Exhibit 10.3


                          REGISTRATION RIGHTS AGREEMENT


         THIS REGISTRATION  RIGHTS AGREEMENT (this  "Agreement") is entered into
as of the  31st  day of  March,  1999,  between  ALLIS-CHALMERS  CORPORATION,  a
Delaware   corporation  (the  "Company"),   and  the  PENSION  BENEFIT  GUARANTY
CORPORATION (the "PBGC").

         WHEREAS,  pursuant  to the  Agreement,  dated as of March 31, 1999 (the
"Master  Agreement"),  by and between the Company and the PBGC,  the Company has
agreed to issue to the PBGC 585,100 shares of the Company's common stock,  $0.15
par value  ("Common  Stock");  in  consideration  of the  settlement  of certain
obligations owed by the Company to the PBGC;

         WHEREAS,  to induce the PBGC to enter into the  Master  Agreement,  the
Company  has  agreed  to  provide  the  registration  rights  set  forth in this
Agreement; and

         WHEREAS, the execution and delivery of this Agreement is a condition to
the obligation of the PBGC as set forth in Section 5.1 of the Master Agreement.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants herein contained, the parties hereto agree as follows:

         1.  Definitions.  As used herein,  the  following  terms shall have the
following respective meanings:

                  "Designated  Transferee"  shall mean any Person that purchases
         Registrable  Shares  from the PBGC  subject  to the  provisions  of the
         Master Agreement.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
         as amended.

                  "Holders"  shall  mean the  PBGC,  affiliates  of PBGC and any
         Designated   Transferees  who  are  holders  of  record  of  shares  of
         Registrable  Shares, and any combination of them, and the term "Holder"
         shall mean any such person.

                  "NASD"  shall  mean the  National  Association  of  Securities
         Dealers, Inc.

                  "Person" shall mean any individual, corporation,  association,
         partnership,  group (as  defined in Section  13(d)(3)  of the  Exchange
         Act), joint venture, business trust or unincorporated organization,  or
         a government or any agency or political subdivision thereof.

                  "Registrable  Shares"  shall mean any Common  Stock (i) issued
         pursuant  to the Master  Agreement,  or (ii) issued or  distributed  in
         respect of the Common  Stock  referred to in clause (i) above by way of
         stock dividend or stock split or other  distribution,  recapitalization
         or  reclassification.  As to any  particular  Registrable  Share,  such
         Registrable  Share  shall cease to be a  Registrable  Share when (x) it
         shall have been

<PAGE>



         sold,  transferred or otherwise  disposed of or exchanged pursuant to a
         registration  statement  under the  Securities Act or (y) it shall have
         been  distributed to the public  pursuant to Rule 144 (or any successor
         provision) under the Securities Act.

                  "Registration  Expenses"  shall have the  meaning set forth in
         Section 8(b) hereof.

                  "Section  4(a)  Notice"  shall have the  meaning  set forth in
         Section 6 hereof.

                  "SEC" shall mean the United  States  Securities  and  Exchange
         Commission.

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
         amended.

         2. Incidental Registrations.

              (a) Right to Include  Registrable  Shares.  Each time the  Company
shall  determine to file a  registration  statement  under the Securities Act in
connection  with the proposed offer and sale for cash of any Common Stock either
by it or by any holders of its outstanding  Common Stock,  the Company will give
prompt written notice of its  determination  to each Holder and of such Holder's
rights  under this Section 2, at least 10 days prior to the  anticipated  filing
date of such registration statement;  provided, however, that the Company is not
required to provide any such notice in connection with a registration  statement
covering a Company  stock  option,  incentive  compensation,  profit-sharing  or
comparable  employee  benefit or compensation  plan. Upon the written request of
each  Holder  made  within 10 days after the receipt of any such notice from the
Company,  (which  request shall specify the  Registrable  Shares  intended to be
disposed of by such Holder),  the Company will use its  commercially  reasonable
efforts to effect the  registration  under the Securities Act of all Registrable
Shares  which the  Company  has been so  requested  to  register  by the Holders
thereof,  to the extent  required to permit the  disposition of the  Registrable
Shares so to be  registered;  provided,  that (i) if, at any time  after  giving
written  notice of its  intention  to register any  securities  and prior to the
effective  date of the  registration  statement  filed in  connection  with such
registration, the Company shall determine for any reason not to proceed with the
proposed  registration  of the  securities to be sold by it, the Company may, at
its  election,  give  written  notice of such  determination  to each  Holder of
Registrable Shares and thereupon shall be relieved of its obligation to register
any Registrable  Shares in connection with such  registration  (but not from its
obligation to pay the Registration Expenses in connection  therewith),  and (ii)
if  such  registration  involves  an  underwritten   offering,  all  Holders  of
Registrable Shares requesting to be included in the Company's  registration must
sell  their  Registrable  Shares  to the  underwriters  on the  same  terms  and
conditions as apply to the Company,  with such  differences,  including any with
respect to  indemnification,  as may be  customary  or  appropriate  in combined
primary and secondary  offerings.  If a registration  requested pursuant to this
Section 2(a) involves an underwritten public offering, any Holder of Registrable
Shares  requesting  to be included in such  registration  may elect,  in writing
prior to the effective date of the  registration  statement  filed in connection
with such  registration,  not to register such Common Stock in  connection  with
such registration.  No registration  effected under this Section 2 shall relieve
the  Company of its  obligations  to effect  registrations  upon  request  under
Section 4 hereof.



