<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1997.
REGISTRATION NO. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BUCYRUS INTERNATIONAL, INC.
BOONVILLE MINING SERVICES, INC.
MINSERCO, INC.
VON'S WELDING, INC.
(Exact names of Registrants as specified in their respective charters)
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<S> <C> <C>
DELAWARE 3531 39-0188050
DELAWARE 3531 36-3705811
DELAWARE 3531 39-1604081
WYOMING 3531 83-0251403
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Numbers) Identification Nos.)
</TABLE>
P.O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WI 53172-0500
(414) 768-4000
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
WILLARD R. HILDEBRAND
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BUCYRUS INTERNATIONAL, INC.
P.O. BOX 500
1100 MILWAUKEE AVENUE
SOUTH MILWAUKEE, WI 53172-0500
(414) 768-4000
(Address, including zip code, and telephone number, including area code, of
agent for service of process)
------------------------
Please address a copy of all communications to:
ANDREW J. GUZIKOWSKI, ESQ.
WHYTE HIRSCHBOECK DUDEK S.C.
111 EAST WISCONSIN AVENUE
SUITE 2100
MILWAUKEE, WISCONSIN 53202
(414) 273-2100
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 3/4% Senior Notes Due 2007............... $150,000,000.00 Par Par $45,455.00
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(1) To be offered to the public in exchange for the Registrant's existing 9 3/4%
Senior Notes due 2007.
(2) Estimated pursuant to Rule 457(c) under the Securities Act of 1933 solely
for purposes of calculating the registration fee.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
BUCYRUS INTERNATIONAL, INC.
BOONVILLE MINING SERVICES, INC.
MINSERCO, INC.
VON'S WELDING, INC.
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING THE
LOCATION IN THE PROSPECTUS OF THE RESPONSES TO THE ITEMS OF PART I OF FORM S-4
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S-4 ITEM NO. AND DESCRIPTION LOCATED UNDER CAPTION IN PROSPECTUS
- ---------------------------------------------------- ------------------------------------------
<S> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION:
------------------------------------------
Forepart of Registration Statement and
1. Outside Front Cover Page of Prospectus.... Outside front cover page
Inside Front and Outside Back Cover Pages
2. of Prospectus............................. Inside front cover page; "Available
Information;" "Incorporation of Certain
Information by Reference;" "Table of
Contents"
Risk Factors, Ratio of Earnings to Fixed
3. Charges and Other Information............. "Summary;" "Risk Factors"
Terms of the Transaction.................. "The Exchange Offer;" "Description of the
4. Notes"
Pro Forma Financial Information........... "Unaudited Pro Forma Combined Condensed
5. Financial Statements"
Material Contacts with Company Being
6. Acquired.................................. NOT APPLICABLE
Additional Information Required for Re-
7. offering by Persons and Parties Deemed to
be Underwriters........................... NOT APPLICABLE
Interests of Named Experts and Counsel.... NOT APPLICABLE
8.
Disclosure of Commission Position on
9. Indemnification for Securities Act
Liabilities............................... "Certain Relationships and Related
Transactions"
B. INFORMATION ABOUT THE REGISTRANT:
------------------------------------------
Information with Respect to S-3
10. Registrants............................... NOT APPLICABLE
Incorporation of Certain Information by
11. Reference................................. NOT APPLICABLE
Information with Respect to S-2 or S-3
12. Registrants............................... NOT APPLICABLE
Incorporation of Certain Information by
13. Reference................................. NOT APPLICABLE
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<PAGE> 3
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14. Information with Respect to Registrants Other Than
S-2 or S-3 Registrants.............................. "Acquisition of the Company by AIP;"
"Capitalization;" "Selected Consolidated Financial
Data;" "Management's Discussion and Analysis of
Financial Condition and Results of Operations;"
"Business;" "Management;" "Certain Relationships and
Related Transactions;" "Principal Shareholders;"
"Revolving Credit Facility;" "Index to Financial
Statements"
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED:
----------------------------------------------------------------------------------------------------------
Information with Respect to S-3
15. Companies........................................... NOT APPLICABLE
Information with Respect to S-2 or S-3 Companies.... NOT APPLICABLE
16.
Information with Respect to Companies Other Than S-2
17. or S-3 Companies.................................... NOT APPLICABLE
D. VOTING AND MANAGEMENT INFORMATION:
----------------------------------------------------
Information if Proxies, Consents, or Authorizations
18. Are to be Solicited................................. NOT APPLICABLE
Information if Proxies, Consents, or Authorizations
19. Are Not to be Solicited in an Exchange Offer........ "Management;" "Principal Shareholders"
</TABLE>
<PAGE> 4
PROSPECTUS
BUCYRUS INTERNATIONAL, INC. [BUCYRUS LOGO]
OFFER TO EXCHANGE 9 3/4% SENIOR NOTES DUE 2007 FOR ANY AND ALL EXISTING NOTES
(AS DEFINED) AS DESCRIBED HEREIN, WITHDRAWAL RIGHTS WITH RESPECT TO THE EXCHANGE
OFFER ARE EXPECTED TO EXPIRE AT THE EXPIRATION OF THE EXCHANGE OFFER
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON DECEMBER ,
1997, UNLESS EXTENDED.
Bucyrus International, Inc., a Delaware corporation ("Bucyrus" and, together
with its subsidiaries, the "Company"), hereby offers (the "Exchange Offer"),
upon the terms and subject to the conditions set forth in this prospectus (the
"Prospectus") and the accompanying letter of transmittal (the "Letter of
Transmittal"), to exchange up to $150,000,000 aggregate principal amount of its
9 3/4% Senior Notes Due 2007 (the "Exchange Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement (as defined) of which this Prospectus is a part, for a
like principal amount of its outstanding 9 3/4% Senior Notes Due 2007 (the
"Existing Notes" and, together with the Exchange Notes, the "Notes"). The
Existing Notes were originally issued in a transaction that was exempt from
registration under the Securities Act (the "Private Offering") and since such
issuance have been resold to (i) qualified institutional buyers in reliance on,
and subject to the restrictions imposed pursuant to, Rule 144A under the
Securities Act ("Rule 144A") and (ii) non-U.S. persons outside the United States
of America in accordance with Regulation S under the Securities Act ("Regulation
S"). The terms of the Exchange Notes are identical in all material respects to
the terms of the Existing Notes that are to be exchanged therefor except that
the Exchange Notes have been registered under the Securities Act and will not
bear legends restricting the transferability thereof, certain registration
rights relating to the Existing Notes will terminate upon completion of the
Exchange Offer, and, if the Exchange Offer is not consummated by March 23, 1998,
Liquidated Damages (as defined) will accrue until but not including the date the
Exchange Offer is consummated. See "Description of the Notes" and "Exchange
Offer; Registration Rights." For federal income tax purposes, an exchange made
pursuant to the Exchange Offer should not constitute a taxable exchange. See
"Exchange Offer; Registration Rights -- Certain Federal Tax Consequences."
Based on interpretations by the staff of the Securities and Exchange Commission
(the "Commission" or "SEC"), as set forth in no-action letters issued to third
parties, Bucyrus believes the Exchange Notes issued pursuant to the Exchange
Offer may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder that is an "affiliate" of Bucyrus within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such holders'
business, such holders are not engaged in and do not intend to engage in, a
distribution of such Exchange Notes and such holders have no arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes. However, the Commission has not considered the Exchange Offer in
the context of a no-action letter and therefore there can be no assurance that
the staff of the Commission would make a similar determination with respect to
the Exchange Offer as in such other circumstances.
SEE "RISK FACTORS" ON PAGE 13 FOR A DESCRIPTION OF CERTAIN FACTORS THAT SHOULD
BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN THE
EXCHANGE NOTES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November , 1997.
<PAGE> 5
Each holder of Existing Notes that desires to participate in the Exchange Offer,
other than a broker-dealer, must acknowledge that it is not engaged in, and does
not intend to engage in, a distribution of Exchange Notes and has no arrangement
or understanding to participate in a distribution of Exchange Notes. Each
broker-dealer that receives Exchange Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of Exchange Notes
received in exchange for Existing Notes where such Existing Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities. As described more fully herein, for a period of one year after the
Expiration Date (as defined), Bucyrus will make this Prospectus available to any
Participating Broker-Dealer (as defined) for use in connection with any such
resale. See "The Exchange Offer" and "Plan of Distribution."
EXCEPT AS DESCRIBED IN THE PRECEDING PARAGRAPH, THIS PROSPECTUS MAY NOT BE USED
FOR AN OFFER TO RESELL, A RESALE OR ANY OTHER RETRANSFER OF EXCHANGE NOTES.
The Exchange Offer is not conditioned upon any minimum number of Existing Notes
being tendered. The Exchange Offer will expire at 5:00 p.m., New York City time,
on December , 1997, unless extended (the "Expiration Date"). Subject to the
terms and conditions of the Exchange Offer, including the reservation of certain
rights by Bucyrus and the right of holders of Existing Notes to withdraw tenders
prior to the acceptance thereof, Existing Notes validly tendered prior to the
Expiration Date will be accepted on or promptly after the Expiration Date.
Exchange Notes to be issued in exchange for properly tendered Existing Notes
will be mailed by the Exchange Agent (as defined herein) promptly after the
acceptance thereof. In the event Bucyrus terminates the Exchange Offer and does
not accept for exchange any Existing Notes, Bucyrus will promptly return the
Existing Notes to the holders thereof. See "The Exchange Offer."
The Notes will mature on September 15, 2007. Interest on the Notes will be
payable semiannually on March 15 and September 15 of each year, commencing March
15, 1998. The Existing Notes are, and the Exchange Notes will be, redeemable at
the option of Bucyrus, in whole or in part, at any time on or after September
15, 2002, at the redemption prices set forth herein, plus accrued and unpaid
interest, if any, to the date of redemption. In addition, at any time or from
time to time on or prior to September 15, 2000, Bucyrus may redeem Notes with
the net cash proceeds of one or more Public Equity Offerings (as defined) at a
redemption price equal to 109.75% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date of redemption; provided, however, that
at least 66% of the principal amount of the Notes originally issued remains
outstanding after each such redemption. Upon a Change of Control (as defined),
each holder of Notes will have the right to require Bucyrus to purchase all or a
portion of such holder's Notes at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase. See "Description of the Notes -- Optional Redemption" and "--
Change of Control."
The Existing Notes are, and the Exchange Notes will be, general unsecured
obligations of Bucyrus and rank senior in right of payment to all future
Indebtedness (as defined) of Bucyrus that is expressly subordinated in right of
payment to the Notes and pari passu in right of payment with all existing and
future unsecured obligations of Bucyrus that are not so subordinated. The
Existing Notes are, and the Exchange Notes will be, fully and unconditionally
guaranteed (collectively, the "Guarantees") by each domestic Restricted
Subsidiary (as defined) (collectively, the "Guarantors"). Each Guarantee is a
general unsecured obligation of the Guarantor thereof and ranks senior in right
of payment to all future Indebtedness of such Guarantor that is expressly
subordinated in right of payment to such Guarantee and pari passu in right of
payment with all existing and future unsecured obligations of such Guarantor
that are not so subordinated. The Existing Notes and the Guarantees are, and the
Exchange Notes will be, effectively subordinated to secured obligations of
Bucyrus and the Guarantors, respectively, to the extent of the assets securing
such obligations. The Existing Notes are, and the Exchange Notes will be,
<PAGE> 6
effectively subordinated to all existing and future liabilities, including
Indebtedness, of Bucyrus' foreign subsidiaries.
As of June 30, 1997, on a pro forma basis after giving effect to the
consummation of the Private Offering, the Bridge Loan (as defined), the
Revolving Credit Facility (as defined), the repayment of the Secured Notes (as
defined) and the payment of fees and expenses in connection with the foregoing
(collectively referred to herein as the "Transactions"), the Company would have
had approximately $36.0 million aggregate principal amount of secured
indebtedness, $6.1 million of outstanding letters of credit, and $47.0 million
of undrawn borrowings under the Company's $75.0 million credit facility entered
into with Bank One, Wisconsin, as of September 24, 1997 (the "Revolving Credit
Facility").
There has not previously been any public market for the Existing Notes or the
Exchange Notes. Bucyrus does not intend to list the Exchange Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
Exchange Notes will develop. See "Risk Factors -- Absence of a Public Market for
the Notes." Moreover, to the extent that Existing Notes are tendered and
accepted in the Exchange Offer, the trading market, if any, for untendered and
tendered but unaccepted Existing Notes could be adversely affected.
Bucyrus will not receive any proceeds from the Exchange Offer, but will bear
certain offering expenses pursuant to the Registration Agreement, dated
September 24, 1997 (the "Registration Agreement"), among Bucyrus and the Initial
Purchasers (as defined) of the Existing Notes. The Exchange Offer is intended to
satisfy certain of Bucyrus' obligations under the Registration Agreement,
including the obligation to register the exchanged Existing Notes under the
Securities Act. Upon the completion of the Exchange Offer, certain special
rights under the Registration Agreement will terminate with respect to Existing
Notes, and holders of Exchange Notes will not be entitled to such rights. See
"The Exchange Offer -- Termination of Certain Rights." No dealer manager is
being utilized in connection with the Exchange Offer.
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the related notes, appearing elsewhere in this Prospectus. Unless the
context otherwise requires, the term "Company" as used in this Prospectus means
Bucyrus International, Inc. and its subsidiaries, before the Marion Acquisition
described below. The pro forma information contained herein and elsewhere in
this Prospectus gives effect to the Marion Acquisition and the AIP Merger
(described below) as if both had occurred on January 1, 1996, or June 30, 1997,
as indicated. See "Unaudited Pro Forma Combined Condensed Financial Statements."
The principal executive offices of the Company are located at 1100 Milwaukee
Avenue, P.O. Box 500, South Milwaukee, WI 53172-0500, and its telephone number
is (414) 768-4000.
The industry size and growth, market share, and competitive position data
contained in this Prospectus are based on internal, industry, and other sources
that are believed to be reliable. Such data are inherently imprecise, but the
Company believes that such data are generally indicative of industry size and
growth and the Company's relative market share and competitive position.
BUSINESS OVERVIEW
The Company is one of the world's leading manufacturers of large-scale
excavation equipment used in surface mining and other earth moving operations,
including rotary blast hole drills, electric mining shovels, and draglines.
Bucyrus machines are used throughout the world by customers who mine coal, iron
ore, copper, gold, phosphate, bauxite, oil sands, and other minerals, as well as
for land reclamation activities. In addition to original equipment manufacturing
("OEM"), an important part of the Company's business consists of aftermarket
sales, such as supplying parts, providing maintenance and repair services, and
providing technical advice, as well as refurbishing and relocating older,
installed machines. After giving pro forma effect to the Marion Acquisition, the
Company's net sales for fiscal 1996 would have been $373.4 million, comprised of
$143.8 million (39%) of new equipment sales and $229.6 million (61%) of
aftermarket sales, fiscal 1996 EBITDA (as defined herein) would have been $34.0
million, and consolidated backlog would have been $243.5 million at June 30,
1997.
The Company manufactures the world's top selling rotary blast hole drills,
having produced a majority of the estimated 69 drills sold in the industry
during 1995 and 1996. The Company's electric mining shovels hold a significant
market position, particularly in developing areas of the world such as China and
Chile, where the Company had an estimated 83% and 65% market share,
respectively, over the last seven years. The Company also manufactures
draglines, which are the industry's largest and most expensive type of
equipment. While sales are sporadic, each dragline represents a significant
sales opportunity, and in September 1997, the Company signed an agreement with
an Australian mining company to build the world's fourth largest dragline, which
is scheduled for completion by December 31, 1999. This is expected to generate
net sales of approximately $57.5 million over the next two and a half years.
The Company's aftermarket parts and service business caters primarily to
its large installed equipment base. Aftermarket support is critical in enhancing
machine longevity and productivity in the field, and its importance is a
function of the size, expense, complexity, and long service life of this type of
equipment. Over the life of a machine, net sales generated from aftermarket
parts and services can exceed the original purchase price. As a result of the
Marion Acquisition, management estimates that the Company has an installed
equipment base of nearly 1,200 machines, consisting of approximately 380
operating draglines (approximately 90% of the world's installed base),
approximately 310 operating rotary blast hole drills (approximately 65% of the
world's installed base), and approximately 485 operating electric mining shovels
(approximately 30% of the world's installed base). Management estimates that the
replacement value of the Company's installed equipment base is in excess of $9
billion based upon current purchase prices for the same or similar machines.
<PAGE> 8
During the past three years, approximately 70% of the Company's new machine
and aftermarket net sales have been in international markets. Among the more
significant foreign markets for the Company's products and services are
Australia and South Africa, as well as developing areas such as Chile and China.
The Company has an established network of foreign subsidiaries and offices that
directly market the Company's products and provide ongoing aftermarket services
overseas. The Company believes that this approach offers better customer service
and support by providing international customers with direct access to the
Company's technological and engineering expertise.
THE MARION ACQUISITION
On August 26, 1997, the Company consummated the acquisition (the "Marion
Acquisition") of certain assets and liabilities of The Marion Power Shovel
Company, a subsidiary of Global Industrial Technologies, Inc. ("Global"), and of
certain subsidiaries and divisions of Global that represent Global's surface
mining equipment business in Australia, Canada, and South Africa (collectively
referred to herein as "Marion"). The purchase price for Marion was $40.1
million, subject to post-closing adjustments which would have reduced the
purchase price by approximately $3.7 million if the Marion Acquisition had taken
place on June 30, 1997.
The Company financed the Marion Acquisition and related fees and expenses
utilizing a $45.0 million unsecured bridge loan (the "Bridge Loan") provided by
a former affiliate of the Company which has been repaid in full with a portion
of the proceeds of the Private Offering.
Marion manufactured large-scale surface mining excavation equipment,
primarily draglines and electric mining shovels, and had a significant
aftermarket parts and services business. For the fiscal year ended October 31,
1996, Marion had total net sales of $109.6 million, consisting of $36.4 million
(33%) in new equipment sales and $73.2 million (67%) in aftermarket parts and
service sales. See "Business -- The Marion Acquisition."
The Marion Acquisition provides a number of benefits to the Company,
including a substantial increase in the Company's worldwide installed equipment
base, expansion of the Company's presence in several important markets, and the
opportunity to achieve significant cost savings.
INCREASED INSTALLED EQUIPMENT BASE. The Marion Acquisition increased
the Company's installed equipment base from approximately 900 machines to
nearly 1,200 machines worldwide, providing the Company with significantly
greater opportunities to market its aftermarket parts and services.
EXPANDED PRESENCE IN POTENTIALLY HIGH GROWTH MARKETS. The Marion
Acquisition provides the Company with an increased strategic presence in
markets that are anticipated to experience substantial growth over the next
several years, such as India and Russia, through Marion's established
relationships with local mining interests and governmental authorities.
SIGNIFICANT COST SAVINGS. The Marion Acquisition results in pro forma
cost savings of $12.5 million for fiscal 1996 as described below, and $5.9
million for the six months ended June 30, 1997, through the consolidation
of manufacturing operations and the rationalization of engineering and
administrative functions. In addition, the Company has identified an
estimated $3.0 million in potential annual cost savings that are not
reflected in the pro forma financial results. The cost savings reflected in
the pro forma results and summarized below, and other anticipated cost
savings, are based on assumptions and expectations that the Company
believes to be reasonable, but are dependent on a variety of important
factors. See "Risk Factors -- Realization of Benefits of the Marion
Acquisition; Integration of Marion" and "Unaudited Pro Forma Combined
Condensed Financial Statements."
The Company is consolidating all of Marion's manufacturing operations
into the Company's existing facilities as Marion's manufacturing facility
was not acquired as part of the Marion
2
<PAGE> 9
Acquisition. This consolidation results in pro forma manufacturing cost
savings of $5.0 million for fiscal 1996, including reductions in direct
facility costs, fixed manufacturing administrative costs, and nonpayroll
manufacturing costs. The Marion Acquisition also results in pro forma
general and administrative cost savings for fiscal 1996 of $5.3 million
through the consolidation of duplicative engineering, accounting, and other
administrative staff, because only selected Marion employees were hired by
the Company. In addition, the elimination of allocated corporate overhead
charges results in pro forma cost savings of $2.2 million for fiscal 1996.
The Company expects to generate the $3.0 million in additional cost
savings not reflected in the pro forma financial results by reducing direct
labor costs, consolidating engineering functions, eliminating marketing
personnel, and closing certain duplicative parts and service locations
resulting from the Marion Acquisition.
ACQUISITION OF THE COMPANY BY AIP
On August 21, 1997, Bucyrus entered into an Agreement and Plan of Merger
(the "AIP Agreement") with American Industrial Partners Acquisition Company, LLC
("AIPAC"), which is wholly owned by American Industrial Partners Capital Fund
II, L.P. ("AIP"), and Bucyrus Acquisition Corp. ("BAC"), a wholly owned
subsidiary of AIPAC. Pursuant to the AIP Agreement, on August 26, 1997, BAC
commenced an offer to purchase for cash 100% of the common stock of Bucyrus (the
"Common Stock") at a price of $18.00 per share (the "AIP Tender Offer").
Consummation of the AIP Tender Offer occurred on September 24, 1997, and BAC was
merged with and into Bucyrus on September 26, 1997 (the "AIP Merger"). Bucyrus
is the surviving entity in the AIP Merger and is currently wholly-owned by
AIPAC.
AIP is a private investment fund headquartered in San Francisco and New
York with committed capital of approximately $574 million. AIP seeks to invest
in companies with either a protected competitive position or proprietary
capability, ideally combined with a leading market share. The firm does not seek
to play a role in daily management; rather, AIP seeks to provide its portfolio
companies with access to the management expertise of its operating partners, all
of whom are former Chief Executive Officers of Fortune 500 corporations, through
active board-level participation as well as on-call advice when desired. See
"Acquisition of the Company by AIP."
Following consummation of the AIP Merger, Robert L. Purdum, an operating
partner of AIP and former Chairman, President and Chief Executive Officer of
Armco Inc., is expected to become the Company's Non-Executive Chairman of the
Board. Although no specific arrangements are in place AIP intends to offer the
Company's executive officers the opportunity to own up to 10% of the Company's
equity through a combination of direct investments and option programs.
BUSINESS STRATEGY
Following an in-depth, strategic review of management and operations in
1995, the Board of Directors refocused the Company's business strategy and hired
a new management team, including Willard R. Hildebrand, President and Chief
Executive Officer, and Daniel J. Smoke, Vice President and Chief Financial
Officer. In addition, the Board increased the responsibilities of four other
senior officers who had been with the Company for an average of 23 years. AIP
intends to continue the Company's existing business strategy, which includes the
following key elements:
GROW THE AFTERMARKET BUSINESS. The Company has increased its focus on
the important aftermarket business because of its attractive profit margins
and its greater stability and predictability compared to the market for new
equipment. In addition, providing aftermarket support, which is critical to
maintain machine longevity and productivity in the field, enhances the
Company's ability to secure new machine orders in the future. The Company's
focus on its aftermarket business is reflected in a number of recently
implemented strategic initiatives that include: (i) working with suppliers
to increase stock levels of replacement parts to shorten
3
<PAGE> 10
response times to customer inquiries; (ii) installation of a new
computerized parts quoting system to improve responsiveness to customer
inquiries; (iii) forming a dedicated engineering team to focus on reducing
manufacturing costs for replacement parts; (iv) enhancing relationships
with key suppliers in order to reduce raw material and purchased part
costs; (v) expanding the Company's facilities in important foreign markets,
such as Chile and South Africa; (vi) investing additional capital in the
Company's domestic repair and service subsidiaries, Boonville Mining
Services, Inc. and Minserco, Inc.; and (vii) purchasing Von's Welding,
Inc., an aftermarket supplier of mining machinery parts and services,
located in Gillette, Wyoming, in North America's most important coal mining
region.
INCREASE OEM QUALITY AND PROFITABILITY. The Company is committed to
increasing the profitability of OEM sales by improving the design and
engineering of its existing line of machines, as well as developing new
products. During 1996, the Company's engineering and service functions were
significantly restructured in response to feedback from a customer focus
group formed to provide direction to the Company's engineering development
activities. A continuation of this close relationship with customers is
fundamental to the Company's objective to become more market driven.
Specific goals included reducing lead times, improving product quality and
reliability, and improving profit margins on OEM sales. To further these
goals, the Company has increased its investment in work-in-process
inventory to reduce delivery times for new equipment orders. The Company's
commitment to quality has been formally recognized by its receipt of ISO
9001 Certification from Det Norske Veritas, one of the world's leading
standards organizations.
MODERNIZE PLANT AND EQUIPMENT. During 1996, the Company began a number
of initiatives to modernize its manufacturing facilities in order to reduce
lead times and inventory levels, provide quicker turn around, and reduce
overall costs of manufacturing both new machines and replacement parts. The
most significant initiative is a three-year, $20 million modernization
program at the Company's South Milwaukee facility. The program includes
replacing approximately 47 older, less efficient machines with 14
technologically advanced machines, and upgrading 10 existing machine tools.
As of June 30, 1997, approximately $5.5 million had been committed to this
project and seven of the 14 machines had been installed, with the remainder
scheduled for installation by early 1999. Following the completion of the
modernization program, the Company expects to realize significant annual
cost savings not reflected in the pro forma financial results through the
reduction of labor, overhead, and raw materials costs.
FOCUS ON STRATEGIC MARKETS. Although 76% of the Company's net sales of
new machines have come from foreign markets during the past five years,
management believes that North America (primarily the western United
States, western Canada, and Mexico) continues to be one of the world's most
important markets for surface mining equipment. Therefore, the Company's
focus includes the strategic placement of its new, quality-engineered
electric mining shovels in high-profile North American installations. The
Company sold the first of these shovels in Canada in 1995, and in the
United States and Mexico in 1996. The Company believes that these
installations will create opportunities for increased new machine sales in
North America. Management has been encouraged by repeat orders in 1997 for
two additional shovels from one of these customers and the receipt of a
shovel order from a new North American customer that has historically
purchased all its equipment from the Company's primary competitor.
EXPAND MARC PROGRAM. The Company is aggressively promoting its
Maintenance and Repair Contracts ("MARCs"), under which mine operators
outsource to the Company all regular maintenance services, repair functions
and, in some cases, operation of the equipment serviced. MARCs offer the
Company a generally predictable, high-margin revenue stream. The Company
currently operates eight MARCs and is seeking to expand the MARC program,
primarily in new mines.
4
<PAGE> 11
While a number of these initiatives have not been fully implemented and the
anticipated benefits have not yet been fully realized, from 1995 to 1996 the
Company's net sales increased 14%, from $231.9 million to $263.8 million, and
EBITDA (as defined herein) improved from $12.7 million (5.5% of net sales) to
$19.2 million (7.3% of net sales). For the first six months of 1997, as compared
to the first six months of 1996, net sales increased 10%, from $130.8 million to
$143.8 million, and EBITDA (as defined herein) improved from $9.3 million (7.1%
of net sales) to $12.9 million (9.0% of net sales). The Company's consolidated
backlog at June 30, 1997 increased 36% to $215.8 million from $158.7 million at
December 31, 1996. The Marion Acquisition provides the Company with increased
opportunities to implement these initiatives, particularly with respect to
Marion's aftermarket business.
RISK FACTORS
Before exchanging Existing Notes for the Exchange Notes offered hereby,
holders of Existing Notes should consider carefully the factors described in
"Risk Factors" and all other information set forth in this Prospectus.
5
<PAGE> 12
SUMMARY OF TERMS OF THE EXCHANGE OFFER
Registration Agreement........ The Existing Notes were sold by Bucyrus on
September 24, 1997 (the "Issue Date") to
Salomon Brothers Inc, Jefferies & Company,
Inc., and Donaldson, Lufkin & Jenrette
Securities Corporation (the "Initial
Purchasers"), which resold the Existing Notes
to certain institutional investors in reliance
on Rule 144A under the Securities Act. In
connection therewith, Bucyrus executed and
delivered, for the benefit of the holders of
the Existing Notes, the Registration Agreement
providing for, among other things, the Exchange
Offer. See "The Exchange Offer -- General,"
"Exchange Offer; Registration Rights" and "Plan
of Distribution."
The Exchange Offer............ Bucyrus is offering to exchange up to
$150,000,000 aggregate principal amount of the
Exchange Notes for a like principal amount of
Existing Notes. Bucyrus will issue the Exchange
Notes on the earliest practicable date
following the Expiration Date.
Based on interpretations by the staff of the
Commission, as set forth in several no-action
letters issued to third parties, the Company
believes that the Exchange Notes issued
pursuant to the Exchange Offer in exchange for
Existing Notes may be offered for resale,
resold and otherwise transferred by any holder
thereof (other than any such holder that is an
"affiliate" of Bucyrus within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act,
provided that such Exchange Notes are acquired
in the ordinary course of such holder's
business and that such holder is not engaged
in, and does not intend to engage in, a
distribution of such Exchange Notes and has no
arrangement or understanding with any person to
participate in the distribution of such
Exchange Notes. The Commission, however, has
not considered the Exchange Offer in the
context of a no-action letter and there can be
no assurance that the staff of the Commission
would make a similar determination with respect
to the Exchange Offer as in such other
circumstances.
Each broker-dealer that receives Exchange Notes
for its own account in exchange for Existing
Notes pursuant to the Exchange Offer must
acknowledge that such Existing Notes were
acquired by such broker-dealer as a result of
market-making activities or other trading
activities and that it will deliver a
prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by
delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may
be used by a broker-dealer for a period of one
year after the Expiration Date in connection
with resales of Exchange Notes received in
exchange for Existing Notes where such Existing
Notes were acquired by such broker-dealer as a
result of market-making activities or other
trading activities. Bucyrus has agreed that,
for a period of one year after the Expiration
Date, it will make this Prospectus available to
any broker-dealer (which may include the
Initial Purchasers) that elects to exchange
Existing Notes, acquired for its own account as
a result of market-making activities or other
6
<PAGE> 13
trading activities, for Exchange Notes
(collectively, "Participating Broker-Dealers")
for use in connection with any such resale. See
"Plan of Distribution."
Each holder of Existing Notes that desires to
participate in the Exchange Offer, other than a
broker-dealer, must acknowledge that it is not
engaged in, and does not intend to engage in, a
distribution of Exchange Notes and has no
arrangement or understanding to participate in
a distribution of Exchange Notes. See "The
Exchange Offer" and "Plan of Distribution."
Expiration Date............... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on December , 1997,
unless the Exchange Offer is extended by
Bucyrus in its sole discretion, in which case
the term "Expiration Date" means the latest
date and time to which the Exchange Offer is
extended.
Accrued Interest on the
Exchange Notes and Existing
Notes....................... Holders of Existing Notes that are accepted for
exchange will not receive any accrued interest
thereon. However, each Exchange Note will bear
interest from the most recent date on which
interest has been paid on the corresponding
Existing Note, or, if no interest has been
paid, from September 24, 1997.
