration shall include a number of Registrable Securities
equal to at least 25% of the Shares held by HarnCo as of the date hereof
(subject to adjustment only for stock splits and recombinations and pro rata
stock dividends and the like), (y) the Company may, if the Board of Directors
determines in the exercise of its reasonable judgment that to effect such Demand
Registration at such time would require premature disclosure of corporate
developments or interfere with a material transaction, defer such Demand
Registration for a single period not to exceed 75 days, and (z) if the Company
elects to defer any Demand Registration pursuant to the terms of this sentence,
no Demand Registration shall be deemed to have occurred for purposes of this
Agreement during the term of such deferral. Within 10 days after receipt of the
request for a Demand Registration, the Company will send written notice (the
"Demand Notice") of such registration request and its intention to comply
therewith to each of the other holders of Registrable Securities and, subject to
subsection (3) below, the Company
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will include in such registration all Registrable Securities of such holders
with respect to which the Company has received written requests for inclusion
therein within 20 business days after the effectiveness of the Demand Notice.
All requests made pursuant to this subsection (b)(1) will specify the aggregate
number of Registrable Securities requested to be registered and will also
specify the intended methods of disposition thereof.
(2) Number of Demand Registrations. HarnCo shall be entitled to up
to two Demand Registrations as provided in subsection (b)(1) above, and the
expenses of each (including the fees and expenses of a total of one counsel for
HarnCo in an amount up to $25,000 per Demand Registration) shall be borne by the
Company. A Demand Registration shall not be counted as a Demand Registration
hereunder unless HarnCo has the right to sell at least 75% of the Registrable
Securities it originally requested to be registered and until such Demand
Registration has been declared effective by the SEC and maintained continuously
effective for a period of 90 days in the case of an immediate offering or 180
days in the case of a shelf registration or such shorter period when all
Registrable Securities included therein have been sold in accordance with such
Demand Registration.
(3) Priority on Demand Registrations. If in any Demand Registration
the managing underwriter or underwriters thereof (or in the case of a Demand
Registration not being underwritten, in the opinion of the holders of a majority
of the Registrable Securities included therein), advise the Company in writing
that in its or their reasonable opinion the number of securities proposed to be
sold in such Demand Registration exceeds the number that can be sold in such
offering without having an adverse effect on the success of the offering
(including, without limitation, any impact on the selling price or the number of
shares that any participant may sell), the Company will include in such
registration only the number of securities that, in the reasonable opinion of
such underwriter or underwriters (or holders of Registrable Securities, as the
case may be) can be sold without having an adverse effect on the success of the
offering as follows: (i) first, the Registrable Securities requested to be
included in such Demand Registration by HarnCo; and (ii) second, shares to be
issued and sold by the Company and shares held by Persons other than HarnCo and
requested to be included in such Demand Registration. To the extent that the
privilege of including shares of Common Stock in any Demand Registration must be
allocated among the holders thereof pursuant to clause (ii) above, the
allocation shall be made pro rata based on the number of shares of Common Stock
that each such participant shall have requested to include therein.
(4) Selection of Underwriters. If a Demand Registration is an
underwritten offering, the Company will select a managing underwriter or
underwriters of recognized national standing to administer the offering;
provided, however, that such underwriter or underwriters must be reasonably
satisfactory to HarnCo.
(c) Registration Procedures. With respect to any Piggyback
Registration or Demand Registration (generically, a "Registration"), the Company
will, subject to subsections (3)(a)(2) and (3)(b)(3) above, as expeditiously as
practicable:
(1) prepare and file with the SEC, within 90 days after mailing the
applicable notice, a Registration Statement or Registration Statements relating
to the applicable
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Registration on any appropriate form under the Act, which form shall be
available for the sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof; provided, however, that the
Company will include in any Registration Statement on a form other than Form S-1
all information that the holders of the Registrable Securities so to be
registered shall reasonably request, including all financial statements required
by the SEC to be filed with Form S-1, cooperate and assist in any filings
required to be made with the National Association of Securities Dealers, Inc.