                                      -2-
<PAGE>


              (b)  Priority  in  Incidental  Registrations.  If  a  registration
pursuant to this  Section 2 involves an  underwritten  offering and the managing
underwriter or  underwriters  in good faith advises the Company in writing that,
in its  opinion,  the number of shares of Common  Stock which the  Company,  the
Holders and any other Persons intend to include in such registration exceeds the
largest  number of shares of  Common  Stock  which can be sold in such  offering
without having an adverse effect on such offering  (including the price at which
such  Common  Stock  can be  sold),  then  the  Company  will  include  in  such
registration (i) first,  100% of the shares of Common Stock the Company proposes
to sell for its own  account;  (ii)  second,  to the  extent  that the number of
shares of Common  Stock which the  Company  proposes to sell for its own account
is, in the  aggregate,  less than the number of shares of Common Stock which the
Company has been advised can be sold in such offering without having the adverse
effect referred to above,  such number of other shares of Common Stock requested
to be  included  in the  offering  for the  account of the Holders and any other
Persons which, in the opinion of such managing underwriter or underwriters,  can
be sold without having the adverse effect  referred to above,  such number to be
allocated  pro rata  among  all  holders  of  Common  Stock on the  basis of the
relative  number of such shares of Common Stock each other person has  requested
to be included in such registration.

         3. Holdback  Agreements.  (a) If any registration of Registrable Shares
shall be in connection with an underwritten  public offering,  the Holders agree
not to effect any public sale or  distribution  (except in connection  with such
public  offering),  of any Common Stock or of any security  convertible  into or
exchangeable  or exercisable  for any Common Stock (in each case,  other than as
part of such underwritten  public  offering),  during the 90-day period (or such
lesser period as the managing  underwriter or underwriters may permit) beginning
on the effective date of such registration,  if, and to the extent, the managing
underwriter  or  underwriters  of any such  offering  determines  such action is
necessary or desirable to effect such  offering,  provided  that each Holder has
received the written notice required by Section 2(a) hereof; provided,  further,
that each Holder shall not be obligated  to comply with such  restrictions  more
than once in any twelve-month period.

              (b)  If  any  registration  of  Registrable  Shares  shall  be  in
connection  with any  underwritten  public  offering,  the Company agrees not to
effect any public sale or  distribution  (except in connection  with such public
offering)  of any of its Common  Stock or of any  security  convertible  into or
exchangeable or exercisable for Common Stock (in each case other than as part of
such  underwritten  public  offering)  during the 90-day  period (or such lesser
period as the managing  underwriter or underwriters may permit) beginning on the
effective date of such registration, and the Company also agrees to use its best
efforts to cause any Company  officer,  director  or any holder of five  percent
(5%) or more of the Common Stock to so agree.

         4. Registration on Request.

              (a)  Request by  Holders.  Upon the  Company's  receipt of written
request  of the  Holders  of at least  20% of the  Registrable  Shares  that the
Company effect the registration  under the Securities Act of all or part of such
Holders'  Registrable  Shares,  and specifying the amount and intended method of
disposition  thereof,  the Company will promptly


                                      -3-
<PAGE>


give notice of such requested  registration  to all other Holders of Registrable
Shares and, as  expeditiously  as  possible,  use its best efforts to effect the
registration  under the Securities Act of: (i) the Registrable  Shares which the
Company  has been so  requested  to  register  by Holders of at least 20% of the
Registrable  Shares; and (ii) all other Registrable Shares which the Company has
been  requested  to  register  by any other  Holder  thereof by written  request
received by the Company  within 21 days after the giving of such written  notice
by the Company (which  request shall specify the intended  method of disposition
of such Registrable Shares);  provided,  however,  that the Company shall not be
required to effect more than one  registration  during any  twelve-month  period
pursuant to this Section 4;  provided,  further,  that the Company  shall not be
obligated to file a registration  statement  relating to a registration  request
under  this  Section  4  (other  than  on  Form  S-3 or any  similar  short-form
registration statement) within a period of three months after the effective date
of any other  registration  statement  of the  Company  other than  registration
statements on Form S-3 (or any similar short-form  registration statement or any
successor  or similar  forms);  provided,  further,  that in no event  shall the
Company be  required  to effect  more than two  registrations  in the  aggregate
pursuant to this Section 4. Promptly  after the  expiration of the 21-day period
referred to in clause (ii) above,  the Company will notify all the Holders to be
included in the  registration  of the other  Holders and the number of shares of
Registrable  Shares  requested  to be included  therein.  The Holders  initially
requesting a  registration  pursuant to this Section 4 may, at any time prior to
the effective date of the registration  statement relating to such registration,
cause such  registration  to be  withdrawn by the Company by providing a written
notice to the Company requesting such withdrawal;  provided,  however, that upon
any such request for  withdrawal,  such Holders shall have forfeited their right
to such demand hereunder, and such Holders shall be responsible for the payment,
on a pro  rata  basis,  of all  Registration  Expenses  incurred  in  connection
therewith.