Conditions to the Exchange
Offer......................... The Exchange Offer is subject to certain
customary conditions, which may be waived by
Bucyrus. See "The Exchange Offer --
Conditions." The Exchange Offer is not
conditioned upon any minimum aggregate
principal amount of Existing Notes being
tendered for exchange.
Withdrawal Rights............. Subject to the conditions set forth herein,
tenders of Existing Notes may be withdrawn
prior to 5:00 p.m., New York City time, on the
Expiration Date. See "The Exchange Offer --
Withdrawal Rights."
Acceptance of Existing Notes
and Delivery of Exchange
Notes....................... Subject to the terms and conditions of the
Exchange Offer, including the reservation of
certain rights by Bucyrus, Bucyrus will accept
for exchange any and all Existing Notes that
are properly tendered in the Exchange Offer,
and not withdrawn, prior to 5:00 p.m., New York
City time, on the Expiration Date. Subject to
such terms and conditions, the Exchange Notes
issued pursuant to the Exchange Offer will be
delivered on the earliest practicable date
following the Expiration Date. Any Existing
Notes not accepted for exchange for any reason
will be returned without cost to the tendering
holder thereof promptly after the Expiration
Date. See "The Exchange Offer -- Acceptance of
Tenders."
Certain Federal Income Tax
Consequences................ For federal income tax purposes, the exchange
of an Existing Note for a Exchange Note should
not constitute a taxable exchange by its
holder. Accordingly, the holders should not
recognize any taxable gain or loss upon such
exchange. See "Exchange Offer; Registration
Rights -- Certain Federal Tax Consequences."
Untendered Existing Notes..... Holders of Existing Notes who do not tender
their Existing Notes in the Exchange Offer or
whose Existing Notes are not accepted for
exchange will continue to hold such Existing
Notes and will be entitled to all the rights
and preferences and will be subject to the
limitations applicable thereto under
7
<PAGE> 14
the Indenture (as defined), except for any such
rights, preferences or limitations which, by
their terms, terminate or cease to be effective
as a result of this Exchange Offer. All
untendered and tendered but unaccepted Existing
Notes will continue to be subject to certain
restrictions on transfer provided therein. See
"Risk Factors -- Restrictions on Transfer." To
the extent that Existing Notes are tendered and
accepted in the Exchange Offer, the trading
market, if any, for untendered and tendered but
unaccepted Existing Notes could be adversely
affected. See "Risk Factors -- Absence of a
Public Market for the Notes" and "The Exchange
Offer -- Certain Effects of the Exchange
Offer."
Broker-Dealers................ Each broker-dealer that receives Exchange Notes
for its own account in exchange for Existing
Notes, where such Existing Notes were acquired
by such broker-dealer as a result of
market-making activities or other trading
activities, must acknowledge that it will
deliver a Prospectus in connection with any
resale of such Exchange Notes. See "Plan of
Distribution."
Exchange Agent/Trustee........ Harris Trust and Savings Bank is serving as
Exchange Agent (the "Exchange Agent") in
connection with the Exchange Offer and as
Trustee ("Trustee") under the Indenture (as
defined).
SUMMARY OF TERMS OF THE EXCHANGE NOTES
The terms of the Exchange Notes and the Existing Notes are identical in all
material respects, except for certain transfer restrictions and registration
rights relating to the Existing Notes and except that, if the Exchange Offer is
not consummated by March 23, 1998, Liquidated Damages (as defined in the
Registration Agreement) will accrue until but excluding the date of consummation
of the Exchange Offer.
Indenture..................... The Existing Notes were, and the Exchange Notes
will be, issued pursuant to an indenture dated
as of September 24, 1997 among Bucyrus, the
Guarantors, and the Trustee (the "Indenture").
Exchange Notes................ $150,000,000 in aggregate principal amount of
9 3/4% Senior Notes Due 2007 of Bucyrus
International, Inc. which have been registered
under the Securities Act.
Maturity Date................. September 15, 2007.
Interest Payment Dates........ Each March 15 and September 15, commencing
March 15, 1998.
Ranking; Guarantees........... The Existing Notes are, and the Exchange Notes
will be, general unsecured obligations of
Bucyrus and rank senior in right of payment to
all future Indebtedness of Bucyrus that is, by
its terms, expressly subordinated in right of
payment to the Notes and pari passu in right of
payment with all existing and future unsecured
obligations of Bucyrus that are not so
subordinated. The Existing Notes are, and the
Exchange Notes will be, fully and
unconditionally guaranteed by each domestic
Restricted Subsidiary. Each Guarantee is a
general unsecured obligation of the Guarantor
thereof and ranks senior in right of payment to
all future Indebtedness of such
8
<PAGE> 15
Guarantor that is, by its terms, expressly
subordinated in right of payment to such
Guarantee and pari passu in right of payment
with all existing and future unsecured
obligations of such Guarantor that are not so
subordinated. The Existing Notes and the
Guarantees are, and the Exchange Notes will be,
effectively subordinated to secured obligations
of Bucyrus and the Guarantors, respectively, to
the extent of the assets securing such
obligations. The Existing Notes are, and the
Exchange Notes will be, effectively
subordinated to all existing and future
liabilities, including Indebtedness, of
Bucyrus' foreign subsidiaries.
Sinking Fund.................. None.
Optional Redemption........... The Existing Notes are, and the Exchange Notes
will be, redeemable, at the option of Bucyrus,
in whole or in part, at any time on or after
September 15, 2002, at the redemption prices
set forth herein, plus accrued and unpaid
interest, if any, to the date of redemption. In
addition, at any time or from time to time on
or prior to September 15, 2000, Bucyrus may
redeem Notes with the net cash proceeds of one
or more Public Equity Offerings (as defined) at
a redemption price in cash equal to 109.75% of
the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of
redemption; provided, however, that at least
66% of the principal amount of the Notes
originally issued shall be outstanding after
each such redemption. See "Description of the
Notes -- Optional Redemption."
Change of Control............. Upon the occurrence of a Change of Control,
each holder of Notes will have the right to
require Bucyrus to purchase all or a portion of
such holder's Notes at a price in cash equal to
101% of the aggregate principal amount thereof,
plus accrued and unpaid interest, if any, to
the date of purchase. In the event of a Change
of Control, there can be no assurance that
Bucyrus will have the financial resources or be
permitted under the terms of its other
indebtedness to purchase the Notes. See
"Description of the Notes -- Change of
Control."
Certain Covenants............. The Indenture contains certain covenants that,
among other things, limit the ability of
Bucyrus and the Restricted Subsidiaries to: (i)
incur additional indebtedness; (ii) pay
dividends or make other distributions with
respect to capital stock; (iii) make certain
investments; (iv) sell certain assets; (v)
enter into certain transactions with
affiliates; (vi) create liens; (vii) enter into
certain sale and leaseback transactions; and
(viii) enter into certain mergers and
consolidations. Such covenants are subject to
important qualifications and limitations. See
"Description of the Notes -- Certain
Covenants."
Registration Rights........... The Company has filed a registration statement
on Form S-4 (together with any amendments
thereto, the "Registration Statement") with
respect to the Exchange Offer made hereby, and
has agreed to use its best efforts to cause the
9
<PAGE> 16
Registration Statement to become effective on
or prior to February 21, 1998. In the event
that any changes in law or the applicable
interpretations of the staff of the Commission
do not permit Bucyrus to effect the Exchange
Offer made hereby, if the Registration
Statement is not declared effective on or prior
to February 21, 1998, if the Exchange Offer is
not consummated on or prior to March 23, 1998
for any reason attributable to actions or
inactions of Bucyrus, or under certain other
circumstances, Bucyrus will, as promptly as
practicable, file with the Commission a shelf
registration statement with respect to the
resale of the Existing Notes (the "Shelf
Registration Statement"), use its best efforts
to cause such Shelf Registration Statement to
become effective generally within 30 days after
the date on which Bucyrus is required to file
the Shelf Registration Statement, and to keep
the Shelf Registration Statement effective
until three years after the effective date
thereof (or until one year after such effective
date if the Shelf Registration Statement is
filed at the request of an Initial Purchaser).
Upon consummation of the Exchange Offer,
Bucyrus generally will have no further
obligation to register the Existing Notes. See
"Exchange Offer; Registration Rights."
Termination of Certain
Rights........................ Holders of Exchange Notes will not be entitled
to certain rights under the Registration
Agreement, including the right to require
Bucyrus to file a registration statement with
respect to the Exchange Notes, and to file a
Shelf Registration Statement, except in certain
limited circumstances. See "The Exchange Offer
-- Termination of Certain Rights."
Absence of a Public Market for
the Exchange Notes............ The Exchange Notes will be new securities for
which there currently is no market. Although
the Initial Purchasers have informed the
Company that they currently intend to make a
market in the Exchange Notes, they are not
obligated to do so, and any such market making
may be discontinued at any time without notice.
Accordingly, there can be no assurance as to
the development or liquidity of any market for
the Exchange Notes. The Company does not intend
to apply for listing of the Exchange Notes on
any securities exchange or for quotation
through The Nasdaq National Market.
Use of Proceeds............... Bucyrus will not receive any proceeds from the
Exchange Offer. The net proceeds to Bucyrus
from the sale of the Existing Notes were used
to purchase or redeem 100% of the Company's
10.5% Secured Notes due December 14, 1999 (the
"Secured Notes") and to refinance indebtedness
incurred in connection with the Marion
Acquisition and the AIP Merger and to pay fees
and expenses related thereto.
For further information regarding the Exchange Notes, see "Description of
the Notes."
10
<PAGE> 17
SUMMARY FINANCIAL INFORMATION AND OTHER DATA
The following table presents selected historical financial data derived
from the consolidated financial statements of the Company and summary pro forma
combined data of the Company and Marion as of the dates and for each of the
periods indicated. The pro forma data were prepared to illustrate the estimated
effect of the Transactions as if the Transactions had occurred, in the case of
statement of operations data and other data, as of January 1, 1996, and in the
case of balance sheet data, as of June 30, 1997. In addition, the pro forma data
for the year ended December 31, 1996, have been prepared using Marion's results
for the fiscal year ended October 31, 1996. The results of Marion's operations
for the twelve month period ending October 31, 1996, are not necessarily
indicative of the results of Marion's operations for the twelve month period
ending December 31, 1996. The pro forma data do not purport to be indicative of
the results of operations or financial position of the Company and Marion that
actually would have been obtained if the Transactions had been completed as of
such dates or to project the results of operations or financial position of the
Company for any future date or period. The information should be read in
conjunction with "Unaudited Pro Forma Combined Condensed Financial Statements,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the financial statements of the Company and of Marion and
related notes thereto, included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA(2)
PREDECESSOR ----------------------
COMPANY(1)
----------- FISCAL YEAR ENDED SIX MONTHS ENDED SIX
DECEMBER 31, JUNE 30, FISCAL YEAR MONTHS
1/1/94 TO 12/14/94 TO ------------------- ------------------- ENDED ENDED
12/13/94 12/31/94 1995 1996 1996 1997 12/31/96 6/30/97
--------- ----------- ---- ---- ---- ---- ----------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
New equipment sales........... $ 47,362 $ 2,072 $ 76,487 $107,396 $ 49,023 $ 55,148 $143,848 $ 59,087
Aftermarket sales............. 138,812 5,738 155,434 156,390 81,797 88,614 229,563 114,814
Total net sales............... 186,174 7,810 231,921 263,786 130,820 143,762 373,411 173,901
Gross profit.................. 28,993 877 26,369 48,660 23,797 27,501 60,584 33,284
Operating earnings
(loss)(3)................... (10,503) (222) (11,299) 12,190 5,943 9,156 6,471 6,705
Other income.................. 2,976 79 1,295 1,003 464 615 1,558 665
Earnings (loss) before
interest expense,
income taxes, and
extraordinary gain.......... (7,527) (143) (10,004) 13,193 6,407 9,771 8,029 7,370
Interest expense.............. 13,911 284 6,254 8,557 4,173 3,956 18,454 9,342
Income taxes.................. 1,395 125 2,514 1,758 1,324 2,392 1,362 2,203
Earnings (loss) before
extraordinary gain.......... (22,833) (552) (18,772) 2,878 910 3,423 (11,787) (4,175)
Net earnings (loss)........... $119,647 $ (552) $(18,772) $ 2,878 $ 910 $ 3,423 $(11,787) $ (4,175)
BALANCE SHEET DATA (END OF
PERIOD):
Cash and cash equivalents..... $ 16,209 $ 11,150 $ 15,763 $ 8,486 $ 11,350 $ 7,042
Receivables................... 26,220 35,603 32,085 43,453 54,271 63,950
Inventories................... 82,393 73,566 70,889 70,458 74,587 122,850
Total assets.................. 179,873 174,038 172,895 173,322 198,513 420,635
Total debt.................... 60,293 65,252 70,241 68,317 80,193 187,285
Total common shareholders'
investment.................. $ 53,617 $ 34,680 $ 37,461 $ 35,162 $ 41,067 $143,000(4)
OTHER DATA:
EBITDA (as defined
herein)(5).................. $ 12,883 $ 392 $ 12,672 $ 19,247 $ 9,333 $ 12,900 $ 34,020 $ 14,829
Capital expenditures.......... 2,616 190 3,006 4,996 1,305 2,433 6,757 3,116
Backlog (end of period)(6).... 72,346 118,024 158,727 184,117 215,767 179,213 243,471
Gross margin percentage....... 15.6% 11.2% 11.4% 18.4% 18.2% 19.1% 16.2% 19.1%
EBITDA as a percentage of net
sales....................... 6.9% 5.0% 5.5% 7.3% 7.1% 9.0% 9.1% 8.5%
</TABLE>
11
<PAGE> 18
(1) The "Predecessor Company" is B-E Holdings, Inc., the former parent of the
Company which was merged with and into the Company on December 14, 1994.
(2) Reflects the effects of the Transactions including certain estimated cost
savings resulting from the Marion Acquisition. See "Unaudited Pro Forma
Combined Condensed Financial Statements." In addition to the cost savings
reflected in the pro forma financial statements, the Company has identified
an estimated $3,000 in potential cost savings which depend upon the
Company's ability to successfully integrate the Marion operations into those
of the Company. See "Risk Factors -- Realization of Benefits of the Marion
Acquisition; Integration of Marion." The following table illustrates the
calculation of Supplemental EBITDA and the ratio of Supplemental EBITDA to
interest expense, which reflects such additional cost savings:
<TABLE>
<CAPTION>
PRO FORMA
------------------------
FISCAL YEAR SIX MONTHS
ENDED ENDED
12/31/96 6/30/97
----------- ----------
<S> <C> <C>
EBITDA (as defined herein).................................. $34,020 $14,829
Supplemental Adjustments:
Direct labor reductions................................... 1,319 660
Engineering and marketing salary and benefits
reductions.............................................. 1,292 646
Elimination of duplicative parts and service locations.... 389 194
------- -------
Supplemental EBITDA......................................... $37,020 $16,329
======= =======
Ratio of Supplemental EBITDA to interest expense............ 2.0x 1.7x
</TABLE>
The decrease in the ratio of Supplemental EBITDA to interest expense
reflects the deteriorated operating results of Marion for the six months
ended June 30, 1997. The Company believes that the factors that contributed
to such deterioration include (i) diversion of Global management's
attention to prepare Marion for its sale, (ii) decreased productivity among
Marion employees, many of whom were not hired by the Company, and (iii)
decreased customer orders due to the uncertainty created by pendency of the
sale during such period. Marion's net current assets and combined equity
decreased after June 30, 1997, and net sales decreased and the net loss
increased subsequent to June 30, 1997 as compared to the corresponding
period in the preceding year.
(3) Includes restructuring and reorganization charges of $9,338 and $3,496 for
the period January 1, 1994, through December 13, 1994, and the year ended
December 31, 1995, respectively.
(4) Following the Private Offering, the Company wrote off an estimated $3,463 of
borrowing costs incurred in connection with the Bridge Loan. Such write-off
was reflected in the results of operations for the three months ended
September 30, 1997 as a charge to earnings.
(5) For purposes of this Prospectus (other than "Description of the Notes"),
"EBITDA" is defined as earnings (loss) before (i) income taxes; (ii)
interest expense; (iii) extraordinary gain; (iv) depreciation; (v)
amortization; (vi) non-cash stock compensation; (vii) loss (gain) on sale of
fixed assets; (viii) restructuring expenses; (ix) reorganization items; (x)
inventory fair-value adjustment charged to cost of products sold; (xi) the
AIP Management Fee (as defined), which is subordinated to the Notes and
which the Company did not incur until the AIP Merger was consummated; and
(xii) in 1995 only, a non-cash charge related to the scrapping and disposal
of excess inventory related to certain older and discontinued machine
models. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- EBITDA." Since cash flow from operations is very
important to the Company's future, the EBITDA calculation provides a summary
review of cash flow performance. EBITDA (as defined herein) should not be
considered an alternative to operating income determined in accordance with
generally accepted accounting principles ("GAAP") as an indicator of
operating performance or to cash flows from operating activities determined
in accordance with GAAP as a measure of liquidity.
(6) Backlog includes the dollar value of orders placed for new equipment as well
as parts and services, including estimates of net sales expected to be
generated from MARCs, minus dollars billed through manufacturing contracts,
which are billed on a percentage of completion basis. MARC sales estimates
are based on payments expected for parts, maintenance, and operational
services over the life of each contract, some of which have terms through
2002. Backlog at June 30, 1997 includes $60,200 in net sales that were
expected to be generated by the sale of a dragline for which a letter of
intent had been received. The Company currently expects that this dragline
will generate net sales of $57,500 over the next two and a half years.
12
<PAGE> 19
RISK FACTORS
HOLDERS OF EXISTING NOTES SHOULD CONSIDER CAREFULLY ALL OF THE INFORMATION
SET FORTH IN THIS PROSPECTUS AND, IN PARTICULAR, SHOULD EVALUATE THE FOLLOWING
RISKS BEFORE TENDERING THEIR EXISTING NOTES IN THE EXCHANGE OFFER, ALTHOUGH THE
RISK FACTORS SET FORTH BELOW ARE GENERALLY APPLICABLE TO THE EXISTING NOTES AS
WELL AS THE EXCHANGE NOTES.
This Prospectus contains statements which constitute forward looking
statements within the meaning of Section 27A of the Securities Act. Discussions
containing such forward looking statements may be found under the captions
"Summary," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Business," as well as elsewhere within the
Prospectus. Forward looking statements include statements regarding the intent,
belief or current expectations of the Company, primarily with respect to the
future operating performance of the Company or related industry developments.
When used in this Prospectus, terms such as "anticipate," "believe," "estimate,"
"expect," "indicate," "may be," "objective," "plan," "predict," and "will be"
are intended to identify such statements. Investors in the Notes are cautioned
that any such forward looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ from those described in the forward looking statements as a result of
various factors, many of which are beyond the control of the Company. Forward
looking statements are based upon management's expectations at the time they are
made. Actual results could differ materially from those projected in the forward
looking statements as a result of the risk factors set forth below and the
matters set forth in the Prospectus generally. The Company cautions the reader,
however, that this list of factors may not be exhaustive.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Existing Notes who do not exchange them for Exchange Notes
pursuant to the Exchange Offer will continue to be subject to certain
restrictions on transfer of such Existing Notes. In general, the Existing Notes
may not be reoffered or resold by their holders except pursuant to an effective
registration statement under the Securities Act or pursuant to an applicable
exemption from such registration, and the Existing Notes are legended to so
restrict their transfer. Based on interpretations by the staff of the SEC, as
set forth in no-action letters issued to third parties, the Company believes
that each holder (other than any holder who is an "affiliate" of Bucyrus within
the meaning of Rule 405 under the Securities Act) who duly exchanges Existing
Notes for Exchange Notes in the Exchange Offer will receive Exchange Notes that
are freely transferable under the Securities Act, provided that such Exchange
Notes are acquired in the ordinary course of such holder's business and that
such holder is not engaged in, and does not intend to engage in, a distribution
of such Exchange Notes and has no arrangement or understanding with any person
to participate in the distribution of such Exchange Notes. By tendering Existing
Notes and executing the Letter of Transmittal, the holder thereof shall
represent and agree that (i) it is neither an affiliate of Bucyrus nor a
broker-dealer tendering Existing Notes acquired directly from Bucyrus for its
own account, (ii) it acquired the Exchange Notes in the ordinary course of its
business and (iii) it is not engaged in, and does not intend to engage in, a
distribution of the Exchange Notes and it has no arrangement or understanding to
participate in a distribution of Exchange Notes. The SEC, however, has not
considered the Exchange Offer in the context of a no-action letter, and
therefore there can be no assurance that the staff of the SEC would make a
similar determination with respect to the Exchange Offer as in such other
circumstances. Holders of Existing Notes who participate in such Exchange Offer
should be aware, however, that, except in the case of certain broker-dealers as
described below, if they accept Exchange Notes in the Exchange Offer for the
purpose of engaging in secondary resales, such Exchange Notes may not be
publicly reoffered or resold without complying with the registration and
prospectus delivery requirements of the Securities Act. The same registration
and prospectus delivery requirements would apply to any holder who is an
"affiliate" of Bucyrus within the meaning of Rule 405 under the Securities Act.
Each broker-dealer
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that receives Exchange Notes for its own account in exchange for Existing Notes,
where such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
See "The Exchange Offer," "Description of the Notes -- Registration Covenant;
Exchange Offer" and "Plan of Distribution."
The Existing Notes may be sold pursuant to the restrictions set forth in
Rule 144A, Regulation D under the Securities Act or Regulation S without
registration under the Securities Act.
SUBSTANTIAL LEVERAGE; RESTRICTIVE LOAN COVENANTS
As a result of the Private Offering, the Company has substantial
indebtedness and significant debt service obligations. As of June 30, 1997, on a
pro forma basis after giving effect to the Transactions, the Company would have
had total long-term indebtedness, including current maturities, of $176.2
million, as well as undrawn borrowings under the Revolving Credit Facility of
$47.0 million. The Indenture permits the Company to incur additional
indebtedness, including secured indebtedness, subject to certain limitations.
See "Capitalization," and "Description of the Notes -- Certain Covenants."
The Company's high degree of leverage could have important consequences to
the holders of Existing Notes and the holders of Exchange Notes, including,
without limitation: (i) a substantial portion of the Company's cash from
operations is committed to the payment of debt service and is not available to
the Company for other purposes; (ii) the Company's ability to obtain additional
financing in the future for working capital expenditures or acquisitions may be
limited; (iii) a substantial decrease in net operating cash flows or an increase
in expenses could make it difficult for the Company to meet its debt service
requirements and force it to modify its operations; (iv) the Company may be more
highly leveraged than its competitors, which may place it at a competitive
disadvantage; (v) certain indebtedness under the Revolving Credit Facility is at
variable rates of interest, which causes the Company to be vulnerable to
increases in interest rates; and (vi) all of the indebtedness outstanding under
the Revolving Credit Facility is secured by substantially all the assets of the
Company and will become due prior to the time the principal on the Notes will
become due. Any inability of the Company to service its indebtedness or obtain
additional financing as needed would have a material adverse effect on the
Company. See "Revolving Credit Facility" and "Description of the Notes."
The Company believes that based upon anticipated levels of operations
(assuming the timely integration of Marion's business into that of the Company)
it will be able to meet its debt service obligations, including interest
payments in respect of the Notes. If, however, the Company cannot generate
sufficient cash flow from operations to meet its obligations, the Company may be
required to refinance its debt or to dispose of assets to obtain funds for such
purpose. There is no assurance that refinancings or asset dispositions could be
effected on satisfactory terms or would be permitted by the terms of the
Revolving Credit Facility or the Indenture. See "-- Realization of Benefits of
the Marion Acquisition; Integration of Marion."
The Revolving Credit Facility and the Indenture contain numerous covenants
that limit the discretion of management with respect to certain business matters
and place significant restrictions on, among other things, the ability of the
Company to incur additional indebtedness, to create liens or other encumbrances,
to make certain payments or investments, loans and guarantees and to sell or
otherwise dispose of assets and merge or consolidate with another entity. See
"Revolving Credit Facility" and "Description of the Notes -- Certain Covenants."
The Revolving Credit Facility also contains a number of financial covenants that
require the Company to maintain certain financial ratios (including a
consolidated fixed charge coverage ratio, a consolidated interest coverage
ratio, and a consolidated leverage ratio) and tests (including maintenance of
the Company's net worth at a specified level). A failure to comply with the
obligations contained in the Revolving Credit Facility or the Indenture could
result in an event of default under the Revolving Credit Facility or an Event of
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Default (as defined herein) under the Indenture that, if not cured or waived,
would permit acceleration of the relevant debt and acceleration of debt under
other instruments that may contain cross-acceleration or cross-default
provisions. Other indebtedness of the Company and its subsidiaries could contain
amortization and other prepayment provisions, or financial or other covenants,
more restrictive than those applicable to the Notes.
REALIZATION OF BENEFITS OF THE MARION ACQUISITION; INTEGRATION OF MARION
Management estimates that significant cost savings can be achieved as a
result of the integration of Marion into the Company; however, the estimates of
potential cost savings are forward looking statements that are inherently
uncertain, and the actual cost savings, if any, could differ materially from
those projected. All of these forward looking statements are based on estimates
and assumptions made by management of the Company, which although believed to be
reasonable, are inherently uncertain and difficult to predict; therefore, undue
reliance should not be placed upon such estimates.
Full realization of the potential benefits and savings of the Marion
Acquisition depends upon a variety of factors, including (i) retention of a
substantial portion of Marion's net sales, particularly aftermarket sales; (ii)
achievement of significant reductions in operating costs through the
consolidation of operations and the restructuring of engineering, manufacturing,
selling, and administrative functions; and (iii) expansion of the Company's
presence in several markets where Marion has established relationships with
local mining interests and government authorities. Any material delays or
unexpected costs incurred in connection with the integration of Marion into the
Company could have a material adverse effect on the Company and its results of
operations, liquidity, and financial condition.
The integration of Marion will require substantial attention from the
Company's management team. The diversion of management's attention, as well as
any other difficulties which may be encountered in the transition and
integration process, could have a material adverse effect on the revenue and
operating results of the Company. There can be no assurance that the Company
will be able to integrate the operations of the Company and Marion successfully
or the extent to which the Company will be able to realize the potential
benefits of the Marion Acquisition or the timing of any such benefits. Failure
to achieve a substantial portion of these benefits within the time frame
expected by the Company could have a material adverse effect on the Company,
including its ability to make payments on the Notes. See "Unaudited Pro Forma
Combined Condensed Financial Statements" and "Business -- Integration
Strategies."
CYCLICAL NATURE OF INDUSTRY; POTENTIAL FLUCTUATIONS IN OPERATING RESULTS
The Company's business is cyclical in nature and sensitive to changes in
general economic conditions, including fluctuations in market prices for coal
and energy alternatives to coal, copper, iron ore, and phosphate. These
businesses are in turn influenced by a variety of factors beyond the Company's
control, including interest rates and general economic conditions throughout the
world. As a result of this cyclicality, the Company has experienced, and in the
future could experience, reduced net sales and margins, which may affect the
Company's ability to satisfy its debt service obligations, including payments on
the Notes, on a timely basis. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
The Company's net sales and operating results may fluctuate significantly
from period to period. Given the large sales price of the Company's machinery,
one or a limited number of machines may account for a substantial portion of net
sales in any particular period. As a result, in any given period, a single
customer may account for a large percentage of net sales. Losing the business of
any of its top customers could have an adverse effect upon the results of
operations and financial condition of the Company. Although the Company
recognizes net sales on a percentage-of-completion basis for new machines, the
timing of one or a small number of contracts
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in any particular period may nevertheless affect operating results. In addition,
net sales and gross profit may fluctuate depending upon the size and the
requirements of the particular contracts entered into in that period. As a
result of these and other factors, the Company may experience significant
fluctuations in net sales and operating results in future periods. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
EFFECTIVE SUBORDINATION
The Existing Notes and the Guarantees are not, and the Exchange Notes will
not be, secured and are, or will be, effectively subordinated to secured
obligations of Bucyrus and the Guarantors, respectively, to the extent of the
assets securing such obligations. The obligations of Bucyrus under the Revolving
Credit Facility are secured by a pledge of the capital stock of certain of
Bucyrus' subsidiaries, by a security interest in substantially all of the
property of Bucyrus and certain of its subsidiaries, including inventory,
equipment, receivables, and intangible assets such as licenses, trademarks, and
customer lists. If Bucyrus becomes insolvent or is liquidated, or if payment
under the Revolving Credit Facility is accelerated, the lenders under the
Revolving Credit Facility would be entitled to exercise the remedies available
to a secured lender under applicable law and pursuant to the Revolving Credit
Facility. Accordingly, such lenders will have a prior claim on such assets of
the Company and such subsidiaries over the Noteholders.
The Existing Notes are, and the Exchange Notes will be, effectively
subordinated to all existing and future liabilities, including Indebtedness, of
Bucyrus' foreign subsidiaries. Claims of creditors of such subsidiaries,
including trade creditors, will generally have priority as to the assets of such
subsidiaries over the claims of Bucyrus and the holders of Bucyrus'
Indebtedness, including the Notes.
FOREIGN OPERATIONS
Both the Company and Marion have significant operations in foreign
countries and derive a substantial portion of their net sales from foreign
markets. During 1996, $279.6 million, or approximately 75%, of the Company's pro
forma net sales were generated outside the United States.
The value of the Company's foreign sales and earnings may vary with
currency exchange rate fluctuations. To the extent that the Company does not
take steps to mitigate the effects of changes in relative values, changes in
currency exchange rates could have an adverse effect upon the Company's results
of operations, which in turn could adversely affect the Company's ability to
meet its debt service obligations, including payments on the Notes. Furthermore,
international manufacturing, sales and service operations are subject to other
inherent risks, including labor unrest, political instability, restrictions on
transfer of funds (including by dividend), export duties and quotas, domestic
and foreign customs and tariffs, current and changing regulatory environments,
difficulty in obtaining distribution support, and potentially adverse tax
consequences. There can be no assurance that these factors will not have a
material adverse effect on the Company or its international operations or sales.
See "Business -- Foreign Operations."
COMPETITION
The Company operates in a highly competitive environment. It competes
directly and indirectly with other manufacturers of draglines, mining shovels
(both electric and hydraulic), and rotary blast hole drills, as well as with
manufacturers of parts and components for all of the foregoing. Some of the
Company's competitors are larger, have greater financial resources, and may be
less leveraged than the Company. See "Business -- Competition."
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PRINCIPAL SHAREHOLDER
As a result of the AIP Merger, AIPAC, which is controlled by AIP, is the
sole shareholder of Bucyrus and has the ability to designate all of the
Directors of Bucyrus. Currently all of the directors of Bucyrus are designees of
AIPAC. See "Principal Shareholders," "Management," and "Acquisition of the
Company by AIP." AIPAC, and indirectly AIP, are in a position to direct the
management and affairs of the Company and may cause the Company to enter into
transactions that in their judgment could ultimately enhance shareholder value
but involve risks to the holders of the Notes.