("NASD"), and use its reasonable best efforts to cause such Registration
Statement to become effective; provided further, that before filing a
Registration Statement or Prospectus related thereto or any amendments or
supplements thereto, the Company will furnish to the holders of the Registrable
Securities covered by such Registration Statement and the underwriters, if any,
copies of all such documents proposed to be filed, which documents will be
subject to the reasonable review of such holders and underwriters and their
respective counsel;
(2) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep each
Registration Statement effective for the applicable period, or such shorter
period which will terminate when all Registrable Securities covered by such
Registration Statement have been sold; cause each Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Act; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus; the Company shall not be deemed to
have used its reasonable best efforts to keep a Registration Statement effective
during the applicable period if it voluntarily takes any action that would
result in selling holders of the Registrable Securities covered thereby not
being able to sell such Registrable Securities during that period unless such
action is required under applicable law, provided, however, that the foregoing
shall not apply to actions taken by the Company in good faith and for valid
business reasons, including without limitation the acquisition or divestiture of
assets, so long as the Company promptly thereafter complies with the
requirements of subsection (11) of this subsection (c), if applicable;
(3) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (B) of any request by the SEC for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (C) of
the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
(D) if at any time the representations and warranties of the Company
contemplated by subsection (14) below cease to be true and correct, (E) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (F) of the
happening of any event which makes any statement made in the Registration
Statement, the Prospectus or any document incorporated therein by reference
untrue or which requires the making of any changes
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in the Registration Statement, the Prospectus or any document incorporated
therein by reference in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(4) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(5) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an underwritten
offering, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and the holders of a
majority of the Registrable Securities being sold agree should be included
therein relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters, the purchase
price being paid therefor by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective amendment promptly after
being notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment;
(6) furnish to each selling holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of the
Registration Statement and any amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(7) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such selling holder of Registrable Securities and underwriters may reasonably
request; the Company consents to the use of each Prospectus or any amendment or
supplement thereto by each of the selling holders of Registrable Securities and
the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or supplement
thereto;
(8) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or "blue sky" laws of such jurisdictions as any seller or
underwriter reasonably requests in writing, and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement; provided,
however, that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject, unless this limitation would
materially adversely impair the ability of HarnCo to sell the Registrable
Securities covered by the Registration Statement;
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(9) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and to be in such denominations and registered
in such names as the managing underwriters may request at least two business
days prior to any sale of Registrable Securities to the underwriters;
(10) use its reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
(11) upon the occurrence of any event contemplated by subsection
(3)(F) above, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(12) cause all Registrable Securities covered by any Registration
Statement to be listed on each securities exchange on which similar securities
issued by the Company are then listed, or cause such Registrable Securities to
be authorized for trading on the Nasdaq National Market if any similar
securities issued by the Company are then so authorized, if requested by the
holders of a majority of such Registrable Securities or the managing
underwriters, if any;
(13) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the applicable Registration Statement;
(14) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection, upon the request of the holders of a majority of the Common
Stock entitled to participate in any Registration, (A) make such representations
and warranties to the holders of such Common Stock and the underwriters, if any,
in form, substance and scope as are customarily made by issuers to underwriters
in primary underwritten offerings; (B) obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and the
holders of a majority of the Common Stock being sold) addressed to each selling
holder and the underwriters, if any, covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by such holders and underwriters; (C) obtain "comfort" or
"procedures" letters and updates thereof from the Company's independent
certified public accountants addressed to the selling holders of Common Stock
and the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "comfort" or "procedures" letters to
underwriters in connection with primary underwritten offerings; (D) if an
underwriting agreement is entered into, the same shall set forth in full the
indemnification provisions and procedures set forth in subsection (f) below with
respect to all
10
parties to be indemnified pursuant to said subsection; and (E) the Company shall
deliver such documents and certificates as may be requested by the holders of a
majority of the Common Stock being sold and the managing underwriters, if any,
to evidence compliance with subsection 3(F) above and with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company;
(15) make available for inspection by a representative of HarnCo,
any underwriter participating in any disposition pursuant to such Registration,
and any attorney or accountant retained by the sellers or underwriter, all
relevant financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information, reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
Registration Statement; provided, however, that any records, information or
documents that are designated by the Company in writing as confidential shall be
kept confidential by such Persons unless disclosure of such records, information
or documents is required by court or administrative order or any regulatory body
having jurisdiction;
(16) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
security holders, earnings statements satisfying the provisions of Section 11(a)
of the Act, no later than 45 days after the end of any 12-month period (or 90
days, if such period is a fiscal year) (A) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in a firm or
best efforts underwritten offering, or (B) if not sold to underwriters in such
an offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration Statement, which
statements shall cover said 12-month periods; and
(17) promptly prior to the filing of any document that is to be
incorporated by reference into any Registration Statement or Prospectus (after
initial filing of the Registration Statement), provide copies of such document
to counsel to the selling holders of Registrable Securities and to the managing
underwriters, if any, make the Company's representatives available for
discussion of such document and make such changes in such document prior to the
filing thereof as counsel for such selling holders or underwriters may
reasonably request.
