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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: June 25, 1996
MORRISON KNUDSEN CORPORATION
Commission File Number 1-8889
A Delaware corporation
IRS Employer Identification No. 82-0393735
MORRISON KNUDSEN PLAZA, BOISE, IDAHO 83729
208/386-5000
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MORRISON KNUDSEN CORPORATION
COMMISSION FILE NUMBER 1-8889
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On June 25, 1996, Morrison Knudsen Corporation, a Delaware corporation (the
"Registrant") filed in the United States Bankruptcy Court for the District of
Delaware a petition for reorganization under Chapter 11 of title 11 of the
United State Code, Case Number 96-1006(PJW) (the "Chapter 11 Filing"). The
Registrant is managing its business as debtor-in-possession subject to Court
approval for certain actions of the Registrant. See the press release dated
June 25, 1996 filed as Exhibit 99.1 hereto and incorporated herein by this
reference.
ITEM 5. OTHER MATERIAL IMPORTANT EVENTS.
On June 25, 1996, the Registrant announced that it has entered into a
definitive agreement regarding (i) the amount of intercompany indebtedness owed
by MK Rail Corporation ("MK Rail") to the Registrant and (ii) providing for an
amendment to the MK Rail Rights Plan which would allow the Registrant to proceed
with its Chapter 11 plan of reorganization. See the press release dated June
25, 1996 filed as Exhibit 99.2 hereto, the MK Rail Note Cancellation and
Restructuring Agreement filed as Exhibit 10.1 hereto and the MK Rail
Stockholders Agreement filed as Exhibit 10.2 hereto, each of which is
incorporated herein by this reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
10.1 MK Rail Note Cancellation and Restructuring Agreement
dated as of June 20, 1996 among the Registrant, MK Rail
and the Registrant's wholly owned subsidiary, Morrison
Knudsen Corporation, an Ohio corporation ("MKO").
10.2 MK Rail Stockholders Agreement dated as of June 20, 1996,
between MK Rail and MKO.
99.1 Registrant's press release dated June 25, 1996 relating
to the filing of Registrant's plan of reorganization.
99.2 Registrant's press release dated June 25, 1996 relating
to the MK Rail intercompany indebtedness and the
amendment to the MK Rail Rights Plan.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MORRISON KNUDSEN CORPORATION
June 25, 1996 By: /s/ Stephen G. Hanks
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Stephen G. Hanks
Executive Vice President and
Chief Legal Officer
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EXHIBIT 10.1
NOTE CANCELLATION AND RESTRUCTURING AGREEMENT
THIS NOTE CANCELLATION AND RESTRUCTURING AGREEMENT (this "AGREEMENT"), made
and entered into as of the 20 day of June, 1996 by and among MK Rail
Corporation, a Delaware corporation ("MK RAIL"), Morrison Knudsen Corporation,
an Ohio corporation ("MKO"), and Morrison Knudsen Corporation, a Delaware
corporation ("MKC").
W I T N E S S E T H:
WHEREAS, MKO owns approximately sixty-three percent (63%) of the issued and
outstanding Common Stock of MK Rail;
WHEREAS, MKC owns all of the outstanding Common Stock of MKO;
WHEREAS, pursuant to a Global Settlement Agreement (the "GLOBAL SETTLEMENT
AGREEMENT") dated as of June 15, 1995 between MKO and MKC (collectively, "MK")
and MK Rail, MKO and MK Rail entered into a Note Agreement dated as of June 26,
1995 (the "NOTE AGREEMENT") under which MK Rail issued a Note to MKO dated June
26, 1995 in the original principal amount of $52,200,000 (the "NOTE");
WHEREAS, the Note is subordinate to MK Rail's current credit facilities
with its senior lenders as well as any replacement financing thereof (the
"SENIOR DEBT") pursuant to and in accordance with the Note Agreement and, in
connection with its current credit facilities, pursuant to the Loan and Security
Agreement (the "BABC LOAN AGREEMENT") dated as of August 31, 1995 between MK
Rail and its subsidiaries and BankAmerica Business Credit, Inc. ("BABC"), as
agent for the financial institutions named therein, as amended, and a related
Subordination Agreement (the "SUBORDINATION AGREEMENT") among MKC, BABC, as
agent, and MK Rail;
WHEREAS, MK Rail has not made any cash payment under the Note due to
restrictions contained in the BABC Loan Agreement and the Subordination
Agreement;
WHEREAS, as a result of certain adjustments, as of the date hereof the
principal amount of the Note is $52,094,568.
WHEREAS, as of May 24, 1996, interest in the amount of $4,120,101 had
accrued on the Note and such interest plus all interest accrued on the Note
since said date has not been paid;
WHEREAS, MK is presently planning to implement a recapitalization of MK
(the "RECAPITALIZATION") pursuant to a Plan of Reorganization (the "PLAN") to be
filed with the United
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States Bankruptcy Court for the District of Delaware (the "BANKRUPTCY COURT"), a
draft of which plan (the "DRAFT PLAN") dated June 10, 1996 has been delivered to
MK Rail;
WHEREAS, pursuant to the Plan, among other things, it is contemplated that
the Common Stock of MK Rail presently held by MKO will be distributed to certain
holders of debt obligations of MKO and to a liquidating trust to be established
as a part of the Plan;
WHEREAS, MK has requested that MK Rail make certain amendments to the
Rights Agreement between MK Rail and Chemical Mellon Shareholder Services,
L.L.C. (the "RIGHTS AGENT") dated as of January 19, 1996, as amended (the
"RIGHTS PLAN"), to facilitate the obtaining by MK of the acceptances required to
confirm the Plan;
WHEREAS, in connection with the Recapitalization and to facilitate the
obtaining by MK of the acceptances needed to confirm the Plan, MK has requested
that certain registration rights be granted MKO that are assignable to the
parties that receive common stock of MK Rail as a part of the Plan;
WHEREAS, MK Rail is willing to grant such registration rights and to make
the requested amendments to the Rights Plan in consideration for the agreement
of MKO to certain corporate governance provisions that are binding on its
transferees and in consideration for the agreement of MK to cancel the Note in
full pursuant and subject to the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements set forth below, the parties hereto, intending to be legally bound,
covenant and agree as follows:
1. CONCURRENT ACTIONS. Concurrently with the execution and delivery
hereof, the following have occurred:
1.1 STOCKHOLDERS AGREEMENT. MK Rail and MKO have executed and delivered a
Stockholders Agreement (the "STOCKHOLDERS AGREEMENT") in the form attached
hereto as Exhibit A.