ENVIRONMENTAL AND RELATED MATTERS
The Company's operations and properties are subject to a broad range of
federal, state, local and foreign laws and regulations relating to environmental
matters, including laws and regulations governing discharges into the air and
water, the handling and disposal of solid and hazardous substances and wastes,
and the remediation of contamination associated with releases of hazardous
substances at Company facilities and at off-site disposal locations. These laws
are complex, change frequently and have tended to become more stringent over
time.
Based upon the Company's experience to date, the Company believes that the
future cost of compliance with existing environmental laws, regulations and
ordinances (or liability for known environmental claims) will not have a
material adverse effect on the Company's business, financial condition and
results of operations. Nevertheless, future events, such as compliance with more
stringent laws or regulations, or more vigorous enforcement policies of
regulatory agencies or stricter or different interpretations of existing laws
could require additional expenditures by the Company which may be material.
Certain laws, such as the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA" or "Superfund") provide for strict joint and several
liability for investigation and remediation of spills and other releases of
hazardous substances. Such laws may apply to conditions at properties presently
or formerly owned or operated by an entity or its predecessors, as well as to
conditions at properties at which wastes or other contamination attributable to
an entity or its predecessors come to be located. The Company is currently a
Potentially Responsible Party ("PRP") under CERCLA at several sites. While no
assurance can be given, the Company believes that expenditures for compliance
and remediation will not have a material effect on its capital expenditures,
earnings or competitive position. See "Business -- Environmental Matters."
LABOR RELATIONS
As of July 31, 1997, 418 of the 797 employees at the Company's South
Milwaukee facility were represented by the United Steelworkers of America Union.
In May 1997, the union ratified a new four-year agreement with the Company that
expires on April 30, 2001. Although the Company believes that its relations with
its employees are satisfactory, a dispute between the Company and its employees
could have a material adverse effect on the Company. See "Business --
Employees."
FRAUDULENT CONVEYANCE CONSIDERATIONS
Various fraudulent conveyance laws have been enacted for the protection of
creditors and may be utilized by a court to subordinate or void the Notes (and
payments of principal and/or interest in respect thereof could be voided and
recovered) or the Guarantees in favor of other existing or future creditors of
the Company or the Guarantors.
Proceeds of the Private Offering were used, in part, to pay the
consideration for the Common Stock, options to purchase Common Stock and stock
appreciation rights with respect to the Common Stock in the AIP Tender Offer
and/or the AIP Merger. If a court in a lawsuit brought by an unpaid creditor or
representative of creditors, such as a trustee in bankruptcy or Bucyrus, or any
Guarantor, as a debtor-in-possession, were to find under relevant federal or
state fraudulent conveyance statutes that Bucyrus or any Guarantor did not
receive fair consideration or reasonably
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equivalent value for issuing the Notes or its Guarantee, as the case may be, and
that, at the time of such incurrence, Bucyrus or such Guarantor (i) was
insolvent; (ii) was rendered insolvent by reason of such incurrence or grant;
(iii) was engaged or about to engage in a business or transaction for which the
assets remaining with Bucyrus or such Guarantor, as the case may be, constituted
unreasonably small capital; or (iv) intended to incur, or believed or reasonably
should have believed that it would incur, debts beyond its ability to pay such
debts as they become due, then such court, subject to applicable statutes of
limitation, could void the Notes or such Guarantor's obligations under its
Guarantee, as the case may be, subordinate the Notes or such Guarantee to other
indebtedness of Bucyrus or such Guarantor, as the case may be, or take other
action detrimental to the holders of Notes.
The measure of insolvency for these purposes will depend upon the governing
law of the relevant jurisdiction. Generally, however, a company will be
considered insolvent for these purposes if the sum of that company's debts is
greater than the fair value of all of that company's property or if the present
fair salable value of that company's assets is less than the amount that will be
required to pay its probable liability on its existing debts as they become
absolute and matured. Moreover, regardless of solvency, a court could void an
incurrence of indebtedness, including the Notes and the Guarantees, if it
determined that such transaction was made with the intent to hinder, delay or
defraud creditors. In addition, a court could subordinate the indebtedness,
including the Notes and the Guarantees, to the claims of all existing and future
creditors on similar grounds.
There can be no assurance as to what standard a court would apply in order
to determine whether Bucyrus or a Guarantor was "insolvent" upon consummation of
the sale of the Notes or whether one or more Guarantors were "insolvent" upon
the incurrence of the Guarantees or that, regardless of the method of valuation,
a court would not determine that Bucyrus or one or more Guarantors was insolvent
as a result of the foregoing.
Based upon financial and other information currently available to it,
management of the Company believes that the indebtedness represented by the
Notes has been incurred for proper purposes and in good faith. Certain courts
have held, however, that a company's purchase of its own capital stock does not
constitute reasonably equivalent value or fair consideration for incurring
indebtedness. By extension, the retirement of options to purchase, or stock
appreciation rights in respect thereof, capital stock of a company may also be
viewed as not constituting reasonably equivalent value or fair consideration to
the company. The Company believes that it (i) is solvent and will continue to be
solvent after issuing the Exchange Notes, (ii) will have sufficient capital for
carrying on the business it intends to conduct after such issuance, and (iii)
will be able to pay its debts as they become due. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources." There can be no assurance, however, that a court would
concur with such beliefs and positions.
PURCHASE OF NOTES ON CHANGE OF CONTROL
Upon a Change of Control, Bucyrus is required, subject to certain
conditions, to offer to purchase all outstanding Notes at 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and liquidated
damages, if any, to the date of purchase. The source of funds for any such
purchase would be Bucyrus' available cash or cash generated from other sources,
including borrowings, sales of assets, sales of equity or funds provided by a
new controlling person. A Change of Control likely would constitute an event of
default under the Revolving Credit Facility that would permit the lenders to
accelerate the debt under the Revolving Credit Facility. In such event, Bucyrus
likely would attempt to refinance the indebtedness outstanding under the
Revolving Credit Facility and the Notes. There can be no assurance that
sufficient funds will be available at the time of any Change of Control to make
any required purchases of Notes tendered and to repay indebtedness under the
Revolving Credit Facility. See "Revolving Credit Facility" and "Description of
the Notes -- Change of Control."
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ABSENCE OF A PUBLIC MARKET FOR THE NOTES
The Exchange Notes are being offered to the holders of Existing Notes. The
Existing Notes were originally issued on the Issue Date to the Initial
Purchasers pursuant to Section 4(2) of the Securities Act. The Company has been
advised that the Existing Notes subsequently have been resold to (i) qualified
institutional buyers as defined in Rule 144A ("Qualified Institutional Buyers"
or "QIBs") in reliance on, and subject to the restrictions imposed pursuant to,
Rule 144A, and (ii) certain non-U.S. persons outside the United States of
America in accordance with Regulation S. The Existing Notes beneficially owned
by Qualified Institutional Buyers are eligible for trading in the Private
Offering, Resale and Trading through Automated Linkages ("PORTAL") Market, which
is the National Association of Securities Dealers' screen-based automated market
for trading of securities eligible for resale under Rule 144A.
To the extent that Existing Notes are tendered and accepted in the Exchange
Offer, the trading market for the remaining untendered or tendered but not
accepted Existing Notes could be adversely affected. The Exchange Notes will
constitute a new issue of securities, have no established trading market and may
not be widely distributed. Although the Initial Purchasers have informed the
Company that they currently intend to make a market in the Exchange Notes, they
are not obligated to do so and may discontinue market making at any time without
notice. The Company does not intend to list the Notes on any national securities
exchange or to seek the admission thereof to trading in The Nasdaq National
Market. Accordingly, there can be no assurance as to the development or
liquidity of any market for either Exchange Notes or the Existing Notes. If a
market does develop, the Notes may trade at a discount from their principal
amount, and the price of the Notes may fluctuate depending on many factors
including, but not limited to, prevailing interest rates, the Company's
operating results and the market for similar securities, and liquidity may
therefore be limited. If a market for the Notes does not develop, purchasers may
be unable to resell such securities for an extended period of time, if at all.
THE EXCHANGE OFFER
PURPOSE
In connection with the initial sale of the Existing Notes, Bucyrus agreed,
subject to certain conditions, to use its best efforts to conduct the Exchange
Offer. Bucyrus' purpose in making the Exchange Offer is to comply with such
agreement and to avoid the payment of Liquidated Damages (as defined) which
would occur if the Exchange Offer were not duly and timely consummated. See
"Exchange Offer; Registration Rights." The full terms of Bucyrus' obligations
with respect to the Exchange Offer are set forth in the Registration Agreement
which has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The Exchange Offer should provide holders of Existing
Notes, which are subject to trading restrictions, with the ability to effect,
for federal income tax purposes, a tax-free exchange of such Existing Notes for
Exchange Notes that should not be subject to such restrictions.
Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to third parties, the Company believes that the
Exchange Offer will provide holders of Existing Notes with Exchange Notes that
will generally be freely transferable by holders thereof (other than any holder
who is an "affiliate" of Bucyrus within the meaning of Rule 405 under the
Securities Act), who may offer for resale, resell or otherwise transfer such
Exchange Notes without complying with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of each such holder's business and such holders are not
engaged in, and do not intend to engage in, a distribution of such Exchange
Notes and have no arrangement or understanding with any person to participate in
a distribution of such Exchange Notes. Bucyrus has not sought, and does not
intend to seek, a no-action letter from the Commission with respect to the
effects of the Exchange Offer. By tendering Existing Notes and
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executing the Letter of Transmittal, the holder thereof shall represent and
agree that (i) it is neither an affiliate of Bucyrus nor a broker-dealer
tendering Existing Notes acquired directly from Bucyrus for its own account,
(ii) it acquired the Exchange Notes in the ordinary course of its business and
(iii) it is not engaged in, and does not intend to engage in, a distribution of
the Exchange Notes and it has no arrangement or understanding to participate in
a distribution of Exchange Notes. Holders of Existing Notes who participate in
the Exchange Offer should be aware that, except in the case of certain
broker-dealers as described below, if they accept the Exchange Offer for the
purpose of participating in a distribution of the Exchange Notes, they cannot
rely on such interpretations by the staff of the Commission and must comply with
the registration and prospectus delivery requirements of the Securities Act.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Existing Notes, where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a Prospectus with any resale
of such Exchange Notes. See "Plan of Distribution."
TERMS OF THE OFFER
Bucyrus hereby offers, upon the terms and conditions set forth herein and
in the related Letter of Transmittal, to exchange Exchange Notes for a like
principal amount of outstanding Existing Notes. An aggregate of $150 million
principal amount of Existing Notes are outstanding. The Exchange Offer is not
conditioned upon any minimum principal amount of Existing Notes being tendered.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
December , 1997 unless extended. The term "Expiration Date" means 5:00 p.m.,
New York City time, on December , 1997, unless Bucyrus, in its sole
discretion, notifies the Exchange Agent that the period of the Exchange Offer
has been extended, in which case the term "Expiration Date" means the latest
time and date on which the Exchange Offer is so extended will expire. See
"-- Expiration and Extension."
In addition, Bucyrus reserves the right to waive any condition or otherwise
amend the Exchange Offer prior to the acceptance of tendered Existing Notes. If
any amendment by Bucyrus of the Exchange Offer or waiver by Bucyrus of any
condition thereto constitutes a material change in the information previously
disclosed to the holders of Existing Notes, Bucyrus will, in accordance with the
applicable rules of the Commission, promptly disseminate disclosure of such
change in a manner reasonably calculated to inform such holders of such change.
If it is necessary to permit an adequate dissemination of information regarding
such material change, Bucyrus will extend the Exchange Offer to permit an
adequate time for holders of Existing Notes to consider the additional
information.
CERTAIN EFFECTS OF THE EXCHANGE OFFER
Because the Exchange Offer is for any and all Existing Notes, the number of
Existing Notes tendered and exchanged in the Exchange Offer will reduce the
principal amount of Existing Notes outstanding. As a result, the liquidity of
any remaining Existing Notes may be substantially reduced. The Existing Notes
beneficially owned by QIBs are currently eligible for sale pursuant to Rule 144A
through the PORTAL System. Because Bucyrus anticipates that most holders of
Existing Notes will elect to exchange such Existing Notes for Exchange Notes due
to the absence of restrictions on the resale of Exchange Notes under the
Securities Act, Bucyrus anticipates that the liquidity of the market for any
Existing Notes remaining after the consummation of the Exchange Offer may be
substantially limited.
The Existing Notes that are not exchanged for Exchange Notes pursuant to
the Exchange Offer will remain restricted securities under the Securities Act.
Accordingly, such Existing Notes may be resold only (i) to Bucyrus, (ii)
pursuant to a registration statement that has been declared effective under the
Securities Act, (iii) for so long as the Existing Notes are eligible for resale
pursuant to
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Rule 144A, to a person it reasonably believes is a Qualified Institutional Buyer
that purchases for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the transfer is being made in
reliance on Rule 144A, (iv) pursuant to offers and sales to non-U.S. persons
that occur outside the United States within the meaning of Regulation S, (v) to
an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3)
or (7) of Regulation D under the Securities Act and referred to in this
Prospectus as an "Institutional Accredited Investor") that is acquiring the
security for its own account or for the account of such an Institutional
Accredited Investor for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act
or (vi) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases (a)
to any requirement of law that the disposition of its property or the property
of such investor account or accounts be at all times within its or their control
and (b) to compliance with any applicable state or other securities laws. After
the Exchange Offer is completed, holders of Existing Notes will not have certain
registration rights under the Registration Agreement. See "--Termination of
Certain Rights."
EXPIRATION AND EXTENSION
The Exchange Offer will expire at 5:00 p.m., New York City time, on
December , 1997, unless extended by Bucyrus. The Exchange Offer may be
extended by oral or written notice from Bucyrus to the Exchange Agent at any
time or from time to time, on or prior to the date then fixed for the expiration
of the Exchange Offer. Notwithstanding any extension of the Exchange Offer, if
the Exchange Offer is not consummated by March 23, 1998, Liquidated Damages (as
defined) will accrue. See "Exchange Offer; Registration Rights." Public
announcement of any extension of the Exchange Offer will be timely made by
Bucyrus, but, unless otherwise required by law or regulation, Bucyrus will not
have any obligation to communicate such public announcement other than by making
a release to the Dow Jones News Service.
ACCRUED INTEREST
Holders of Existing Notes that are accepted for exchange will not receive
any accrued interest thereon. However, each Exchange Note will bear interest
from the most recent date on which interest has been paid on the corresponding
Existing Note, or, if no interest has been paid, from September 24, 1997.
CONDITIONS
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to cause the
issuance of Exchange Notes in respect of any validly tendered Existing Notes not
accepted and, prior to the acceptance of tendered Existing Notes, may terminate
the Exchange Offer (by oral or written notice to the Exchange Agent and by
timely public announcement communicated, unless otherwise required by applicable
law or regulation, by making a release to the Dow Jones News Service) or,
subject to compliance with the applicable rules of the Commission, delay the
acceptance of the tendered Existing Notes, if any material change occurs which
is likely to affect the Exchange Offer, including, but not limited to, the
following:
(i) there shall occur (a) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (b) any limitation
by any governmental agency or authority which may adversely affect the
ability of the Company to complete the transactions contemplated by the
Exchange Offer, (c) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States or any limitation by
any governmental agency or authority which adversely affects the extension
of credit or (d) a commencement of a war, armed hostilities or other
similar international calamity directly or indirectly involving the United
States, or, in the case of any of
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the foregoing existing at the time of the commencement of the Exchange
Offer, a material acceleration or worsening thereof;
(ii) any statute, rule or regulation shall have been proposed or
enacted, or any action shall have been taken or proposed to be taken by any
governmental authority which, in the sole judgment of the Company, would or
might prohibit, restrict or delay completion of the Exchange Offer;
(iii) there shall be instituted or threatened any action or proceeding
before any court or governmental agency challenging the Exchange Offer or
otherwise directly or indirectly relating to the Exchange Offer;
(iv) there shall occur any development in any pending action or
proceeding which, in the sole judgment of the Company, would or might
prohibit, restrict or delay consummation of the Exchange Offer;
(v) there exists, in the sole judgment of the Company, any actual or
threatened legal impediment (including a default or prospective default
under an agreement, indenture or other instrument or obligation to which
the Company is a party or by which it is bound) to the completion of the
Exchange Offer; or
(vi) prior to the completion of the Exchange Offer, the Company
determines there has been a change in law or applicable interpretation
thereof by the staff of the Commission such that the Exchange Notes that
would be received by holders in the Exchange Offer in exchange for Existing
Notes would not be transferable, upon receipt, by each such holder (other
than a holder that is an affiliate of the Company, a holder who acquires
the Exchange Notes outside the ordinary course of such holder's business, a
holder who is engaged in or intends to engage in a distribution of such
Exchange Notes or a holder who has arrangements or understandings with any
person to participate in the Exchange Offer for the purpose of distributing
the Exchange Notes) without restriction under the Securities Act.
Subject to the obligations under the Registration Agreement to use its best
efforts to complete the Exchange Offer, the Company expressly reserves the
right, at any time prior to the acceptance of tendered Existing Notes, to
terminate the Exchange Offer and not accept for exchange any Existing Notes upon
the occurrence of any of the foregoing conditions. In addition, the Company may
amend the Exchange Offer at any time prior to the acceptance of tendered
Existing Notes if any of the conditions set forth above occur. Moreover,
regardless of whether any of the foregoing conditions has occurred, the Company
reserves the right, in its reasonable discretion, to amend the Exchange Offer in
any manner prior to the acceptance of tendered Existing Notes, although it has
no current intention to do so.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company, in whole or in part, at any time and
from time to time in its sole discretion. Any determination made by the Company
concerning an event, development or circumstance described or referred to above
will be final and binding on all parties to the Exchange Offer.
In addition, the Company will not accept for exchange any Existing Notes
tendered, and no Exchange Notes will be issued in exchange for any such Existing
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended.
If the event referred to in clause (vi), above, shall occur, the Company
shall be under no continuing obligation under the Registration Agreement to
complete the Exchange Offer, but in lieu thereof will be obligated to file and
use its best efforts to secure and maintain the effectiveness
22
<PAGE> 29
under the Securities Act of a "shelf" registration statement providing for the
resale of Existing Notes. See "Exchange Offer; Registration Rights."
HOW TO TENDER
A holder of Existing Notes may tender Existing Notes by (i) properly
completing and signing the Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof), having their signatures guaranteed if required,
and delivering the same, together with the Existing Notes being tendered (or a
confirmation of an appropriate book-entry transfer), to the Exchange Agent on or
prior to the Expiration Date, or (ii) requesting a broker, dealer, bank, trust
company or other nominee to effect the transaction for such holder prior to the
Expiration Date.
Exchange Notes will not be issued in the name of a person other than that
of a registered holder of the Existing Notes appearing on the Note register.
The Exchange Agent will establish an account with respect to the Existing
Notes at The Depository Trust Company (the "Depository") for purposes of the
Exchange Offer promptly after the date of this Prospectus, and any financial
institution which is a participant in the Depository may make book-entry
delivery of the Existing Notes by causing the Depository to transfer such
Existing Notes into the Exchange Agent's account in accordance with the
Depository's procedure for such transfer. Although delivery of Existing Notes
may be effected through book-entry transfer into the Exchange Agent's account at
the Depository, the Letter of Transmittal, with any required signature
guarantees and any other required documents, must in any case be transmitted to
and received by the Exchange Agent on or prior to the Expiration Date at the
address set forth below under "--Exchange Agent," or the guaranteed delivery
procedure described below must be complied with. Delivery of documents to the
Depository does not constitute delivery to the Exchange Agent. See "--
Exchanging Book-Entry Notes."
THE METHOD OF DELIVERY OF EXISTING NOTES AND ALL OTHER DOCUMENTS, INCLUDING
DELIVERY THROUGH DTC, IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY
MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED,
AND PROPER INSURANCE BE OBTAINED.
If a holder desires to tender Existing Notes pursuant to the Exchange Offer
and such holder's Existing Notes are not immediately available or time will not
permit all of the above documents to reach the Exchange Agent prior to the
Expiration Date, or such holder cannot complete the procedure of book-entry
transfer on a timely basis, such tender may be effected if the following
conditions are satisfied:
(i) such tenders are made by or through an eligible guarantor
institution which is a member of one of the following Signature Guarantee
Programs: The Securities Transfer Agents Medallion Program (STAMP); The New
York Stock Exchanges Medallion Signature Program (MSP) and The Stock
Exchanges Medallion Program (SEMP) (each, an "Eligible Institution");
(ii) a properly completed and duly executed notice of guaranteed
delivery ("Notice of Guaranteed Delivery"), in substantially the form
provided by the Company, is received by the Exchange Agent as provided
below on or prior to the Expiration Date; and
(iii) the Existing Notes, in proper form for transfer (or confirmation
of book-entry transfer of such Existing Notes into the Exchange Agent's
account at the Depository as described above), together with a properly
completed and duly executed Letter of Transmittal and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within five New York Stock Exchange, Inc. trading days after the date of
execution of such Notice of Guaranteed Delivery.
23
<PAGE> 30
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed Letter of Transmittal accompanied by Existing
Notes (or a timely confirmation received of a book-entry transfer of Existing
Notes into the Exchange Agent's account at the Depository) or a Notice of
Guaranteed Delivery from an Eligible Institution is received by the Exchange
Agent. Issuances of Exchange Notes in exchange for Existing Notes tendered
pursuant to a Notice of Guaranteed Delivery by an Eligible Institution will be
made only against delivery of the Letter of Transmittal (and any other required
documents) and the tendered Existing Notes (or a timely confirmation received of
a book-entry transfer of Existing Notes into the Exchange Agent's account at the
Depository) to the Exchange Agent or confirmation of the Book-Entry Transfer
Facility Automated Tender Offer Program ("ATOP") procedures set forth below. See
" -- Exchanging Book-Entry Notes."
Partial tenders of Existing Notes may be made only if (i) the principal
amount tendered is equal to $1,000 or an integral multiple thereof and (ii) the
remaining untendered portion of such Existing Notes is in a principal amount of
$250,000, or any integral multiple of $1,000 in excess of such amount. Holders
tendering less than the entire principal amount of any Existing Note they hold
in accordance with the foregoing restrictions must appropriately indicate such
fact on the Letter of Transmittal accompanying the tendered Existing Note.
With respect to tenders of Existing Notes, Bucyrus reserves full discretion
to determine whether the documentation is complete and generally to determine
all questions as to tenders, including the date of receipt of a tender, the
propriety of execution of any document, and any other questions as to the
validity, form, eligibility or acceptability of any tender. Bucyrus reserves the
right to reject any tender not in proper form or otherwise not valid or the
acceptance of exchange of which, in the opinion of Bucyrus's counsel, may be
unlawful or to waive any irregularities or conditions, and Bucyrus's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions on the Letter of Transmittal) will be final. Bucyrus shall not be
obligated to give notice of any defects or irregularities in tenders and shall
not incur any liability for failure to give any such notice. The Exchange Agent
may, but shall not be obligated to, give notice of any irregularities or defects
in tenders, and shall not incur any liability for any failure to give any such
notice. Existing Notes shall not be deemed to have been duly or validly tendered
unless and until all defects and irregularities have been cured or waived. All
improperly tendered Existing Notes, as well as Existing Notes in excess of the
principal amount tendered for exchange, will be returned (unless irregularities
and defects are timely cured or waived), without cost to the tendering holder
(or, in the case of Existing Notes delivered by book-entry transfer within the
Depository, will be credited to the account maintained within the Depository by
the participant in the Depository which delivered such shares), promptly after
the Expiration Date.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Existing Notes, such Existing Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case signed
exactly as the name or names of the registered holder or holders appear on the
Existing Notes.
If the Letter of Transmittal or any Existing Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
24
<PAGE> 31
EXCHANGING BOOK-ENTRY NOTES
The Exchange Agent and the Depository have confirmed that any financial
institution that is a participant in the Depository may utilize ATOP to tender
Existing Notes.
Any Depository participant may make book-entry delivery of Existing Notes
by causing the Depository to transfer such Existing Notes into the Exchange
Agent's account in accordance with the Depository's ATOP procedures for
transfer. However, the exchange for the Existing Notes so tendered will only be
made after timely confirmation (a "Book-Entry Confirmation") of such book-entry
transfer of Existing Notes into the Exchange Agent's account, and timely receipt
by the Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message, transmitted by the Depository and
received by the Exchange Agent and forming part of a Book-Entry Confirmation,
which states that the Depository has received an express acknowledgment from a
participant tendering Existing Notes that are the subject of such Book-Entry
Confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and that the Company may enforce such
agreement against such participant.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, certain terms and
conditions which are summarized below and are part of the Exchange Offer.
Each holder who tenders Existing Notes (other than certain broker-dealers)
and executes the Letter of Transmittal will be required to represent and agree
that such tendering holder is neither an affiliate of Bucyrus nor a
broker-dealer tendering Existing Notes acquired directly from Bucyrus for its
own account, has acquired the Exchange Notes in the ordinary course of its
business, is not engaged in, and does not intend to engage in, the distribution
of the Exchange Notes and has no arrangement or understanding to participate in
a distribution of Exchange Notes. Each broker-dealer that receives Exchange
Notes for its own account in exchange for Existing Notes, where such Existing
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge, among other things,
that it will deliver a Prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution." The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
Existing Notes tendered in exchange for Exchange Notes (or a timely
confirmation of a book-entry transfer of such Existing Notes into the Exchange
Agent's account at the Depository) must be received by the Exchange Agent, with
the Letter of Transmittal and any other required documents, by 5:00 p.m., New
York City time, on or prior to December , 1997, unless extended, or within the
time periods set forth above in " -- How to Tender" pursuant to a Notice of
Guaranteed Delivery from an Eligible Institution. The party tendering the
Existing Notes for exchange (the "Tendering Holder") shall be deemed to have
sold, assigned and transferred the Existing Notes to the Exchange Agent, as
agent of Bucyrus, and irrevocably constituted and appointed the Exchange Agent
as the Tendering Holder's agent and attorney-in-fact to cause the Existing Notes
to be transferred and exchanged. The Tendering Holder shall also warrant that it
has full power and authority to tender, exchange, sell, assign, and transfer the
Existing Notes and to acquire the Exchange Notes issuable upon the exchange of
such tendered Existing Notes, that the Exchange Agent, as agent of Bucyrus, will
acquire good and unencumbered title to the tendered Existing Notes, free and
clear of all liens, restrictions, charges and encumbrances, and that the
Existing Notes tendered for exchange are not subject to any adverse claims when
accepted by the Exchange Agent, as agent of Bucyrus. The Tendering Holder shall
also warrant that it will, upon request, execute and deliver any additional
documents deemed by Bucyrus or the Exchange Agent to be necessary or desirable
to complete the exchange, sale, assignment and transfer of the Existing Notes.
All authority conferred or agreed to be conferred in the Letter of Transmittal
by the Tendering
25
<PAGE> 32
Holder will survive the death or incapacity of the Tendering Holder and any
obligation of the Tendering Holder shall be binding upon the heirs, executors,
administrators, personal representatives, trustees in bankruptcy, legal
representatives, successors and assigns of such Tendering Holder.
Signature(s) on the Letter of Transmittal will be required to be guaranteed
as set forth above in " -- How to Tender." All questions as to the validity,
form, eligibility (including time of receipt) and acceptability of any tender
will be determined by Bucyrus, in its sole discretion, and such determination
will be final and binding. Unless waived by Bucyrus, irregularities and defects
must be cured by the Expiration Date.
WITHDRAWAL RIGHTS
All tenders of Existing Notes may be withdrawn at any time prior to the
Expiration Date. To be effective, a notice of withdrawal must be timely received
by the Exchange Agent at the address set forth below under " -- Exchange Agent."
Any notice of withdrawal must specify the person named in the Letter of
Transmittal as having tendered the Existing Notes to be withdrawn. If the
Existing Notes have been physically delivered to the Exchange Agent, the
Tendering Holder must also submit the serial number shown on the particular
Existing Notes to be withdrawn. If the Existing Notes have been delivered
pursuant to the book-entry procedures set forth above under " -- How to Tender,"
any notice of withdrawal must specify the name and number of the participant's
account at the Depository to be credited with the withdrawn Existing Notes. The
Exchange Agent will return the properly withdrawn Existing Notes as soon as
practicable following receipt of the notice of withdrawal. All questions as to
the validity, including time of receipt, of notices and withdrawals will be
determined by Bucyrus, and such determination will be final and binding on all
parties.
ACCEPTANCE OF TENDERS
Subject to the terms and conditions of the Exchange Offer, including the
reservation of certain rights by Bucyrus, Existing Notes tendered (either
physically or through book-entry delivery as described in " -- How to Tender")
with a properly executed Letter of Transmittal and all other required
documentation, and not withdrawn, will be accepted on or promptly after the
Expiration Date. At the option of the holder of an Exchange Note, such Exchange
Note may be held in the form of either (i) a certificated Exchange Note or (ii)
a beneficial interest in one or more of the Global Notes (as defined).
Beneficial interests in the Global Notes will be shown on, and transfers thereof
will be effected only through, records maintained by the Depository and its
participants. Subject to the terms and conditions of the Exchange Offer,
certificated Exchange Notes to be issued in exchange for properly tendered
Existing Notes will be mailed by the Exchange Agent promptly after the
acceptance of such tendered Existing Notes and the Exchange Notes to be issued
in the form of Global Notes will be deposited with the Depository promptly after
acceptance of the related tendered Existing Notes. Acceptance of tendered
Existing Notes will be effected by the delivery of a notice to that effect by
Bucyrus to the Exchange Agent. Subject to the applicable rules of the
Commission, Bucyrus, however, reserves the right, prior to the acceptance of
tendered Existing Notes, to delay acceptance of tendered Existing Notes upon the
occurrence of any of the conditions set forth above under the caption "--
Conditions." Bucyrus confirms that its reservation of the right to delay
acceptance of tendered Existing Notes is subject to the provisions of Rule
14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which requires that a tender offeror pay the consideration offered or
return the tendered securities promptly after the termination or withdrawal of a
tender offer.
Although Bucyrus does not currently intend to do so, if it modifies the
terms of the Exchange Offer, such modified terms will be available to all
holders of Existing Notes, whether or not their Existing Notes have been
tendered prior to such modification. Any material modification will be disclosed
in accordance with the applicable rules of the Commission and, if required, the
Exchange
26
<PAGE> 33
Offer will be extended to permit holders of Existing Notes adequate time to
consider such modification.
The tender of Existing Notes pursuant to any one of the procedures set
forth in "-- How to Tender" will constitute an agreement between the Tendering
Holder and Bucyrus upon the terms and subject to the conditions of the Exchange
Offer.