              (b)  Registration  Statement Form. If any  registration  requested
pursuant  to this  Section 4 which is  proposed by the Company to be effected by
the filing of a registration  statement on Form S-3 (or any successor or similar
short-form  registration  statement) shall be in connection with an underwritten
public offering,  and if the managing  underwriter or underwriters  shall advise
the  Company  in  writing  that,  in its  opinion,  the use of  another  form of
registration statement is of material importance to the success of such proposed
offering, then such registration shall be effected on such other form.

              (c) Effective  Registration  Statement.  A registration  requested
pursuant to this  Section 4 will not be deemed to have been  effected  unless it
has become effective under the Securities Act and, subject to Section 4(d), such
registration  has been maintained for a period of six (6) months or such earlier
period such that all the Registrable  Shares included in such  registration have
actually  been sold  thereunder.  In  addition,  if within 180 days after it has
become  effective,   the  offering  of  Registrable   Shares  pursuant  to  such
registration  is  materially  interfered  with by any stop order,  injunction or
other order or  requirement  of the SEC or other  governmental  agency or court,
such registration will be deemed not to have been effected.

              (d)   Priority  in   Requested   Registrations.   If  a  requested
registration  pursuant to this Section 4 involves an  underwritten  offering and
the managing  underwriter or


                                      -4-
<PAGE>


underwriters  in good faith advises the Company in writing that, in its opinion,
the  number  of  shares  of  Common  Stock  requested  to be  included  in  such
registration  (including  shares of Common  Stock of the  Company  which are not
Registrable  Shares)  exceeds the largest number of shares of Common Stock which
can be sold in such offering  without  having an adverse effect on such offering
(including the price at which such shares of Common Stock can be sold), then the
Company will include in such  registration  (i) first,  100% of the  Registrable
Shares requested to be registered pursuant to Section 4(a) hereof (provided that
if the number of  Registrable  Shares  requested  to be  registered  pursuant to
Section 4(a) hereof exceeds the number which the Company has been advised can be
sold in such offering  without having the adverse effect referred to above,  the
number of such  Registrable  Shares to be included in such  registration  by the
Holders  shall be  allocated  pro rata  among  such  Holders on the basis of the
relative  number of  Registrable  Shares  each such Holder has  requested  to be
included in such  registration);  (ii) second,  to the extent that the number of
Registrable Shares requested to be registered pursuant to Section 4(a) hereof is
less  than the  number of shares of  Common  Stock  which the  Company  has been
advised can be sold in such offering  without having the adverse effect referred
to above,  such  number of shares of Common  Stock the  Company  requests  to be
included in such registration; and (iii) third, to the extent that the number of
Registrable  Shares  requested to be included in such  registration  pursuant to
Section 4(a) hereof and the shares of Common Stock which the Company proposes to
sell for its own account are, in the  aggregate,  less than the number of shares
of Common Stock which the Company has been advised can be sold in such  offering
without having the adverse effect referred to above, such number of other shares
of Common Stock proposed to be sold by any other Person which, in the opinion of
such  managing  underwriter  or  underwriters,  can be sold  without  having the
adverse effect  referred to above (provided that if the number of such shares of
Common Stock of such other Persons requested to be registered exceeds the number
which the Company has been advised can be sold in such offering  without  having
the adverse effect referred to above,  the number of such shares of Common Stock
to be  included in such  registration  pursuant  to this  Section  4(d) shall be
allocated  pro rata  among all such other  Persons on the basis of the  relative
number of shares of Common Stock each such Person has requested to be include in
such registration).

         5. Registration Procedures.

              (a) If and whenever the Company is required by the  provisions  of
Sections  2 or 4  hereof  to use  its  best  efforts  to  effect  or  cause  the
registration  of  Registrable  Shares,  the Company  shall as  expeditiously  as
possible:

                            (i) prepare  and, in any event  within 60 days after
              the end of the period within which a request for  registration may
              be  given  to  the  Company,  file  with  the  SEC a  registration
              statement  with  respect  to such  Registrable  Shares and use its
              commercially   reasonable   efforts  to  cause  such  registration
              statement to become effective;

                            (ii)  prepare and file with the SEC such  amendments
              and supplements to such registration  statement and the prospectus
              used in  connection  therewith  as may be  necessary  to keep such
              registration statement effective for a


                                      -5-
<PAGE>

              period not in excess of 180 days or such shorter  period until the
              shares  covered  thereunder  are  sold  and  to  comply  with  the
              provisions of the  Securities  Act, the Exchange Act and the rules
              and  regulations   promulgated  thereunder  with  respect  to  the
              disposition  of all the  shares of Common  Stock  covered  by such
              registration  statement  during such period in accordance with the
              intended methods of disposition by the Holders hereof set forth in
              such registration  statement;  provided,  that (A) before filing a
              registration   statement   (including   an   initial   filing)  or
              prospectus,  or any amendments or supplements thereto, the Company
              will furnish to the Holders of the  Registrable  Shares covered by
              such registration statement copies of all documents proposed to be
              filed,  which  documents will be subject to the review and comment
              of such  Holders,  and (B) the Company  will notify each Holder of
              Registrable  Shares covered by such registration  statement of any
              stop  order  issued or  threatened  by the SEC,  any  other  order
              suspending  the  use  of  any  preliminary  prospectus  or of  the
              suspension of the qualification of the registration  statement for
              offering  or sale in any  jurisdiction,  and take  all  reasonable
              actions  required to prevent  the entry of such stop order,  other
              order or suspension or to remove it if entered;