1.2 RIGHTS AMENDMENT. MK has received a copy of a Second Amendment to
Rights Agreement (the "RIGHTS PLAN AMENDMENT") in the form attached hereto as
Exhibit B executed by MK Rail and the Rights Agent.
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2. CONDITIONS TO EFFECTIVENESS AND ACTIONS RELATING THERETO.
2.1 CONDITIONS TO EFFECTIVENESS. This Agreement and the Stockholders
Agreement shall not be in force or effect until the following conditions have
been satisfied (at which time they shall, automatically and without necessity of
any further action by MK, MK Rail or any other person or entity, be in full
force and effect):
(a) MK Rail has received a written consent or written consents (the
"MK CREDITOR CONSENT") in form and substance reasonably satisfactory to MK Rail
containing language substantially similar to the language set forth in Exhibit C
hereto executed by the MK Requisite Creditors (as defined herein) whereby the MK
Requisite Creditors consent to the execution and delivery by MKC and MKO of this
Agreement and the Stockholders Agreement and to the consummation of the
transactions contemplated hereby and thereby and undertake to support said
transactions. For purposes hereof, the term "MK REQUISITE CREDITORS" shall mean
the following creditors of MK: (a) creditors in each of the classes of
creditors referenced as Classes MK-3, MK-6, MKO-3, MKO-6, S-3 and S-6 in the
Draft Plan that constitute a majority in number and that hold at least two-
thirds (2/3) in amount of the claims of each such class voting to accept or
reject the Draft Plan and (b) the Majority Lenders, as defined in the Amended
and Restated Override Agreement dated on October 10, 1995 among MKC, MKO, the
Banks and Other Financial Institutions Named Therein, Mellon Bank, N.A., as
agent for said banks and financial institutions and Bank of America National
Trust and Savings Association, as Metra Agent (the "OVERRIDE AGREEMENT").
(b) CONSENT OF BABC. MKC and MKO shall have received a written
consent in form and substance reasonably satisfactory to MKC and MKO (the "BABC
CONSENT") executed by BABC, acting as agent for MK Rail's secured lenders,
whereby MK Rail's secured lenders consent to the execution and delivery of this
Agreement and the Stockholders Agreement and to the consummation of the
transactions contemplated hereby and thereby.
(c) MKO shall have presented or caused to be presented to MK Rail the
certificate or certificates evidencing the shares of Common Stock of MK Rail
owned by MKO and a legend shall have been placed thereon in accordance with the
Stockholders Agreement.
2.2 BEST EFFORTS TO OBTAIN CONSENTS. Each party agrees to use its best
efforts to obtain the consents required to satisfy the conditions set forth in
Section 2.1 hereof as promptly as practicable.
3. MOTION TO BANKRUPTCY COURT. MK shall, within ten (10) days after
filing its initial petition in the Bankruptcy Court, submit to the Bankruptcy
Court a motion (the "MOTION") in form and substance approved in writing by MK
Rail, (which approval shall not be unreasonably withheld) requesting an order of
the Bankruptcy Court in form and substance approved in writing by MK Rail
assuming this Agreement and the Stockholders Agreement and approving the
transactions contemplated hereby and thereby (the "BANKRUPTCY COURT APPROVAL"),
and shall use
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its best efforts to obtain such order as promptly as practicable thereafter.
Among other things, the Bankruptcy Court Approval shall approve an escrow
arrangement in form and substance satisfactory to MKO and MK Rail as
contemplated by Section 5.2 hereof.
4. CANCELLATION OF NOTE. Subject to the terms and conditions contained
herein, the Note, including all principal thereof and interest accrued thereon,
shall be canceled and retired in full. The aggregate amount that must be paid
to so cancel and retire the Note in full (the "CANCELLATION AMOUNT") shall be
Thirty-Four Million Five Hundred Thousand Dollars ($34,500,000). The
Cancellation Amount shall be paid in two installments as set forth herein.
5. FIRST CLOSING OF NOTE CANCELLATION.
5.1 REDUCTION PAYMENT. On the First Closing Date (as defined herein), MK
Rail shall make a payment (the "REDUCTION PAYMENT") in immediately available
funds in the amount of Six Million Nine Hundred Thousand Dollars ($6,900,000)
plus interest accrued on said amount from the date hereof until the First
Closing Date, calculated at a rate per annum equal to the rate of interest (the
"Prime Rate") announced from time to time by PNC Bank, National Association as
its Prime Rate (which rate shall automatically change with and as of the date of
each announced change thereof).
5.2 MANNER OF PAYMENT. If on the First Closing Date the Distribution
Condition (as defined herein) has been satisfied or waived by MK Rail, the
Reduction Payment shall be paid to or upon the order of MKO. If on the First
Closing Date, the Distribution Condition has not been satisfied or waived by MK
Rail, MK Rail shall pay the amount of the Reduction Payment to an escrow agent
reasonably satisfactory to MK Rail and MKO to be held in escrow for the benefit
of MKO and MK Rail in accordance with an escrow arrangement (the "ESCROW
ARRANGEMENT") approved as a part of the Bankruptcy Court Approval under which
arrangement the amount held in escrow, including interest accrued thereon, shall
not be subject to any right of offset, claim, demand, cause of action or other
right any other party may have thereto, and under which arrangement (a) the
amount of the Reduction Payment, together with all interest accrued thereon
while it is held in escrow, will be disbursed to MKO upon satisfaction of the
Distribution Condition or waiver thereof by MK Rail and (b) said amount,
including all interest accrued thereon, will be disbursed to MK Rail if this
Agreement is terminated in accordance with its terms prior to the time the
Distribution Condition is satisfied or so waived, in which case there shall be
no Debt Reduction (as defined in Section 5.4 below).
5.3 DISTRIBUTION CONDITION. For purposes of this Agreement:
(a) The term "DISTRIBUTION CONDITION" shall mean satisfaction of any
one of the following conditions:
(i) The Bankruptcy Court Approval shall have been entered and
shall be a Final Order (as defined herein); or
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(ii) The first business day both (A) that is at least ten (10)
days after entry of an order by the Bankruptcy Court which has not
been stayed or set aside confirming a Plan that contains in all
substantial respects the provisions (the "MANDATORY PLAN PROVISIONS")
set forth in Exhibit D hereto and that does not contain any provisions
that are inconsistent with the terms hereof, the Stockholders
Agreement or the Mandatory Plan Provisions (a "CONFORMING PLAN") and
(B) upon which all other conditions to the Effective Date of the
Conforming Plan, other than those relating to the transactions
contemplated hereby, have been satisfied or waived.