EXCHANGE AGENT
Harris Trust and Savings Bank has agreed to provide certain services as
Exchange Agent for the Exchange Offer. Tendering Holders who require assistance
should contact the Exchange Agent. Letters of Transmittal and any inquiries with
respect to the Exchange Offer must be addressed to the Exchange Agent as
follows:
<TABLE>
<S> <C> <C>
Delivery to other than the above address will not constitute valid
delivery.
SOLICITATION OF TENDERS; EXPENSES
Except as described above under "-- Exchange Agent," Bucyrus has not
retained any agent in connection with the Exchange Offer and will not make any
payments to brokers, dealers or other persons for soliciting or recommending
acceptances of the Exchange Offer. Bucyrus, will, however, reimburse the
Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. Bucyrus will also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this Prospectus and related documents to the beneficial
owners of the Existing Notes and in handling or forwarding tenders for their
customers.
TRANSFER TAXES
Bucyrus will pay all transfer taxes, if any, applicable to the transfer of
Existing Notes to it or its order pursuant to the Exchange Offer. If, however,
Exchange Notes and/or substitute Existing Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Existing Notes tendered, or if tendered
Existing Notes are registered in the name of any person other than the person
signing the Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the transfer of Existing Notes to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other person) will be payable by the
Tendering Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such Tendering Holder.
ACCOUNTING TREATMENT
The carrying value of the Existing Notes is expected to become the carrying
value of the Exchange Notes at the time of the Exchange Offer. Accordingly, no
gain or loss for accounting purposes will be recognized. The expenses of the
Exchange Offer will be amortized over the term of the Exchange Notes.
27
</TABLE>
<PAGE> 34
TERMINATION OF CERTAIN RIGHTS
Holders of the Exchange Notes will not be entitled to certain special
rights under the Registration Agreement, which rights will terminate when the
Exchange Offer is completed. Pursuant to the Registration Agreement, the
Exchange Offer shall be deemed to be "completed" upon the occurrence of (i) the
filing and effectiveness under the Securities Act of a registration statement
relating to the Exchange Notes to be issued in the Exchange Offer, (ii) the
maintenance of such registration statement continuously effective for a period
of not less than 30 days after notice has been sent to holders of Existing Notes
and (iii) the delivery by Bucyrus in exchange for all Existing Notes that have
been duly tendered and not validly withdrawn on or prior to the Expiration Date
of Exchange Notes transferable by each holder thereof (other than a holder that
is an affiliate of Bucyrus within the meaning of Rule 405 under the Securities
Act, a broker-dealer tendering Existing Notes acquired directly from Bucyrus for
its own account, a holder who acquires the Exchange Notes outside the ordinary
course of such holder's business or a holder who is engaged in or who intends to
engage in a distribution of the Exchange Notes or who has arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing the Exchange Notes) without restrictions under the
Securities Act. The rights that will terminate include the right to require the
Company (i) to file with the Commission, and use its best efforts to cause to
become effective under the Securities Act, a registration statement with respect
to the Exchange Notes and (ii) other than in certain limited circumstances, to
file with the Commission, use its best efforts to cause to become effective
under the Securities Act and keep continuously effective for a period of up to
three years a "shelf" registration statement providing for the registration of,
and the sale on a continuous or delayed basis by the holders of, Existing Notes.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of Bucyrus's obligations
under the Registration Agreement. Bucyrus will not receive any cash proceeds
from the issuance of the Exchange Notes offered hereby. In consideration for
issuing the Exchange Notes as contemplated in this Prospectus, Bucyrus will
receive in exchange Existing Notes in like principal amount, the form and terms
of which are identical in all material respects to the form and terms of the
Exchange Notes, except as otherwise described herein. The Existing Notes
surrendered in exchange for the Exchange Notes will be retired and canceled and
cannot be reissued. Accordingly, issuance of the Exchange Notes will not result
in any increase in the indebtedness of Bucyrus.
The proceeds to Bucyrus for the sale of the Existing Notes were
approximately $145.5 million, net of Initial Purchasers' discount. The net
proceeds to Bucyrus from the sale of the Existing Notes were used to purchase or
redeem 100% of the Company's 10.5% Secured Notes due December 14, 1999 (the
"Secured Notes") and to refinance indebtedness incurred in connection with the
Marion Acquisition and the AIP Merger and fees and expenses related thereto.
28
<PAGE> 35
ACQUISITION OF THE COMPANY BY AIP
On August 21, 1997, Bucyrus entered into the AIP Agreement with AIPAC,
which is wholly owned by AIP, and BAC, a wholly-owned subsidiary of AIPAC.
Pursuant to the AIP Agreement, on August 26, 1997, BAC commenced an offer to
purchase for cash 100% of the Common Stock at a price of $18.00 per share (the
"AIP Tender Offer").
Following consummation of the AIP Tender Offer, and the satisfaction of
certain conditions set forth in the AIP Agreement, on September 26, 1997, BAC
merged with and into Bucyrus, and each shareholder of Bucyrus received $18.00 in
cash for each share of Common Stock (the "AIP Merger"). Bucyrus is the surviving
entity following the AIP Merger and AIPAC is its sole shareholder. The AIP
Merger was accomplished without submission to a shareholder vote, as permitted
under Delaware law.
The consideration in the AIP Tender Offer and the AIP Merger was funded by
(i) a $143.0 million cash common equity contribution from AIP (the "AIP Equity
Contribution"); and (ii) a loan to BAC from, or arranged by, AIP (the "AIP
Bridge Loan"). Upon consummation of the AIP Merger, the AIP Bridge Loan was
repaid, and the consideration in the AIP Merger was paid, with a portion of the
proceeds from the Private Offering.
All issued and outstanding restricted stock was purchased in the AIP Tender
Offer. In addition, all issued and outstanding stock options and SARs were
cancelled, and regardless of whether such stock options or SARs had then vested
or were exercisable, each holder of stock options or SARs received cash per
share equal to $18.00 less the "strike price" of such stock options or SARs.
Following consummation of the AIP Merger, Robert L. Purdum, an operating
partner of AIP and former Chairman, President and Chief Executive Officer of
Armco Inc., is expected to become the Company's Non-Executive Chairman of the
Board. Although no specific arrangements are in place, AIP presently intends to
offer the Company's executive officers the opportunity to own up to 10% of the
Company's equity through a combination of direct investments and option
programs.
29
<PAGE> 36
CAPITALIZATION
The following table sets forth the actual and pro forma consolidated
capitalization of the Company as of June 30, 1997, after giving effect to the
Transactions. The table should be read in conjunction with "Unaudited Pro Forma
Combined Condensed Financial Statements" and the financial statements of the
Company and of Marion, and related notes thereto, included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------------------------
PRO FORMA PRO FORMA AIP
MARION MERGER AND
ACTUAL ACQUISITION(1) PRIVATE OFFERING
------ -------------- ----------------
(UNAUDITED;
DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt:
Short-term obligations............................. $ 11,438 $ 11,438 $ 11,057
Current maturities of long-term debt............... 416 416 416
Bridge Loan........................................ -- 45,000 --
-------- -------- --------
Total short-term debt................................ 11,854 56,854 11,473
-------- -------- --------
Long-term debt, less current maturities:
10.5% Secured Notes due December 14, 1999.......... 65,785 65,785 --
9 3/4% Senior Notes due 2007....................... -- -- 150,000
Revolving Credit Facility (2)...................... -- -- 23,258
Other.............................................. 2,554 2,554 2,554
-------- -------- --------
Total long-term debt, less current maturities........ 68,339 68,339 175,812
-------- -------- --------
Common shareholders' investment:
Common stock -- par value $.01 per share,
authorized 20,000,000 shares, issued and
outstanding 10,534,574 shares, actual and pro
forma for the Marion Acquisition; authorized,
issued and outstanding 1,000 shares, pro forma
for the AIP Merger.............................. 105 105 --
Additional paid-in capital......................... 57,739 57,739 143,000
Unearned stock compensation........................ (2,395) (2,395) --
Accumulated deficit................................ (13,023) (13,023) --
Cumulative translation adjustment.................. (1,359) (1,359) --
-------- -------- --------
Total common shareholders' investment................ 41,067 41,067 143,000
-------- -------- --------
Total capitalization (including short-term debt)..... $121,260 $166,260 $330,285
======== ======== ========
</TABLE>
- -------------------------
(1) Reflects an assumed net purchase price for Marion of $36,451. For the
purposes of calculating the amount of the assumed post-closing adjustment to
the purchase price, the Company has used Marion's June 30, 1997 balance
sheet.
(2) The Revolving Credit Facility provides for up to $75,000 of borrowing
availability, subject to a borrowing base limitation. See "Revolving Credit
Facility."
30
<PAGE> 37
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
The Unaudited Pro Forma Combined Condensed Statements of Operations of the
Company for the year ended December 31, 1996, and the six months ended June 30,
1997 (the "Pro Forma Statements of Operations"), and the Unaudited Pro Forma
Combined Condensed Balance Sheet of the Company as of June 30, 1997 (the "Pro
Forma Balance Sheet" and together with the Pro Forma Statements of Operations,
the "Pro Forma Financial Statements"), have been prepared to illustrate the
estimated effect of the Transactions. The Pro Forma Financial Statements are
based on certain estimates and assumptions made by the management of the Company
as to the combined operations of the Company and Marion which the Company
believes to be reasonable. The Pro Forma Financial Statements do not purport to
be indicative of the results of operations or financial position of the Company
and Marion that actually would have been obtained had the Transactions been
completed as of the assumed dates, or to project the results of operations or
financial position of the Company for any future date or period.
The Pro Forma Balance Sheet gives pro forma effect to the Transactions as
if they had occurred on June 30, 1997. The Pro Forma Statements of Operations
give pro forma effect to the Transactions as if they had occurred on January 1,
1996. For purposes of the Pro Forma Statements of Operations for the year ended
December 31, 1996, Marion's historical Statement of Operations for the fiscal
year ended October 31, 1996, was combined with the Company's historical
Statement of Operations for the year ended December 31, 1996. For purposes of
the Pro Forma Statement of Operations for the six months ended June 30, 1997,
Marion's historical Statement of Operations for the six months ended June 30,
1997, was combined with the Company's historical Statement of Operations for the
six months ended June 30, 1997. Marion's results for the months of November and
December 1996 are not included in these Pro Forma Statements of Operations.
Marion's net sales and net loss for these two months were $9.5 million and $1.6
million, respectively. The Pro Forma Statements of Operations have been prepared
assuming retention of all of the Company's and Marion's net sales. See "Risk
Factors -- Realization of Benefits of the Marion Acquisition; Integration of
Marion."
The Marion Acquisition and the AIP Merger will be accounted for by the
purchase method of accounting. Under purchase accounting, the total purchase
price will be allocated to the tangible and intangible assets and liabilities
assumed based upon their respective fair values as of the closing of the Marion
Acquisition and the AIP Merger, respectively, based on valuations and studies
which are not yet available. A preliminary allocation of each purchase price has
been made to major categories of assets and liabilities in the accompanying Pro
Forma Financial Statements based on available information. The actual allocation
of the purchase prices and resulting effects on income from operations may
differ significantly from the pro forma amounts included herein. These pro forma
adjustments represent management's preliminary determination of purchase
accounting adjustments and are based upon available information and certain
assumptions that management believes to be reasonable. A balance sheet will be
prepared with respect to Marion's balance sheet as of the date of such closing,
on which the post-closing purchase price adjustment will be based. Management
does not expect that differences between the preliminary and final purchase
price allocation will have a material impact on the Company's financial position
and/or results of operations.
The Pro Forma Financial Statements should be read in conjunction with the
financial statements of the Company and of Marion, and the related notes
thereto, included elsewhere in this Prospectus. See also "Risk Factors --
Realization of Benefits of the Marion Acquisition; Integration of Marion" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
For purposes of the Pro Forma Financial Statements, the "Marion
Acquisition" includes the Company's acquisition of Marion and the financing
effected to consummate that acquisition, and the "AIP Merger" includes the
acquisition of the Company by AIP and the Private Offering.
31
<PAGE> 38
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------------------------------------------------------------------
HISTORICAL PRO FORMA ADJUSTMENTS
------------------- ------------------------------------------------
SUBTOTAL
MARION COMBINED AIP COMBINED
BUCYRUS MARION ACQUISITION(1)(2) PRO FORMA MERGER(8)(9) PRO FORMA
-------- ------- ----------------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......... $ 11,350 $ 240 $ 452(3) $ 12,042 $ (5,000) $ 7,042
Receivables....................... 54,271 9,679 63,950 63,950
Inventories....................... 74,587 37,427 112,014 10,836(10) 122,850
Prepaid expenses and other current
assets.......................... 5,091 91 (1,892)(4) 3,290 (225)(11) 3,065
-------- ------- -------- -------- -------- --------
Total Current Assets.............. 145,299 47,437 (1,440) 191,296 5,611 196,907
OTHER ASSETS:
Restricted funds on deposit....... 1,079 -- 1,079 1,079
Goodwill.......................... -- -- 110,306(10) 110,306
Intangible assets -- net.......... 8,101 1,372 662(5) 10,135 16,515(10) 26,650
Other assets...................... 6,395 361 3,200(6) 9,956 3,287(12) 13,243
-------- ------- -------- -------- -------- --------
15,575 1,733 3,862 21,170 130,108 151,278
PROPERTY, PLANT AND EQUIPMENT --
NET:.............................. 37,639 9,146 (7,925)(5) 38,860 33,590(10) 72,450
-------- ------- -------- -------- -------- --------
$198,513 $58,316 $ (5,503) $251,326 $169,309 $420,635
======== ======= ======== ======== ======== ========
LIABILITIES AND COMMON SHAREHOLDERS'
INVESTMENT
CURRENT LIABILITIES:
Accounts payable and accrued
expenses........................ $ 41,712 $ 9,401 $ (5,599)(7) $ 45,514 $ 45,514
Payable to affiliated entity...... -- 839 (839)(7) -- --
Liabilities to customers on
uncompleted contracts and
warranties...................... 7,170 4,011 11,181 11,181
Income taxes...................... 2,042 -- 2,042 2,042
Short-term obligations............ 11,438 -- 45,000 56,438 $(45,000) 11,057
(381)(13)
Current maturities of long-term
debt............................ 416 -- 416 416
-------- ------- -------- -------- -------- --------
Total Current Liabilities......... 62,778 14,251 38,562 115,591 (45,381) 70,210
LONG-TERM LIABILITIES:
Deferred income taxes............. 138 -- 138 138
Liabilities to customers on
uncompleted contracts and
warranties...................... 3,239 -- 3,239 3,239
Postretirement benefits........... 10,800 6,725 (6,725)(7) 10,800 2,569(14) 13,369
Deferred expenses and other....... 12,152 4,344 (4,344)(7) 12,152 2,715(15) 14,867
-------- ------- -------- -------- -------- --------
26,329 11,069 (11,069) 26,329 5,284 31,613
LONG-TERM DEBT, less current
maturities........................ 68,339 -- 68,339 (42,908)(16) 175,812
150,000
381(13)
COMMON SHAREHOLDERS' INVESTMENT:
Common stock...................... 105 -- 105 (105)(17) --
Additional paid-in capital........ 57,739 -- 57,739 85,261(17) 143,000
Unearned stock compensation....... (2,395) -- (2,395) 2,395(17) --
Accumulated deficit............... (13,023) -- (13,023) 13,023(17) --
Cumulative translation
adjustment...................... (1,359) -- (1,359) 1,359(17) --
Combined equity................... -- 32,996 (32,996) -- --
-------- ------- -------- -------- -------- --------
41,067 32,996 (32,996) 41,067 101,933 143,000
-------- ------- -------- -------- -------- --------
$198,513 $58,316 $ (5,503) $251,326 $169,309 $420,635
======== ======= ======== ======== ======== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Balance Sheet.
32
<PAGE> 39
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(1) A summary of sources and uses of proceeds for the Marion Acquisition was as
follows:
<TABLE>
<S> <C>
SOURCES OF FUNDS:
Gross proceeds from the Bridge Loan....................... $45,000
-------
Total Sources of Funds...................................... $45,000
=======
USES OF FUNDS:
Estimated purchase price for Marion*...................... $36,451
Bridge Loan borrowing costs of $3,463 less $1,338 paid by
the Company as of June 30, 1997........................ 2,125
Transaction costs of $6,195 (primarily relocation costs),
less $463 paid by the Company as of June 30, 1997...... 5,732
Increase to on-hand cash balances......................... 692
-------
Total Uses of Funds......................................... $45,000
=======
</TABLE>
- -------------------------
* The purchase price of Marion was approximately $40,120 plus or minus the
change in Marion's net assets from January 31, 1997, to the closing date. At
June 30, 1997, the change in the net assets is a decrease of $3,669 which
would reduce the estimated purchase price to $36,451.
(2) The Marion Acquisition included trade receivables, inventory, selected
current assets, selected other long-term assets, machinery and equipment,
trade payables and selected current liabilities. The estimated allocation of
the purchase price of Marion was as follows:
<TABLE>
<S> <C>
PURCHASE PRICE:
Cash...................................................... $36,451
Liabilities assumed....................................... 7,813
Transaction costs (primarily relocation costs)............ 6,195
-------
$50,459
=======
ALLOCATION OF PURCHASE PRICE:
Receivables............................................... $ 9,679
Inventories............................................... 37,427
Intangible assets (primarily engineering drawings)........ 2,034
Other assets.............................................. 98
Machinery and equipment................................... 1,221
-------
$50,459
=======
</TABLE>
(3) Reflects the net increase in cash related to the purchase of Marion:
<TABLE>
<S> <C>
Gross proceeds from the Bridge Loan......................... $ 45,000
Purchase of Marion.......................................... (36,451)
Payment of transaction costs................................ (5,732)
Payment of borrowing costs incurred in connection with the
Bridge Loan............................................... (2,125)
Elimination of Marion cash not acquired by the Company...... (240)
--------
$ 452
========
</TABLE>
33
<PAGE> 40
(4) The reduction in prepaid expenses reflects the following:
<TABLE>
<S> <C>
Reclassification of Bridge Loan borrowing costs and
transaction costs that have been paid by the Company as of
June 30, 1997............................................. $(1,801)
Elimination of Marion assets not acquired by the Company.... (91)
-------
$(1,892)
=======
</TABLE>
(5) Reflects the allocation of the purchase price to intangible assets and
machinery and equipment.
(6) Reflects the following:
<TABLE>
<S> <C>
Capitalization of borrowing costs incurred by the Company in
connection with the Bridge Loan........................... $3,463
Elimination of Marion assets not acquired by the Company.... (263)
------
$3,200
======
</TABLE>
Following the Private Offering, the Company wrote off its entire borrowing
costs incurred in connection with the Bridge Loan. Such write-off was
reflected in the results of operations for the three months ended September
30, 1997 as a charge to earnings.
(7) These adjustments represent the elimination of liabilities not assumed by
the Company.
(8) A summary of sources and uses of proceeds from the Private Offering and the
AIP Merger is as follows:
<TABLE>
<S> <C>
SOURCES OF FUNDS:
Gross proceeds from the Private Offering.................. $150,000
Cash equity contribution by AIP........................... 143,000
Borrowings under Revolving Credit Facility................ 23,258
Cash...................................................... 5,000
--------
Total Sources of Funds...................................... $321,258
========
USES OF FUNDS:
Purchase of outstanding shares of Common Stock, stock
options and SARs....................................... $196,567
Repayment of Secured Notes................................ 65,785
Repayment of Bridge Loan.................................. 45,000
Repayment of existing credit facility..................... 381
Transaction costs......................................... 7,200
Debt issuance costs of $6,550 less $225 paid by the
Company as of June 30, 1997............................ 6,325
--------
Total Uses of Funds......................................... $321,258
========
</TABLE>
(9) The estimated allocation of the purchase of the Common Stock of the Company
is as follows:
<TABLE>
<S> <C>
PURCHASE PRICE:
Cash equity contribution by AIP........................... $143,000
Liabilities assumed....................................... 270,435
Transaction costs......................................... 7,200
--------
$420,635
========
ALLOCATION OF PURCHASE PRICE:
Current assets............................................ $196,907
Intangible assets (including goodwill of $110,306)........ 136,956
Other long-term assets.................................... 14,322
Property, plant and equipment............................. 72,450
--------
$420,635
========
</TABLE>
34
<PAGE> 41
(10) The adjustments reflect the write-up to fair market value.
- Inventory has been adjusted to its fair value as required by Accounting
Principles Board Opinion No. 16. This adjustment primarily relates to
finished parts which are being valued at their selling price, less cost
to sell, less a selling profit. As such inventory is sold, this
adjustment to fair value will be charged to cost of products sold. The
Company expects the inventory to be sold over a one year period.
- Goodwill is expected to be amortized over 30 years.
- Intangible assets consist of engineering drawings and bill of material
listings and are expected to be amortized over 20 years.
- Plant and equipment will be amortized over the estimated useful lives of
the respective assets using the straight-line method for financial
reporting purposes. Estimated useful lives are expected to be 20 years
for buildings and improvements and 10 years for machinery and equipment.
- The Company intends to review its property, plant and equipment and
intangible assets and obtain appraisals of these assets in order to
determine what revisions, if any, should be made to individual accounts.
The Company does not expect the appraised values to be materially
different than the values assigned in these pro forma financial
statements.
(11) Reflects the reclassification of debt issuance costs that have been paid by
the Company as of June 30, 1997.
(12) Reflects the following:
<TABLE>
<S> <C>
Capitalization of debt issuance costs incurred by the
Company in connection with the Notes which will be
amortized over the life of the Notes...................... $ 6,550
Elimination of capitalized borrowing costs incurred by the
Company in connection with the Bridge Loan................ (3,463)
Adjustment of pension assets to the amount of the fair value
of the assets in excess of the projected benefit
obligation................................................ 200
-------
$ 3,287
=======
</TABLE>
(13) Reflects the repayment of the existing credit facility.
(14) Reflects the adjustment of the reserve for postretirement life and medical
benefits to the amount of the accumulated postretirement benefit
obligation.
(15) Reflects the adjustment of the pension accrual to the excess of the
projected benefit obligation over plan assets.
(16) Reflects the following:
<TABLE>
<S> <C>
Repayment of Secured Notes.................................. $(65,785)
Borrowings under the Revolving Credit Facility, excluding
item (13) above........................................... 22,877
--------
$(42,908)
========
</TABLE>
(17) Reflects the elimination of the old equity of the Company and the AIP
Equity Contribution.
35
<PAGE> 42
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------- PRO FORMA ADJUSTMENTS
BUCYRUS MARION ----------------------------------------
YEAR ENDED YEAR ENDED SUBTOTAL
DECEMBER 31, OCTOBER 31, MARION COMBINED AIP COMBINED
1996 1996 ACQUISITION PRO FORMA MERGER PRO FORMA
------------ ----------- ----------- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales..................... $263,786 $109,625 $373,411 $373,411
Cost of products sold......... 215,126 93,026 $(7,404)(2)(4) 300,748 $ 12,079(5) 312,827
-------- -------- ------- -------- -------- --------
Gross profit.................. 48,660 16,599 7,404 72,663 (12,079) 60,584
Product development, selling,
administrative, and
miscellaneous expenses...... 36,470 16,514 (6,539)(3)(4) 46,445 7,668(6) 54,113
Allocation of parent
corporation administrative
and overhead expenses....... 2,200 (2,200)(3) -- --
-------- -------- ------- -------- -------- --------
Operating earnings............ 12,190 (2,115) 16,143 26,218 (19,747) 6,471
Other income.................. 1,003 555 1,558 1,558
-------- -------- ------- -------- -------- --------
Earnings before interest
expense and income taxes.... 13,193 (1,560) 16,143 27,776 (19,747) 8,029
Interest expense.............. 8,557 228 (7) 8,785 9,669(7) 18,454
-------- -------- ------- -------- -------- --------
Earnings (loss) before income
taxes....................... 4,636 (1,788) 16,143 18,991 (29,416) (10,425)
Income taxes.................. 1,758 (662) 5,551(8) 6,647 (5,285)(8) 1,362
-------- -------- ------- -------- -------- --------
Net earnings (loss)........... $ 2,878 $ (1,126) $10,592 $ 12,344 $(24,131) $(11,787)
======== ======== ======= ======== ======== ========
Net loss per share of Common Stock................................................................... --(9)
OTHER DATA:
EBITDA (as defined
herein)(10)................. $ 19,247 $ 434 $14,339 $ 34,020 $ 34,020
Capital expenditures.......... $ 4,996 $ 1,761 $ 6,757 $ 6,757
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Statements
of Operations.
36
<PAGE> 43
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL FOR THE PRO FORMA ADJUSTMENTS
SIX MONTHS ENDED ----------------------------------------
JUNE 30, 1997 SUBTOTAL
------------------- MARION COMBINED AIP COMBINED
BUCYRUS MARION ACQUISITION PRO FORMA MERGER PRO FORMA
-------- ------- ----------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales...................... $143,762 $31,549 $(1,410)(1) $173,901 $173,901
Cost of products sold.......... 116,261 27,824 (3,943)(2)(4) 140,142 $ 475(5) 140,617
-------- ------- ------- -------- ------- --------
Gross profit................... 27,501 3,725 2,533 33,759 (475) 33,284
Product development, selling,
administrative, and
miscellaneous expenses....... 18,345 7,254 (2,731)(3)(4) 22,868 3,711(6) 26,579
Allocation of parent
corporation administrative
and overhead expenses........ -- 1,246 (1,246)(3) -- --
-------- ------- ------- -------- ------- --------
Operating earnings............. 9,156 (4,775) 6,510 10,891 (4,186) 6,705
Other income................... 615 50 665 665
-------- ------- ------- -------- ------- --------
Earnings before interest
expense and income taxes..... 9,771 (4,725) 6,510 11,556 (4,186) 7,370
Interest expense............... 3,956 780 4,736 4,606(7) 9,342
-------- ------- ------- -------- ------- --------
Earnings (loss) before income
taxes........................ 5,815 (5,505) 6,510 6,820 (8,792) (1,972)
Income taxes................... 2,392 (2,125) 2,120(8) 2,387 (184)(8) 2,203
-------- ------- ------- -------- ------- --------
Net earnings (loss)............ $ 3,423 $(3,380) $ 4,390 $ 4,433 $(8,608) $ (4,175)
======== ======= ======= ======== ======= ========
Net loss per share of Common Stock.............................................................. --(9)
OTHER DATA:
EBITDA (as defined
herein)(10).................. $ 12,900 $(3,718) $ 5,647 $ 14,829 $ 14,829
Capital expenditures........... $ 2,433 $ 683 $ 3,116 $ 3,116
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Statements
of Operations.
37
<PAGE> 44
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(1) Represents the adjustment to net sales to conform Marion's revenue
recognition policy for shovels (shipment method) to the Company's percentage
of completion method. The adjustment for 1996 is immaterial and is not
included in the 1996 Pro Forma Combined Condensed Statement of Operations.
(2) Reflects the following:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Elimination of depreciation on buildings which are not
being purchased by the Company........................ $ (91) $ (46)
Elimination of the LIFO provision....................... (484) --
Reversal of provision for warranties on planetary
gearing on certain draglines not assumed by the
Company pursuant to the purchase contract............. (1,400) --
Adjustment to cost of sales to conform Marion's revenue
recognition policy for shovels (shipment method) to
the Company's percentage of completion method......... -- (1,182)
Adjustment to depreciation expense based on the assigned
fair value of machinery and equipment................. (443) (222)
Elimination of manufacturing costs related to
non-acquired assets and non-assumed employees (see
below)................................................ (4,986) (2,493)
------- -------
$(7,404) $(3,943)
======= =======
</TABLE>
As part of the purchase contract, the Company did not acquire the
manufacturing facility of Marion. The elimination of direct costs related
to this facility, including maintenance, security, taxes, insurance, etc.
results in reductions of approximately $2,239 and $1,120 for the year ended
December 31, 1996 and the six months ended June 30, 1997, respectively.
This does not include depreciation savings reflected in the table above.
Also as part of the purchase contract, the Company hired only specifically
identified Marion employees which reflected a department-by-department
evaluation of personnel required to handle the workload. Various
subsidiaries of Global have retained all liabilities related to employees
not permanently hired by the Company. The elimination of salaries and
benefits from administrative personnel in the fixed manufacturing
departments (plant management, purchasing, industrial relations, quality
assurance, etc.) who have not been hired results in savings of $1,773 and
$886 for the year ended December 31, 1996 and the six months ended June 30,
1997, respectively. An additional $974 and $487 for the year ended December
31, 1996 and the six months ended June 30, 1997, respectively, of
duplicative nonpayroll costs related to manufacturing (corporate
allocations, travel costs, outside consultants, and other manufacturing
items) have been identified.
38
<PAGE> 45
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(3) As part of the purchase contract, the Company hired only specifically
identified Marion employees. In addition, the Company has identified
redundant functions and costs at Marion. These include:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Salaries and benefits from the elimination of specific
administrative departments (executive, treasury, human
resources, and finance)............................... $(2,982) $(1,492)
Additional non-payroll related costs related to the
administrative functions of Marion.................... (1,287) (644)
Corporate overhead charges allocated from the parent of
Marion................................................ (2,200) (1,246)
Salaries and related costs from Marion's permanent
elimination of various engineering positions in
December 1996......................................... (1,000) --
------- -------
$(7,469) $(3,382)
======= =======
</TABLE>
In addition, the adjustments to reflect the impact of purchase accounting
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Adjustment to amortization of intangible assets based on
the assigned fair value of such assets................ $ (728) $(324)
Adjustment to depreciation expense based on the assigned
fair value of machinery and equipment................. (542) (271)
------- --------
$(1,270) $(595)
======= ========
</TABLE>
(4) In addition to the above pro forma adjustments, the Company expects to
realize significant additional annual cost savings related to headcount
reductions and related expenses at Marion which have not been included in
the Pro Forma Combined Condensed Statements of Operations. The primary cost
savings are related to reduced direct labor costs, engineering and marketing
headcount reductions, and future closing of parts and service locations as
summarized below:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Direct labor reductions................................. $(1,319) $ (660)
Engineering and marketing salary and benefit
reductions............................................ (1,292) (646)
Elimination of duplicative parts and service
locations............................................. (389) (194)
------- -------
$(3,000) $(1,500)
======= =======
</TABLE>
39
<PAGE> 46
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(5) Reflects the impacts of purchase accounting as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Inventory write-up charged to cost of products sold as
the inventory is sold.................................. $10,836 $ --
Adjustment to depreciation expense based on the assigned
fair value of property, plant and equipment............ 1,243 475
------- ------
$12,079 $475
======= ======
</TABLE>
Inventory has been adjusted to its fair value as required by Accounting
Principles Board Opinion No. 16. This adjustment primarily relates to
finished parts which are being valued at their selling price, less cost to
sell, less a selling profit. As such inventory is sold, this adjustment to
fair value will be charged to cost of products sold.