                            (iii)  furnish to each Holder and each  underwriter,
              if applicable,  of Registrable Shares covered by such registration
              statement such number of copies of the registration  statement and
              of each amendment and  supplement  thereto (in each case including
              all exhibits), such number of copies of the prospectus included in
              such registration statement (including each preliminary prospectus
              and summary  prospectus),  in conformity with the  requirements of
              the  Securities  Act,  and such other  documents as each Holder of
              Registrable  Shares  covered by such  registration  statement  may
              reasonably  request in order to facilitate the  disposition of the
              Registrable Shares owned by such Holder;

                            (iv) use its best  efforts  to  register  or qualify
              such  Registrable  Shares covered by such  registration  statement
              under the state securities or blue sky laws of such  jurisdictions
              as each Holder of Registrable  Shares covered by such registration
              statement and, if  applicable,  each  underwriter,  may reasonably
              request,  and do any and all other  acts and  things  which may be
              reasonably   necessary  to  consummate  the  disposition  in  such
              jurisdictions  of the  Registrable  Shares  owned by such  Holder,
              except that the Company  shall not for any purpose (A) be required
              to qualify generally to do business as a foreign  corporation or a
              broker-dealer in any jurisdiction  where, but for the requirements
              of this clause (iv), it would not be obligated to be so qualified,
              (B) subject  itself to taxation  in any such  jurisdiction  or (C)
              consent to service of process in any such jurisdiction;

                            (v) use its commercially reasonable efforts to cause
              such Registrable Shares covered by such registration  statement to
              be registered with or approved by such other governmental agencies
              or authorities  as may be necessary to enable the Holders  thereof
              to consummate the disposition of such Registrable Shares;

                            (vi) if at any time when a  prospectus  relating  to
              the  Registrable  Shares is  required  to be  delivered  under the
              Securities  Act any event  shall


                                      -6-
<PAGE>


              have  occurred as the result of which any such  prospectus as then
              in effect would include an untrue  statement of a material fact or
              omit to state any material fact  required to be stated  therein or
              necessary to make the statements therein not misleading,  promptly
              give  written  notice  thereof  to each  Holder  and the  managing
              underwriter or underwriters,  if any, of such  Registrable  Shares
              and prepare and furnish to each such Holder a reasonable number of
              copies  of  an  amended  or  supplemental  prospectus  as  may  be
              necessary so that,  as thereafter  delivered to the  purchasers of
              such  Registrable  Shares,  such  prospectus  shall not include an
              untrue statement of material fact or omit to state a material fact
              required to be stated  therein or necessary to make the  statement
              therein not misleading;

                            (vii)   enter   into   such   customary   agreements
              (including an  underwriting  agreement in customary form) and take
              such other actions as each Holder of Registrable Shares being sold
              or the underwriter or underwriters,  if any, reasonably request in
              order  to  expedite  or  facilitate   the   disposition   of  such
              Registrable  Shares,   including  customary   indemnification  and
              opinions;

                            (viii) use its best  efforts  to obtain a  "comfort"
              letter  or  letters   from  the   Company's   independent   public
              accountants  in customary  form and  covering  matters of the type
              customarily  covered by  "comfort"  letters  as the  Holders of at
              least 25% of the Registrable Shares being sold or the underwriters
              retained by such Holders shall reasonably request;

                            (ix)    make    available    for    inspection    by
              representatives  of any Holder of  Registrable  Shares  covered by
              such registration statement,  by any underwriter  participating in
              any  disposition  to be  effected  pursuant  to such  registration
              statement and by any attorney,  accountant or other agent retained
              by such Holders or any such  underwriter,  all financial and other
              records,  pertinent  corporate  documents  and  properties  of the
              Company and its  subsidiaries,  and cause all of the Company's and
              its subsidiaries' officers,  directors and employees to supply all
              information and respond to all inquiries  reasonably  requested by
              such Holders or any such  representative,  underwriter,  attorney,
              accountant   or  agent  in  connection   with  such   registration
              statement;

                            (x)  promptly  prior to the  filing of any  document
              which is to be  incorporated  by reference  into the  registration
              statement  or  the   prospectus   (after  initial  filing  of  the
              registration  statement),  provide  copies  of  such  document  to
              counsel  to the  Holders  of  Registrable  Shares  covered by such
              registration   statement  and  to  the  managing   underwriter  or
              underwriters,  if any,  and  make  the  Company's  representatives
              available for discussion of such document;

                            (xi)  otherwise  use  its  commercially   reasonable
              efforts to comply with all applicable rules and regulations of the
              SEC,  and  make  available  to its  security  holders,  as soon as
              reasonably   practicable   after   the   effective   date  of  the
              registration  statement, an earnings statement which shall satisfy
              the  provisions  of