The Company may require each seller of Registrable Securities as to
which any Registration is being effected to furnish to the Company such
information regarding the proposed distribution of such securities as the
Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subsection (3)(F) of this
subsection (c), such holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement until such
holder's receipt of copies of the supplemented or amended Prospectus as
contemplated by subsection (11) of this subsection (c), or until it is advised
in writing (the "Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus, and, if so
11
directed by the Company, such holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time periods referred to in subsection (2) of this
subsection (c) shall be extended by the number of days during the period from
and including the date of the giving of such notice to and including the date
when each seller of Registrable Securities covered by such Registration
Statement shall have received the copies of the supplemented or amended
prospectus contemplated by subsection (11) of this subsection (c) or the Advice.
(d) Restrictions on Public Sale.
(1) Public Sale by Holders of Registrable Securities. To the extent
not inconsistent with applicable law, each party whose Registrable Securities
are included in a Registration Statement hereunder, if requested by the managing
underwriter or underwriters for such Registration, agrees not to effect any
public sale or distribution of Registrable Securities, including a sale pursuant
to Rule 144, during the 10 business days prior to, and during the 180-day period
(or such shorter period as may be agreed to by such underwriters) beginning on,
the effective date of a Registration Statement pursuant to such Piggyback
Registration or Demand Registration (except as part of such Piggyback or Demand
Registration).
(2) Public Sale by the Company and Others. If requested by the
managing underwriter or underwriters for any underwritten Registration, or by
the holder or holders initially requesting a Demand Registration that is not
being underwritten, neither the Company nor Investor will effect any public sale
or distribution of Common Stock for its own account (or securities convertible
into or exchangeable or exercisable for Common Stock) during the 10 business
days prior to, and during the 180-day period beginning on, the effective date of
such Registration, except pursuant to such Registration.
(3) Other Registrations. If the Company has previously filed a
Registration Statement with respect to Registrable Securities, and if such
previous Registration has not been withdrawn or abandoned, the Company will not
file or cause to be effected any other registration of any of its Common Stock
(or securities convertible into or exchangeable for, or options to purchase,
Common Stock) under the Act (except on Forms S-4 or S-8 or any similar successor
form), whether on its own behalf or at the request of any holder or holders of
Common Stock (or securities convertible into or exchangeable or exercisable for
Common Stock), until a period of at least 90 days has elapsed from the effective
date of such previous Registration; provided, however, that if the holders of
50% or more of the aggregate number of Registrable Securities included in such
previous Registration shall agree in writing, such period may be shortened by
the Company but not to a period shorter than one month.
(e) Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement will be borne by the Company,
including, without limitation, all registration and filing fees, the fees and
expenses of the counsel and accountants for the Company (including the expenses
of any "comfort" or "procedures" letters and special audits required by or
incident to the performance of such persons), all other costs and
12
expenses of the Company incident to the preparation, printing and filing under
the Act of the Registration Statement (and all amendments and supplements
thereto) and furnishing copies thereof and of the Prospectus included therein,
the costs and expenses incurred by the Company in connection with the
qualification of the Registrable Securities under the state securities or "blue
sky" laws of various jurisdictions, the costs and expenses associated with
filings required to be made with the NASD (including, if applicable, the fees
and expenses of any "qualified independent underwriter" and its counsel as may
be required by the rules and regulations of the NASD), the costs and expenses of
listing the Registrable Securities for trading on a national securities exchange
or authorizing them for trading on the Nasdaq National Market and all other
costs and expenses incurred by the Company in connection with any Registration
hereunder; provided, however, that, except as otherwise provided in subsection
(a)(4) and (b)(2) above, the Company shall not bear the costs and expenses of
HarnCo or any other holder of Registrable Securities for underwriters'
commissions or expenses, brokerage fees, transfer taxes, or the fees and
expenses of any counsel, accountants or other representative retained by HarnCo
or any other holder of Registrable Securities.