(6) Reflects the impacts of purchase accounting, the amortization of the fees,
and the AIP Management Fee incurred by the Company in connection with the
Private Offering as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Purchase Accounting:
Amortization of goodwill............................... $3,679 $1,840
Adjustment to depreciation expense based on the
assigned fair value of property, plant and
equipment........................................... 1,058 405
Adjustment to amortization of intangible assets based
on the assigned fair value of such assets........... 826 413
AIP Management Fee....................................... 1,450 725
Amortization of fees..................................... 655 328
------ --------
$7,668 $3,711
====== ========
</TABLE>
(7) Reflects the following:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1996 1997
------------ ----------------
<S> <C> <C>
Interest on the Notes at an assumed interest rate of
10.5%.................................................. $15,750 $ 7,875
Reversal of interest on the Secured Notes being
retired................................................ (7,783) (3,454)
Reversal of Marion's historical interest expense......... (228) (780)
Interest on borrowings under the Revolving Credit
Facility at an assumed interest rate of 8.4375%........ 1,930 965
------- -------
$ 9,669 $ 4,606
======= =======
</TABLE>
There is no pro forma interest expense adjustment reflected for the Bridge
Loan as it was repaid from the sale of the Existing Notes.
The impact of a 1/8 of 1% change in the interest rate on the Notes
approximates $188 per annum. Assuming an interest rate of 9 3/4%, interest
expense would have been $14,625 for the fiscal year ended December 31,
1996, and $7,313 for the six months ended June 30, 1997.
40
<PAGE> 47
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(8) Pro forma income taxes have been provided at local statutory rates by tax
jurisdiction. For the Marion Acquisition, income taxes provided on U.S.
operations are offset by pre-bankruptcy net operating loss carryforwards.
The benefit of such net operating loss carryforwards would be reflected as
a reduction of intangibles rather than the tax provision. As a result of
the AIP Merger, the tax benefit on U.S. operating losses has been
completely offset by valuation allowances due to uncertainty as to their
realization and the previous pro forma provision for the Marion Acquisition
is eliminated. This results in an overall net income tax provision for pro
forma purposes which primarily relates to taxes on foreign income.
(9) As a result of the AIP Merger, there are 1,000 outstanding shares of Common
Stock, all of which are owned by AIPAC; therefore, net loss per share of
Common Stock is not meaningful.
(10) For purposes of this Prospectus (other than "Description of the Notes"),
"EBITDA" is defined as earnings (loss) before (i) income taxes; (ii)
interest expense; (iii) extraordinary gain; (iv) depreciation; (v)
amortization; (vi) non-cash stock compensation; (vii) loss (gain) on sale
of fixed assets; (viii) restructuring expenses; (ix) reorganization items;
(x) inventory fair-value adjustment charged to cost of products sold; (xi)
the AIP Management Fee, which is subordinated to the Notes and was not
incurred by the Company until after the AIP Merger was consummated; and
(xii) in 1995 only, a non-cash charge related to the scrapping and disposal
of excess inventory related to certain older and discontinued machine
models. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- EBITDA." Since cash flow from operations is
very important to the Company's future, the EBITDA calculation provides a
summary review of cash flow performance. EBITDA (as defined herein) should
not be considered an alternative to operating income determined in
accordance with GAAP as an indicator of operating performance or to cash
flows from operating activities determined in accordance with GAAP as a
measure of liquidity.
(11) On September 24, 1997, all issued and outstanding stock options and SARs
were cancelled, and regardless of whether such stock options or SARs had
then vested or were exercisable, each holder of stock options or SARs
received cash per share equal to $18.00 less the "strike price" of such
stock options or SARs. As a result, the Company incurred a one-time non-
recurring pretax charge of approximately $7,000 in the three months ended
September 30, 1997. Such amount was funded by a portion of the proceeds
from the AIP Equity Contribution and is included in the sources and uses of
funds.
41
<PAGE> 48
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth historical financial information of the
Company as of and for the years or periods ended December 31, 1996, 1995, and
1994, and as of and for the six months ended June 30, 1997 and 1996, and for the
Predecessor Company as of and for the years or periods ended December 13, 1994,
December 31, 1993, and December 31, 1992. The Statement of Operations and
Balance Sheet information as of and for the years or periods ended December 31,
1996, 1995, and 1994, December 13, 1994, and December 31, 1993 and 1992, have
been derived from the audited consolidated financial statements of the Company.
The Statement of Operations and Balance Sheet information as of and for the six
months ended June 30, 1997 and 1996, were derived from the unaudited
consolidated financial statements of the Company, which include all adjustments
that management considers necessary to present fairly the financial results for
these interim periods, all of which were of a normal recurring nature. The
results of operations for the six month periods are not necessarily indicative
of results to be expected for the full year. This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements of the Company, and
related notes thereto, and other financial information included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR COMPANY(1)
-----------------------------------
YEAR ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JANUARY 1 - DECEMBER 14 - DECEMBER 31, JUNE 30,
-------------------- DECEMBER 13, DECEMBER 31, ------------------- -------------------
1992 1993 1994 1994 1995 1996 1996 1997
---- ---- ------------ ------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA:
Net sales.................... $242,468 $ 198,464 $186,174 $ 7,810 $231,921 $263,786 $130,820 $143,762
Cost of products sold........ 200,424 166,774 157,181 6,933 205,552 215,126 107,023 116,261
-------- --------- -------- -------- -------- -------- -------- --------
Gross profit................. 42,044 31,690 28,993 877 26,369 48,660 23,797 27,501
Product development, selling,
administrative, and
miscellaneous expenses..... 34,054 33,749 30,158 1,099 34,172 36,470 17,854 18,345
Restructuring and
reorganization charges..... -- 4,387 9,338 -- 3,496 -- -- --
-------- --------- -------- -------- -------- -------- -------- --------
Operating earnings (loss).... 7,990 (6,446) (10,503) (222) (11,299) 12,190 5,943 9,156
Other income................. 4,349 1,735 2,976 79 1,295 1,003 464 615
-------- --------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
interest expense, income
taxes, extraordinary gain,
and cumulative effects of
changes in accounting
principles................. 12,339 (4,711) (7,527) (143) (10,004) 13,193 6,407 9,771
Interest expense............. 28,146 35,065 13,911 284 6,254 8,557 4,173 3,956
-------- --------- -------- -------- -------- -------- -------- --------
Earnings (loss) before income
taxes, extraordinary gain,
and cumulative effects of
changes in accounting
principles................. (15,807) (39,776) (21,438) (427) (16,258) 4,636 2,234 5,815
Income taxes................. 940 916 1,395 125 2,514 1,758 1,324 2,392
-------- --------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
extraordinary gain and
cumulative effects of
changes in accounting
principles................. (16,747) (40,692) (22,833) (552) (18,772) 2,878 910 3,423
Extraordinary gain........... -- -- 142,480 -- -- -- -- --
Cumulative effects of changes
in accounting principles... -- (11,298) -- -- -- -- -- --
-------- --------- -------- -------- -------- -------- -------- --------
Net earnings (loss).......... (16,747) (51,990) 119,647 (552) (18,772) 2,878 910 3,423
Redeemable preferred stock
dividends.................. (1,869) 50 (40) -- -- -- -- --
Preferred stock accretion.... (522) (689) (106) -- -- -- -- --
Reorganization item --
preferred stock............ -- -- (40,555) -- -- -- -- --
-------- --------- -------- -------- -------- -------- -------- --------
Net earnings (loss)
attributable to common
shareholders............... $(19,138) $ (52,629) $ 78,946 $ (552) $(18,772) $ 2,878 $ 910 $ 3,423
======== ========= ======== ======== ======== ======== ======== ========
Weighted average number of
shares outstanding (in
thousands)................. 6,355 8,933 9,269 10,170 10,203 10,259 10,235 10,345
======== ========= ======== ======== ======== ======== ======== ========
Earnings (loss) per share of
Common Stock............... $ (3.01) $ (5.89) $ 8.52 $ (0.05) $ (1.84) $ 0.28 $ 0.09 $ 0.33
======== ========= ======== ======== ======== ======== ======== ========
</TABLE>
42
<PAGE> 49
<TABLE>
<CAPTION>
PREDECESSOR COMPANY(1)
-----------------------------------
YEAR ENDED YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JANUARY 1 - DECEMBER 14 - DECEMBER 31, JUNE 30,
-------------------- DECEMBER 13, DECEMBER 31, ------------------- -------------------
1992 1993 1994 1994 1995 1996 1996 1997
---- ---- ------------ ------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA
(END OF PERIOD):
Cash and cash equivalents.... $ 16,020 $ 13,696 $ 16,209 $ 11,150 $ 15,763 $ 8,486 $ 11,350
Receivables.................. 27,125 25,731 26,220 35,603 32,085 43,453 54,271
Inventories.................. 67,009 63,671 82,393 73,566 70,889 70,458 74,587
Total assets................. 206,805 188,811 179,873 174,038 172,895 173,322 198,513
Total debt................... 198,652 207,702 60,293 65,252 70,241 68,317 80,193
Total common shareholders'
investment (deficiency in
assets).................... $(89,002) $(143,110) $ 53,617 $ 34,680 $ 37,461 $ 35,162 $ 41,067
OTHER DATA:
EBITDA (as defined
herein)(2)................. $ 25,347 $ 11,694 $12,883 $ 392 $ 12,672 $ 19,247 $ 9,333 $ 12,900
Capital expenditures......... 3,750 2,990 2,616 190 3,006 4,996 1,305 2,433
Gross margin percentage...... 17.3% 16.0% 15.6% 11.2% 11.4% 18.4% 18.2% 19.1%
EBITDA as a percentage of net
sales...................... 10.5% 5.9% 6.9% 5.0% 5.5% 7.3% 7.1% 9.0%
Ratio of earnings to fixed
charges(3)................. -- -- -- -- -- 1.5x 1.5x 2.3x
</TABLE>
- -------------------------
(1) The "Predecessor Company" is B-E Holdings, Inc., the former parent of the
Company, which was merged with and into the Company on December 14, 1994.
(2) For purposes of this Prospectus (other than "Description of the Notes"),
"EBITDA" is defined as earnings (loss) before (i) income taxes; (ii)
interest expense; (iii) extraordinary gain; (iv) depreciation; (v)
amortization; (vi) non-cash stock compensation; (vii) loss (gain) on sale of
fixed assets; (viii) restructuring expenses; (ix) reorganization items; (x)
inventory fair-value adjustment charged to cost of products sold; (xi) the
AIP Management Fee, which is subordinated to the Notes and was not incurred
by the Company until after the AIP Merger was consummated; and (xii) in 1995
only, a non-cash charge related to the scrapping and disposal of excess
inventory related to certain older and discontinued machine models. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- EBITDA." Since cash flow from operations is very important to
the Company's future, the EBITDA calculation provides a summary review of
cash flow performance. EBITDA (as defined herein) should not be considered
an alternative to operating income as determined in accordance with GAAP as
an indicator of operating performance or to cash flows from operating
activities determined in accordance with GAAP as a measure of liquidity. For
1993, EBITDA (as defined herein) also excluded the cumulative effect of
changes in accounting principles.
(3) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income from continuing operations before income taxes and fixed
charges. Fixed charges consist of interest expense and amortization of debt
fees. Earnings were inadequate to cover fixed charges in certain years. The
deficiency amounted to approximately $15,807 for 1992, $39,776 for 1993,
$21,438 for the period January 1 to December 13, 1994, $427 for the period
December 14 to December 31, 1994, and $16,258 for 1995.
43
<PAGE> 50
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The reorganization of the Company under Chapter 11 of the Bankruptcy Code
was effective December 14, 1994. The reorganization was accounted for using the
principles of fresh start reporting as required by AICPA Statement of Position
90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code." Under the principles of fresh start reporting, total assets were recorded
at their assumed reorganization value, with the reorganization value allocated
to identifiable tangible and intangible assets on the basis of their estimated
fair value, and liabilities were adjusted to the present values of amounts to be
paid where appropriate. The consolidated financial statements for periods
subsequent to December 14, 1994, include the related amortization charges
associated with the fair value adjustments.
As a result of the implementation of fresh start reporting, the
consolidated financial statements of the Company are not comparable to the
consolidated financial statements of periods prior to December 14, 1994. The
consolidated financial statements presented for prior periods are not the
Company's, but instead are those of B-E Holdings, Inc. (the "Predecessor
Company"), the former parent of the Company, which was merged with and into the
Company on December 14, 1994.
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 AND 1996
NET SALES. Net sales for the first six months of 1997 were $143.8 million
compared with $130.8 million for the first six months of 1996. Net sales of
repair parts and services were $88.6 million, which is an increase of 8% from
the first six months of 1996. The increase in repair parts and service net sales
occurred primarily at foreign locations. Net machine sales were $55.1 million,
which is an increase of 13% from the first six months of 1996. Net sales of
electric mining shovels increased 39% from the first six months of 1996. The
increase in electric mining shovel volume was primarily in copper markets. Net
sales of blast hole drills decreased 28% from the first six months of 1996.
There has been an overall decline in worldwide blast hole drill sales activity
in 1997.
OTHER INCOME. Other income, which consists primarily of interest income,
was $0.6 million and $0.5 million for the six months ended June 30, 1997 and
1996, respectively.
COST OF PRODUCTS SOLD. Cost of products sold for the first six months of
1997 was $116.3 million, or 81% of net sales, compared with $107.0 million, or
82% of net sales, for the first six months of 1996. The increase in gross margin
percentage was primarily due to improved machine margins.
PRODUCT DEVELOPMENT, SELLING, ADMINISTRATIVE AND MISCELLANEOUS
EXPENSES. Product development, selling, administrative and miscellaneous
expenses for the first six months of 1997 were $18.3 million, or 13% of net
sales, compared with $17.9 million, or 14% of net sales, for the first six
months of 1996.
INTEREST EXPENSE. Interest expense for the first six months of 1997 was
$4.0 million compared with $4.2 million for the first six months of 1996. The
Company had the option of paying interest on the Secured Notes in cash at 10.5%
or in kind (issuance of additional Secured Notes) at 13%. For the first six
months of 1997, interest was accrued at 10.5% since the Company paid this
interest in cash. For the first six months of 1996, interest was accrued at 13%
since the Company paid this interest in kind. Interest was accrued on a higher
principal balance in 1997 since all interest was paid in kind through December
31, 1996.
INCOME TAXES. For the six months ended June 30, 1997, income tax expense
consists primarily of foreign taxes at applicable statutory rates and a non-cash
income tax provision on United States taxable income at applicable statutory
rates. For the component of the United States tax provision relating to tax
benefits realized from reductions in the valuation allowance established as of
44
<PAGE> 51
December 14, 1994 (the date the Company reorganized under chapter 11 of the
Bankruptcy Code), a corresponding $0.5 million reduction of intangible assets
was recorded in accordance with AICPA Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code." For the
component of the United States tax provision relating to reductions in the
valuation allowance established after December 14, 1994, an income tax benefit
was recorded.
For the six months ended June 30, 1996, income tax expense consists
primarily of foreign taxes at applicable statutory rates. For United States tax
purposes there was a loss for which there was no income tax benefit.
NET EARNINGS. Net earnings for the first six months of 1997 were $3.4
million compared with $0.9 million for the first six months of 1996. The
increase in net earnings was primarily due to increased sales volume and
improved gross margin percentage.
INVENTORY, BACKLOG AND NEW ORDERS. The Company maintains a substantial
inventory of partially manufactured machines and components, as well as finished
goods inventory, primarily consisting of replacement parts, in order to reduce
lead times and respond quickly to customers' delivery requirements. Inventories
at June 30, 1997 were $74.6 million (27% of net sales for the twelve months
ended June 30, 1997), compared with $70.5 million (28% of net sales for the
twelve months ended June 30, 1996) at June 30, 1996. At June 30, 1997 and 1996,
$48.1 million and $43.4 million, respectively, were held as finished goods
inventory.
The Company's consolidated backlog at June 30, 1997, was $215.8 million
compared with $158.7 million at December 31, 1996, and $184.1 million at June
30, 1996. Machine backlog at June 30, 1997, was $103.8 million, which is an
increase of 112% from December 31, 1996, and an increase of 12% from June 30,
1996. The Company received a letter of intent from BHP Coal Pty. Ltd., an
Australian mining company, to purchase a 257OWS walking dragline which is
scheduled for completion by December 31, 1999. This was expected to generate net
sales of approximately $60.2 million and is included in machine backlog at June
30, 1997. The Company currently expects that this dragline will generate net
sales of $57.5 million over the next two and one half years. Machine backlog for
electric mining shovels and blast hole drills has decreased 53% from June 30,
1996. Repair parts and service backlog at June 30, 1997 was $112.0 million,
which is an increase of 2% from December 31, 1996, and an increase of 23% from
June 30, 1996. The increase in repair parts and service backlog from June 30,
1996, was at both United States and foreign locations. Backlog includes the
dollar value of orders placed for new equipment as well as parts and services,
including estimates of revenues expected to be generated from MARCs, minus
dollars billed through manufacturing contracts, which are billed on a percentage
of completion basis. MARC revenue estimates are based on payments expected for
parts and for maintenance and operational services over the life of each
contract, some of which have terms through 2002.
New orders for the first six months of 1997 were $200.8 million, which is
an increase of 2% from the first six months of 1996. New machine orders were
$109.9 million, which is an increase of 44% from the first six months of 1996.
Included in new machine orders for the first six months of 1997 was
approximately $60.2 million for the aforementioned 257OWS dragline for BHP Coal
Pty. Ltd. of Australia. New machine orders for electric mining shovels for the
first six months of 1997 were even with last year while new machine orders for
blast hole drills have decreased. There has been an overall decline in worldwide
blast hole drill orders in 1997, which was anticipated as a result of a
temporary lower demand for copper. During the first six months of 1996, a
multiple machine order was received from one South American customer in the
copper market resulting in new machine orders substantially higher than
historical levels in that six months. As a result of a decline in copper prices
in 1996 from historically high levels, demand from this market segment has
remained low. However, due to a resurgence in copper prices in late 1996, which
the Company expects to continue through 1997, there should be continued demand
from this market segment for electric mining shovels and blast hole drills.
There also was an increase in iron ore production in late 1994 that was
sustained through 1995 and 1996. The Company anticipates that some iron ore
producers will continue to replace aged electric mining shovel and blast hole
drill fleets with new
45
<PAGE> 52
machines in an effort to reduce iron ore production costs. Also, price increases
for hard coking coal in 1995 and 1996 have brought new demand for machines in
western Canada and Australia in recent months. New repair parts and service
orders were $90.9 million for the first six months of 1997, which is a decrease
of 25% from the first six months of 1996. Included in new repair parts and
service orders for the first six months of 1996 were large maintenance and
repair contract orders at foreign locations.
COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
NET SALES. Net sales for 1996 were $263.8 million compared with $231.9
million for 1995. Net sales of repair parts and services for 1996 were $156.4
million, which is an increase of 1% from 1995. This increase consists of an
increase in net sales at Minserco, Inc., a mining service subsidiary of the
Company, offset by a decrease in net sales of repair parts, primarily at foreign
locations. Net machine sales for 1996 were $107.4 million, which is an increase
of 40% from 1995. The increase in net machine sales was primarily due to
increased electric mining shovel shipments, primarily in copper markets.
Net sales for 1995 were $231.9 million compared with $194.0 million for
1994. Net sales of repair parts and services for 1995 were $155.4 million, which
is an increase of 8% from 1994. The increase in repair parts and service net
sales was primarily due to increased repair parts net sales at foreign locations
as a result of higher demand for replacement parts. Net machine sales for 1995
were $76.5 million, which is an increase of 55% from 1994. The increase was due
to increased blast hole drill and electric mining shovel shipments, primarily in
copper, coal, and iron ore markets.
OTHER INCOME. Other income, which consists primarily of interest income,
was $1.0 million, $1.3 million, and $3.1 million for 1996, 1995, and 1994,
respectively. Included in the amount for 1994 was a favorable insurance
settlement of $1.4 million.
COST OF PRODUCTS SOLD. Cost of products sold for 1996 was $215.1 million,
or 82% of net sales, compared with $205.6 million, or 89% of net sales, for
1995, and $164.1 million, or 85% of net sales, for 1994. Included in cost of
products sold for 1995 and 1994 were charges of $10.1 million and $0.4 million,
respectively, as a result of the fair value adjustment to inventory. This
adjustment was made in accordance with the principles of fresh start reporting
adopted in 1994 and was charged to cost of products sold as the inventory was
sold. Also included in cost of products sold for 1995 was a charge of $4.4
million for the scrapping and disposal of excess inventory which related to
certain older and discontinued machine models. Excluding the effects of the
inventory fair value adjustment and excess inventory charge, cost of products
sold as a percentage of net sales for 1995 was 82%.
PRODUCT DEVELOPMENT, SELLING, ADMINISTRATIVE, AND MISCELLANEOUS
EXPENSES. Product development, selling, administrative, and miscellaneous
expenses for 1996 were $36.5 million, or 14% of net sales, compared with $34.2
million, or 15% of net sales, in 1995, and $31.3 million, or 16% of net sales,
in 1994. The dollar increase for 1996 was primarily due to higher product
development and service costs to provide increased support to customers.
INTEREST EXPENSE. Interest expense for 1996 was $8.6 million compared with
$6.3 million for 1995. The increase for 1996 was primarily due to an increase in
the interest rate on the Secured Notes from 10.5% to 13% effective December 14,
1995, for interest paid in kind by adding the interest to the principal balance.
Also, interest on the Secured Notes was accrued on a higher principal balance in
1996 since all interest was paid in kind through December 31, 1996. The Company
had the option of paying interest on the Secured Notes in cash at 10.5% or in
kind at 13%.
Interest expense for 1995 was $6.3 million compared with $14.2 million for
1994. The decrease was primarily due to the exchange of unsecured debt
securities of B-E Holdings, Inc. and the Company for shares of the Company's
common stock in connection with the Company's reorganization.
46
<PAGE> 53
RESTRUCTURING EXPENSES. Restructuring expenses of $2.6 million in 1995
consist of employee severance expenses recorded to reflect the cost of reduced
employment and the severance costs related to the resignation of three officers
of the Company. See Note B to the Company's audited financial statements
appearing elsewhere herein.
REORGANIZATION ITEMS. Reorganization items represent the expenses incurred
as a result of the Company's efforts to reorganize under Chapter 11 of the
Bankruptcy Code. In 1995, reorganization items consist entirely of legal and
professional fees. Reorganization items in 1994 consist of $8.0 million of legal
and professional fees, $41.1 million to adjust debt and redeemable preferred
stock to the amount of the allowed claims in the Amended Plan, and a $1.1
million write-off of capitalized financing costs. These expenses were partially
offset by $0.4 million of interest income earned from the Petition Date through
December 13, 1994, on accumulated cash balances of B-E Holdings, Inc. and the
Company.
INCOME TAXES. Income tax expense consists primarily of foreign taxes at
applicable statutory rates.
NET EARNINGS (LOSS). Net earnings for 1996 were $2.9 million compared with
a net loss of $18.8 million for 1995. During 1995, the Company undertook a
restructuring of its corporate headquarters and foreign subsidiaries and
completed an evaluation of its inventories and other items. The Company, in
evaluating its inventory, determined that excess levels existed for certain
older and discontinued machine models. Accordingly, a charge of $4.4 million was
made in 1995 for the eventual scrapping and disposal of this inventory.
Severance costs of $2.6 million were also recorded to reflect the cost of
reduced employment at the corporate headquarters and foreign subsidiaries, and
the resignation of three former officers. In addition, a $1.0 million charge
resulting from the reestimation of certain customer warranty reserves was
recorded in 1995, and a $0.9 million charge was made for reorganization items
related to issues continuing from the bankruptcy proceedings. Net loss for 1995
also included $8.6 million (net of income taxes) of the inventory fair value
adjustment related to fresh start reporting.
Net loss for 1995 was $18.8 million compared with net earnings of $119.1
million for 1994. Included in net earnings for 1994 was an extraordinary gain on
debt discharge of $142.5 million which was partially offset by reorganization
items of $9.3 million.
INVENTORY, BACKLOG, AND NEW ORDERS. Inventories at December 31, 1996, were
$70.9 million (27% of net sales) compared with $73.6 million (32% of net sales)
at December 31, 1995, and $82.4 million (42% of net sales) at December 31, 1994.
At December 31, 1996, 1995, and 1994, $44.1 million, $44.5 million, and $51.9
million, respectively, were held as finished goods inventory.
The Company's consolidated backlog on December 31, 1996 was $158.7 million
compared with $118.0 million at December 31, 1995 and $72.3 million at December
31, 1994. Machine backlog at December 31, 1996 was $49.0 million, which is a
decrease of 26% from December 31, 1995. The decrease in machine backlog from
December 31, 1995 was primarily in electric mining shovel volume. Repair parts
and service backlog at December 31, 1996 was $109.7 million, which is an
increase of 110% from December 31, 1995. The increase in repair parts and
service backlog from December 31, 1995, was primarily at foreign locations and
reflect new orders related to long-term maintenance and repair contracts which
will be completed in the next three to five years.
New orders for 1996 were $304.5 million, which is an increase of 10% from
1995. New machine orders for 1996 were $90.6 million, which is a decrease of 22%
from 1995. The decrease in new machine orders for 1996 was primarily in electric
mining shovel volume and represented low machine net sales activity during the
second half of 1996, primarily related to copper markets. New repair parts and
service orders for 1996 were $213.9 million, which is an increase of 33% from
1995. The increase in repair parts and service orders for 1996 was primarily due
to large maintenance and repair contract orders at foreign locations in the
first three months of 1996.
47
<PAGE> 54
LIQUIDITY AND CAPITAL RESOURCES
Working capital and current ratio are two financial measurements which
provide an indication of the Company's ability to meet its short-term
obligations. These measurements at December 31, 1994, 1995, and 1996, and June
30, 1997, were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------- JUNE 30,
1994 1995 1996 1997
---- ---- ---- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Working capital................................. $ 78,208 $ 65,330 $ 78,814 $ 82,521
Current ratio (ratio of current assets to
current liabilities).......................... 2.6 to 1 2.2 to 1 2.9 to 1 2.3 to 1
</TABLE>
The decrease in the current ratio from December 31, 1996 to June 30, 1997,
was primarily due to increased liabilities in order to support increased
production of machines. The increase in working capital and the current ratio
for the year ended December 31, 1996, was primarily due to a decrease in current
liabilities to customers on uncompleted contracts and warranties and a decrease
in outstanding project financing borrowings. The decrease in working capital and
the current ratio for the year ended December 31, 1995, was primarily due to the
inventory fair value adjustment of $10.1 million being charged to cost of
products sold as the inventory was sold and an inventory obsolescence provision
of $4.4 million. See "Results of Operations -- Comparison of Fiscal Years Ended
December 31, 1996, 1995, and 1994 -- Cost of Products Sold."
Equipment Assurance Limited, a subsidiary of Bucyrus, has pledged $1.1
million of its cash to secure its reimbursement obligations for outstanding
letters of credit at June 30, 1997. This collateral amount is classified as
Restricted Funds on Deposit in the Company's Consolidated Condensed Balance
Sheets.
The Company believes that current levels of cash and liquidity, together
with funds generated by operations, funds available from the Revolving Credit
Facility, and other project financing arrangements will be sufficient to permit
the Company to satisfy its debt service requirements and fund operating
activities through at least 1998. The Company is subject to significant
business, economic, and competitive uncertainties that are beyond its control.
Accordingly, there can be no assurance that the Company's financial resources
will be sufficient for the Company to satisfy its debt service obligations and
fund operating activities under all circumstances. See "Revolving Credit
Facility."
The Company had outstanding letters of credit and guarantees of $6.1
million at June 30, 1997. Of this amount, $4.7 million is related to the
Company's existing credit agreement with Bank One, Wisconsin, with the remainder
provided by various banks and insurance companies.
At June 30, 1997, the Company had approximately $2.3 million of approved
but unspent capital appropriations. Included in this amount is the remaining
$1.2 million to be spent for a new service shop facility in Chile which is being
financed primarily with a local bank in Chile.
In addition, at June 30, 1997, the Company had committed approximately $5.5
million of a planned $20.0 million machine shop tool modernization project. The
initial machine tools have been financed with operating leases and the remaining
machine tools are expected to be financed using internally generated cash,
borrowings under the Revolving Credit Facility, or operating leases.
48
<PAGE> 55
EBITDA
For purposes of this Prospectus (other than "Description of the Notes"),
"EBITDA" is defined as earnings (loss) before (i) income taxes; (ii) interest
expense; (iii) extraordinary gain; (iv) depreciation; (v) amortization; (vi)
non-cash stock compensation; (vii) loss (gain) on sale of fixed assets; (viii)
restructuring expenses; (ix) reorganization items; (x) inventory fair-value
adjustment charged to cost of products sold; (xi) the AIP Management Fee, which
is subordinated to the Notes and was not incurred by the Company until after the
AIP Merger was consummated; and (xii) in 1995 only, a non-cash charge related to
the scrapping and disposal of excess inventory related to certain older and
discontinued machine models. Since cash flow from operations is very important
to the Company's future, the EBITDA calculation provides a summary review of
cash flow performance. In addition, the Revolving Credit Facility requires the
calculation of EBITDA for certain ratios and covenants. EBITDA (as defined
herein) should not be considered an alternative to operating income determined
in accordance with GAAP as an indicator of operating performance or to cash
flows from operating activities determined in accordance with GAAP as a measure
of liquidity. The following table reconciles the Company's historical earnings
(loss) before income taxes and extraordinary gain to EBITDA (as defined herein).
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
------------ YEARS ENDED SIX MONTHS ENDED
JANUARY 1- DECEMBER 14- DECEMBER 31, JUNE 30,
DECEMBER 13, DECEMBER 31, ------------------ -----------------
1994 1994 1995 1996 1996 1997
------------ ------------ ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Earnings (loss) before income
taxes and extraordinary gain.... $(21,438) $(427) $(16,258) $ 4,636 $ 2,234 $ 5,815
Restructuring expenses............ -- -- 2,577 -- -- --
Reorganization items.............. 9,338 -- 919 -- -- --
Inventory fair value adjustment
charged to cost of products
sold............................ -- 362 10,065 -- -- --
Non-cash expenses:
Depreciation.................... 7,356 145 3,671 3,882 1,980 2,179
Amortization.................... 3,679 23 1,194 1,142 584 534
Stock compensation.............. -- -- -- 668 116 420
(Gain) loss on sale of fixed
assets........................ 37 5 (166) 362 246 (4)
Payment in kind interest on the
Secured Notes and deferred
rent (interest) on sale and
leaseback financing
arrangement (Predecessor
Company)...................... 7,287 258 5,691 7,783 3,767 --
Amortization of debt discount... 71 -- -- -- -- --
Cash interest expense(1).......... 6,553 26 563 774 406 3,956
-------- ----- -------- ------- ------- -------
Adjusted EBITDA(2)(3)............. 12,883 392 8,256 19,247 9,333 12,900
Excess inventory charge(3)........ -- -- 4,416 -- -- --
-------- ----- -------- ------- ------- -------
EBITDA (as defined herein)(3)..... $ 12,883 $ 392 $ 12,672 $19,247 $ 9,333 $12,900
======== ===== ======== ======= ======= =======
</TABLE>
- -------------------------
(1) Cash interest expense for the Predecessor Company includes all accrued but
unpaid interest prior to February 18, 1994, the date the Predecessor Company
commenced voluntary petitions under Chapter 11 of the Bankruptcy Code (the
"Petition Date"). Contractual interest of $20.3 million on the unsecured
debt of the Predecessor Company did not accrue subsequent to the Petition
Date. Excludes interest on the Secured Notes that has been paid in kind,
amortization of debt discount, and deferred rent (interest) on the sale and
leaseback financing arrangement.