(b) The Distribution Condition may be waived by MK Rail in its sole
discretion by a written notice or by payment of the Final Installment (as
defined herein) to MKO.
(c) The term "FINAL ORDER" shall mean an order of the Bankruptcy
Court which has not been reversed, stayed, modified or amended, and as to
which the time to appeal or seek certiorari has expired, and with respect
to which no appeal or petition for certiorari has been timely taken, or as
to which any appeal that has been taken or any petition for certiorari that
has been or may be filed has been dismissed or resolved by the highest
court to which the order was appealed or from which certiorari was sought.
5.4 EFFECT OF DISBURSEMENT OF REDUCTION PAYMENT TO MKC. After the
Reduction Payment is paid to MKO either directly by MK Rail or pursuant to the
Escrow Arrangement, it shall constitute the first installment of the
Cancellation Amount and shall, with no further action on the part of any party,
be applied to cancel Seven Million Six Hundred Sixty Thousand Dollars
($7,660,000) of the principal amount of the Note, together with all interest
accrued on said principal amount (the "DEBT REDUCTION").
6. FIRST CLOSING DATE. The closing of the Debt Reduction (the "FIRST
CLOSING") shall occur at the corporate headquarters of MK Rail at 10:00 a.m.
local time on earliest of the following dates (the "FIRST CLOSING DATE"): (a)
the first business day to occur after ten (10) days have elapsed following the
issuance of the Bankruptcy Court Approval, (b) the date the Distribution
Condition is satisfied or waived by MK Rail, or (c) such other day as is
designated by MK Rail by at least three business days advance written notice to
MKO; provided, however, that in any such case, the obligation of MK Rail to
close the Debt Reduction shall be conditioned on satisfaction or waiver by MK
Rail on the First Closing Date of all of the MK Rail First Closing Conditions
(as defined herein) and the obligations of MKO to close the Debt Reduction shall
be conditioned upon satisfaction or waiver on said date of the MKO First Closing
Conditions (as defined herein).
7. SECOND CLOSING OF NOTE CANCELLATION. On the Second Closing Date (as
defined herein), MK Rail shall pay to or upon the order of MKO the sum of Twenty
Seven Million
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Six Hundred Thousand Dollars ($27,600,000) in immediately available funds (the
"FINAL INSTALLMENT"), representing the second and final installment of the
Cancellation Amount, which shall fully satisfy all obligations of MK Rail under
the Note, and MKO shall deliver the Note marked canceled to MK Rail (the "NOTE
CANCELLATION"). In addition, in the event the Second Closing has not occurred
on or before September 30, 1996 and such failure to close has not been caused by
the default of MKC or MKO of any of their material obligations hereunder, MK
Rail shall also pay to or upon the order of MKO, with the Final Installment,
interest accrued on the amount of the Final Installment from September 30, 1996
through the date of payment, calculated at a per annum rate equal to the Prime
Rate from time to time announced during said period. Upon such payment of the
Final Installment, plus interest accrued thereon, if any, all obligations of the
parties under the Note and the Note Agreement shall terminate and be of no
further force or effect.
8. SECOND CLOSING DATE. The closing of the Note Cancellation (the
"SECOND CLOSING") shall occur at the corporate headquarters of MK Rail at 10:00
a.m. local time on the later of (a) the date the Distribution Condition has been
satisfied or waived by MK Rail or (b) the date two (2) business days after the
MK Rail Second Closing Conditions (as defined herein), other than the
Distribution Condition, have been satisfied or waived by MK Rail and the MKO
Second Closing Conditions have been satisfied or waived by MKO, or on such other
date or at such other time or place as is mutually agreed by the parties hereto
(the "SECOND CLOSING DATE").
9. MK RAIL FIRST CLOSING CONDITIONS. The obligations of MK Rail to
consummate the transactions contemplated to occur at the First Closing are
subject to the satisfaction on or prior to the First Closing Date, unless waived
by MK Rail, in its sole discretion, of each of the following conditions
(collectively referred to as the "MK RAIL FIRST CLOSING CONDITIONS"), all of
which shall be deemed to be waived by consummation by MK Rail of its obligations
with respect to the said closing to the extent not satisfied:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of MKO and MKC herein contained shall be true and correct on and as
of the First Closing Date in all material respects, with the same force and
effect as though made on and, except for any set forth as of a specific date, as
of such date, except as affected by the transactions contemplated hereby.
9.2 PERFORMANCE OF AGREEMENTS. MKO and MKC shall have performed all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by them at or prior
to the First Closing Date.
9.3 BANKRUPTCY COURT ACTION. The Bankruptcy Court Approval shall have
been issued or the Distribution Condition shall have been satisfied.
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9.4 NO INJUNCTIONS. No judgment, order or decree shall have been issued
by a court of competent jurisdiction, governmental agency or other tribunal that
has the effect of enjoining, prohibiting or forbidding the consummation of the
transactions contemplated hereby.
10. MKO FIRST CLOSING CONDITIONS. The obligations of MKO to consummate
the transactions contemplated to be consummated at the First Closing are subject
to the satisfaction on or prior to the First Closing Date unless waived by MKO,
in its sole discretion, of each of the following conditions (collectively
referred to as the "MKO FIRST CLOSING CONDITIONS"), all of which shall be deemed
to be waived by consummation by MKO of its obligations with respect to the said
closing to the extent not satisfied:
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of MK Rail herein contained shall be true and correct on and as of
the First Closing Date in all material respects, with the same force and effect
as though made on and, except for any set forth as of a specific date, as of
such date, except as affected by the transactions contemplated hereby.
10.2 PERFORMANCE OF AGREEMENTS. MK Rail shall have performed all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by it on or prior
to the First Closing Date.
10.3 NO INJUNCTIONS. No judgment, order or decree shall have been
issued by a court of competent jurisdiction, government agency or other tribunal
that has effect of enjoining, prohibiting or forbidding the consummation of the
transactions contemplated hereby.
11. MK RAIL SECOND CLOSING CONDITIONS. The obligations of MK Rail to
consummate the transactions contemplated to occur at the Second Closing are
subject to the satisfaction on or prior to the Second Closing Date, unless
waived by MK Rail, in its sole discretion, of each of the following conditions
(collectively referred to as the "MK RAIL SECOND CLOSING CONDITIONS"), all of
which shall be deemed to be waived by consummation by MK Rail of its obligations
with respect to the said closing to the extent not satisfied:
11.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of MK herein contained shall be true and correct on and as of the
Second Closing Date in all material respects, with the same force and effect as
though made on and, except for any set forth as of a specified date, as of such
date, except as affected by the transactions contemplated hereby.