(f) Indemnification.
(1) Indemnification by the Company. The Company agrees to indemnify
and hold harmless (i) each Stockholder and (ii) each Person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") any Stockholder
(any of the Persons referred to in this clause (ii) being hereinafter referred
to as a "controlling person") and (iii) the respective officers, directors,
partners, employees, representatives and agents of any Stockholder or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Stockholder"), to the fullest
extent lawful, from and against any and all losses, claims, damages, liabilities
and judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (or any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except, with respect to any Stockholder,
insofar as such losses, claims, damages, liabilities or judgments (1) are caused
by any such untrue statement or omission or alleged untrue statement or omission
based upon information furnished in writing to the Company by such Stockholder
expressly for use therein or (2) with respect to any preliminary prospectus,
result from the fact that such Stockholder sold Common Stock to a Person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the final prospectus, as amended or supplemented, if the Company
shall have previously furnished copies thereof to the Stockholders in accordance
with this Agreement and the final prospectus, as amended or supplemented, would
have corrected such untrue statement or omission.
In case any action shall be brought against any of the Indemnified
Stockholders or any Person controlling any of the Indemnified Stockholders,
based upon any Registration Statement or Prospectus, or any amendment or
supplement thereto, and with respect to which indemnity may be sought against
the Company, such Indemnified Stockholder (or the Indemnified Stockholder
controlled by such controlling person) shall promptly notify the
13
Company in writing and the Company shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified
Stockholder and payment of all fees and expenses. Such Indemnified Stockholder
or any such controlling person shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be paid by such Indemnified Stockholder, unless
(i) the employment of such counsel shall have been specifically authorized in
writing by the Company, (ii) the Company shall have failed to assume the defense
and employ counsel or (iii) the named parties to any such action (including any
impleaded parties) include both such Indemnified Stockholder or such controlling
person and the Company and such Indemnified Stockholder or such controlling
person shall have been advised by such counsel that it would be inappropriate
for the same counsel to represent the Indemnified Stockholder and the Company
(in which case the Company shall not have the right to assume the defense of
such action on behalf of such Indemnified Stockholder or such controlling
person, it being understood, however, that the Company shall not, in connection
with any one such action or separate but substantially similar or related
actions 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 (in addition to any local counsel) for the Indemnified
Stockholders and all controlling persons, which firm shall be designated in
writing by the Indemnified Stockholders and that all such fees and expenses
reasonably incurred shall be reimbursed as they are incurred). The Company shall
not be liable for any settlement of any such action effected without the written
consent of the Company, but if settled with the written consent of the Company,
the Company agrees to indemnify and hold harmless any Indemnified Stockholder
and any such controlling person from and against any amounts payable pursuant to
such written consent in connection with such settlement. Notwithstanding the
immediately preceding sentence, if in any case where the fees and expenses of
counsel are at the expense of the Company and an Indemnified Stockholder shall
have requested the Company to reimburse such Indemnified Stockholder for such
fees and expenses of counsel as incurred, the Company agrees that they shall be
liable for any settlement of any action effected without their written consent
if (i) such settlement is entered into more than 30 business days after the
receipt by the Company of the aforesaid request and (ii) the Company shall have
failed to reimburse such Indemnified Stockholder in accordance with such request
for reimbursement prior to the date of such settlement. The Company shall not,
without the prior written consent of such Indemnified Stockholder, effect any
settlement of any pending or threatened proceeding in respect of which such
Indemnified Stockholder is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Stockholder, unless such settlement
includes an unconditional release of such Indemnified Stockholder from all
liability on claims that are the subject matter of such proceeding at no cost to
such Indemnified Stockholder.
(2) Indemnification by Stockholders. Each Stockholder agrees to
indemnify and hold harmless the Company and any Person controlling the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company to the each of
the Indemnified Stockholders, but only with reference to information relating to
such Stockholder that was furnished in writing by such Stockholder expressly for
use in any Registration Statement. In no event shall the liability of any
selling Stockholder hereunder be greater in amount than the dollar amount of the
proceeds
14
received by such Stockholder upon the sale of the Common Stock giving rise to
such indemnification obligation.
