Exhibit 10.2
LOCK-UP AGREEMENT
THIS AGREEMENT, dated as of March 31, 1999, by and among Allis-Chalmers
Corporation, a Delaware corporation (the "Company"), the Pension Benefit
Guaranty Corporation, a United States government corporation acting in its
individual capacity and as trustee of the Allis-Chalmers Consolidated Pension
Plan (the Pension Benefit Guaranty Corporation, together with its designee for
the purpose of holding company capital stock, are collectively referred to
herein as the "PBGC"), AL-CH Company, L.P., a Delaware limited partnership
("AL-CH"), Wells Fargo Bank, as trustee under that certain Amended and Restated
Retiree Health Trust Agreement for UAW Retired Employees of Allis-Chalmers
Corporation (the "UAW Trust"), and Firstar Trust Company, as trustee under that
certain Amended and Restated Retiree Health Trust Agreement for non-UAW Retired
Employees of Allis-Chalmers Corporation (the "Non-UAW Trust").
W I T N E S S E T H:
WHEREAS, each party to this Agreement, other than the Company, is a
significant stockholder of the Company;
WHEREAS, the parties to this Agreement believe that it is in their
respective best interests to provide for the transfer and/or disposition of
shares of Company common stock, $.15 par value ("Common Stock") under certain
circumstances, and, except for the Company, with respect to the voting of their
shares of Common Stock under certain circumstances; and
WHEREAS, the Company and the PBGC are parties to that certain
Agreement, dated as of March 31, 1999 (the "Master Agreement"), pursuant to
which this Lock-Up Agreement is being executed and delivered.
NOW, THEREFORE, the parties to this Agreement, intending to be legally
bound, hereby covenant and agree as follows:
1. No Transfer or Disposition of Shares. Unless the Company's Board of
Directors ("Board") has terminated the Common Stock transfer restrictions set
forth in Article XIII of the Company's Amended and Restated Certificate of
Incorporation ("Certificate"), each of AL-CH, the UAW Trust and the Non-UAW
Trust covenant and agree that, during the period commencing on the date hereof
and continuing until the third (3rd) anniversary of the Release Event Date, it
will not, directly or indirectly, sell, transfer, assign or otherwise dispose
any shares of Common Stock now beneficially owned. Nothing provided in this
Agreement shall restrict AL-CH, the UAW Trust or the Non-UAW Trust from
distributing to any partner or beneficiary, respectively, shares of Common Stock
as long as such partner or beneficiary, as the case may be, executes and
delivers a lock-up agreement containing provisions substantially similar to the
provisions of this Section.
2. Prior Opportunity to Sell.
(a) Each of AL-CH, the UAW Trust and the Non-UAW Trust covenant
and agree that, during the period (the "Window Period") commencing with the
third (3rd) anniversary of the Release Event Date and continuing until the fifth
(5th) anniversary of the Release Event Date, it will not, directly or
indirectly, sell, transfer, assign or otherwise dispose of any shares of Common
Stock without first giving the PBGC an opportunity to sell all or any portion of
the shares of Common Stock it now beneficially owns pursuant to (b) or (c)
below.
(b) If AL-CH, the UAW Trust or the Non-UAW Trust desire to sell
shares of Common Stock during the Window Period in a public offering pursuant to
an effective registration statement under the Securities Act of 1933, as
amended, it shall first give written notice to the PBGC of such intention not
less than twenty (20) business days prior to effecting any sale. If the PBGC, by
written notice to all of the other parties to this Agreement given within twenty
(20) business days after the receipt of such notice of intention to sell, elects
to sell shares of Common Stock, then AL-CH, the UAW Trust and the Non-UAW Trust
shall refrain from effecting any sale until the earlier of (i) forty-five (45)
days after receipt of written notice from the PBGC indicating its desire to sell
its shares or (ii) the fifth (5th) anniversary of the Release Event Date. The
PBGC covenants and agrees that, if it elects to sell shares of Common Stock
during the Window Period prior to sales by AL-CH, the UAW Trust and the Non-UAW
Trust, that it will diligently pursue the sale of such shares, subject in all
cases to market conditions, and that it will notify all of the other parties to
this Agreement in writing at any time that the PBGC has completed or
discontinued its proposed sale of shares of Common Stock.
(c) If any time AL-CH, the UAW Trust or the Non-UAW Trust is
presented with an opportunity to sell shares of Common Stock during the Window
Period other than in a public offering, AL-CH, the UAW Trust or the Non-UAW
Trust, as the case may be, shall first give written notice to the PBGC and all
of the other parties to this Agreement of such opportunity (including the
proposed sale price and other material terms and conditions) not less than
twenty (20) business days prior to effecting any sale. If the PBGC, by written
notice to all of the parties to this Agreement given within twenty (20) business
days after the receipt of such notice of intention to sell, elects to sell
shares of Common Stock in such transaction, then the PBGC shall have the right,
until the earlier of (i) forty-five (45) days after delivery of the written
notice from the PBGC indicating its desire to sell shares or (ii) the fifth
(5th) anniversary of the Release Event Date, to sell shares of Common Stock
pursuant to such opportunity. If the PBGC has not consummated a sale of shares
of Common Stock during such time period, then AL-CH, the UAW Trust or the
Non-UAW Trust, as the case may be, shall be entitled to sell shares of Common
Stock upon terms no less favorable than those offered to the PBGC.