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<PAGE> 56
(2) The Company has historically reported "Adjusted EBITDA" in its financial
disclosures to highlight the effects that fresh start accounting,
restructuring expenses, and reorganization items have on reported net
earnings.
(3) For the year ended December 31, 1995, the Company recognized a charge of
$4.4 million to cost of products sold for the scrapping and disposal of
excess inventory which related to certain older and discontinued machine
models. See Note E to the Company's audited financial statements appearing
elsewhere herein. The Company is presenting an alternative calculation of
EBITDA (as defined herein) as compared to Adjusted EBITDA, to reflect the
non-cash impact of this charge for comparison purposes.
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BUSINESS
GENERAL
The Company (formerly known as Bucyrus-Erie Company) was incorporated in
Delaware in 1927 as the successor to a business that has been in continuous
operation since 1880. The Company is one of the world's leading manufacturers of
large-scale excavation equipment used in surface mining and other earth moving
operations, including rotary blast hole drills, electric mining shovels, and
draglines. Bucyrus machines are used throughout the world by customers who mine
coal, iron ore, copper, gold, phosphate, bauxite, oil sands, and other minerals,
as well as for land reclamation activities.
An important part of the Company's business consists of aftermarket sales,
such as supplying parts, providing maintenance and repair services, providing
technical advice, as well as refurbishing and relocating older, installed
machines. The importance of aftermarket products and services in this industry
is a function of the equipment's size, expense, complexity, and long life.
Through domestic and foreign subsidiaries and overseas offices, the Company
offers a global network of comprehensive direct marketing services and
aftermarket support, which is critical to enhance machine longevity and
productivity in the field. This network caters primarily to the Company's own
installed equipment base; however, it also provides repair parts and maintenance
services for other manufacturers' equipment on a limited basis.
For the fiscal year ended December 31, 1996, the Company had total net
sales of $263.8 million, comprised of $107.4 million (41%) in new equipment
sales and $156.4 million (59%) in aftermarket parts and service sales, and had
EBITDA (as defined herein) of $19.2 million. See the Company's consolidated
financial statements appearing elsewhere herein.
THE MARION ACQUISITION
On August 26, 1997, the Company consummated the Marion Acquisition. The
purchase price for Marion was $40.1 million, subject to post-closing adjustments
which would have reduced the purchase price by approximately $3.7 million if the
Marion Acquisition had taken place on June 30, 1997. For the fiscal year ended
October 31, 1996, Marion had total net sales of $109.6 million, comprised of
$36.4 million (33%) in new equipment sales and $73.2 million (67%) in
aftermarket parts and service sales.
The Company financed the Marion Acquisition and related fees and expenses
utilizing a $45.0 million unsecured bridge loan (the "Bridge Loan") provided by
a former affiliate of the Company which has been repaid in full with a portion
of the proceeds of the Private Offering.
Like the Company, Marion manufactured large surface mining excavation
equipment, primarily draglines and electric mining shovels, and had a
significant aftermarket parts and services business supporting its installed
base of over 300 machines throughout the world. The aftermarket business
provides Marion-engineered components and replacement parts, as well as ongoing
electrical and mechanical service assistance on an as-required basis. Marion's
principal customers for both new machines and aftermarket parts and services
were operators of surface coal mines worldwide. Coal producers accounted for
approximately 70% of Marion's total net sales in recent years, with copper, iron
ore, phosphate rock and oil sands mining primarily accounting for the balance.
Australia, Canada, India, South Africa, and the United States were Marion's
largest geographical markets, although sales volume by country varied
substantially from year to year. In recent years, approximately 70% of Marion's
total net sales were in markets outside the United States.
As described below, the Marion Acquisition provides a number of benefits to
the Company, including a substantial increase in the Company's worldwide
installed equipment base, expansion of the Company's presence in several
important markets, and the opportunity to achieve significant
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<PAGE> 58
cost savings. See "Risk Factors -- Realization of Benefits of the Marion
Acquisition; Integration of Marion."
INCREASED INSTALLED EQUIPMENT BASE. The Marion Acquisition increased
the Company's installed equipment base from approximately 900 machines to
nearly 1,200 machines worldwide, providing the Company with significantly
greater opportunities to market its aftermarket parts and services.
EXPANDED PRESENCE IN POTENTIALLY HIGH GROWTH MARKETS. The Marion
Acquisition provides the Company with an increased strategic presence in
markets that are anticipated to experience substantial growth over the next
several years, such as India and Russia, through Marion's established
relationships with local mining interests and governmental authorities.
SIGNIFICANT COST SAVINGS. The Marion Acquisition results in pro forma
cost savings of $12.5 million for fiscal 1996 as described below, and $5.9
million for the six months ended June 30, 1997, through the consolidation
of manufacturing operations and the rationalization of engineering and
administrative functions. In addition, the Company has identified an
estimated $3.0 million in potential annual cost savings that are not
reflected in the pro forma financial results. The cost savings reflected in
the pro forma results and summarized below, and other anticipated cost
savings, are based on assumptions and expectations that the Company
believes to be reasonable, but are dependent on a variety of important
factors. See "Risk Factors -- Realization of Benefits of the Marion
Acquisition; Integration of Marion" and "Unaudited Pro Forma Combined
Condensed Financial Statements."
The Company is consolidating all of Marion's manufacturing operations
into the Company's existing facilities as Marion's manufacturing facility
was not acquired as part of the Marion Acquisition. This results in pro
forma manufacturing cost savings of $5.0 million for fiscal 1996, and $2.5
million for the six months ended June 30, 1997, including reductions in
direct facility costs, fixed manufacturing administrative costs, and
nonpayroll manufacturing costs. Cost savings of $2.2 million (excluding
depreciation) for fiscal 1996, and $1.1 million for the six months ended
June 30, 1997, are attributed to the elimination of direct costs related to
the operation of Marion's primary facility in Marion, Ohio. The Company
hired only certain of Marion's manufacturing employees, resulting in pro
forma cost savings of $1.8 million for fiscal 1996, and $0.9 million for
the six months ended June 30, 1997. The elimination of overhead expenses
relating to manufacturing, including corporate allocations, travel costs,
and consulting expenses, results in pro forma cost savings of $1.0 million
for fiscal 1996, and $0.5 million for the six months ended June 30, 1997.
Management believes that the Company has adequate capacity to integrate
Marion's manufacturing operations.
The Marion Acquisition also results in pro forma cost savings of $7.5
million for fiscal 1996, and $3.4 million for the six months ended June 30,
1997, through the consolidation of duplicative product development,
general, and administrative functions. The Company hired only certain of
Marion's administrative employees, with the associated elimination of
salaries and related expenses resulting in pro forma cost savings of $4.3
million for fiscal 1996, and $2.1 million for the six months ended June 30,
1997. The elimination of general and administrative overhead expenses,
primarily relating to allocated corporate expenses, results in pro forma
cost savings of $2.2 million for fiscal 1996, and $1.2 million for the six
months ended June 30, 1997. In late 1996, Marion eliminated various
full-time engineering positions, resulting in pro forma cost savings of
$1.0 million for fiscal 1996. Based on a department-by-department analysis,
management believes that the Company's current operations, which have been
supplemented by employees hired from Marion, will be adequately staffed for
the foreseeable future; however, there can be no assurance that this will
be the case.
The Company expects to generate the $3.0 million in additional cost
savings not reflected in the pro forma financial results by reducing direct
labor costs, consolidating engineering functions, eliminating marketing
personnel, and closing certain parts and service locations. The
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<PAGE> 59
Company hired only certain of Marion's engineering and marketing staff
which is expected to result in incremental annual cost saving of
approximately $1.3 million. The Company's current engineering staff, along
with selected individuals from Marion's engineering staff, is expected to
be adequate to handle the engineering function. Application of the
Company's direct labor operating efficiencies to the former Marion
operations is expected to result in annual cost savings of approximately
$1.3 million. Since Marion operates administrative and sales offices, parts
warehouses and repair facilities in the same geographical areas as the
Company, the consolidation of these functions is expected to result in
annual cost savings of approximately $0.4 million.
After giving pro forma effect to the Marion Acquisition, the Company's net
sales for fiscal 1996 would have been $373.4 million, comprised of $143.8
million (39%) of new equipment sales and $229.6 million (61%) of aftermarket
sales, and in fiscal 1996 EBITDA (as defined herein) would have been $34.0
million. See "Unaudited Pro Forma Combined Condensed Financial Statements."
BUSINESS STRATEGY
Following an in-depth, strategic review of management and operations in
1995, the Board of Directors refocused the Company's business strategy and hired
a new management team, including Willard R. Hildebrand, President and Chief
Executive Officer, and Daniel J. Smoke, Vice President and Chief Financial
Officer. In addition, the Board increased the responsibilities of four other
senior officers who had been with the Company for an average of 23 years. AIP
intends to continue the Company's existing business strategy, which includes the
following key elements:
GROW THE AFTERMARKET BUSINESS. The Company has increased its focus on
the important aftermarket business because of its attractive profit margins
and its greater stability and predictability compared to the market for new
equipment. In addition, providing aftermarket support, which is critical to
maintain machine longevity and productivity in the field, enhances the
Company's ability to secure new machine orders in the future. The Company's
focus on its aftermarket business is reflected in a number of recently
implemented strategic initiatives that include: (i) working with suppliers
to increase stock levels of replacement parts to shorten response times to
customer inquiries; (ii) installation of a new computerized parts quoting
system to improve responsiveness to customer inquiries; (iii) forming a
dedicated engineering team to focus on reducing manufacturing costs for
replacement parts; (iv) enhancing relationships with key suppliers in order
to reduce raw material and purchased part costs; (v) expanding the
Company's facilities in important foreign markets, such as Chile and South
Africa; (vi) investing additional capital in the Company's domestic repair
and service subsidiaries, Boonville Mining Services, Inc. and Minserco,
Inc.; and (vii) purchasing Von's Welding, Inc., an aftermarket supplier of
mining machinery parts and services, located in Gillette, Wyoming, in North
America's most important coal mining region.
The Company has formed relationships with key suppliers of Bucyrus
products to reduce costs, advance product technology, and improve customer
support. In addition, the Company is working with suppliers to increase
their average stock levels of parts in an effort to improve response time
to customer inquiries. Since 1995, average stock levels have increased from
approximately $1.0 million to approximately $5.5 million.
Because approximately 64% of the Company's installed equipment base is
located in international markets, and 76% of the Company's new machine
sales over the past five years have been to international customers, the
Company is committed to providing first-rate customer service on a
worldwide basis. In 1996 and 1997, the Company invested capital in a new
expanded service center and office complex in Antofagasta, Chile, which
will primarily service nearby copper mining customers, and an important new
warehouse facility located in Middleburg, in the heart of the South African
coal fields.
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Domestically, the Company remains committed to strengthening
operations at its two wholly-owned subsidiaries, Boonville Mining Services,
Inc. ("BMSI") and Minserco, Inc. ("Minserco"). BMSI provides replacement
parts and repair and rebuild services for surface mining equipment
manufactured both by the Company and by its competitors. Among other
things, BMSI competes directly with "will-fitters" who sell non-OEM and
knock off replacement parts, and provides additional manufacturing capacity
for the Company. Minserco services the mining industry with comprehensive
structural and mechanical engineering, non-destructive testing, repairs and
rebuilds of machine components, product and component upgrades, contract
maintenance, turnkey erections, and machine moves. Minserco's new orders
have increased from $13.7 million in 1994 to $28.5 million in 1996. In June
1997, the Company purchased 100% of the stock of Von's Welding, Inc.
("Von's") for approximately $2.0 million, including the assumption of
approximately $1.1 million in liabilities. Von's, located in Gillette,
Wyoming, is engaged in the business of providing replacement parts and
aftermarket services for mining equipment and trucks. Von's business will
be consolidated into Minserco, which will maintain Von's operating facility
and employees. This acquisition will enhance the Company's presence and
ability to provide tooling and repair services and replacement parts in
North America's most important coal mining region.
INCREASE OEM QUALITY AND PROFITABILITY. The Company is committed to
increasing the profitability of OEM sales by improving the design and
engineering of its existing line of machines, as well as developing new
products. During 1996, the Company's engineering and service functions were
significantly restructured in response to feedback from a customer focus
group formed to provide direction to the Company's engineering development
activities. A continuation of this close relationship with customers is
fundamental to the Company's objective to become more market driven.
Specific goals included reducing lead times, improving product quality and
reliability, and improving profit margins and OEM sales. To further these
goals, the Company has increased its investment in work-in-process
inventory to reduce delivery times for new equipment orders. The Company's
commitment to quality has been formally recognized by its receipt of ISO
9001 Certification from Det Norske Veritas, one of the world's leading
standards organizations.
MODERNIZE PLANT AND EQUIPMENT. During 1996, the Company began a number
of initiatives to modernize its manufacturing facilities in order to reduce
lead times and inventory levels, provide quicker turn around, and reduce
overall costs of manufacturing both new machines and replacement parts. The
most significant initiative is a three-year, $20 million modernization
program at the Company's South Milwaukee facility. The program includes
replacing approximately 47 older, less efficient machines with 14
technologically advanced machines, and upgrading 10 existing machine tools.
Some older machines will be retained by the Company to replace the
manufacturing capacity of certain Marion machines that will not be
transferred to the Company's South Milwaukee facility. As of June 30, 1997,
approximately $5.5 million had been committed to this project and seven of
the 14 machines had been installed, with the remainder scheduled for
installation by early 1999. The significant reduction in the number of
machines will open floor space, allowing the Company to increase capacity
and to complete the fabrication of Marion's current in-progress inventory
in South Milwaukee. Following the completion of the modernization program,
the Company expects to realize significant annual cost savings not
reflected in the pro forma financial results through the reduction of
labor, overhead, and raw materials costs.
FOCUS ON STRATEGIC MARKETS. Although 76% of the Company's net sales of
new machines have come from foreign markets during the past five years
(primarily Australia, Chile, China, and South Africa), management believes
that North America (primarily western Canada, the western United States,
and Mexico) continues to be one of the world's most important markets for
surface mining equipment. Therefore, the Company's focus includes the
strategic placement of its new, quality-engineered electric mining shovels
in high-profile North American
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installations. The Company sold the first of these shovels in Canada in
1995, and in the United States and Mexico in 1996. The Company believes
that these installations will create opportunities for increased new
machine sales in North America. Management has been encouraged by repeat
orders in 1997 for two additional shovels from one of these customers, and
the receipt of a shovel order from a new North American customer that has
historically purchased all its equipment from the Company's primary
competitor.
EXPAND MARC PROGRAM. The Company is aggressively promoting its
Maintenance and Repair Contracts, under which mine operators outsource to
the Company all regular maintenance services, repair functions and, in some
cases, operation of the equipment serviced. MARCs offer the Company a
generally predictable, high-margin revenue stream. New mines are the
primary target for MARCs because it is difficult and expensive for a mining
company to establish infrastructures for necessary and ongoing maintenance
and repair in undeveloped or remote areas. The Company currently operates
eight MARCs and is seeking to expand the MARC program. See "-- Aftermarket
Parts and Services."
While a number of these initiatives have not been fully implemented and the
anticipated benefits have not yet been fully realized, from 1995 to 1996 the
Company's net sales increased 14%, from $231.9 million to $263.8 million, and
EBITDA (as defined herein) improved from $12.7 million (5.5% of net sales) to
$19.2 million (7.3% of net sales). For the first six months of 1997, as compared
to the first six months of 1996, net sales increased 10%, from $130.8 million to
$143.8 million, and EBITDA (as defined herein) improved from $9.3 million (7.1%
of net sales) to $12.9 million (9.0% of net sales). The Company's consolidated
backlog increased 36% from $158.7 million at December 31, 1996 to $215.8 million
at June 30, 1997. The Marion Acquisition provides the Company with increased
opportunities to implement these initiatives, particularly with respect to
Marion's aftermarket business.
INTEGRATION STRATEGIES
Following a detailed review of Marion's business, the Company has developed
a comprehensive plan to integrate Marion's operations into those of the Company.
The Marion Acquisition results in substantial pro forma cost savings, primarily
through the consolidation of Marion's manufacturing operations into the
Company's existing facilities and the rationalization of engineering and
administrative functions. In addition, the Marion Acquisition enhances the
Company's product offering and, through application of the Company's established
business strategies, creates opportunities to capture additional new machine and
aftermarket sales. See "Risk Factors -- Realization of Benefits of the Marion
Acquisition; Integration of Marion" and "Unaudited Pro Forma Combined Condensed
Financial Statements."
CONSOLIDATION OF OPERATIONS. Management expects to realize significant
cost savings through the integration of Marion's manufacturing operations
into those of the Company. The Company will relocate some of Marion's
production machinery and fabricating equipment from the Marion facility to
the Company's manufacturing operations in South Milwaukee, Wisconsin, and
Boonville, Indiana. Machinery and tooling that cannot be used in the
Company's existing facilities will be sold. The estimated annual cost
savings from the consolidation of manufacturing operations included in the
pro forma adjustments are approximately $5.0 million. The Company will
commence the integration of Marion's manufacturing operations as soon as
possible.
CONSOLIDATION OF SALES, SERVICE, AND ADMINISTRATIVE
FUNCTIONS. Management expects to realize significant cost savings through
the rationalization of Marion's and the Company's sales, service, and
administrative functions. The Company has performed a detailed,
department-by-department assessment of Marion's existing administrative
functions and has identified a number of redundant and duplicative
positions and functions, the elimination of which results in pro forma
annual cost savings of $6.5 million. The pro forma statements do not
55
<PAGE> 62
include any consolidation of sales functions, although it is anticipated
that numerous positions will be eliminated. In addition, because Marion
operates administrative and sales offices, parts warehouses, and repair
facilities in the same geographical areas as the Company, the consolidation
plan includes closing certain of the former Marion facilities, including
warehouses and/or repair facilities in Ohio, Wyoming, Alberta, Quebec, and
South Africa. These cost savings are not reflected in the pro forma
adjustments. In Australia, the Company plans to close its administrative
and sales offices and operate out of facilities acquired from Marion.
Although numerous duplicative positions will be eliminated, certain key
personnel from Marion's offices, warehouses, and repair facilities will be
hired and integrated into the Company's administrative, sales, and service
staff.
CONSOLIDATION OF ENGINEERING FUNCTIONS. The Company hired certain of
Marion's best-qualified engineers and technicians to assist with the
integration process and the continued development and production of high
quality machines. As of December 31, 1996, Marion had already eliminated
various engineering positions, resulting in the $1.0 million in annual cost
savings reflected in the pro forma adjustments. The anticipated elimination
of additional engineering positions is expected to generate additional cost
savings that are not reflected in the pro forma adjustments. The Company
currently employs an engineering staff of 70 and believes that this staff,
in conjunction with the hiring of certain Marion engineers, will provide
the Company with sufficient engineering support for the foreseeable future;
however, there can be no assurance that this will be the case.
EXPANSION OF AFTERMARKET BUSINESS. The Marion Acquisition
significantly increases the Company's aftermarket parts and service
business, which generated $73.2 million, or approximately 67% of Marion's
total net sales, during fiscal 1996. By converting Marion's aftermarket
customers to the Company's service and support programs as soon as
practicable, the Company seeks not only to maintain existing levels of
aftermarket sales, but to increase its aftermarket penetration of Marion
accounts. Although the Company already has relationships with substantially
all of Marion's customers, to better serve these customers, the Company has
hired a number of Marion's field personnel, who will continue to be
responsible for servicing Marion's installed equipment base. The Company
also believes that the Marion Acquisition creates additional opportunities
to expand BMSI's and Minserco's operations, helping the Company to become
more competitive in the aftermarket for parts and services.
INTEGRATION OF PRODUCTS AND TECHNOLOGY. Three of Marion's five
equipment models and its best technology will be integrated into the
Company's existing product lines. Marion manufactured two basic models of
electric mining shovels. The smaller model, which represented six of
Marion's nine electric mining shovels sold during the past two years and
has been particularly popular in India, will be incorporated into the
Company's product line. The larger model is similar to the Company's most
popular electric shovel model and will therefore be discontinued. Two of
Marion's smaller special purpose dragline models will be incorporated into
the Company's product line to complement the larger models currently
offered by the Company.
COSTS AND EXPENSES ASSOCIATED WITH THE MARION ACQUISITION. The Company
expects to incur one-time costs and expenses of approximately $6.2 million
in connection with the Marion Acquisition and the integration of Marion's
business into the Company's operations. These costs primarily relate to
moving certain equipment from Marion, Ohio, to the Company's existing
facilities, relocating personnel, and consolidating offices and warehouses.
Under the terms of the purchase agreement, Global retained ownership of
Marion's manufacturing facility in Marion, Ohio, and is responsible for all
severance costs, pension expenses, and postretirement medical and other
benefits associated with the closing of Marion's manufacturing operations.
The Company's existing facilities and equipment are anticipated to be
adequate to fulfill expected sales with little need for additional capital
expenditures other than previously planned modernization of specific
equipment; however, there can be no assurance that this will be the case.
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INDUSTRY OVERVIEW
The large-scale surface mining equipment manufactured and serviced by the
Company is used primarily in coal, copper, and iron ore mines worldwide. Growth
in demand for these commodities is a function of population growth and
continuing improvements in standards of living in many areas of the world. The
market for new surface mining equipment is somewhat cyclical in nature due to
market fluctuations for these commodities; however, the aftermarket for parts
and services is more stable because these expensive, complex machines are
typically kept in continuous operation for 15 to 30 years and require regular
maintenance and repair throughout their productive lives.
Although total industry sales of new equipment have varied substantially
from year to year, management estimates that since 1987 total worldwide sales of
rotary blast hole drills, electric mining shovels and draglines have averaged
approximately $285 million annually. The largest markets for this mining
equipment have been in Australia, Canada, China, India, Russia, South Africa,
South America, and the United States. Together, these markets typically account
for approximately 90% of all new machines sold, although in any given year,
markets in other countries may assume greater importance. See "Risk Factors --
Cyclical Nature of Industry; Potential Fluctuations in Operating Results," and
"-- Competition."
MARKETS SERVED
While the Company's products are used in a variety of different types of
mining operations, including gold, phosphate, bauxite, and oil sands, as well as
for land reclamation, the Company manufactures surface mining equipment
primarily for large companies and quasi-governmental entities engaged in the
mining of coal, iron ore, and copper throughout the world. Until the late 1980s,
coal mining accounted for the largest percentage of industry demand for the
Company's machines, and it continues to be one of the largest users of
replacement parts and services. In recent years, however, copper and iron ore
mining operations have accounted for an increasingly greater share of new
machine sales. During the past five years, approximately 55% of the Company's
new equipment orders have gone to customers who mine copper, 32% to iron ore
mining customers, and 13% to coal mining customers. Nevertheless, while the
copper and iron ore mining industries have accounted for the majority of new
machine sales in recent years, the increasing worldwide demand for coal is
expected to continue and the Company expects that coal mining will account for
an increasing percentage of new machine sales over the next several years.
COPPER. From 1995 to 1996, copper consumption increased by 2.5% in the
United States, with European countries such as France, Germany, Italy and
Britain experiencing similar growth. This growth in demand is attributable
to both general economic growth, as well as increased use of copper in
high-tech industrial production. Unusual trading activity led to a sharp
decline in copper prices in mid-1996 from historically high levels; since
then, copper prices have recovered, and as a result, several new copper
projects have been put back on line and existing mines expanded in
Argentina, Chile, Indonesia, Mexico, and Sweden. These initiatives have
resulted in increased demand for the Company's excavation equipment in
these markets. In spite of the fluctuations during 1996, copper prices are
expected to remain relatively firm through 1997. According to Metal
Bulletin Research, an industry periodical, copper consumption is expected
to grow at approximately 2.3% in 1997.
IRON ORE. Although iron ore demand decreased with the worldwide
recession of 1992 and 1993, and Japanese and European iron ore buyers
lowered ore contract prices significantly in 1992 and again in 1993, there
was an increase in iron ore production in late 1994 that was sustained
through 1995 when global consumption increased, creating additional demand
for steel. In 1995, iron ore was the most widely traded non-energy
commodity in both value and volume, and the iron ore market passed the one
billion tons level, setting a new record for the worldwide industry. Prices
for iron ore began to recover slightly in 1995 and 1996, climbing back
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to 1992 levels. AME Mineral Economic analysts predict that iron ore
production will rise 10% by the year 2000.
COAL. The demand for steam coal, which represents approximately 85% of
total coal mining activity, is based largely on the demand for electric
power and the price and availability of competing sources of energy, such
as oil, natural gas, and nuclear power. Initially, the 1973 Arab oil
embargo resulted in an unprecedented increase in the demand for coal
production, reflecting expectations that oil prices would continue to rise.
Eventually the effects of a worldwide recession, escalating interest rates,
energy conservation efforts, and an increase in the world's supply of oil
resulted in a sharp drop in demand for coal. More recently, coal production
in the United States has been impacted by the Clean Air Act, causing higher
sulfur coal mines to be closed or to have outputs drastically curtailed.
Many machines have been shut down and a few have been relocated to lower
sulfur mines in eastern Appalachia and Wyoming's Powder River Basin where
excess production capacity and stagnant demand have driven coal prices
downward. Nevertheless, the increase in demand for coal in developing
countries with rapidly growing populations, such as India and China, has
stimulated coal mining production worldwide and is eventually expected to
increase both domestic and foreign demand for excavation equipment. The
Energy Information Administration is forecasting an increase in world
energy demand and an increase in world coal consumption.
The Company's excavation machines are used for land reclamation as well as
for mining, which has a positive effect on the demand for its products and
replacement parts and expands the Company's potential customer base. Current
federal and state legislation regulating surface mining and reclamation may
affect some of the Company's customers, principally with respect to the cost of
complying with, and delays resulting from, reclamation and environmental
requirements.
OEM PRODUCTS
The Company's line of original equipment manufactured ("OEM") products
includes a full range of rotary blast hole drills, electric mining shovels, and
draglines.
ROTARY BLAST HOLE DRILLS. Most surface mines require breakage or
blasting of rock, overburden, or ore by explosives. To accomplish this, it
is necessary to bore out a pattern of holes into which the explosives are
placed. Rotary blast hole drills are used to drill these holes, and are
usually described in terms of the diameter of the hole they bore. The
average life of a blast hole drill is 15 to 20 years.
The Company manufactures the world's top selling rotary blast hole
drills, having produced a majority of the estimated 69 drills sold in the
industry during 1995 and 1996. The Company offers a line of rotary blast
hole drills ranging in hole diameter size from 9.0 inches to 17.5 inches
and ranging in price from approximately $1.5 million to $2.8 million per
drill, depending on machine size and variable features.
In an effort to enhance drill sales and expand its market position,
during 1996 the Company introduced the Model 39R diesel hydraulic blast
hole drill, the Company's third drill model and first diesel hydraulic
blast hole drill. This innovative machine breaks new ground in
maneuverability and the ability to drill in difficult terrain, as well as
offering extraordinary drill productivity and functions unavailable in
other manufacturers' models.
ELECTRIC MINING SHOVELS. Mining shovels are primarily used to load
coal, copper ore, iron ore, other mineral-bearing materials, overburden, or
rock into trucks. There are two basic types of mining shovels, electric and
hydraulic. Electric mining shovels are able to handle larger shovels or
"dippers," allowing them to load greater volumes of rock and minerals,
while hydraulic shovels are smaller and more maneuverable. The Company
manufactures only electric mining shovels. The average life of an electric
mining shovel is 15 to 20 years.
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Shovels are characterized in terms of weight and dipper capacity. The
Company offers a full line of electric mining shovels, weighing from 400 to
1,000 tons and having dipper capacities from 12 to 80 cubic yards. Prices
range from approximately $3 million to approximately $9 million per shovel.
The Company's most popular electric mining shovel model is the Model 495B,
which is known for its reliability and productivity.
The Company's electric mining shovels continue to be extremely popular
in the surface mining industry. In the developing coal mining market of
China and in the rapidly growing Chilean copper mining market, Bucyrus
shovels have accounted for the majority of new electric mining shovels
purchased since 1988. Among the Company's business strategies is the
strategic placement of new electric mining shovels in high-profile North
American mining installations.
DRAGLINES. Draglines are primarily used to remove overburden, which is
the earth located over a coal or mineral deposit, by dragging a large
bucket through the overburden, carrying it away and depositing it in a
remote spoil pile. The Company's draglines weigh from 500 to 7,500 tons,
and are typically described in terms of their "bucket size," which can
range from nine to 220 cubic yards. The Company currently offers a full
line of models ranging in price from $10 million to over $60 million per
dragline. The average life of a dragline is 20 to 30 years.
Draglines are the industry's largest and most expensive type of
equipment, and while sales are sporadic, each dragline represents a
significant sales opportunity. Management therefore remains committed to
maintaining the Company's ability to produce these machines. In September
1997, the Company signed an agreement with an Australian mining company to
build the world's fourth largest dragline, which is scheduled for
completion by December 31, 1999. This is expected to generate net sales of
approximately $57.5 million over the next two and a half years.
AFTERMARKET PARTS AND SERVICES
The Company has a comprehensive aftermarket business that supplies
replacement parts and services for the surface mining industry. Although the
vast majority of the Company's sales of aftermarket parts and services has been
in support of the large installed equipment base of over 900 Bucyrus machines
worldwide, the Company also manufactures parts and provides services for other
manufacturers' installed equipment. The Company's aftermarket services include
maintenance and repair labor, technical advice, refurbishment, and relocation of
older, installed machines, particularly draglines. The Company also provides
engineering, manufacturing, and servicing for the consumable rigging products
that attach to dragline buckets (such as dragline teeth and adapters, shrouds,
dump blocks, and chains) and shovel dippers (such as dipper teeth, adapters, and
heel bands).