(3) Contribution. If the indemnification provided for in this
Section 3(f) is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
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 and judgments in such proportion as
is appropriate to reflect the relative fault of the Company, on the one hand,
and such Stockholder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and such Stockholder, on the other hand,
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 Company, on the
one hand, or such Stockholder, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and each Stockholder agree that it would not be just and
equitable if contribution pursuant to this Section 3(f)(3) were determined by
pro rata allocation (even if the Stockholders were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The losses, claims, damages, liabilities or judgments of an
indemnified party referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim prior to the indemnifying
party's assumption of the defense thereof or subsequent thereto to the extent
permitted by the second sentence of the second paragraph of Section 3(f) hereof.
Notwithstanding the provisions of this Section 3(f), none of the Stockholders
(and their related Indemnified Stockholders) shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the net proceeds
received by such Stockholder with respect to the sale of shares of Common Stock
exceeds the amount of any damages which such Stockholder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. 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. The
Stockholders' obligations to contribute pursuant to this Section 3(f)(3) are
several in proportion to the respective amount of Common Stock sold by each of
the Stockholders pursuant to any Registration and not joint.
(g) Rule 144 or 144A. The Company agrees that at all times after it
has filed a Registration Statement pursuant to the requirements of the Act
relating to any class of equity securities of the Company, it will file in a
timely manner all reports required to be filed by it pursuant to the Act and the
Exchange Act and will take such further action as any holder of Registrable
Securities may reasonably request in order that such holder may effect sales of
Shares pursuant to Rule 144. At any reasonable time and upon request of HarnCo,
the Company
15
will furnish HarnCo and others with such information as may be necessary to
enable HarnCo to effect sales of Common Stock pursuant to Rule 144 under the Act
and will deliver to HarnCo a written statement as to whether the Company has
complied with such requirements. Notwithstanding the foregoing, the Company may
deregister any class of its equity securities under Section 12 of the Exchange
Act or suspend its duty to file reports with respect to any class of its
securities pursuant to Section 15(d) of the Exchange Act if it is then permitted
to do so pursuant to the Exchange Act and the rules and regulations thereunder.
(h) Participation in Underwritten Registrations. No Stockholder may
participate in any underwritten Registration hereunder unless such Stockholder
(i) agrees to sell its Shares of Common Stock on the basis provided in any
underwriting arrangements approved by the persons entitled hereunder to select
the underwriter pursuant to subsections (3)(a)(3) and (3)(b)(4) above, and (ii)
accurately completes in a timely manner and executes all questionnaires, powers
of attorney, underwriting agreements, lock-up agreements and other documents
customarily required under the terms of such underwriting arrangements.
(i) Other Registration Rights. The Company will not grant to any
Person (including HarnCo) any demand or piggyback registration rights with
respect to the Common Stock of the Company other than demand or piggyback
registration rights that are not inconsistent with the terms of this Section 3.
To the extent that the Company grants to any Person registration rights with
respect to Convertible Securities of a class then held by HarnCo, the Company
will confer comparable rights to HarnCo with respect to such Convertible
Securities.
(j) Termination. HarnCo's rights pursuant to this Section 3 shall
terminate upon the last to occur of the following: (i) the third anniversary of
an initial public offering of the Common Stock, (ii) such time as HarnCo is
eligible to sell its Shares under Rule 144(k) under the Act, and (iii) such time
as the Company has established a market capitalization of at least $250,000,000,
having at least $100,000,000 of publicly traded Common Stock. The provisions of
this Section 3 shall terminate as to any Registrable Security on the date such
Registrable Security is sold pursuant to an effective Registration Statement or
pursuant to Rule 144 (or any similar provision then in force under the Act).
Section 4. Operating Policies.
(a) Board of Directors.
(i) The Board of Directors shall consist of not less than
three (3) Directors. HarnCo (or its successors or permitted assigns) shall have
the right to nominate one (1) director, reasonably acceptable to Investor.
(ii) HarnCo (or its successors or permitted assigns) shall
have the right to replace its existing nominee at any time with another nominee
reasonably acceptable to Investor. Investor shall not vote its Shares to remove
HarnCo's nominee elected as Director unless HarnCo has agreed to that nominee's
removal.
16
(iii) Investor shall vote its Shares to elect HarnCo's
nominee. Meetings of the Board of Directors shall be governed in accordance with
this Agreement and the Company's Certificate of Incorporation and Bylaws.