(d) Nothing provided in this Agreement shall limit or restrict in
any way the Company's right of refusal set forth in Section 4.6 of the Master
Agreement.
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3. Voting. During the term of this Agreement, each party covenants and
agrees to vote, at any annual or special meeting of the Company stockholders and
in a written consent, all shares of Common Stock beneficially owned in favor of
the election as director the persons nominated for director of the Company by
the Nominating Committee of the Company's Board of Directors, and to refrain
from taking any action contrary to or inconsistent with such obligation. During
the term of this Agreement, each party further covenants and agrees not to vote
its shares of Common Stock or to take any other action to amend the Company's
Certificate or By-laws in a manner that is inconsistent with, or in breach of,
the Master Agreement. Without limiting the generality of the foregoing, each
party hereto agrees that it will (i) vote all of its Common Stock in favor of
the amendments to the Company's Certificate identified on the attached Exhibit
A, (ii) vote all of its Common Stock for the election of the persons designated
by the PBGC (each, a "PBGC Director") to serve on the Board of Directors of the
Company and (iii) vote all of its Common Stock in favor of the election of
Company directors who are committed to cause, and who do cause, one (1) PBGC
Director to be appointed to the Nominating Committee of the Company's Board of
Directors ("Board"), and one (1) PBGC Director to be appointed as the Chairman
of the Compensation Committee of the Board.
4. Representations and Warranties. Each of AL-CH, the UAW Trust and the
Non-UAW Trust hereby severally represents and warrants to the PBGC as follows
(it being understood and agreed that no such party, including but not limited to
AL-CH, is making any representations or warranties on behalf of any other
party):
(a) Each is duly organized and validly existing, and has all
requisite power and authority to conduct its business as it is now being
conducted.
(b) Each has full legal power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement on behalf of such party, and the
consummation of the transactions contemplated hereby, have been duly authorized
by appropriate action on behalf of such party, and no other legal action is
necessary on its part to authorize the execution, delivery and performance of
this Agreement. This Agreement constitutes a valid and binding obligation of
such party, enforceable against such party in accordance with its terms. The
execution, delivery and performance of this Agreement by such party will not
conflict with, violate or result in a breach of any provision of, require a
consent under, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of or accelerate the performance required by, or result in a right of
termination or acceleration under (i) the charter, articles of organization,
limited partnership agreement or comparable organizational document of such
party, or (ii) any mortgage, note, indenture, deed of trust, lease, loan
agreement, warrant, registration rights agreement or other agreement or
instrument, the violation of which would have a material adverse effect on such
party.
(c) Each is the beneficial owner of the number of shares of Common
Stock set forth after its name on the attached Exhibit B.
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(d) No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state, local or other
governmental authority or body is required in connection with the execution,
delivery and performance of this Agreement on the part of such party and the
consummation of the transactions contemplated hereunder.
(e) To the knowledge of such party, there are no legal,
administrative, arbitration or other legal proceedings claims, actions or
governmental investigations of any nature pending against such party which, if
adversely decided, would have a material adverse effect on such party's
ownership of the Common Stock or legal power and authority to execute, deliver
and perform this Agreement.
5. Miscellaneous.
5.1 Survival of Representations and Warranties. All covenants and
agreements and all representations and warranties made herein shall survive any
closing hereunder.
5.2 Notices. All demands, notices, request, consents, and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered by courier service, messenger, or confirmed
telecopy at, or if duly deposited in the mails, by certified or registered mail,
postage prepaid, return receipt requested, to the following addresses, or such
other addresses as may be furnished hereafter by notice in writing, to the
following parties.
To the Company: Allis-Chalmers Corporation
2255 Glades Road, Suite #307E
Boca Raton, FL 33431
Attn: John Grigsby
Telecopy No.: (561) 994-3298
With copies to: Robert E. Nederlander
Nederlander organization, Inc.
810 7th Avenue
New York, NY 10019
Telecopy No.: (212) 586-5862
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
Attn: Luke E. Sims
Telecopy No.: (414) 297-4900
To the PBGC: Pension Benefit Guaranty Corporation
1200 K Street, N.W.
Washington, D.C. 20005
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Attn: Frank McCulloch, Esq.
Telecopy No.: (202) 326-4112
With copies to: Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, NY 10020-1182
Attn: Mark D. Silverschotz, Esq.
Telecopy No.: (212) 278-1733
To the UAW Richard D. Lichtenstein, Ph. D.
Retiree Trust: University of Michigan
Department of Healthy Management & Policy
1420 Washington Heights
Ann Arbor, MI 48109
Telecopy No.: (734) 764-4338
With copies to: Groom Law Group
1701 Pennsylvania Avenue, Suite 1200
Washington, DC 20006
Attn.: Ian Lanoff
Telecopy No.: (202) 659-4503
To the Non-UAW Art Streich
Retireee Trust: 1307 Milwaukee Street
Delafield, WI 53018
Telephone No.: (414) 646-8182
With copies to: Michael Best & Friedrich
100 East Wisconsin Avenue, Suite 3300
Milwaukee, WI 53202
Attn.: Scott H. Engroff, Esq.