11.2 PERFORMANCE OF AGREEMENTS. MKO and MKC shall have performed all
obligations and agreements and complied with all covenants and conditions
contained in this Agreement to be performed or complied with by them at or prior
to the Second Closing.
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11.3 SALE OF ALERT MFG. AND SUPPLY CO., INC. MK Rail shall have
consummated the sale, on terms and at a price satisfactory to MK Rail in its
sole discretion, of all of the stock or substantially all of the assets of Alert
Mfg. & Supply Co., Inc., an Illinois corporation and a wholly-owned subsidiary
of Power Parts Company, an Illinois corporation and a wholly-owned subsidiary of
MK Rail.
11.4 SALE OF MK GAIN, S.A. DE C.V.. MK Rail shall have consummated the
sale, on terms and at a price satisfactory to MK Rail in its sole discretion, of
all of the stock or substantially all of the assets of MK Gain, S.A. de C.V., a
wholly-owned subsidiary of MK Rail that conducts its business and operations in
Mexico.
11.5 NO INJUNCTIONS. No judgment, order or decree shall have been issued
by a court of competent jurisdiction, government agency or other tribunal that
has the effect of enjoining, prohibiting or forbidding the consummation of the
transactions contemplated to occur at the Second Closing.
11.6 DISTRIBUTION CONDITION. The Distribution Condition shall have been
satisfied.
11.7 FIRST CLOSING. The First Closing shall have occurred prior to or
concurrently with the Second Closing.
12. MKO SECOND CLOSING CONDITIONS. The obligations of MKO to consummate
the transactions contemplated to occur at the Second Closing are subject to the
satisfaction on or prior to the Second Closing Date, unless waived by MKO, in
its sole discretion, of each of the following conditions (collectively referred
to as the "MKO SECOND CLOSING CONDITIONS"), all of which shall be deemed to be
waived by consummation by MK of its obligations with respect to the said closing
to the extent not satisfied:
12.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of MK Rail herein contained shall be true and correct on and as of
the Second Closing Date in all material respects, with the same force and effect
as though made on and, except for any set forth as of a specific date, as of
such date, except as affected by the transactions contemplated hereby.
12.2 TENDER BY MK RAIL. MK Rail shall tender for payment to MKO the full
amount of the Final Installment.
12.3 NO INJUNCTION. No judgment, order or decree shall have been issued by
any court of competent jurisdiction, government agency or other tribunal that
has the effect of enjoining, prohibiting or forbidding the consummation of the
transactions contemplated hereby or by the Stockholders Agreement.
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12.4 FIRST CLOSING. The First Closing shall have occurred prior to or
concurrently with the Second Closing.
13. AFFIRMATIVE COVENANTS.
13.1 MANDATORY PLAN PROVISIONS. The Plan, when it becomes effective,
shall contain the Mandatory Plan Provisions and shall not contain any provision
that is inconsistent with the terms hereof, of the Stockholders Agreement or of
the Mandatory Plan Provisions.
13.2 BEST EFFORTS TO SATISFY CERTAIN CLOSING CONDITIONS. MK Rail shall use
its best efforts to cause the MK Rail Second Closing Conditions set forth in
Sections 11.3 and 11.4 to be satisfied or, if in its sole discretion it
determines that it is not in the best interests of MK Rail to consummate either
of such transactions, to obtain financing on terms satisfactory to MK Rail in
its sole discretion that will enable MK Rail to waive said conditions; provided,
however, that MK Rail shall not be obligated to effect any transaction if in its
sole discretion it determines in good faith that such transaction is not in its
best interests.
13.3 COPIES OF BANKRUPTCY COURT ACTIONS. MKO shall give MK Rail copies of
the motion requesting the Bankruptcy Court Approval, the Bankruptcy Court
Approval, the Plan and amendments thereto, any order issued by the Bankruptcy
Court confirming the Plan promptly after the filing or entry thereof, and any
other pleadings or filings affecting MK Rail or the transactions contemplated
herein.
13.4 DISTRIBUTION OF MK RAIL COMMON STOCK At the time any Common Stock of
MK Rail is distributed by MKO to any party, MKO shall provide to MK Rail an
accurate list setting forth the name and address of each beneficial owner known
to MK receiving said stock from MKO, the number of shares of Common Stock
received by such owner and the number or numbers of the stock certificates
representing such shares and the names of any custodians, nominees or agents
holding shares for such beneficial owner (including, without limitation, street
names in which any such certificates are held).
14. REPRESENTATIONS AND WARRANTIES OF MKO AND MKC. MKO and MKC hereby
jointly and severally represent and warrant to MK Rail as follows:
14.1 ORGANIZATION; POWER; GOOD STANDING. MKO is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. MKC is a corporation duly organized and validly existing under the laws
of the State of Delaware. MKO and MKC have all requisite corporate power and
authority to enter into this Agreement and, in the case of MKO, the Stockholders
Agreement, and to perform their respective obligations hereunder and thereunder.
14.2 AUTHORITY RELATIVE TO AGREEMENT. The execution, delivery and
performance of this Agreement by MKO and MKC and of the Stockholders Agreement
by MKO have been duly
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and effectively authorized by all necessary corporate action. This Agreement
and the Stockholders Agreement have been duly executed by MKO and MKC, as the
case may be, and this Agreement and the Stockholders Agreement are the valid,
legally binding and enforceable obligations of MKO and MKC, as the case may be,
except as they may be limited or otherwise affected by applicable bankruptcy,
reorganization, insolvency, moratorium, fraudulent transfer and other similar
laws of general application from time to time in effect relating to or affecting
creditors' rights. Copies of the Articles of Incorporation, Code of Regulations
and Resolutions of the Board of Directors of MKO authorizing the execution and
delivery by MKO of this Agreement and the Stockholders Agreement and
consummation of the transactions contemplated hereby and thereby, certified by
the Secretary or Assistant Secretary of MKO, together with a Good Standing
Certificate issued by the Secretary of State of Ohio with respect to MKO within
thirty (30) days of the date hereof and a certificate of the Secretary or
Assistant Secretary of MKO setting forth the names, signatures and offices held
by the officers authorized to execute this Agreement and the Stockholders
Agreement, have been delivered to MK Rail. Copies of the Certificate of
Incorporation, By-Laws and Resolutions of the Board of Directors of MKC
approving this Agreement and the transactions contemplated hereby, certified by
the Secretary or Assistant Secretary of MKC, together with a Good Standing
Certificate issued by the Secretary of State of Delaware with respect to MKC
within thirty (30) days of the date hereof and a certificate of the Secretary or
Assistant Secretary of MKC setting forth the names, signatures and offices of
the officers duly authorized to execute this Agreement have been delivered to MK
Rail.