During 1996, the Company generated $156.4 million (59% of total net sales)
from its aftermarket business. In general, the Company realizes higher margins
on sales of parts and services than it does on sales of new machines. Moreover,
because the expected life of large, complex mining machines ranges from 15 to 30
years, the Company's aftermarket business is inherently more stable and
predictable than the fluctuating market for new products. Over the life of a
machine, net sales generated from aftermarket parts and services can exceed the
original purchase price.
Approximately 70% of the Company's aftermarket business relates to
providing parts and services to newer mining equipment operating in
international markets, while the remaining 30% of the aftermarket business
caters to equipment located in the United States, which is generally older. A
substantial portion of the Company's international repair and maintenance
services are provided through its global network of wholly-owned foreign
subsidiaries and overseas offices, operating in Australia, Brazil, Canada,
Chile, China, England, India, Mauritius, and South Africa. The Company's two
domestic subsidiaries, Minserco and BMSI, provide repair and maintenance
services
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throughout North America. Minserco, which maintains offices in Florida, Texas,
West Virginia, and Wyoming, provides comprehensive structural and mechanical
engineering, non-destructive testing, repairs and rebuilds of machine
components, product and component upgrades, contract maintenance, turnkey
erections, and machine moves. Minserco's services are provided almost
exclusively to maintenance and repair of Bucyrus machines operating in North
America. BMSI, located in Boonville, Indiana, builds replacement parts and
provides repair and rebuild services both for Bucyrus machines and other
manufacturers' equipment. The majority of BMSI's business is located in North
America.
To comply with the increasing aftermarket demands of larger mining
customers, the Company offers comprehensive maintenance and repair contracts.
Under these contracts, the Company provides all replacement parts, regular
maintenance services, and necessary repairs for the excavation equipment at a
particular mine with an on-site support team. In addition, two of these
contracts call for Company personnel to operate the equipment serviced. MARCs
are highly beneficial to the Company's mining customers because they promote
high levels of equipment reliability and performance, allowing the customer to
concentrate on mining production. MARCs typically have terms of three to five
years with standard termination and renewal provisions, although some contracts
allow termination by the customer for any cause. In recent years, the Company
has aggressively promoted its MARC program because it provides the Company with
a predictable, high margin form of business. New mines in areas such as Chile
and Argentina are the primary targets for MARCs because it is difficult and
expensive for mining companies to establish the necessary infrastructures for
ongoing maintenance and repair in underdeveloped or remote locations. The
Company currently operates eight MARCs and has plans to expand this program.
CUSTOMERS
The Company does not consider itself dependent upon any single customer or
group of customers; however, on an annual basis a single customer may account
for a large percentage of sales, particularly new machine sales. For example,
during fiscal 1996, sales to Compania Minera Dona Ines de Collahuasi, S.A., a
Chilean copper mining company, accounted for approximately 14% of the Company's
net sales. In fiscal 1994 and 1995, BHP Coal Pty. Ltd., an Australian mining
company, accounted for approximately 20% and 22%, respectively, of the Company's
net sales, and approximately 26% and 17%, respectively, of Marion's net sales.
See "Risk Factors -- Cyclical Nature of Industry; Potential Fluctuations in
Operating Results."
MARKETING, DISTRIBUTION AND SALES
In the United States, new mining machinery is primarily sold directly by
Company personnel, and to a lesser extent, through a northern Minnesota
distributor who supplies customers in the iron ore mining regions of the Upper
Midwest. Outside of the United States, new equipment is sold by Company
personnel, through independent distributors and through the Company's
subsidiaries and offices located in Australia, Brazil, Canada, Chile, China,
England, India, Mauritius, and South Africa. Aftermarket parts and services are
primarily sold directly through the Company's foreign subsidiaries and offices
and through the Company's domestic subsidiaries, Minserco and BMSI. The Company
believes that marketing through its own global network of subsidiaries and
offices offers better customer service and support by providing customers with
direct access to the Company's technological and engineering expertise.
With the exception of the MARC business, all the Company's sales are on a
project-by-project basis. Typical payment terms for new equipment require a down
payment, and invoicing is done on a percent of completion basis, such that a
substantial portion of the purchase price is received by the time shipment is
made to the customer. Sales contracts for machines are predominantly at fixed
prices, with escalation clauses in certain cases. Most sales of replacement
parts call for prices in effect at the time of order. During 1996, price
increases from inflation had a relatively minor impact on the Company's reported
net sales.
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FOREIGN OPERATIONS
A substantial portion of the Company's net sales and operating earnings is
attributable to operations located abroad. Over the past five years, 76% of the
Company's new machine sales have been in international markets. The Company's
foreign sales, consisting of exports from the United States and sales by
consolidated foreign subsidiaries, totaled $191.9 million in 1996, $169.1
million in 1995, and $131.8 million in 1994.
The Company's largest foreign markets are in Australia, Chile, China, and
South Africa. The Company also employs direct marketing strategies in developing
markets, such as Brazil, India, Indonesia, Jordan, Morocco, and Russia. In
recent years, Australia and South Africa have emerged as strong producers of
metallurgical coal, while Chile and South Africa have continued to be leading
producers of other minerals, primarily copper and gold, respectively. The
Company expects that India and Russia will become major coal producing regions
in the future. In India, the world's second most populous country, the demand
for coal as a major source of energy is expected to increase over the next
several decades.
New machine sales in foreign markets are supported by the Company's
established network of foreign subsidiaries and overseas offices that directly
market the Company's products and provide ongoing services and replacement parts
for equipment installed abroad. The availability and convenience of the services
provided through this worldwide network not only promotes high margin
aftermarket sales of parts and services, but also gives the Company an advantage
in securing new machine orders.
Bucyrus and its U.S. subsidiaries normally price their products, including
direct sales of new equipment to foreign customers, in U.S. dollars. Foreign
subsidiaries normally procure and price aftermarket replacement parts and repair
services in the local currency. Approximately 70% of the Company's net sales are
priced in U.S. dollars. The value, in U.S. dollars, of the Company's investments
in its foreign subsidiaries and of dividends paid to the Company by those
subsidiaries will be affected by changes in exchange rates. The Company does not
normally enter into currency hedges, although it may do so with regard to
certain individual contracts. See "Risk Factors -- Foreign Operations."
COMPETITION
There are a limited number of manufacturers of new surface mining
equipment. The Company is one of two manufacturers of electric mining shovels
and draglines. The Company's only competitor in electric mining shovels and
draglines is Harnischfeger Corporation, although electric mining shovels also
compete against hydraulic shovels of which there are at least six other
manufacturers. In rotary blast hole drills, the Company competes with at least
three other manufacturers, including Harnischfeger Corporation. Methods of
competition are diverse and include product design and performance, service,
delivery, application engineering, pricing, financing terms, and other
commercial factors. See "Risk Factors -- Competition."
For most owners of the Company's machines, the Company is the primary
replacement source for large, heavily engineered, integral components; however,
the Company encounters intense competition for sales of smaller, less
sophisticated, consumable replacement parts and repair services in certain
markets. The Company's competition in parts sales consists primarily of smaller,
independent firms called "will-fitters," that produce copies of the parts
manufactured by the Company and other original equipment manufacturers. These
copies are generally sold at lower prices than genuine parts produced by the
manufacturer. Management estimates that there are over 90 will-fitters competing
with the Company in the aftermarket business, almost exclusively in North
America, and that they accounted for an estimated 75% of North American sales in
the aftermarket parts and service business in 1996. Outside North America,
customers mainly rely upon the Company's subsidiaries to provide aftermarket
parts and services.
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The Company has a variety of programs to attract large volume customers for
its replacement parts. Although will-fitters engage in significant price
competition in parts sales, the Company possesses clear non-price advantages
over will-fitters. The Company's engineering and manufacturing technology and
marketing expertise exceed that of its will-fit competitors, who are in many
cases unable to duplicate the exact specifications of genuine Bucyrus parts.
Moreover, use of parts not manufactured by the Company can void the warranty on
a new Bucyrus machine, which generally runs for one year on new equipment, with
certain components being warranted for longer periods.
RAW MATERIALS AND SUPPLIES
The Company purchases from outside vendors the semi- and fully-processed
materials (principally structural steel, castings, and forgings) required for
its manufacturing operations, and other items, such as electrical equipment,
that are incorporated directly into the end product. The Company's foreign
subsidiaries purchase components and manufacturing services both from local
subcontractors and from Bucyrus. Certain additional components are sometimes
purchased from subcontractors, either to expedite delivery schedules in times of
high demand or to reduce costs. Moreover, in countries where local content
preferences or requirements exist, local subcontractors are used to manufacture
a substantial portion of the components required in the Company's foreign
manufacturing operations. Although the Company is not dependent upon any single
supplier, there can be no assurance that the Company will continue to have an
adequate supply of raw materials or components necessary to enable it to meet
the demand for its products. Competitors are believed to be subject to similar
conditions.
MANUFACTURING
A substantial portion of the design, engineering, and manufacturing of
Bucyrus machines is done at the Company's South Milwaukee plant. The size and
weight of these mining machines dictates that the machines be shipped to the job
site in sub-assembled units where they are assembled for operation with the
assistance of Company technicians. Planning and on-site coordination of machine
assembly is a critical component of the Company's service to its customers.
Moreover, to reduce lead time and assure that customer delivery requirements are
met, the Company maintains an inventory of sub-assembled units for frequently
utilized components of various types of equipment.
The Company manufactures and sells replacement parts and components and
provides comprehensive aftermarket service for its entire line of mining
machinery. The Company's large installed base of surface mining machinery
provides a steady stream of parts sales due to the long useful life of the
Company's machines, averaging 20 to 30 years for draglines and 15 to 20 years
for electric mining shovels and blast hole drills. Parts sales and aftermarket
services comprise a substantial portion of the Company's net sales. The Company
also provides aftermarket service for certain equipment of other original
equipment manufacturers through BMSI.
Although a majority of the Company's operating profits are derived from
sales of parts and services, the long-term prospects of the Company depend upon
maintaining a large installed equipment base worldwide. Therefore, the Company
remains committed to improving the design and engineering of its existing line
of machines, as well as developing new products. In 1996, a three year machine
shop modernization program began in the Company's South Milwaukee manufacturing
facility that involves a $20 million investment in the latest technology in the
machine tool industry. The program is aimed at reduced lead times, quicker
turnaround, reduced in-process inventory, and overall cost reduction. See "--
Business Strategy -- Plant and Equipment Modernization."
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PROPERTIES
The Company's principal manufacturing plant in the United States is located
in South Milwaukee, Wisconsin, and is owned by the Company. This plant comprises
approximately 1,038,000 square feet of floor space. A portion of this facility
houses the Company's corporate offices. The major buildings at this facility are
constructed principally of structural steel, concrete, and brick and have
sprinkler systems and other devices for protection against fire. The buildings
and equipment therein, which include machine tools and equipment for fabrication
and assembly of the Company's mining machinery, including draglines, electric
mining shovels, and blast hole drills, are well-maintained, in good condition,
and in regular use.
The Company leases a facility in Memphis, Tennessee, which has
approximately 110,000 square feet of floor space and is used as a central parts
warehouse. The current lease is for five years commencing in July 1996 and
contains an option to renew for an additional five years.
BMSI leases a facility in Boonville, Indiana which has approximately 60,000
square feet of floor space on a 5.84 acre parcel of land. The facility has the
manufacturing capability of large machining, gear cutting, heavy fabricating,
rebuilding, and stress relieving. The major manufacturing buildings are
constructed principally of structural steel with metal siding.
The Company also has administrative and sales offices and, in some
instances, repair facilities and parts warehouses, at certain of its foreign
locations, including Australia, Brazil, Canada, Chile, China, India, and South
Africa. The Company plans to do business out of Marion's offices in Australia,
and close down the Company's existing leased offices there.
EMPLOYEES
As of July 31, 1997, the Company had approximately 1,413 full-time
employees, approximately 892 of whom were working primarily in the United
States. In addition, from time to time the Company employs part-time employees
to handle peak loads. Of the 797 employees at the Company's South Milwaukee
facility, 418 are represented by the United Steelworkers of America. In May
1997, the union ratified a new four year agreement with the Company that expires
on April 30, 2001. See "Risk Factors -- Labor Relations."
LEGAL PROCEEDINGS
JOINT PROSECUTION. The Company and its former affiliate Jackson National
Life Insurance Company ("JNL") entered into a joint prosecution agreement (the
"Joint Prosecution Agreement") dated as of August 21, 1997 relating to various
claims the Company and JNL have or may have resulting from the Company's
reorganization in 1994 under Chapter 11 of the United States Bankruptcy Code
(the "Chapter 11 Reorganization") against the law firm of Milbank, Tweed, Hadley
& McCloy ("Milbank") for disgorgement of fees (the "Disgorgement Claim") and
other claims (collectively, the "Milbank Claims"). All proceeds of the Milbank
Claims will be allocated as follows: (i) first, to pay, or to reimburse the
prior payment of, all bona fide third-party costs, expenses and liabilities
incurred on or after September 1, 1997 in connection with prosecuting the
Milbank Claims (the "Joint Prosecution") including, without limitation, the
reasonable fees and disbursements of counsel and other professional advisors,
which are to be advanced by JNL; (ii) the next $8.675 million of proceeds from
the Milbank Claims, if any, will be paid to JNL, provided that the Company will
retain 10% of the proceeds of the Disgorgement Claim, if any, and will direct
payment to JNL of the balance of such proceeds; and (iii) all additional
proceeds of the Milbank Claims will be divided equally between JNL and the
Company. Notwithstanding the foregoing, the Company shall also receive the
benefit of any reduction of any obligation it may have to pay Milbank's
outstanding fees if any. JNL will indemnify the Company in respect of any
liability resulting from the Joint Prosecution other than in respect of legal
fees and expenses incurred prior to September 1, 1997. The Joint Prosecution may
involve lengthy and complex litigation and there can be no assurance whether or
when any recovery may be obtained or, if obtained, whether it will be in
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an amount sufficient to result in the Company receiving any portion thereof
under the formula described above.
Consistent with the Joint Prosecution Agreement, on September 25, 1997, the
Company and JNL commenced an action against Milbank (the "Milwaukee Action") in
the Milwaukee County Circuit Court. The Company seeks damages against Milbank
arising out of Milbank's alleged malpractice, breach of fiduciary duty, common
law fraud, breach of contract, unjust enrichment and breach of the obligation of
good faith and fair dealing. JNL seeks damages against Milbank arising out of
Milbank's alleged tortious interference with contractual relations, abuse of
process and common law fraud. The Company and JNL seek to recover actual and
punitive damages from Milbank. On October 1, 1997, Milbank removed the Milwaukee
Action to the United States District Court for the Eastern District of
Wisconsin. On October 7, 1997, the Company and JNL moved to remand the
proceeding to the Milwaukee County Circuit Court. Milbank's response to the
motion to remand is due by November 4, 1997, and Milbank's response to the
complaint in the Milwaukee Action is due by December 1, 1997. The Milwaukee
Action may involve lengthy and complex litigation and there can be no assurance
whether or when any recovery may be obtained or, if obtained, whether it will be
in an amount sufficient to result in the Company receiving any portion thereof
under the formula described above.
On September 23, 1997, Minserco, Inc, one of the Guarantors, was found
liable to BR West Enterprises, Inc. d/b/a West Machine and Tool Works ("West")
in litigation pending in the United States District Court for the Eastern
District of Texas (the "Texas Court"), for damages claimed with regard to an
alleged joint venture agreement. On October 29, 1997, a final judgment was
entered in the amount of $4.3 million, including attorney's fees and costs.
Minserco strongly disputes the Findings of Fact and Conclusions of Law entered
by the Texas Court and intends to seek a new trial and, if not successful to
vigorously appeal the case to the United States Court of Appeals for the Fifth
Circuit. It is the view of management that Minserco's ultimate liability, if
any, in this action is not expected to have a material effect on the Company's
financial position or results of operations, although no assurance to that
effect can be given.
The Company is normally subject to numerous product liability claims, many
of which relate to products no longer manufactured by Bucyrus or its
subsidiaries, and other claims arising in the ordinary course of business. The
Company has insurance covering most of said claims, subject to varying
deductibles ranging from $0.3 million to $3.0 million, and has various limits of
liability depending on the insurance policy year in question. It is the view of
management that the final resolution of said claims and other similar claims
which are likely to arise in the future will not individually or in the
aggregate have a material effect on the Company's financial position or results
of operations, although no assurance to that effect can be given.
The Company is involved in various other litigation arising in the normal
course of business. It is the view of management that the Company's recovery or
liability, if any, under pending litigation is not expected to have a material
effect on the Company's financial position or results of operations, although no
assurance to that effect can be given.
ENVIRONMENTAL AND RELATED MATTERS
The Company's operations and properties are subject to a broad range of
federal, state, local and foreign laws and regulations relating to environmental
matters, including laws and regulations governing discharges into the air and
water, the handling and disposal of solid and hazardous substances and wastes,
and the remediation of contamination associated with releases of hazardous
substances at Company facilities and at off-site disposal locations. These laws
are complex, change frequently and have tended to become more stringent over
time. Future events, such as compliance with more stringent laws or regulations,
or more vigorous enforcement policies of regulatory agencies or stricter or
different interpretations of existing laws, could require additional
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expenditures by the Company, which may be material. See "Risk Factors --
Environmental and Related Matters."
Certain environmental laws, such as CERCLA, provide for strict, joint and
several liability for investigation and remediation of spills and other releases
of hazardous substances. Such laws may apply to conditions at properties
presently or formerly owned or operated by an entity or its predecessors, as
well as to conditions at properties at which wastes or other contamination
attributable to an entity or its predecessors come to be located.
The Company was one of 53 entities named by the U.S. Environmental
Protection Agency ("EPA") as potentially responsible parties ("PRPs") with
regard to the Millcreek dumpsite, located in Erie County, Pennsylvania, which is
on the National Priorities List of sites for cleanup under CERCLA. The Company
was named as a result of allegations that it disposed of foundry sand at the
site in the 1970's. Both the United States government and the Commonwealth of
Pennsylvania initiated actions to recover cleanup costs; the Company has settled
with both with respect to its liability for past costs. In addition 37 PRPs,
including the Company, have received Administrative Orders issued by the EPA
pursuant to Section 106(a) of CERCLA to perform site capping and flood control
remediation at the Millcreek site. The Company is one of 18 parties responsible
for a share of the estimated $7.0 million in costs, which share is presently
proposed as per capita but may be subject to reallocation before the conclusion
of the case.
In December 1990, the Wisconsin Department of Natural Resources ("DNR")
conducted a pre-remedial screening site inspection on property owned by the
Company located at 1100 Milwaukee Avenue, in South Milwaukee, Wisconsin.
Approximately 35 acres of this site were allegedly used as a landfill by the
Company until approximately 1983. The Company disposed of certain manufacturing
wastes at the site, primarily foundry sand. DNR's Final Site Screening Report,
dated April 16, 1993, summarized the results of additional investigation. A DNR
Decision Memo, dated July 21, 1991, which was based upon the testing results
contained in the Final Site Screening Report, recommended additional
groundwater, surface water, sediment and soil sampling. To date, the Company is
not aware of any initiative by the DNR to require any further action with
respect to this site. Consequently, the Company has not regarded and does not
regard, this site as presenting a material contingent liability. There can be no
assurance, however, that additional investigation by the DNR will not be
conducted with respect to this site at some later date or that this site will
not in the future require removal or remedial actions to be performed by the
Company, the costs of which could, depending on the circumstances, be material.
Prior to 1985, a wholly owned indirect subsidiary of Bucyrus provided
comprehensive general liability insurance coverage for affiliate corporations.
The subsidiary issued such policies for occurrences during the years 1974 to
1984, which policies could involve material liability. Claims have been made
under certain of these policies for certain potential CERCLA liabilities of
former Bucyrus subsidiaries. It is possible that other claims could be asserted
in the future with respect to such policies. While the Company does not believe
that liability under such policies will result in material costs, this cannot be
guaranteed.
Along with multiple other parties, the Company or its subsidiaries are
currently PRPs under CERCLA and analogous state laws at three additional sites
at which Bucyrus and/or its subsidiaries (including the above referenced
insurance subsidiary by insurance claim) may incur future costs. While CERCLA
imposes joint and several liability on responsible parties, liability for each
site is likely to be apportioned among the parties. The Company does not believe
that its potential liability in connection with these sites or any other
discussed above, either individually or in the aggregate, will have a material
adverse effect on the Company's business, financial condition or results of
operations. However, the Company cannot guarantee that it will not incur cleanup
liability in the future with respect to sites formerly or presently owned or
operated by the Company, or with respect to off-site locations, the costs of
which could be material.
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The Company has also been named as a defendant in seven pending premises
liability asbestos cases, which are proceeding both in the state courts of
Indiana and federal court. In all these cases, insurance carriers have accepted
the defense of such cases. These cases are in preliminary stages and while the
Company does not believe that costs associated with these matters will be
material, it cannot guarantee that this will be the case.
While no assurance can be given, the Company believes that expenditures for
compliance and remediation will not have a material effect on its capital
expenditures, earnings or competitive position.
PATENTS, LICENSES AND FRANCHISES
The Company has a number of United States and foreign patents, patent
applications and patent licensing agreements. It does not consider its business
to be materially dependent upon any patent, patent application, or patent
license agreement.
CHAPTER 11 REORGANIZATION
On February 4, 1988, the Company was acquired in a leveraged buyout by
former members of management and a group of investors led by Goldman, Sachs &
Co. and Broad Street Investment Fund (the "LBO"). The Company was acquired for
approximately $300 million of which only $2.0 million was equity.
Although the Company's strong aftermarket parts business covered most of
its cash flow requirements, it was insufficient to service the LBO debt and
simultaneously provide the working capital necessary to build new machines.
Moreover, the Company's former management employed a strategy of selling new
machines below cost in order to maintain market share and to compensate its
customers for the long lead times that resulted from the lack of sufficient
working capital to stock the components required to match the lead times of its
competitors.
While the Company experienced increasing net sales from 1988 to 1991, the
Company continued to increase its use of leverage. Additionally, in 1990 the
Company settled tax disputes for the years 1977 to 1982 that required an
additional $22 million of borrowings. Subsequently, in January 1993, in the
midst of a cyclical downturn in the mining industry, the Company's interest
expense obligations increased dramatically as the interest rates on several
issues of the Company's debt obligations reset resulting in the majority of the
Company's debt obligations accruing interest at effective rates ranging from 15%
to in excess of 20%. The Company subsequently announced its intention not to pay
interest on a large majority of its debt obligations, and in February 1994, the
Company filed a prepackaged plan of reorganization under Chapter 11 of the U.S.
Bankruptcy Code. In December 1994, the Company's plan of reorganization was
confirmed.
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MANAGEMENT
DIRECTORS
Directors of Bucyrus are elected annually and hold office until the next
annual meeting of shareholders and until their successors are duly elected and
qualified. The executive officers of Bucyrus serve at the discretion of Bucyrus'
Board of Directors (the "Board").
The following table sets forth, for each of the three directors of Bucyrus,
information as of the date of this Prospectus regarding their names, ages,
principal occupations, and other directorships in certain companies held by
them. Each director currently on the Board is a designee of AIPAC. Except as
otherwise noted, each director has engaged in the principal occupation or
employment and has held the offices shown for more than the past five years.
Unless otherwise indicated, each director listed above is a citizen of the
United States and the address of such person is the Company's principal
executive offices. There are no family relationships among directors and
executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
---- --- --------------------------------------
<S> <C> <C>
Kim A. Marvin........................ 35 Mr. Marvin is a Director, the Secretary and a Vice
President of American Industrial Partners Acquisition
Company, LLC. Mr. Marvin joined the San Francisco
office of American Industrial Partners in 1997 from the
Mergers & Acquisitions Department of Goldman, Sachs &
Co. where he was employed since 1994.
Kenneth A. Pereira................... 36 Mr. Pereira is a Director and a Vice President of
American Industrial Partners Company, LLC. Mr. Pereira
joined the San Francisco office of American Industrial
Partners in 1989 and specializes in the tax and
accounting aspects of acquisitions. He also serves as
the Controller of American Industrial Partners
Corporation.
Lawrence W. Ward, Jr. ............... 44 Mr. Ward is a Director and the President of American
Industrial Partners Acquisition Company, LLC. Mr. Ward
has been an employee of American Industrial Partners
since 1992. From 1989 to 1992, he was Vice President
and Chief Financial Officer of Plantronics, Inc., a
telecommunications equipment company. Mr. Ward is
currently a director of Easco Corporation, Day
International Group, Inc. and RBX Corporation.
</TABLE>
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EXECUTIVE OFFICERS
Set forth below are the names, ages and present occupation of all executive
officers of the Company. Executive officers named therein (the "named executive
officers") are elected annually and serve at the pleasure of the Board. Mr.
Hildebrand is employed under a three-year employment agreement, which
automatically renews for additional one-year terms subject to the provisions of
the agreement. Messrs. Mackus, Onsager, Phillips, Smoke, and Sullivan are each
employed under one-year employment agreements which automatically renew for
additional one-year terms subject to the provisions thereof. See "-- Employment
Agreements; Change in Control" below.
<TABLE>
<CAPTION>
EMPLOYED BY
THE COMPANY
NAME AGE, POSITION, AND BACKGROUND SINCE
---- ----------------------------- -----------
<S> <C> <C>
Willard R. Hildebrand............. Mr. Hildebrand, age 58, has served as President and 1996
Chief Executive Officer since he joined the Company
in March 1996. Mr. Hildebrand was President and
Chief Executive Officer of Great Dane Trailers,
Inc. (a privately held manufacturer of a variety of
truck trailers) from 1991 to 1996. Prior to 1991,
Mr. Hildebrand held a variety of sales and
marketing positions with Fiat-Allis North America,
Inc. and was President and Chief Operating Officer
from 1985 to 1991. Mr. Hildebrand was a director of
the Company from March 1996 until September 1997.
Craig R. Mackus................... Mr. Mackus, age 45, has served as Secretary since 1974
May 1996 and as Controller since February 1988. Mr.
Mackus was Division Controller and Assistant
Corporate Controller from 1985 to 1988, Manager of
Corporate Accounting from 1981 to 1982 and 1984 to
1985, and Assistant Corporate Controller of Western
Gear Corporation from 1982 to 1984.
Michael G. Onsager................ Mr. Onsager, age 43, has served as Vice President 1976
--Engineering since September 1996. He was Chief
Engineer -- Advanced Technology Development from
1995 to September 1996, Assistant Chief Engineer
from 1990 to 1993 and 1994 to 1995, and Parts
Product Manager from 1993 to 1994.
Thomas B. Phillips................ Mr. Phillips, age 51, has served as Vice President 1970
--Materials since March 1996. He was Director of
Materials from 1986 to 1996, Manufacturing Manager
from June 1986 to October 1986, and Materials
Manager from 1983 to 1986.
Daniel J. Smoke................... Mr. Smoke, age 48, has served as Vice President and 1996
Chief Financial Officer since he joined the Company
in November 1996. Mr. Smoke was Vice President
Finance and Chief Financial Officer of Folger Adam
Company from 1995 to 1996. From 1986 to 1994, Mr.
Smoke held a variety of financial and operating
positions with Eagle Industries, Inc.
Timothy W. Sullivan............... Mr. Sullivan, age 44, has served as Vice President 1976
--Marketing since April 1995. He was the Director
of Business Development in 1994, Director of Parts
Sales and Subsidiary Operations from 1990 to 1994,
and Product Manager of Electric Mining Shovels and
International Sales from 1986 to 1990.
</TABLE>
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<PAGE> 75
COMPENSATION OF DIRECTORS
Directors of Bucyrus, other than full time employees, currently receive
$ each month, regardless of whether meetings are held or the number of
meetings held. No fees are paid for attendance at committee meetings. Directors
are also reimbursed for out-of-pocket expenses.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information for each of the last
three fiscal years concerning compensation awarded to, earned by or paid to each
person who served as Bucyrus' Chief Executive Officer during fiscal 1996 and
each of the four most highly compensated executive officers other than the Chief
Executive Officer who were in office on December 31, 1996. The persons named in
the table are sometimes referred to herein as the "named executive officers."
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL -----------------------
COMPENSATION(1) AWARDS
------------------- -----------------------
RESTRICTED
STOCK SECURITIES ALL OTHER
NAME AND PRINCIPAL AWARDS UNDERLYING COMPENSATION
POSITION YEAR SALARY BONUS (2) OPTIONS(#) (3)
------------------ ---- ------ ----- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
WILLARD R. HILDEBRAND............. 1996 $323,816 $200,000 $2,700,000 200,000 $265,931
President and Chief
Executive Officer
FRANK W. MILLER................... 1996 (4) -- -- -- --
Interim President 1995 (4) -- -- -- --
and Chief Executive
Officer
CRAIG R. MACKUS................... 1996 $123,000 $ 26,975 -- -- $ 4,090
Secretary and 1995 114,900 10,000 -- -- 3,732
Controller 1994 105,030 -- -- -- 3,447
MICHAEL G. ONSAGER................ 1996 $101,672 $ 22,666 -- -- $ 3,336
Vice President -- 1995 80,361 -- -- -- 2,617
Engineering 1994 70,255 -- -- -- 2,291
THOMAS B. PHILLIPS................ 1996 $119,168 $ 26,976 -- -- $ 4,299
Vice President -- 1995 104,202 10,000 -- -- 3,833
Materials 1994 97,096 -- -- -- 3,397
TIMOTHY W. SULLIVAN............... 1996 $128,004 $ 34,644 -- -- $ 4,260
Vice President -- 1995 114,932 10,000 -- -- 4,124
Marketing 1994 102,507 -- -- -- 3,362
</TABLE>
- -------------------------
(1) Certain personal benefits provided by the Company to the named executive
officers are not included in the table. The aggregate amount of such
personal benefits for each named executive officer in each year reflected in
the table did not exceed the lesser of $50,000 or 10% of the sum of such
officer's salary and bonus in each respective year.
(2) Represents the market value on the date of grant of restricted Common Stock
granted under the 1996 Employees' Stock Incentive Plan (the "Employees'
Stock Incentive Plan"). At the end of the last fiscal year, the number and
value (based on the fiscal year-end closing price of $8.75 per share) of the
aggregate restricted stock holdings of the named individual were 300,000 and
$2,625,000, respectively. All of the restrictions on the restricted stock
lapsed in connection with the AIP Tender Offer and such shares were tendered
and purchased therein.
(3) "All Other Compensation" includes the employer match under the Company's
401(k) savings plan for 1996, 1995, and 1994, respectively: Mr. Hildebrand
($4,750), Mr. Mackus ($3,690, $3,403, $3,151), Mr. Onsager ($3,050, $2,411,
$2,108), Mr. Phillips ($3,262, $2,961, $2,913), and Mr. Sullivan ($3,840,
$3,798, $3,075); life insurance premium payments for 1996, 1995 and 1994,
respectively: Mr. Hildebrand ($2,775), Mr. Mackus ($400, $329, $296), Mr.