                                      -7-
<PAGE>


              Section 11(a) of the Securities Act and the rules and  regulations
              promulgated thereunder;

                            (xii) use its best efforts to provide a CUSIP number
              for all  Registrable  Shares not later than the effective  date of
              the applicable registration statement,  and provide the applicable
              transfer  agents with  printed  certificates  for the  Registrable
              Shares  which  are  in  a  form  eligible  for  deposit  with  the
              Depository Trust Company;

                            (xiii) notify counsel for the Holders of Registrable
              Shares  included in such  registration  statement and the managing
              underwriter or  underwriters,  if any,  promptly,  and confirm the
              notice in writing,  (A) when the  registration  statement,  or any
              post-effective amendment to the registration statement, shall have
              become  effective,  or any  supplement  to the  prospectus  or any
              amendment  prospectus shall have been filed, (B) of the receipt of
              any  comments  from the SEC and (C) of any  request  of the SEC to
              amend  the  registration  statement  or  amend or  supplement  the
              prospectus or for additional information; and

                            (xiv)  cooperate  with each  seller  of  Registrable
              Shares  and  each  underwriter,   if  any,  participating  in  the
              disposition  of  such  Registrable  Shares  and  their  respective
              counsel in  connection  with any filings  required to be made with
              the NASD.

              (b) Each Holder of  Registrable  Shares hereby  agrees that,  upon
receipt of any notice from the Company of the happening of any event of the type
described in Section  5(a)(vi) hereof,  such Holder shall forthwith  discontinue
disposition of such Registrable Shares covered by such registration statement or
related prospectus until such Holder's receipt of the copies of the supplemental
or amended  prospectus  contemplated  by Section  5(a)(vi)  hereof,  and,  if so
directed  by the  Company,  such  Holder  will  deliver to the  Company  (at the
Company's expense) all copies of the prospectus in its possession, covering such
Registrable  Shares  at the time of  receipt  of such  notice.  In the event the
Company  shall give any such notice,  the period  mentioned in Section  5(a)(ii)
hereof  shall be  extended  by the number of days  during  the  period  from and
including  the date of the giving of such notice  pursuant  to Section  5(a)(vi)
hereof and including the date when such Holder shall have received the copies of
the supplemental or amended prospectus contemplated by Section 5(a) (vi) hereof.
If for any other reason the  effectiveness of any  registration  statement filed
pursuant to Section 4 hereof is suspended or interrupted prior to the expiration
of the time  period  regarding  the  maintenance  of the  effectiveness  of such
Registration  Statement  required by Section 5(a)(ii) hereof so that Registrable
Shares may not be sold pursuant  thereto,  the  applicable  time period shall be
extended  by the number of days  equal to the  number of days  during the period
beginning with the date of such  suspension or  interruption  to and ending with
the date  when the sale of  Registrable  Shares  pursuant  to such  registration
statement may be recommenced.

              (c) Each Holder hereby agrees to provide the Company, upon receipt
of its request, with such information about such Holder to enable the Company to
comply  with  the  requirements  of  the  Securities  Act  and to  execute  such
certificates  as the  Company may


                                      -8-
<PAGE>


reasonably  request in connection with such information and otherwise to satisfy
any requirements of law.

         6. Denial, Postponement or Suspension of Registration.

              (a) If the Company  receives a written  request in compliance with
Section 4(a) hereof (a "Section 4(a) Notice") and is then  contemplating  filing
with the SEC a  registration  statement  within 90 days of the date the  Company
receives such request,  which filing could otherwise  trigger the application of
incidental  registration  rights of  Holders  under  Section 2 hereof,  then the
Company  may deny the  Holders the rights of  registration  granted  pursuant to
Section 4 hereof;  provided,  however, that the Company shall be prohibited from
exercising its denial rights pursuant to this Section 6(a) more than one time in
any  twelve-month  period.  The Company  shall give prompt  written  notice (the
"Denial  Notice") to the Holders of any such denial.  The  Company's  failure to
file a registration  statement with the SEC promptly (but in no event later than
90 days  after the date it  receives  a Section  4(a)  Notice)  after  denying a
Holder's  request  pursuant to Section 4(a) hereof,  shall result in the loss of
the  Company's  denial  rights with respect to any  registration  by the Holders
pursuant to a Section  4(a) Notice  given  within 180 days after  receipt of the
Denial Notice.

              (b) The  Company,  at its option,  may postpone for up to 180 days
the filing of any registration  statement authorized  hereunder,  and to suspend
sales under any registration  statement authorized hereunder for up to 180 days;
provided, however, that in computing the 180-day period for which the Company is
required to maintain the effectiveness of any registration  statement authorized
in accordance with Section 5 hereof, the period of any such suspension shall not
be  included;  provided,  further,  that the Company  shall be  prohibited  from
exercising  its  suspension  rights  pursuant to this Section 6(b) more than one
time in any twelve-month period. The Company shall give prompt written notice to
the Holders of any such  postponement  or  suspension,  and shall  likewise give
prompt written notice to the Holders of the termination of such  postponement or
suspension.  Each Holder hereby  agrees to postpone the sale of any  Registrable
Shares registered pursuant to any registration  statement  authorized under this
Agreement during any postponement or suspension.