14.3 EFFECT OF AGREEMENT. The execution, delivery and performance of this
Agreement and the Stockholders Agreement by MKO and MKC, as the case may be, and
the consummation of the transactions contemplated hereby and thereby will not
(a) require the consent, approval, authorization, license, order, or permit of
any person, corporation, partnership, joint venture or other business
association or public authority, other than the Bankruptcy Court Approval and
the MK Creditor Consent; (b) violate, with or without the giving of notice or
the passage of time, or both, any provisions of law or any statute or any rule,
regulation, order, award, judgment or decree of any court or governmental
authority now applicable to MKO or MKC; or (c) conflict with or result in a
breach or termination of any provision of, or constitute a default under, or
result in the creation of any lien, charge or encumbrance upon any of the
properties or assets of MKO or MKC pursuant to any corporate charter, bylaw,
indenture, mortgage, deed of trust, lease, contract, agreement or other
instrument, or any order, judgment, award, decree, statute, ordinance,
regulation or any other restriction of any kind or character, to which MKO or
MKC is a party, or by which MKO or MKC is bound.
14.4 TITLE TO NOTE; NO PRIOR TRANSFER. MKO is the owner of the Note free
and clear of any and all liens, claims and encumbrances of any kind or nature
whatsoever other than the pledge (the "PLEDGE") of the Note to Mellon Bank, N.A.
as agent under the Amended and Restated Credit Agreement dated as of July 31,
1995 among MKC, MKO, the Banks and Other Financial Institutions Named Therein
and Mellon Bank as agent for said banks and financial institutions and the
Override Agreement. MKO has and will continue to have at the First Closing Date
and at the Second Closing Date good title to the Note and, subject to
satisfaction of the
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Distribution Condition, the absolute right, power and authority to sell, assign,
transfer, cancel and deliver the Note to MK Rail, free and clear of all liens,
pledges, encumbrances, security interests or other restrictions, other than
those set forth in the Note Agreement and Subordination Agreement. Other than
the Pledge, MKO has not previously sold, assigned or otherwise transferred any
interest in the Note and no other party has any right, title or interest in and
to the Note. The Note constitutes Collateral identified in the Asset
Disposition Programs (as defined in the Override Agreement) and, accordingly,
under the Override Agreement, its release may be authorized by the Majority
Lenders (as defined therein).
15. REPRESENTATIONS AND WARRANTIES OF MK RAIL. MK Rail hereby represents
and warrants to MKO and MKC as follows:
15.1 ORGANIZATION; POWER; GOOD STANDING. MK Rail is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. MK Rail has all requisite corporate power and authority to enter into
this Agreement and the Stockholders Agreement and to perform its obligations
hereunder and thereunder.
15.2 AUTHORITY RELATIVE TO AGREEMENT. The execution, delivery and
performance of this Agreement and the Stockholders Agreement by MK Rail have
been duly and effectively authorized by all necessary corporate action by MK
Rail. This Agreement and the Stockholders Agreement have been duly executed by
MK Rail and are the valid, legally binding and enforceable obligations of MK
Rail except as they may be limited or otherwise affected by applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent transfer and
other similar laws of general application from time to time in effect relating
to or affecting creditors' rights. Copies of the Certificate of Incorporation,
By-Laws and Resolutions of the Board of Directors of MK Rail approving this
Agreement, the Rights Plan Amendment, the Stockholders Agreement and the
transactions contemplated hereby and thereby, certified by the Secretary or
Assistant Secretary of MK Rail, together with a Good Standing Certificate issued
by the Secretary of State of Delaware with respect to MK Rail within thirty (30)
days of the date hereof and a certificate of the Secretary or Assistant
Secretary of MK Rail setting forth the names, signatures and offices of the
officers duly authorized to execute this Agreement and the Stockholders
Agreement, have been delivered to MKO.
15.3 EFFECT OF AGREEMENT. The execution, delivery and performance of this
Agreement and the Stockholders Agreement by MK Rail and the consummation of the
transactions contemplated hereby and thereby will not (i) require the consent,
approval, authorization, license, order, or permit of any person, corporation,
partnership, joint venture or other business association or public authority
other than the BABC Consent; (ii) violate, with or without the giving of notice
or the passage of time, or both, any provisions of law or any statute or any
rule, regulation, order, award, judgment or decree of any court or governmental
authority now applicable to MK Rail; or (iii) conflict with or result in a
breach or termination of any provision of, or constitute a default under, or
result in the creation of any lien, charge or encumbrance upon any of the
properties or assets of MK Rail, pursuant to any corporate charter, bylaw,
indenture,
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mortgage, deed of trust, lease, contract, agreement or other instrument, or any
order, judgment, award, decree, statute, ordinance, regulation or any other
restriction of any kind or character, to which MK Rail is a party, or by which
MK Rail is bound.
15.4 RIGHTS PLAN AMENDMENTS. The Board of Directors of MK Rail has adopted
and approved the Rights Plan Amendment and such amendment is in full force and
effect, subject to its terms.
16. TERMINATION. This Agreement may be terminated only as follows:
16.1 TERMINATION BY MUTUAL CONSENT. By the mutual written agreement of the
parties entered into at any time prior to the Second Closing Date, in which case
all of the obligations of the parties not performed prior to the date of
termination shall be of no further force or effect.
16.2 TERMINATION BY MK RAIL. By MK Rail, by written notice to MKO, if the
Second Closing has not occurred on or before December 31, 1996, and such failure
to close has not been caused by the default by MK Rail of any of its material
representations, warranties, agreements or covenants under this Agreement.
16.3 TERMINATION BY MKO. By MKO, by written notice to MK Rail, if either
of the following occurs:
(a) If the Second Closing has not occurred on or before the latest of
(i) August 30, 1996, (ii) the date sixty (60) days after the filing by MK of a
petition under Title 11 of the United States Bankruptcy Code and of a Conforming
Plan which has received the consents of the creditors described in clause (a) of
the definition of MK Requisite Creditors or (iii) the date the Distribution
Condition and the condition set forth in Section 11.5 hereof have been satisfied
or waived by MK Rail, and such failure to close has not been caused by the
default by MKO or MKC of any of their respective material representations,
warranties, agreements or covenants under this Agreement.