(iv) HarnCo's rights pursuant to this Section 4(a) shall
terminate in the event that a third party acquires control of Harnischfeger
Industries, Inc. and such third party then or thereafter, directly or
indirectly, engages in the Competing Business on a significant level (a "Sale").
(b) Insurance. The Company shall maintain in full force and effect a
policy or policies of insurance issued by insurers of recognized responsibility,
insuring it and its properties and business against such losses and risks, and
in such amounts, as are customary in the case of an entity engaged in the same
or substantially similar business as the Company.
(c) Management Services. The Stockholders agree and acknowledge that
Chartwell Investments Inc., or an affiliate thereof, ("Chartwell") shall provide
the Company with such services related to the operations of the Company and
other management services necessary or desirable for its conduct of business in
consideration for payment of compensation to Chartwell on terms and conditions
to be agreed between the Company and Chartwell. Notwithstanding the foregoing,
the Compensation arrangements to be entered into at the closing of the
Recapitalization Agreement shall provide no greater than (i) closing fees of 1%
of total committed debt and equity plus expense reimbursement and (ii)
management fees of $1,000,000 per annum plus expense reimbursement.
(d) Pay Taxes and Other Liabilities. The Company shall pay and
discharge, before the same become delinquent and before penalties accrue
thereon, all taxes, assessments and governmental charges upon or against it or
any of its properties, except to the extent and so long as (i) the same are
being contested in good faith and by appropriate proceedings in such manner as
not to cause any materially adverse effect upon its financial condition or the
loss of any right of redemption from any sale thereunder and (ii) it shall have
set aside on its books reserves (segregated to the extent required by generally
accepted accounting principles) deemed by it adequate with respect thereto.
(e) Corporate Existence. The Company shall at all times preserve and
keep in full force and effect its corporate existence and all rights and
franchises (including licenses, authorizations and permits material to its
business.
(f) HarnCo Consent for Certain Actions. The following actions will
require HarnCo's consent:
(i) (A) Repurchases by the Company of Common Stock or
Convertible Securities (other than (1) repurchases of Shares and Convertible
Securities from Investor and HarnCo on a pro rata basis and (2) repurchases of
Common Stock or Convertible Securities from departing management members); and
17
(B) repurchases of Series B Preferred Stock and Series C
Preferred Stock from Investor and HarnCo on a pro rata basis based on the
aggregate liquidation value of the shares of such series held by them.
(ii) Post-closing affiliate and insider transactions
(including changes in management fees), other than transactions approved by the
Board which are fair and reasonable and at market terms and conditions.
(iii) Granting conflicting rights or entering into conflicting
agreements (other than covenants in third-party debt documents) relative to this
Agreement.
(g) Books and Records. The Company shall keep the books and records
of the Company in accordance with generally accepted accounting principles as
applied in the United States. The Company shall furnish each Stockholder:
(i) promptly after transmission, copies of (x) all reports,
officers' certificates, and other information furnished by the Company to equity
holders of the Company generally and (y) all reports filed by the Company or its
officers and directors with any securities exchange or the SEC; and
(ii) With reasonable promptness, such other information
relating to the finances, properties, business and affairs of the Company, as
any Stockholder reasonably may request from time to time;
provided, however, that HarnCo's right to receive non-public
information shall terminate in the event of a Sale (as defined in Section 4(a)
above).
Section 5. Legends.
(i) Investor and HarnCo agree that each certificate representing
shares of Common Stock shall bear the following legends until such time as the
same are no longer applicable:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM."
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF, AND ARE ENTITLED TO THE BENEFITS SET FORTH
IN, A STOCKHOLDERS AND REGISTRATION RIGHTS AGREEMENT DATED AS OF
MARCH 30, 1998, A COPY OF WHICH IS ON FILE AT THE OFFICE OF MMH
HOLDINGS,
18
INC. MMH HOLDINGS, INC. WILL FURNISH A COPY OF SUCH STOCKHOLDERS AND
REGISTRATION RIGHTS AGREEMENT TO THE RECORD HOLDER HEREOF WITHOUT
CHARGE UPON WRITTEN REQUEST TO MMH HOLDINGS, INC. AT ITS PRINCIPAL
PLACE OF BUSINESS OR REGISTERED OFFICE."