         7. Underwritten Registrations. Subject to the provisions of Sections 2,
3 and 4  hereof,  any  of  the  Registrable  Shares  covered  by a  registration
statement  may be sold in an  underwritten  offering  at the  discretion  of the
Holder thereof.  In the case of an underwritten  offering  pursuant hereto,  the
managing underwriter or underwriters shall be selected by the Company.

         8. Expenses.

              (a)  The  fees,  costs  and  expenses  of  all   registrations  in
accordance  with  Section 2 and Section 4 hereof  shall be borne by the Company,
subject to the provisions of Section 8(b) hereof.

              (b) The fees,  costs and expenses of  registration  to be borne as
provided in Section 8(a) hereof shall include, without limitation,  all expenses
incident to the  Company's  performance  of or compliance  with this  Agreement,
including  without  limitation


                                      -9-
<PAGE>


all SEC or NASD  registration and filing fees and expenses,  reasonable fees and
expenses of any "qualified  independent  underwriter"  and its counsel as may be
required  by the  rules  of the  NASD,  fees and  expenses  of  compliance  with
securities or blue sky laws (including  without  limitation  reasonable fees and
disbursements  of  counsel  for the  underwriters,  if any,  or for the  selling
Holders, in connection with blue sky qualifications of the Registrable  Shares),
rating  agency  fees,   printing  expenses   (including   expenses  of  printing
certificates for Registrable Shares and prospectuses),  messenger, telephone and
delivery expenses, the fees and expenses incurred in connection with the listing
of the shares of Common Stock to be  registered on each  securities  exchange or
national  market  system on which  similar  shares of Common Stock issued by the
Company are then listed,  fees and  disbursements of counsel for the Company and
all  independent  certified  public  accountants  (including the expenses of any
annual audit,  special audit and "cold comfort"  letters required by or incident
to such performance and compliance), securities laws liability insurance (if the
Company, in its sole and absolute discretion, decides to obtain such insurance),
the fees and  disbursements  of  underwriters  customarily  paid by  issuers  or
sellers of securities (including, without limitation, expenses relating to "road
shows" and other  marketing  activities),  the  reasonable  fees of one  counsel
retained in connection with each such  registration by the Holders of a majority
of the Registrable Shares being registered,  the reasonable fees and expenses of
any  special   experts   retained  by  the  Company  in  connection   with  such
registration,  and fees and  expenses of other  persons  retained by the Company
(but not including any underwriting  discounts or commissions or transfer taxes,
if  any,  attributable  to the  sale of  Registrable  Shares  by  such  Holders)
(collectively, "Registration Expenses").

         9. Indemnification.

              (a)   Indemnification  by  the  Company.   In  the  event  of  any
registration  of any shares of Common Stock of the Company under the  Securities
Act  pursuant to Section 2 or 4 hereof,  the Company  will,  and it hereby does,
indemnify and hold harmless, to the extent permitted by law, each of the Holders
of any Registrable Shares covered by such registration statement, each affiliate
of such  Holder and their  respective  directors  and  officers  or general  and
limited  partners (and the directors,  officers,  general and limited  partners,
affiliates and controlling Persons thereof),  each other Person who participates
as an  underwriter  in the  offering or sale of such shares of Common  Stock and
each other  Person,  if any,  who controls  such Holder or any such  underwriter
within  the  meaning  of the  Securities  Act  (collectively,  the  "Indemnified
Parties"), against any and all losses, claims, damages or liabilities,  joint or
several,  and expenses  (including any amounts paid in any  settlement  effected
with the Company's  consent) to which any  Indemnified  Party may become subject
under the  Securities  Act,  state  securities  or blue sky laws,  common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Indemnified Party is a party
thereto) or expenses arise out of or are based upon (i) any untrue  statement or
alleged  untrue  statement of any material  fact  contained in any  registration
statement  under which such  shares of Common  Stock were  registered  under the
Securities Act, any preliminary,  final or summary prospectus contained therein,
or any amendment or supplement thereto, (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the  statements  therein not misleading or (iii) any violation by the Company of
any federal,  state or common law rule or


                                      -10-
<PAGE>


regulation  applicable  to the  Company and  relating  to action  required of or
inaction  by the  Company  in  connection  with any such  registration,  and the
Company will reimburse such Indemnified Party for any out-of-pocket legal or any
other expenses  reasonably  incurred by it in connection with  investigating  or
defending any such loss, claim, liability, action or proceeding;  provided, that
the Company shall not be liable to any Indemnified Party in any such case to the
extent that any such loss, claim, damage,  liability (or action or proceeding in
respect  thereof) or expense arises out of or is based upon any untrue statement
or  alleged  untrue  statement  or  omission  or alleged  omission  made in such
registration  statement  or  amendment  or  supplement  thereto  or in any  such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information with respect to such Holder furnished to the Company by such
Holder  specifically  for use in the preparation  thereof.  Such indemnity shall
remain in full force and effect  regardless of any  investigation  made by or on
behalf of such Holder or any Indemnified Party and shall survive the transfer of
such Common Stock by such Holder.