(b) Effective on any date after December 31, 1996, if both (i) the
Second Closing has not occurred on or before the termination date and such
failure to close by said date has not been caused by a breach by MKO or MKC of
any of their respective material representations, warranties, agreement or
covenants under this Agreement and (ii) MKO has given MK Rail at least thirty
(30) days advance written notice of its intention to terminate under this
subsection (b), which notice sets forth the proposed termination date, and MK
Rail (A) has not prior to the proposed termination date given MKO written notice
that it waives any MK Rail Second Closing Conditions that have not been
satisfied and (B) has not tendered for payment to MKO the full amount of the
Final Installment (and, to the extent not previously paid, the Reduction
Payment) within five (5) business days after giving such written notice to MKO.
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16.4 EFFECT OF TERMINATION. (a) Upon a termination under Section 16.2 or
16.3, any party who is not in default of its material representations,
warranties, agreements and covenants under this Agreement shall have no further
obligations hereunder. A failure to obtain a consent or approval or to
consummate a transaction that is a condition to a closing shall not constitute
such a default by a party provided, in the case of consents or approvals, that
the party has complied with any obligation expressly set forth hereunder with
respect to attempting to obtain such consent or approval. A termination under
Section 16.2 or 16.3 hereof shall not excuse any party that is in default of any
of its material representations, warranties, agreements or covenants under this
Agreement from any liability the party may have to any other party as a result
of such default.
(b) A termination hereunder shall have no effect on the Rights Plan
Amendment, which shall be governed by its terms, or on the Debt Reduction, if
the Reduction Payment has been delivered to MKC.
17. TRANSFER OF NOTE. MKO shall not convey, negotiate, endorse, assign or
otherwise transfer its right, title or interest in the Note to any party prior
to the termination of this Agreement unless such party has agreed by a written
agreement in form and substance satisfactory to MK Rail in its reasonable
discretion to assume and be bound by all of the obligations of MKO under this
Agreement. Notwithstanding the foregoing, it is understood that MKO has pledged
and will continue to pledge the Note to secure its obligations to certain of its
lenders that have expressly consented in writing to this Agreement and to the
transactions contemplated hereby and the conditions and restrictions set forth
herein, a copy of which consent has been provided to MK Rail as described in
Section 1 hereof.
18. FURTHER ASSURANCES. MKO, MKC and MK Rail hereby agree to execute and
deliver such other instruments, and take such other action, as either party may
reasonably request of the other party hereto in connection with the transactions
contemplated by this Agreement and the Stockholders Agreement.
19. STATUS OF NOTE AND NOTE AGREEMENT. Unless and until the Second
Closing occurs, and notwithstanding termination of this Agreement in accordance
with its terms, the Note (reduced as provided herein if the Reduction Payment
has been delivered to MKO) and the Note Agreement shall continue to be in full
force and effect.
20. RESTRICTION ON OWNERSHIP CHANGES OF MK RAIL AND MK. MK shall not,
until after the Second Closing Date or the termination of this Agreement in
accordance with its terms, transfer any Common Stock of MK Rail or permit any
party to take, or to permit any other party to take, any other action or enter,
or permit any other party to enter, into any agreement that could cause there to
be an ownership change of MK Rail or MK for purposes of Section 382 of the
Internal Revenue Code of 1986, as amended. Nothing herein that states that MK
shall not permit a third party to act in a certain manner shall be deemed to
require MK to take any action with respect to a third party over which it does
not have control unless by contract or otherwise the
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<PAGE>
action in question cannot be taken by the third party without the consent or
approval or other action of either MK or a party which is controlled by MK.
21. NO EFFECT ON OTHER RIGHTS AND OBLIGATIONS AMONG THE PARTIES. Except
as expressly provided herein, in the Stockholders Agreement or the Rights
Amendment, neither this Agreement nor the Stockholders Agreement, nor the
consummation of the transactions contemplated hereby or thereby, nor the Plan,
shall in any way affect or impair or constitute a waiver or release of any
rights or obligations of the parties hereto.
22. GOVERNING LAW. This Agreement shall be deemed to be a contractual
obligation under, and shall be governed by and construed in accordance with, the
laws of the State of Delaware without regard to conflicts of laws principles.
23. NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or by registered
or certified mail or recognized overnight delivery service, return receipt
requested, charges prepaid, or by confirmed facsimile transmission:
(a) If to MK Rail, to:
MK Rail Corporation
1200 Reedsdale Street
Pittsburgh, Pennsylvania 15233
Attention: Chairman
FAX: (412) 321-0111
Confirm: (412) 237-2250
With a copy to:
Michael A. Weiss, Esq.
Doepken Keevican & Weiss
37th Floor, USX Tower
600 Grant Street
Pittsburgh, Pennsylvania 15219
FAX: (412) 355-2609
Confirm: (412) 355-2614
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(b) If to MKO or MKC, to:
Morrison Knudsen Corporation
720 Park Boulevard
Boise, Idaho 83712
Attention: President
FAX: [(208) 386-7186]
Confirm: [(208) 386-5000]
With a copy to:
Robert Dean Avery, Esq.
Jones, Day, Reavis & Pogue
Suite 4600
555 West Fifth Street
Los Angeles, California 90013-1025
FAX: (213) 243-2539
Confirm: (213) 489-3939
and
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15219-1886
Attention: Alan Kopolow
FAX: (412) 234-0286
Confirm: (412) 236-1013
24. INTERPRETATION. The headings of the various sections hereof are for
convenience of reference only and shall not affect the meaning or construction
of any provision hereof. Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular, the singular the plural
and the part the whole and "OR" has the inclusive meaning represented by the
phrase "AND/OR". The words "HEREOF", "HEREIN", "HEREUNDER" and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement.
25. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement and the
Stockholders Agreement and the exhibits hereto constitute the entire agreement
between the parties regarding the subject matter hereof. Subject to Section
16.4(b) hereof and Section 12.8 of the Stockholders Agreement, it is
acknowledged and agreed that said documents evidence and effect one and the same
integrated transaction and that the consideration for any and all agreements,
releases, promises, or obligations of one party to the other under said
documents consists of all of the agreements, releases, covenants, promises and
obligations of the other party contained in all of
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<PAGE>
said documents. This Agreement may not be amended or altered in any manner
unless such amendment or alteration is in writing and signed by each of MKO, MKC
and MK Rail. No covenant or condition or any other part of this Agreement may be
waived except by written instrument signed and made a part hereof by MKO, MKC
and MK Rail. The failure of any party hereto to enforce any of the provisions
of this Agreement or the waiver thereof in any instance will not be construed as
a general waiver or relinquishment on its part of any such provisions, but the
same will be and remain in full force and effect. Notwithstanding the
foregoing, it is understood and agreed that the Note and the transactions
relating thereto are also governed by the Note Purchase Agreement and the Global
Settlement Agreement.
26. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon MKO, MKC
and MK Rail and their respective successors and assigns, and shall inure to the
benefit of MKO, MKC and MK Rail and their respective successors and assigns. No
party hereto shall have any right to assign its rights or delegate its duties
under this Agreement without the other parties' prior written consent.
27. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby,
have duly executed and delivered this Agreement as of the date first above
written.
MK RAIL CORPORATION
By: /s/ John C. Pope
--------------------------------------------
John C. Pope, Chairman
MORRISON KNUDSEN CORPORATION
an Ohio corporation
By: /s/ Stephen G. Hanks
--------------------------------------------
Name: STEPHEN G. HANKS
Title: EXECUTIVE VICE PRESIDENT, CHIEF
LEGAL OFFICER AND SECRETARY
MORRISON KNUDSEN CORPORATION
a Delaware corporation
By: /s/ Stephen G. Hanks
-------------------------------------------
Name: STEPHEN G. HANKS
Title: EXECUTIVE VICE PRESIDENT, CHIEF
LEGAL OFFICER AND SECRETARY
<PAGE>
EXHIBITS
THE REGISTRANT AGREES TO PROVIDE TO THE
SECURITIES AND EXCHANGE COMMISSION, UPON REQUEST,
WITH COPIES OF THE EXHIBITS HERETO.
<PAGE>
EXHIBIT 10.2
STOCKHOLDERS AGREEMENT
DATED AS OF JUNE 20, 1996
BETWEEN
MK RAIL CORPORATION
AND
MORRISON KNUDSEN CORPORATION
<PAGE>
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (this "Agreement") dated as of June __, 1996
between MK Rail Corporation, a Delaware corporation (the "Company"), and
Morrison Knudsen Corporation, an Ohio corporation ("MKO").
RECITALS
WHEREAS, in connection with the reorganization of Morrison Knudsen
Corporation, a Delaware corporation ("MK"), certain creditors of MK and MKO will
acquire restricted shares of 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
contemplates filing with the Bankruptcy Court pursuant to which, among 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:
1.1. DEFINITIONS.
AFFILIATE. "Affiliate" means Affiliate as defined in Rule 12b-2
promulgated by the Commission under the Exchange Act.
AGENT. "Agent" means the principal placement agent on an agented
placement of Registrable Securities.
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BANKRUPTCY COURT. "Bankruptcy Court" shall mean the United States
Bankruptcy Court for the District of Delaware, in which court the Plan has been
filed.
CERTIFICATE AMENDMENT. "Certificate Amendment" shall have the meaning
set forth in Section 9.5.
COMMISSION. "Commission" shall mean the United States Securities and
Exchange Commission.
COMMON STOCK. "Common Stock" shall mean (i) the common stock, par
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 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 have
the meaning set forth in SECTION 2.1(i).
DEMAND REGISTRATION STATEMENT. "Demand Registration Statement" shall
have the meaning set forth in SECTION 2.1(i).
DEMANDING HOLDERS. "Demanding Holders" shall have the meaning set
forth in SECTION 2.1(i).
DISTRIBUTION DATE. "Distribution Date" shall mean the date MK Rail
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 forth
in SECTION 9.6.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
HOLDER. "Holders" shall mean MKO and the Transferees of the Common
Stock held by MKO or their Transferees in accordance with SECTION 8.
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<PAGE>
MAJORITY SELLING HOLDERS. "Majority Selling Holders" means those
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 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
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
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, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
PIGGYBACK REGISTRATION STATEMENT. "Piggyback Registration Statement"
shall have the meaning set forth in SECTION 3.
PLAN. "Plan" shall mean the plan of reorganization with respect 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", 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, subject
to SECTION 8: (i) the Shares owned by the Holders on any date of determination,
(ii) any shares of Common
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<PAGE>
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, HOWEVER, that Registrable Securities shall not include any securities
which 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 then
outstanding" shall mean, with respect to a specified determination date, the
Registrable Securities owned by all Holders on such date.
REGISTRATION EXPENSES. "Registration Expenses" shall have the meaning
set forth in SECTION 6.1.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
SELLING HOLDERS. "Selling Holders" shall mean, with respect to a
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 by
certain creditors of MK in connection with the reorganization of MK.
SHELF REGISTRATION STATEMENT. "Shelf Registration Statement" shall
have the meaning set forth in SECTION 2.2.
STANDSTILL TERMINATION DATE. "Standstill Termination Date" shall have
the meaning set forth in SECTION 9.2.
STOCKHOLDERS MEETING. "Stockholders Meeting" shall have the meaning
set forth in SECTION 9.7.
SUBSTANTIAL STOCKHOLDER. "Substantial Stockholder" shall mean any
Person beneficially owning 5% of more of the outstanding Common Stock.
TRANSFER. "Transfer" shall mean and include the act of selling,
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
foreclosure or other exercise of remedies of a secured creditor after an event
of default under or with respect to a
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<PAGE>
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
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
7.1.
1.2. USAGE.
(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 from time to time and references to a statute or other
governmental rule are to it as amended and otherwise modified from 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 the context otherwise
requires.
(v) The definitions set forth herein are equally applicable both 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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<PAGE>
Section 2. DEMAND AND SHELF REGISTRATION STATEMENTS.
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
Holders") 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 such number
of such Demanding Holder's Registrable Securities as the Demanding Holder shall
request in writing; PROVIDED, HOWEVER, that no request may be made pursuant to
this SECTION 2.1 if (A) within twelve months prior to the date of such request a
Demand Registration Statement pursuant to this SECTION 2.1 shall have been
declared effective by the Commission or (B) the 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 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.
(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 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, 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 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
2.1(i) to effect the registration of any Registrable Securities, the Company
shall promptly give written notice of
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<PAGE>
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 efforts 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 shall be entitled to have all or a
portion of such Holders' Registrable Securities included in the 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 a 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 been satisfied upon the earlier
of (x) the date as of which all of the Registrable 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 a request for a Demand
Registration Statement pursuant to SECTION 2.1, the Company shall have the right
to register in any such Demand Registration Statement and to include in any
related offering shares of authorized but 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).
2.5. In any Demand Registration Statement, the managing or lead
underwriter or underwriters (for 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
the Company and each Selling
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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 SECTIONS 2 or 3.
Section 3. PIGGYBACK REGISTRATION STATEMENTS.
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 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.
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
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acceptable to the Company, 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 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.