Telecopy No.: (414) 277-0656
All demands, requests, consents, notices and communications shall be deemed to
have been given either: (x) at the time of actual delivery thereof; or (y) if
given by certified or registered mail, five (5) business days after
certification or registration thereof, to any officer (or an authorized
recipient of deliveries to the office) of the party to whom given.
5.3 Specific performance. Each of the parties to this Agreement
shall be entitled to enforce its rights under this Agreement, specifically, to
recover damages and costs (including attorneys' fees) caused by any breach of
any provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement, and that any
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or
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other injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
5.4 Integration and Severability. Except for the Master Agreement
and that certain Registration Rights Agreement, dated as of the Release Event
Date, between the Company and the PBGC, this Agreement embodies the entire
agreement and understanding among the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof. In case any
one or more of the provisions contained in this Agreement, or in any instrument
contemplated hereby, or any application thereof, shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
remaining provisions contained herein and therein, and any other application
thereof shall not in any way be affected or impaired thereby.
5.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
5.6 Covenant of Further Assurances. Each party hereto agrees to
execute any and all documents, and to perform such other actions, to the extent
permitted by law, that may be reasonably necessary or expedient to further the
purposes of this Agreement or to further assure the benefits intended to be
conferred hereby.
5.7 Public Announcements. The parties hereto agree that no party
hereto shall make any public announcement or other dissemination of information
concerning the contents of this Agreement and the documents to be delivered and
transactions contemplated hereby, without the prior written consent of the other
parties hereto. Notwithstanding the foregoing, any party hereto may make any
disclosure which its counsel advises is required by applicable law or
governmental rule and regulation, in which case the other parties shall be
advised in advance, and the parties shall use reasonable efforts to cause a
mutually agreeable release or announcement to be issued.
5.8 Captions. The captions used in this Agreement are for purposes
of convenience only and shall not be deemed to modify, or provide any basis for
interpretation of, any of the provisions of this Agreement.
5.9 Governing Law. The Agreement shall be construed in accordance
with, and shall be governed by, the internal laws of the State of Delaware.
5.10 Jurisdiction. The courts of the State of New York in New York
County and the United States District Court for the Southern District of New
York shall have jurisdiction over the parties with respect to any dispute or
controversy between them arising under or in connection with this agreement and,
by execution and delivery of this agreement, each of the parties to this
Agreement submits to the jurisdiction of those courts, including but not limited
to the in personam and subject matter jurisdiction of those courts, waived any
objections to such jurisdiction on the grounds of venue or forum non conveniens,
the absence of in personam or subject matter jurisdiction and any similar
grounds, consents to service of process by mail (in accordance with Section 5.2)
or any other manner permitted by law, and
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irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement.
5.11 Mutual Waiver of Jury Trial. Because disputes arising in
connection with complex financial transactions are most quickly and economically
resolved by an experiences and expert person and the parties wish applicable
state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable laws.
Therefore, to achieve the best combination of the benefits of the judicial
system and of arbitration, the parties hereto waive all right to trial by jury
in any action, suit or proceeding brought to enforce or defend any rights of
remedies under this Agreement.
5.12 Term. This Agreement shall continue in effect until the
earlier of (i) the fifth (5th) anniversary of the Release Event Date or (ii)
such time as the PBGC ceases to beneficially own not less than 117,020 shares of
Common Stock (subject to adjustment as provided in Section 5.13 hereof).
5.13 Equitable Adjustment. In the event of a stock split, reverse
stock split, recapitalization, reorganization or comparable change in the
Company's capital structure (other than an issuance of Common Stock for fair
value), any reference to a specific number of shares of Common Stock herein
shall be equitably adjusted to reflect such change.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ALLIS-CHALMERS CORPORATION
By: /s/John T. Grigsby, Jr.
Name: John T. Grigsby, Jr.
Title: Executive V.P. and CFO
PENSION BENEFIT GUARANTY CORPORATION
By: /s/Robert M. Klein
Name: Robert M. Klein
Title: Acting Chief Negotiator
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AL-CH COMPANY, L.P.
By: Q.E.N., Inc.
By: /s/Robert E. Nederlander
Name Robert E. Nederlander
Title: President
AMENDED AND RESTATED RETIREE HEALTH
TRUST AGREEMENT FOR UAW RETIRED
EMPLOYEES OF ALLIS-CHALMERS CORPORATION
By: WELLS FARGO BANK, N.A., in its
Representative capacity of the
above-named Trust:
By: /s/Jane McKeever
Name: Jane McKeever
Title: Trust Officer
AMENDED AND RESTATED HEALTH TRUST
AGREEMENT FOR NON-UAW RETIRED EMPLOYEES
OF ALLIS-CHALMERS CORPORATION
By: FIRSTAR TRUST COMPANY
By: /s/Richard A. Whittow
Name: Richard A. Whittow
Title: Vice President
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