              (b)  Indemnification by the Holders and Underwriters.  The Company
may  require,  as a  condition  to  including  any  Registrable  Shares  in  any
registration statement filed in accordance with Sections 2 or 4 hereof, that the
Company shall have received an undertaking  reasonably  satisfactory  to it from
the Holders of such Registrable  Shares or any underwriter to indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section 9(a)
hereof) the Company  with respect to any  statement  or alleged  statement in or
omission or alleged omission from such registration statement,  any preliminary,
final or summary prospectus  contained therein,  or any amendment or supplement,
if such statement or alleged  statement or omission or alleged omission was made
in reliance upon and in conformity with written  information with respect to the
Holders of the Registrable Shares being registered or such underwriter furnished
to the Company by such Holders or such  underwriter  specifically for use in the
preparation  of such  registration  statement,  preliminary,  final  or  summary
prospectus or amendment or supplement,  or a document  incorporated by reference
into any of the foregoing; provided, that no such Holder shall be liable for any
indemnity  claims in excess of the amount of  proceeds  received  by such Holder
from the sale of Registrable  Shares.  Such indemnity shall remain in full force
and effect regardless of any  investigation  made by or on behalf of the Company
or any of  the  Holders,  or any  of  their  respective  affiliates,  directors,
officers or controlling  Persons,  and shall survive the transfer of such Common
Stock by such Holders.

              (c)  Notices  of  Claims,   Etc.  Promptly  after  receipt  by  an
indemnified  party hereunder of written notice of the commencement of any action
or  proceeding  with  respect to which a claim for  indemnification  may be made
pursuant to this Section 8, such  indemnified  party will, if a claim in respect
thereof is to be made against an indemnifying  party, give written notice to the
latter of the  commencement  of such action;  provided,  that the failure of the
indemnified  party to give  notice as  provided  herein  shall not  relieve  the
indemnifying party of its obligations under this Section 9, except to the extent
that the indemnifying party is actually materially prejudiced by such failure to
give notice.  In case any such action is brought  against an indemnified  party,
the  indemnifying  party will be  entitled to  participate  in and to assume the
defense thereof,  with counsel satisfactory to such indemnified party, and after
notice from the indemnifying  party to such indemnified party of its election to


                                      -11-
<PAGE>


assume the defense thereof,  the  indemnifying  party will not be liable to such
indemnified party for any legal or other expenses  subsequently  incurred by the
latter in connection  with the defense  thereof other than  reasonable  costs of
investigation;  provided  that the  indemnified  party  shall  have the right to
employ counsel to represent the indemnified party and its respective controlling
persons, directors,  officers, general or limited partners,  employees or agents
who may be subject  to  liability  arising  out of any claim in respect of which
indemnification may be sought by the indemnified party against such indemnifying
party under this Section 9 if (i) the employment of such counsel shall have been
authorized in writing by such indemnifying  party in connection with the defense
of such action,  (ii) the  indemnifying  party shall not have promptly  employed
counsel  reasonably  satisfactory to the indemnified party to assume the defense
of such action or counsel,  or (iii) any indemnified party shall have reasonably
concluded that there may be defenses  available to such indemnified party or its
respective controlling persons, directors,  officers,  employees or agents which
are in  conflict  with or in  addition to those  available  to the  indemnifying
party,  and in that  event  the  reasonable  fees  and  expenses  of one firm of
separate  counsel for the  indemnified  party shall be paid by the  indemnifying
party. No indemnifying party will consent to entry of any judgment or enter into
any  settlement  which does not  include as an  unconditional  term  thereof the
giving by the claimant or plaintiff to such indemnified  party of a release from
all liability in respect of such claim or litigation.

              (d) If the  indemnification  provided  for in this Section 9 shall
for any reason be  unavailable  to any  indemnified  party under Section 9(a) or
9(b)  hereof or is  insufficient  to hold it  harmless  in  respect of any loss,
claim,  damage or  liability,  or any  action in  respect  thereof  referred  to
therein,  then each  indemnifying  party shall  contribute to the amount paid or
payable by such  indemnified  party as a result of such loss,  claim,  damage or
liability,  or action in respect  thereof,  (i) in such  proportion  as shall be
appropriate to reflect the relative  benefits  received by the indemnified party
and indemnifying party or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative  benefits  referred to in clause (i) but also the relative
fault of the  indemnified  party and  indemnifying  party  with  respect  to the
statements or omissions which resulted in such loss, claim, damage or liability,
or  action  in  respect  thereof,  as  well  as  any  other  relevant  equitable
considerations.  Notwithstanding  any other  provision of this Section  9(d), no
Holder of  Registrable  Shares shall be required to contribute an amount greater
than the dollar  amount of the proceeds  received by such Holder with respect to
the  sale of any  such  Registrable  Shares.  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.