3.4 If the Company has previously filed a registration statement
with respect to Registerable Securities pursuant to SECTION 2.1 or pursuant to
this SECTION 3, and if such previous registration statement has not been
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 SECTION
2 or SECTION 3 to effect the registration of any Registrable 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 SECTION 2.2, and use 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 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,
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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 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 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 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), 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 Statement,
the preparation and filing of a supplement, amendment or incorporated document
is postponed as permitted by SECTION 4.2(i) or Section 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 with the Commission
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
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terms of the underwriting agreement entered into pursuant to SECTION 4.6. In the
event that any Registrable 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 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
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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 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;
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(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 commencing 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
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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 of any such other Selling Holder against any
and all losses, claims,
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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
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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 losses, claims, damages, liabilities or expenses, 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
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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 Morrison
Knudsen 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
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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(l)(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
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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,
disqualification, 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 of 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 one 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 be held as closely as practicable to the
second anniversary of the Distribution Date (which meeting may
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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 Sections 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 then 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 waiver 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 the 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.
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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
1200 Reedsdale Street
Pittsburgh, PA 15233
Attention: Chairman
With a copy to:
Michael A. Weiss, Esquire
Doepken Keevican & Weiss
37th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219
(b) If to MKO or MKC, to:
Morrison Knudsen Corporation
720 Park Boulevard
Boise, Idaho
Attention: President
With a copy to:
Robert Dean Avery, Esq.
Jones, Day, Reavis & Pogue
Suite 4600
555 West Fifth Street
Los Angeles, CA 90013-1025
(c) and if to any other Holder, to:
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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.
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.
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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 representatives
and other than parties entitled to indemnification uinder Section 7 hereof, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
MK RAIL CORPORATION
By: /s/John C. Pope, Chairman
-----------------------------
John C. Pope, Chairman
MORRISON KNUDSEN CORPORATION
By: /s/Stephen G. Hanks
-------------------------------
Name: Stephen G. Hanks
Title: Executive Vice President, Chief
Legal Officer and Secretary
<PAGE>
EXHIBIT A
AGREEMENT TO BE BOUND
BY THE STOCKHOLDERS AGREEMENT
The undersigned, being the proposed transferee of ______ shares of the
common stock, $.01 par value 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 is governed by the
Stockholders Agreement dated as of __________, 1996 (the "Agreement") initially
among the Company and Morrison Knudsen 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.
<PAGE>
EXHIBIT 99.1
MORRISON KNUDSEN CORPORATION NEWS RELEASE
Morrison Knudsen Plaza/P. O. Box 73
Boise, Idaho 83729
Telex: 368439/Phone: (208)386-6611
Fax: (208) 386-5065
For Further Information Contact: Brent D. Brandon
Vice President Corporate Communications
- --------------------------------------------------------------------------------
FOR RELEASE: June 25, 1996
MORRISON KNUDSEN CORPORATION, A DELAWARE HOLDING COMPANY,
FILES PLAN OF REORGANIZATION
OPERATIONS TO CONTINUE BUSINESS AS USUAL
Boise -- Morrison Knudsen Corporation, a Delaware holding company,
announced today that as planned, the company has filed its plan of
reorganization under Chapter 11 in the United States Bankruptcy Court for the
District of Delaware. The plan of reorganization pertains only to the
corporate parent company and does not involve MK's operating companies,
Morrison Knudsen Corporation of Ohio and National Projects, Inc., or any of
their engineering, construction, environmental and mining subsidiaries. MK's
plan of reorganization was approved by MK's secured creditors and provides
for, among other things, the merger of Morrison Knudsen with Washington
Construction Group, Inc. and an exchange of MK's existing secured debt
for new equity in the combined company.
"Our prepackaged reorganization provides an excellent vehicle for relieving
the parent corporation of its debt and enabling our operations, which are strong
and healthy, to be even more competitive in the marketplace," said Robert A.
Tinstman, MK's President and Chief Executive Officer. "The financial
restructuring at the corporate parent level does not involve our operating
companies. With strong core operations and a $60 million working capital
facility in place, MK will continue to honor all contract commitments and
obligations to clients, joint venture partners, subcontractors and suppliers
and pay employees on time and in full."
Morrison Knudsen of Delaware filed its voluntary petition for
reorganization in Wilmington, Delaware and received approval of first day
motions which ensure that the company can continue in the ordinary course of
business. The corporation's plan of reorganization is expected to be
consummated by September 30, 1996, subject to possible modification and the
satisfaction of certain conditions, and would result in an essentially
debt-free company with a strong balance sheet and substantial bonding
capacity.
Morrison Knudsen's operating groups serve the world's
environmental, heavy civil, industrial, mining, operations & maintenance,
power, process and transportation markets as an engineer and constructor.
# # #
<PAGE>
EXHIBIT 99.2
MORRISON KNUDSEN CORPORATION NEWS RELEASE
Morrison Knudsen Plaza/P. O. Box 73
Boise, Idaho 83729
Telex: 368439/Phone: (208)386-6611
Fax: (208) 386-5065
For Further Information Contact: Brent D. Brandon
Vice President Corporate Communications
- --------------------------------------------------------------------------------
FOR RELEASE: June 25, 1996
MK AND MK RAIL SIGN AGREEMENT FOR MK RAIL'S PURCHASE OF
INTERCOMPANY NOTE AND AMENDMENT TO STOCKHOLDERS RIGHTS PLAN
Boise -- Morrison Knudsen Corporation announced today that it has signed a
definitive agreement with MK Rail Corporation regarding the amount of
intercompany indebtedness owed by MK Rail to Morrison Knudsen and providing for
an amendment to MK Rail's Stockholders Rights Plan which would allow MK to
proceed with its planned financial restructuring.
Under the terms of the agreement, MK Rail will purchase an intercompany
promissory note with a face value of $52.2 million, plus accrued interest, for
$34.5 million in cash. In connection with MK's reorganization plan, MK has
proposed exchanging the proceeds from the sale of the note and accrued
interest, together with new equity in MK and other non-core assets, for MK's
secured debt. The purchase of the note, which is due in 2000, is expected to be
completed by September 30, 1996, pursuant to MK's financial restructuring.
The agreement also provides for an amendment to MK Rail's Stockholders
Rights Plan which would allow MK to proceed with its planned debt-for-equity
exchange and merger with Washington Construction Group, Inc.
Morrison Knudsen Corporation (MRN-NYSE), founded in 1912, serves the
world's environmental, industrial process, mining, operations & maintenance,
power, transportation and heavy construction markets as an engineer and
constructor.
# # #