Section 6. Specific Performance, Etc. The Company, Investor and
HarnCo, in addition to being entitled to exercise all rights provided herein, in
the Company's Certificate of Incorporation or granted by law, including recovery
of damages, will be entitled to specific performance of its rights under this
Agreement. The Company, Investor and HarnCo agree that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance that a remedy at law would be adequate.
Section 7. Termination. Except where an earlier time is provided
herein, the rights and obligations of the parties other than those set forth in
Sections 2(b) and 3 (which shall survive for the periods indicated therein)
shall terminate upon a Termination Event.
Section 8. Miscellaneous.
(a) Notices. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by telecopy, overnight courier or
registered or certified mail (return receipt requested) postage prepaid to the
parties at the following addresses (or such other address for any party as shall
be specified by like notice, provided, however, that notices of a change of
address shall be effective only upon receipt thereof). Notice sent by mail shall
be effective five days after mailing.
(i) If to the Company at:
MMH Holdings, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
(ii) If to the Investor at:
MHE Investments, Inc.
c/o Chartwell Investments Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
19
with copies to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
(iii) If to HarnCo at:
Harnischfeger Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers of or consents to departures from the provisions
hereof may not be given unless approved by the Company in writing and the
Company has obtained the written consent of Investor and HarnCo. No action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as waiver of any preceding
or succeeding breach and no failure by any party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
(c) Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same instrument.
20
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
(f) Governing Law. The validity, performance, construction and
effect of this Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to agreements made and to be
performed therein. The parties hereto agree to submit to the jurisdiction of the
courts of the State of Delaware in any action or proceeding arising out of or
relating to this Agreement.
(g) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(h) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings other than those set forth or referred to herein with
respect to the registration rights granted by the Company with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
Section 9. Definitions.
The following terms, as used herein, have the following respective
meanings:
Affiliate shall mean (i) any person or entity directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company (including, without limitation, each of Investor and its Related
Parties), (ii) any spouse, immediate family member or other relative who has the
same principal residence of any person described in clause (i) above, (iii) any
trust in which any such persons or entities described in clause (i) or (ii)
above has a beneficial interest and (iv) any corporation or other organization
of which any such persons or entities described in clause (i) or (ii) above
collectively own more than 50% of the equity of such entity; provided, however,
that in no event shall HarnCo be deemed to be an Affiliate of the Company. For
purposes of this definition, ownership of 10% or more of the voting common
equity of a person or entity shall be deemed to be control of such person or
entity.
Common Stock shall mean the shares of common stock, par value $.01
per share, of the Company and all other classes of the Company's voting or
non-voting common stock which may exist on the date of this Agreement or which
may be created in the future.
Competing Business shall mean a business or enterprise that is
competitive with the MHE Business (as defined in the Recapitalization Agreement)
as conducted on the date of the Confidentiality and Non-Competition Agreement,
attached as Exhibit B to the Recapitalization Agreement and to be executed in
connection with the closing thereof; provided, that, Competing Business will not
include inspection, repair, modernization, maintenance or
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other services related to mining, paper or any other type of equipment (except
industrial cranes, hoists, winches, and other related types of industrial
"through the air" material handling equipment).
Convertible Securities shall mean securities convertible into or
exchangeable for, or options to purchase, Common Stock.
Covered Convertible Securities shall mean Convertible Securities
that have been issued to holders of Shares pursuant to Section 1 plus any
additional Convertible Securities issued to holders of Shares or Covered
Convertible Securities as part of a dividend on, subdivision of, or other
distribution in respect of, Shares or any type of Convertible Security that is
made pro rata to all holders of such Shares or type of Convertible Security.
Exempt Issuance shall mean (i) any issuance of Common Stock or
Convertible Securities to officers, employees, consultants or directors of the
Company or any Subsidiary thereof primarily for compensatory purposes, (ii) any
issuance, pro rata to all holders of Common Stock, of Common Stock or
Convertible Securities as a dividend on, subdivision of, or other distribution
in respect of, the Common Stock and (iii) any issuance of Common Stock or
Convertible Securities which are sold in an underwritten offering registered
under the Securities Act of 1933, as amended (the "Act").