         10.  Rule  144.  The  Company  covenants  that it will file in a timely
manner the reports  required to be filed by it under the  Securities Act and the
Exchange Act and the rules and  regulations  promulgated  thereunder (or, if the
Company is not required to file such reports,  it will,  upon the request of any
Holder of Registrable Shares, make publicly available such information),  and it
will take such further action as any Holder of Registrable Shares may reasonably
request,  all to the extent  required from time to time to enable such Holder to
sell Registrable Shares without registration under the Securities Act within the
limitations of the exemptions provided by (a) Rule 144 under the Securities Act,
as such  Rule may be  amended


                                      -12-
<PAGE>


from time to time,  or (b) any similar rule or regulation  hereafter  adopted by
the SEC. Upon the request of any Holder of Registrable  Shares, the Company will
deliver to such Holder a written  statement as to whether it has  complied  with
such requirements.

         11.  Assignability.  The rights  granted to the PBGC in this  Agreement
shall not be assigned or transferred,  and any attempted  assignment or transfer
shall be null and void and without legal  effect;  provided,  however,  that the
PBGC or any Designated  Transferee  shall be entitled to assign and transfer any
or all of its rights hereunder to one or more Designated  Transferees as long as
(i) the obligations of the Company hereunder are not increased or enlarged, (ii)
each  Designated  Transferee  executes  and delivers an  agreement,  in form and
substance reasonably satisfactory to the Company,  acknowledging such Designated
Transferee's  obligations  under  this  Agreement,  and  (iii)  each  Designated
Transferee  acquires not less than 117,020  shares of Common  Stock,  subject to
equitable  adjustment  after  the date  hereof  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).

         12.  Notices.  Any and all  notices,  designations,  consents,  offers,
acceptances or any other  communications shall be given in writing by either (a)
personal  delivery to and  receipted  for by the addressee or by (b) telecopy or
registered  or  certified  mail  which  shall be  addressed,  in the case of the
Company,  to:  Allis-Chalmers  Corporation,  1626 South 70th Street,  Milwaukee,
Wisconsin 53214, Attention:  William Vaitl, with a copy to Luke E. Sims, Foley &
Lardner, 777 East Wisconsin Avenue,  Milwaukee,  Wisconsin 53202, in the case of
Holders,  the address or addresses thereof appearing on the books of the Company
or of the transfer agent and registrar for its Common Stock.

         All such notices and  communications  shall be deemed to have been duly
given and  effective:  when  delivered by hand,  if  personally  delivered;  two
business days after being deposited in the mail, postage prepaid, if mailed; and
when receipt acknowledged, if telecopied.

         13. No  Inconsistent  Agreements.  The Company will not hereafter enter
into any agreement with respect to its Common Stock which is  inconsistent  with
the rights granted to the Holders in this Agreement.

         14.  Specific  Performance.  The Company  acknowledges  that the rights
granted  to  the  Holders  in  this  Agreement  are  of a  special,  unique  and
extraordinary  character,  and that any breach of this  Agreement by the Company
could not be compensated for by damages.  Accordingly,  if the Company  breaches
its obligations under this Agreement, the Holders shall be entitled, in addition
to any other  remedies that they may have, to enforcement of this Agreement by a
decree of specific performance  requiring the Company to fulfill its obligations
under this Agreement.  The Company consents to personal jurisdiction in any such
action brought in the United States District Court for the Southern  District of
New York or any such other court and to service of process upon it in the manner
set forth in Section 11 hereof.



                                      -13-
<PAGE>


         15.  Severability.  If any  provision of this  Agreement or any portion
thereof is finally determined to be unlawful or unenforceable, such provision or
portion thereof shall be deemed to be severed from this  Agreement.  Every other
provision,  and  any  portion  of  such  an  invalidated  provision  that is not
invalidated by such a determination, shall remain in full force and effect.

         16.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts,  each of which  shall be  deemed  an  original  and all of  which,
together, shall constitute one and the same instrument.

         17. Defaults.  A default by any party to this Agreement in such party's
compliance with any of the conditions or covenants  hereof or performance of any
of the obligations of such party hereunder shall not constitute a default by any
other party.

         18. Amendments, Waivers. This Agreement may not be amended, modified or
supplemented  and no waivers of or consents to  departures  from the  provisions
hereof  may be given  unless  consented  to in writing  by the  Company  and the
Holders of a majority of the Registrable Shares; provided, however, that no such
amendment,  supplement,  modification  or waiver shall deprive any Holder of any
rights under Sections 2 or 4 hereof without the consent of such Holder.

         19.  Captions.  The  captions  contained  in  this  Agreement  are  for
reference purposes only and are not part of this Agreement.

         20. Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement,  or where any provision  hereof is validly asserted
as a defense,  the  successful  party shall be  entitled  to recover  reasonably
attorneys' fees in addition to any other available remedy.

         21.  Entire  Agreement.  This  Agreement,   together  with  the  Master
Agreement  and the other  agreements  referenced  therein,  contains  the entire
agreement among the parties hereto with respect to the transactions contemplated
herein and  understandings  among the parties  relating  to the  subject  matter
hereof.



                                      -14-
<PAGE>


         22.  Governing  Law.  This  Agreement is make  pursuant to and shall be
construed in  accordance  with the internal  laws of the State of Delaware.  The
parties  hereto submit to the  non-exclusive  jurisdiction  of 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 in any action or proceeding  arising out of or
relating to this Agreement.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date aforesaid.


                                          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




                                      -15-