Exempt Transfer shall mean (i) transfers by Investor to its Related
Parties; (ii) transfers by Investor's Related Parties to Investor; (iii)
transfers by Investor or any of Investor's Related Parties to any other Person
pursuant to an effective registration statement under the Act and/or pursuant to
Rule 144 under the Act; (iv) other transfers by Investor to any unaffiliated
third party in a cumulative aggregate amount not to exceed 10% of the total
number of shares of Common Stock outstanding on such date; (v) any transfers by
Investor or any of Investor's Related Parties pursuant to a merger,
consolidation, reorganization, recapitalization or other similar transaction
involving an unaffiliated third party in which all holders of such Common Stock
or Convertible Securities are offered the right to receive the same
consideration, and on the same terms, as Investor or such Related Party and (vi)
transfers by Investor to any other Person in connection with the closing of the
transactions contemplated by the Recapitalization Agreement; provided that any
such Related Party transferee shall be entitled to all of the rights of, and
subject to all of the obligations of, Investor under this Agreement; and further
provided that such Related Party shall agree in writing to become bound by the
terms of this Agreement as a condition to such transfer.
Family Member shall mean, for any individual person, the spouse or
sibling of such person and such person's and his or her spouse's or siblings'
respective estates, lineal descendants, adoptive children, heirs, executors,
personal representatives, administrators and trusts exclusively for any of their
benefit or exclusively for the benefit of their respective spouses, siblings,
estates, lineal descendants, adoptive children or heirs.
Fully Diluted Shares shall mean all issued and outstanding shares of
Common Stock and all shares of Common Stock issuable upon conversion, exchange
or exercise of Convertible Securities.
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Independent Third Party means any person (a) who, immediately prior
to the contemplated transaction, does not own in excess of 10% of the Common
Stock on a fully-diluted basis, (b) who is not controlling, controlled by or
under common control with (1) any such 10% owner of the Common Stock, (2)
Investor or (3) any Related Party and (c) who is not a Family Member of any such
person.
Initial Shares shall mean the Shares owned by Investor and HarnCo as
of the date hereof.
Person shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
Prospectus shall mean the Prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to the Prospectus, including post-effective amendments, and all material
incorporated by reference in such Prospectus.
Registrable Securities means the Shares, but with respect to any
Share, only until such time as such Share (i) has been effectively registered
under the Act and disposed of in accordance with the Registration Statement
covering it or (ii) has been sold to the public pursuant to Rule 144 (or any
similar provision then in force) under the Act and the legend referred to in
Section 5 has been removed or the Company has authorized the removal thereof
from the certificate representing such Share.
Registration Statement means any registration statement of the
Company filed pursuant to the Act and which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
Prospectus amendments and supplements to such Registration Statement, including
post-effective amendments, and all exhibits and all material incorporated by
reference in such Registration Statement.
Related Party with respect to Investor shall mean: (i) any partner,
controlling stockholder, Subsidiary or Family Member (in the case of an
individual) of Investor or (ii) any trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, owners or Persons directly or
indirectly beneficially holding a 51% or more controlling interest of which
consist of Investor and/or such other Persons referred to in the immediately
preceding clause (i).
Shares shall mean the Initial Shares plus (i) any additional shares
of Common Stock issued to holders of Shares as part of a dividend on,
subdivision of, or other distribution in respect of Common Stock that is made
pro rata to all holders of Common Stock, (ii) any additional shares of Common
Stock issued to holders of Shares or Covered Convertible Securities pursuant
Section 1 hereof, and (iii) any additional shares of Common Stock issued to
holders of Covered Convertible Securities upon conversion of such Covered
Convertible Security.
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Subsidiary shall mean with respect to any Person, (i) a corporation
a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries thereof or such
Person and one or more Subsidiaries thereof, directly or indirectly, at the date
of determination thereof has at least a majority ownership interest and the
power to direct the policies, management and affairs thereof.
Termination Event shall mean either (i) a public offering of Common
Stock pursuant to an effective registration statement under the Act covering the
offer and sale of Common Stock for the account of the Company, in which the
aggregate proceeds to the Company equal or exceed $50,000,000, or (ii) HarnCo
ceasing to own at least 5% of the Company's outstanding voting Common Stock.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Stockholders and
Registration Rights Agreement as of the date first above written.
MMH HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
MHE INVESTMENTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Number of shares of Common Stock held:
____________________________________________
HARNISCHFEGER CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Secretary
Number of shares of Common Stock held:
____________________________________________