Onsager
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<PAGE> 76
($286, $206, $183), Mr. Phillips ($1,037, $872, $484), and Mr. Sullivan
($420, $326, $287); and payments made in 1996 in connection with
employment agreements to Mr. Hildebrand ($258,406 including a relocation
allowance of $187,021 and a pension benefit of $71,385).
(4) Mr. Miller became Interim President and Chief Executive Officer pursuant to
a Management Agreement (the "Management Agreement"), dated July 21, 1995,
as amended, between the Company and Miller Associates. Amounts paid by the
Company under the Management Agreement were paid to Miller Associates and
Mr. Miller was separately compensated by Miller Associates. Pursuant to the
Management Agreement, Mr. Miller served as Interim President and Chief
Executive Officer until March 11, 1996 when Mr. Hildebrand was appointed as
President and Chief Executive Officer by the Board.
EMPLOYMENT AGREEMENTS; CHANGE OF CONTROL
The Company has entered into employment agreements with all of the named
executive officers. These agreements govern the compensation, benefits and
treatment upon termination under various circumstances, including voluntary
termination by either party, or termination by reason of retirement, death or
disability, or in the event of a change of control, as those terms are defined
in the agreements. Each employment agreement automatically renews for a one year
term upon the expiration of its initial term and any subsequent terms, unless
two months' written notice is given by either party of intent to terminate at
the end of that term. Each employment agreement may be terminated by either the
Company or the executive at any time by giving notice as required under the
agreement; provided, however, that if the named executive officer is terminated
by the Company without cause at any time, or if the executive terminates his
employment with good reason in connection with a change in control, as those
terms are defined in the agreement, then the executive will be entitled to
certain severance benefits as described in that executive's individual
agreement. Finally, each agreement imposes confidentiality restrictions on the
executive and places restrictions on the executive's involvement in activities
that may compete with the Company both during employment and following
termination. Violation of such confidentiality and non-competition provisions,
or other termination for cause, as defined in the agreements, may result in
forfeiture of severance and other benefits that may otherwise accrue. Individual
compensation, benefits and other salient features of each agreement is described
below.
Mr. Hildebrand serves as President and Chief Executive Officer under a
three-year employment agreement with the Company, dated March 11, 1996. Mr.
Hildebrand's base salary is $400,000 per year, subject to increase at the
discretion of the Board, and he is eligible to participate in the Company's
Management Incentive Plan ("Bonus Plan"), which, in Mr. Hildebrand's case,
provides for an annual cash incentive bonus equal to 50% of base salary in the
event of achievement of targeted performance and a maximum of 100% of base
salary in the event of exceptional performance, as determined in accordance with
the Bonus Plan. In addition, Mr. Hildebrand was granted 300,000 shares of
restricted stock and options for 200,000 shares of Common Stock at 55% of its
grant date market price, all of which were tendered and purchased (in the case
of restricted stock) or cancelled and redeemed (in the case of stock options) in
connection with the AIP Merger. Mr. Hildebrand is entitled to participate in the
Company's employee benefit plan for senior executives and provided other fringe
benefits, such as club membership, vacation and the use of a Company car.
Finally, Mr. Hildebrand's employment agreement provided for one time payments to
compensate him for lost retirement benefits and to reimburse him for costs
associated with the relocation of his residence.
Mr. Smoke serves as Chief Financial Officer under a one-year employment
agreement with the Company, dated November 7, 1996. Mr. Smoke's base salary is
$175,000 per year, subject to increase at the discretion of the Board, and he is
eligible to participate in the Bonus Plan, which, in Mr. Smoke's case, provides
for an annual cash incentive bonus equal to 35% of base salary in the event of
achievement of targeted performance and a maximum of 70% of base salary in the
event of exceptional performance, as determined in accordance with the Bonus
Plan. In addition, Mr. Smoke was granted options for 30,000 shares of Common
Stock, as well as stock appreciation rights to
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<PAGE> 77
50,000 shares, all of which were cancelled and redeemed in connection with the
AIP Merger. Mr. Smoke is entitled to participate in the Company's employee
benefit plan for senior executives and provided other fringe benefits, such as
club membership, vacation and the use of a Company car. Finally, Mr. Smoke's
employment agreement provides for one time payments to reimburse him for costs
associated with the relocation of his residence.
Mr. Sullivan, Mr. Mackus, Mr. Phillips, and Mr. Onsager each serve under
similar one-year employment agreements with the Company dated May 21, 1997. Each
of these agreements provides for the executive's position and base salary, which
is subject to merit increases in accordance with the Company's normal salary
merit increase review policy. In addition, the executive is entitled to
participate in such employee and fringe benefits plans as the Company provides
to other similarly situated management employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AIP TENDER OFFER AND AIP MERGER
Upon the effective date of the AIP Merger, all issued and outstanding stock
options and SARs were cancelled, and regardless of whether such stock options or
SARs had then vested or were exercisable, each holder of stock options or SARs
received cash per share equal to $18.00 less the "strike price" of such stock
options or SARs. The aggregate value of this treatment of stock options and SARs
was approximately $12.3 million.
The Company's directors and executive officers received an aggregate of
approximately $10.3 million in the AIP Tender Offer and the AIP Merger in
consideration for their shares of Common Stock, stock options and SARs. Of such
$10.3 million, Mr. Hildebrand received approximately $8.0 million.
MANAGEMENT SERVICES AGREEMENT
AIP expects to provide substantial ongoing financial and management
services to the Company utilizing the extensive operating and financial
experience of AIP's principals. AIP will receive an annual fee of $1.5 million
for providing general management, financial and other corporate advisory
services to the Company, payable semiannually 45 days after the scheduled
interest payment date for the Notes, and will be reimbursed for out-of-pocket
expenses. The fees will be paid to AIP pursuant to a management services
agreement among AIP, Bucyrus and the Guarantors and will be subordinated in
right of payment to the Notes.
AIP TRANSACTION FEE
At the close of the AIP Merger, AIP was paid a fee of $4.0 million and
reimbursed for out-of-pocket expenses in connection with the negotiation of the
AIP Agreement and for providing certain investment banking services to the
Company including the arrangement and negotiation of the terms of Notes and for
other financial advisory and management consulting services.
FUTURE AGREEMENTS WITH EXECUTIVE OFFICERS
Although no specific arrangements are in place, AIP presently intends to
offer the Company's executive officers the opportunity to own up to 10% of the
Company's equity through a combination of direct investments and option
programs.
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
Von's has, pursuant to its Bylaws, established a policy indemnifying
officers and directors, to the fullest extent allowed by law, for liabilities
and expenses arising out of their actions in their capacities as officers and
directors. This provision does not exclude indemnification for liability on the
part of officers and directors under the Securities Act arising out of material
misrepresentations
71
<PAGE> 78
or omissions contained in a registration statement filed under the Securities
Act. Although the Certificates of Incorporation and Bylaws of Bucyrus, Minserco,
and Boonville contain no such provisions, such indemnification is nevertheless
authorized by the Delaware General Corporation Law. However, insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers, and controlling persons pursuant to the
foregoing provisions, the Issuers have been informed that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
PRINCIPAL SHAREHOLDERS
As a result of the AIP Merger, Bucyrus has a single shareholder, AIPAC,
whose business address is One Maritime Plaza, Suite 2525, San Francisco,
California, 94111. See "Acquisition of the Company by AIP."
72
<PAGE> 79
REVOLVING CREDIT FACILITY
In connection with the Private Offering, Bucyrus has entered into a new
senior bank credit agreement (the "Revolving Credit Facility") with Bank One,
Wisconsin ("Bank One"). Bank One has provided working capital and other
financing, including a letter of credit facility, to Bucyrus since 1988.
Pursuant to the Revolving Credit Facility, Bucyrus replaced its former $15
million letter of credit and revolving loan facility with the $75 million
Revolving Credit Facility. The Revolving Credit Facility is expected to be used
in the future for general working capital purposes and capital expenditures. As
of June 30, 1997, on a pro forma basis after giving effect to the Transactions,
approximately $23.3 million would have been outstanding under the Revolving
Credit Facility. See "Capitalization." Borrowings under the Revolving Credit
Facility bear interest at variable rates and are subject to a borrowing base
formula, which at June 30, 1997, would have permitted borrowings and letters of
credit of approximately $68.7 million (including the reserve referred to in (B)
in the following paragraph).
The $75 million Revolving Credit Facility includes a $25 million sublimit
for standby letters of credit. The issuance of standby letters of credit will
reduce the amount available for direct borrowings under the Revolving Credit
Facility. Availability under the Revolving Credit Facility is limited to a
borrowing base which is defined as (A) the sum of (i) 80% of North American
accounts receivable; (ii) 50% of domestic finished goods and raw materials;
(iii) a declining percentage (initially 30%) of domestic work-in-process; (iv)
80% of the estimated orderly liquidation value (as determined by a formula) of
Bucyrus and domestic subsidiaries machinery and equipment; and (v) 30% of
qualified domestic net unbilled progress billing receivables minus (B) a reserve
equal to one semi-annual interest payment on the Notes. The obligations of
Bucyrus under the Revolving Credit Facility are guaranteed by certain
subsidiaries, and the Revolving Credit Facility is secured by substantially all
of the assets of the Company, other than real property and assets of foreign
subsidiaries. Pricing on the Revolving Credit Facility is, at the option of
Bucyrus, (i) Bank One's base rate or Federal Funds Rate plus 0.5% per annum plus
an applicable margin ranging from 0% to 0.5% dependent on the ratio of adjusted
funded debt to EBITDA (as defined), or (ii) LIBOR plus an applicable margin
ranging from 1.5% to 2.75% dependent on the ratio of adjusted funded debt to
EBITDA (as defined). Letters of credit will be priced at 50% of the applicable
LIBOR interest rate margin for non-financial letters of credit and 100% of the
applicable LIBOR interest rate margin in the case of financial letters of
credit. The initial LIBOR margin is 2.75%.
The Revolving Credit Facility contains certain restrictive covenants that
impose limitations upon, among other things, the ability of Bucyrus and the
guarantors to incur liens; merge, consolidate or dispose of assets; make loans
and investments; incur indebtedness; engage in certain transactions with
affiliates; incur contingent obligations; enter into joint ventures; enter into
lease agreements; pay dividends and make other distributions; change its
business; redeem the Notes; and make capital expenditures.
The Revolving Credit Facility also contains covenants requiring Bucyrus (A)
to maintain certain financial ratios as follows: (i) ratio of adjusted funded
debt to EBITDA (as defined); (ii) fixed charge coverage ratio; and (iii)
interest coverage ratio; and (B) to maintain a minimum net worth.
All extensions of credit under the Revolving Credit Facility are subject to
customary documentation and the continued accuracy of all representations and
warranties as well as the absence of any Material Adverse Effect or Default or
Event of Default. Capitalized terms not defined herein have the meanings set
forth in the Revolving Credit Facility.
The Revolving Credit Facility may be Refinanced (as defined in the
Indenture) from time to time in accordance with the terms of the Indenture. See
"Description of the Notes -- Certain Covenants -- Limitation on Incurrence of
Indebtedness" and "-- Certain Definitions."
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<PAGE> 80
DESCRIPTION OF THE NOTES
GENERAL
The Existing Notes were, and the Exchange Notes will be, issued pursuant to
an Indenture dated as of September 24, 1997 ("Indenture") among Bucyrus, the
Guarantors, and Harris Trust and Savings Bank, as Trustee ("Trustee"). The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 as in effect on the
date the Indenture is qualified thereunder (the "Trust Indenture Act" provided,
however that in the event that the Trust Indenture Act is amended after such
date, "Trust Indenture Act" means, to the extent required by any such amendment,
the Trust Indenture Act of 1939 as so amended). The Notes are subject to all
such terms, and holders of Notes are referred to the Indenture and the Trust
Indenture Act for a statement of those terms.
The following is a summary of certain provisions of the Indenture and the
Notes, a copy of which Indenture and the form of Note is available upon request
to Bucyrus at the address set forth under "Available Information." The following
summary of certain provisions of the Indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Indenture, including the definitions of certain terms therein,
and those terms made a part thereof by the Trust Indenture Act. Capitalized
terms used herein and not otherwise defined have the meanings set forth under
"-- Certain Definitions."
Principal of and interest on the Notes will be payable, and the Notes may
be exchanged or transferred, at the office or agency of Bucyrus in the Borough
of Manhattan, City of New York, which, unless otherwise provided by Bucyrus,
will be the offices of the Trustee. At the option of Bucyrus, payment of
interest may be made by check mailed to the addresses of holders as such
addresses appear in the Note register.
The Notes are issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000.
TERMS OF THE NOTES
The Existing Notes are, and the Exchange Notes will be, general unsecured
obligations of Bucyrus, limited to $150 million aggregate principal amount, and
will mature on September 15, 2007. The Notes bear interest at the rate per annum
shown on the cover page hereof from the Issue Date, or from the most recent date
to which interest has been paid or provided for, payable semi-annually on March
15 and September 15 of each year, commencing March 15, 1998, to holders of
record at the close of business on the immediately preceding March 1 and
September 1, respectively. Bucyrus will pay interest on overdue principal at 1%
per annum in excess of such rate, and it will pay interest on overdue
installments of interest at such higher rate to the extent lawful. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
GUARANTEES
Each of the existing and future Restricted Subsidiaries other than any
Foreign Subsidiary (the "Guarantors") has irrevocably and unconditionally
Guaranteed (the "Guarantees"), as primary obligors and not merely as sureties,
on an unsecured senior basis the performance and punctual payment when due,
whether at Stated Maturity, by acceleration or otherwise, of all obligations of
Bucyrus under the Indenture and the Notes, whether for payment of principal of
or interest on the Notes, expenses, indemnification or otherwise (all such
obligations guaranteed by the Guarantors being herein called the "Guaranteed
Obligations"). The Guarantors agreed to pay, in addition to the amount stated
above, any and all expenses (including reasonable counsel fees and expenses)
incurred by the Trustee or the Holders in enforcing any rights under the
Guarantees. Each Guarantee is limited in amount to an amount not to exceed the
maximum amount that can be Guaranteed by the applicable Guarantor without
rendering such Guarantee voidable under applicable
74
<PAGE> 81
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally. See "Risk Factors -- Fraudulent
Conveyance Considerations."
Each Guarantee is a continuing guarantee and shall (a) remain in full force
and effect until payment in full of all the Guaranteed Obligations, (b) be
binding upon each Guarantor, and (c) inure to the benefit of and be enforceable
by the Trustee, the holders and their successors, transferees and assigns. A
Guarantee will be released upon the sale (including by merger, consolidation,
combination or otherwise) of all the Capital Stock, or all or substantially all
of the assets, of the applicable Guarantor if such sale is made in compliance
with the Indenture.
RANKING
The Existing Notes are, and the Exchange Notes will be general unsecured
obligations of Bucyrus and rank senior in right of payment to all future
Indebtedness of Bucyrus that is, by its terms, expressly subordinated in right
of payment to the Notes and pari passu in right of payment with all existing and
future unsecured obligations of Bucyrus that are not so subordinated. The
Existing Notes are, and the Exchange Notes will be fully and unconditionally
guaranteed by each domestic Restricted Subsidiary. Each Guarantee is a general
unsecured obligation of the Guarantor thereof and ranks senior in right of
payment to all future Indebtedness of such Guarantor that is, by its terms,
expressly subordinated in right of payment to such Guarantee and pari passu in
right of payment with all existing and future unsecured obligations of such
Guarantor that are not so subordinated.
The Existing Notes and each Guarantee are, and the Exchange Notes will be,
effectively subordinated to secured Indebtedness of Bucyrus and the applicable
Guarantor, respectively to the extent of the assets securing such Indebtedness.
The Bank Credit Facility is secured by substantially all assets of Bucyrus and
certain of its Subsidiaries (including machinery and equipment, inventory and
receivables, other intangibles, and 65% of the stock of Bucyrus' foreign
subsidiaries) other than real property.
The Existing Notes are, and the Exchange Notes will be, effectively
subordinated to all existing and future liabilities, including Indebtedness, of
Bucyrus' foreign subsidiaries. Claims of creditors of such subsidiaries,
including trade creditors, will generally have priority as to the assets of such
subsidiaries over the claims of Bucyrus and the holders of Bucyrus'
Indebtedness, including the Notes.
As of June 30, 1997, on a pro forma basis after giving effect to the
Transactions (as defined) the Company would have had approximately $36.0 million
aggregate principal amount of secured indebtedness, $6.1 million of outstanding
letters of credit, and $47.0 million of undrawn borrowings under the Revolving
Credit Facility. Although the Indenture contains limitations on the amount of
additional Indebtedness that Bucyrus and the Restricted Subsidiaries may incur,
under certain circumstances the amount of such Indebtedness could be
substantial. See "-- Certain Covenants -- Limitation on Incurrence of
Indebtedness."
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, the Notes will not be
redeemable at the option of Bucyrus prior to September 15, 2002. Thereafter, the
Notes will be redeemable, at Bucyrus' option, in whole or in part, at any time
or from time to time, upon not less than 30 nor more than 60 days' prior notice
mailed by first-class mail to each holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest, if any, to the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on an
interest payment date that is on or prior to the date fixed
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<PAGE> 82
for redemption), if redeemed during the 12-month period commencing on September
15 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ ----------
<S> <C>
2002........................................................ 104.875%
2003........................................................ 103.250
2004........................................................ 101.625
2005 and thereafter......................................... 100.000%
</TABLE>
In addition, at any time or from time to time on or prior to September 15,
2000, Bucyrus may redeem Notes with the net cash proceeds of one or more Public
Equity Offerings following which there is a Public Market, at a redemption price
equal to 109.75% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest due on an interest
payment date that is on or prior to the date fixed for redemption); provided,
however, that at least 66% of the original aggregate principal amount of the
Notes must remain outstanding immediately after each such redemption (other than
any Notes owned by Bucyrus or any of its Subsidiaries) and such redemption shall
be effected within 60 days of the consummation of the latest Public Equity
Offering.
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. If any Note is to be redeemed in part only, the notice
of redemption relating to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder shall have the
right to require Bucyrus to purchase all or a portion of such holder's Notes at
a purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of holders of record on the relevant record date to receive interest due
on an interest payment date that is on or prior to the date fixed for
redemption), in accordance with the provisions of the next paragraph.
Within 30 days following any Change of Control, Bucyrus shall mail a notice
to each holder with a copy to the Trustee stating: (1) that a Change of Control
has occurred and that such holder has the right to require Bucyrus to purchase
such holder's Notes at the purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on the relevant record date to
receive interest on an interest payment date that is on or prior to the date
fixed for purchase); (2) the circumstances and relevant facts and relevant
financial information regarding such Change of Control; (3) the purchase date
(which shall be no earlier than 30 days nor later than 60 days from the date
such notice is mailed); and (4) the instructions as determined by Bucyrus,
consistent with the covenant described hereunder, that a holder must follow in
order to have its Notes purchased.
Bucyrus shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to the covenant described
hereunder. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described hereunder,
Bucyrus shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
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<PAGE> 83
The occurrence of a Change of Control would constitute a default under the
Revolving Credit Facility. In addition, Bucyrus' ability to pay cash to the
holders upon a repurchase may be limited by Bucyrus' then existing financial
resources. There can be no assurance that sufficient funds will be available
when necessary to make any repurchases required in connection with a Change of
Control. Bucyrus' failure to purchase the Notes in connection with a Change in
Control would result in a default under the Indenture which would, in turn,
constitute a default under the Revolving Credit Facility.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Existing Notes were and the
Exchange Notes will be issued in the form of one or more global notes
(collectively, the "Global Notes"). The Global Notes is deposited with, or on
behalf of, The Depository Trust Company (the "Depository") and registered in the
name of the Depository or its nominee. Except as set forth below, the Global
Notes may be transferred, in whole and not in part, only to the Depository or
another nominee of the Depository. Investors may hold their beneficial interests
in the Global Notes directly through the Depository if they have an account with
the Depository or indirectly through organizations which have accounts with the
Depository.
Notes that are issued as described below under "-- Certificated Notes" will
be issued in definitive form. Upon the transfer of a Note in definitive form,
such Note will, unless the Global Notes have previously been exchanged for Notes
in definitive form, be exchanged for an interest in the Global Notes
representing the principal amount of Notes being transferred.
The Depository has advised Bucyrus as follows: The Depository is a
limited-purpose trust company and organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and "a clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depository was created to hold securities of institutions that have accounts
with the Depository ("participants") and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depository's participants include securities brokers and dealers (which may
include the Initial Purchasers), banks, trust companies, clearing corporations
and certain other organizations. Access to the Depository's book-entry system is
also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
whether directly or indirectly.
Upon the issuance of the Global Notes, the Depository credited, on its
book-entry registration and transfer system, the principal amount of the Notes
represented by such Global Notes to the accounts of participants. The accounts
to be credited have been designated by the Initial Purchasers of such Notes.
Ownership of beneficial interests in the Global Notes is limited to participants
or persons that may hold interests through participants. Ownership of beneficial
interests in the Global Notes is shown on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depository
(with respect to participants' interest) and such participants (with respect to
the owners of beneficial interests in the Global Notes other than participants).
The laws of some jurisdictions may require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such limits and
laws may impair the ability to transfer or pledge beneficial interests in the
Global Notes.
So long as the Depository, or its nominee, is the registered holder and
owner of the Global Notes, the Depository or such nominee, as the case may be,
will be considered the sole legal owner and holder of the related Notes for all
purposes of such Notes and the Indenture. Except as set forth below, owners of
beneficial interests in the Global Notes will not be entitled to have the Notes
represented by the Global Notes registered in their names, will not receive or
be entitled to receive
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physical delivery of certificated Notes in definitive form and will not be
considered to be the owners or holders of any Notes under the Global Notes.
Bucyrus understands that under existing industry practice, in the event an owner
of a beneficial interest in the Global Notes desires to take any action that the
Depository, as the holder of the Global Notes, is entitled to take, the
Depository would authorize the participants to take such action, and that the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Payment of principal of and interest on Notes represented by the Global
Notes registered in the name of and held by the Depository or its nominee will
be made to the Depository or its nominee, as the case may be, as the registered
owner and holder of the Global Notes.
Bucyrus expects that the Depository or its nominee, upon receipt of any
payment of principal of or interest on the Global Notes, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Notes as
shown on the records of the Depository or its nominee. Bucyrus also expects that
payments by participants to owners of beneficial interests in the Global Notes
held through such participants will be governed by standing instructions and
customary practices and will be the responsibility of such participants. Bucyrus
will not have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests in
the Global Notes for any Note or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests or for any other aspect
of the relationship between the Depository and its participants or the
relationship between such participants and the owners of beneficial interests in
the Global Notes owning through such participants.
Unless and until it is exchanged in whole or in part for certificated Notes
in definitive form, the Global Notes may not be transferred except as a whole by
the Depository to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository.
Although the Depository has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Notes among participants of the
Depository, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Trustee nor Bucyrus will have any responsibility for the performance by the
Depository or its participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
CERTIFICATED NOTES
The Notes represented by the Global Notes are exchangeable for certificated
Notes in definitive form of like tenor as such Notes in denominations of U.S.
$1,000 and integral multiples thereof if (i) the Depository notifies Bucyrus
that it is unwilling or unable to continue as Depository for the Global Notes or
if at any time the Depository ceases to be a clearing agency registered under
the Exchange Act, (ii) Bucyrus in its discretion at any time determines not to
have all of the Notes represented by the Global Notes or (iii) a default
entitling holders of Notes to accelerate the maturity thereof has occurred and
is continuing. Any Note that is exchangeable pursuant to the preceding sentence
is exchangeable for certificated Notes issuable in authorized denominations and
registered in such names as the Depository shall direct. Subject to the
foregoing, the Global Notes are not exchangeable, except for Global Notes of the
same aggregate denomination to be registered in the name of the Depository or
its nominee. In addition, certificates representing Existing Notes bear a legend
as provided in the Private Offering (unless Bucyrus determines otherwise in
accordance with applicable law) subject, with respect to such Notes, to the
provisions of such legend. Holders of certificated Notes may only transfer their
Notes (i) to Bucyrus, or (ii) to a QIB; provided, however, that the agreement of
such holder is subject to any requirement of law that the disposition of such
holder's property shall at all times be and remain within its control.
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CERTAIN COVENANTS
The Indenture contains covenants including, among others, the following:
Limitation on Incurrence of Indebtedness.
(a) Bucyrus shall not, and shall not permit any Restricted Subsidiary
to, Incur, directly or indirectly, any Indebtedness except that Bucyrus or
any Guarantor may Incur Indebtedness if, immediately after giving effect to
such Incurrence, the Consolidated Coverage Ratio exceeds 2.0 to 1.0.
(b) The foregoing paragraph (a) will not prohibit Incurrence of the
following Indebtedness (collectively, "Permitted Indebtedness"):
(1) Indebtedness of Bucyrus or any Restricted Subsidiary Incurred
pursuant to the Bank Credit Facility; provided, however, that, after
giving effect to any such Incurrence, the aggregate principal amount of
such Indebtedness then outstanding does not exceed the greater of (i)
$75.0 million or (ii) the sum of (x) 60% of the net book value of the
inventory of Bucyrus and the Restricted Subsidiaries and (y) 85% of the
net book value of the accounts receivable of Bucyrus and the Restricted
Subsidiaries, in each case determined on a consolidated basis in
accordance with GAAP;
(2) Indebtedness represented by the Notes (and the Guarantees
thereof), and Refinancing Indebtedness thereof;
(3) Indebtedness to the extent outstanding on the Issue Date (other
than Indebtedness described in clause (1) of this paragraph or the AIP
Bridge Loan), and Refinancing Indebtedness thereof;
(4) Indebtedness of Bucyrus owed to and held by any Wholly Owned
Subsidiary or Indebtedness of a Wholly Owned Subsidiary owed to and held
by Bucyrus or another Wholly Owned Subsidiary; provided, however, that
an Incurrence of Indebtedness that is not permitted by this clause (4)
shall be deemed to have occurred upon (a) the transfer or other
disposition of any such Indebtedness to a Person other than Bucyrus or a
Wholly Owned Subsidiary, (b) the sale, lease, transfer or other
disposition of shares of Capital Stock (including by consolidation or
merger) of any Wholly Owned Subsidiary that holds Indebtedness of
Bucyrus or any other Wholly Owned Subsidiary to a Person other than
Bucyrus or another Wholly Owned Subsidiary, or (c) the designation of a
Wholly Owned Subsidiary that holds Indebtedness of Bucyrus or any other
Wholly Owned Subsidiary as an Unrestricted Subsidiary;
(5) Indebtedness of Bucyrus owed to and held by any Guarantor or
Indebtedness of a Guarantor owed to and held by Bucyrus or another
Guarantor; provided, however, that an Incurrence of Indebtedness that is
not permitted by this clause (5) shall be deemed to have occurred upon
(a) the transfer or other disposition of any Indebtedness to a Person
other than Bucyrus or a Guarantor or (b) such Guarantor's ceasing to be
a Guarantor;
(6) Hedging Obligations consisting of Interest Rate Agreements and
Currency Agreements entered into in the ordinary course of business and
not for the purpose of speculation; provided, however, that, in the case
of Currency Agreements and Interest Rate Agreements, such Currency
Agreements and Interest Rate Agreements do not increase the Indebtedness
of Bucyrus outstanding at any time other than as a result of
fluctuations in foreign currency exchange rates or interest rates or by
reason of fees, indemnities and compensation payable thereunder;
(7) Purchase Money Indebtedness and Capital Lease Obligations
Incurred to finance the acquisition or improvement by Bucyrus or a
Restricted Subsidiary of any assets
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(including capital expenditures), and Refinancing Indebtedness thereof,
in an aggregate principal amount not to exceed $10.0 million at any time
outstanding;
(8) Indebtedness of any Foreign Subsidiary Incurred for the working
capital purposes of such Foreign Subsidiary, and Refinancing
Indebtedness thereof, in an aggregate principal amount not to exceed
$15.0 million at any time outstanding;
(9) Indebtedness of Bucyrus or any Restricted Subsidiary
constituting lease payments or guarantees of lease payments or similar
obligations of a customer of Bucyrus or a Restricted Subsidiary in
connection with a Leasing Program, and Refinancing Indebtedness thereof,
in an aggregate principal amount not to exceed $10.0 million at any time
outstanding; and
(10) Indebtedness of Bucyrus or any Restricted Subsidiary in
addition to that described in clauses (1) through (9) above, so long as
the aggregate principal amount of all such Indebtedness incurred
pursuant to this clause (10) does not exceed $10.0 million at any time
outstanding.
(c) Notwithstanding the foregoing, Bucyrus shall not, and shall not
permit any Guarantor to, Incur any Indebtedness that purports to be by its
terms (or by the terms of any agreement or instrument governing such
Indebtedness) subordinated to any other Indebtedness of Bucyrus or of such
Guarantor, as the case may be, unless such Indebtedness is also by its
terms (or by the terms of the agreement or instrument governing such
Indebtedness) made expressly subordinated to the Notes or the Guarantee of
such Guarantor, as applicable, to at least the same extent as such
Indebtedness is subordinated to such other Indebtedness of Bucyrus or such
Guarantor, as applicable.
Limitation on Restricted Payments.
(a) Bucyrus shall not, and shall not permit any Restricted Subsidiary,
directly or indirectly, to declare or make a Restricted Payment if:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) immediately after giving effect to the proposed Restricted
Payment, Bucyrus is not able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant described under
"-- Limitation on Incurrence of Indebtedness" above; or
(3) the aggregate amount of such Restricted Payment together with
all other Restricted Payments (the amount of any payments made in
property other than cash to be valued at the fair market value of such
property, as determined in good faith by the Board of Directors)
declared or made since the Issue Date (other than any Restricted Payment
described in clause (ii), (iii) or (iv) of paragraph (b) below) would
exceed the sum (the "Basket") of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal
quarter immediately following the fiscal quarter during which the
Notes are originally issued to the end of the most recent fiscal
quarter prior to the date of such Restricted Payment for which
financial statements are available (or, in case such Consolidated Net
Income accrued during such period (treated as one accounting period)
shall be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by Bucyrus from the
issuance or sale (other than to a Subsidiary of Bucyrus) of Qualified
Stock subsequent to the Issue Date;
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(C) the principal amount (or accreted value, if less) by which
Indebtedness of Bucyrus or any Restricted Subsidiary is reduced on
Bucyrus' balance sheet upon the conversion or exchange (other than by
a Subsidiary of Bucyrus) subsequent to the Issue Date into Qualified
Stock (less the amount of any cash, or the fair value of any other
property, distributed by Bucyrus or any Restricted Subsidiary upon
such conversion or exchange); and
(D) to the extent not included in the calculation of the
Consolidated Net Income referred to in (A), an amount equal to the
sum of (i) the net reduction in Investments in Unrestricted
Subsidiaries resulting from dividends, repayments of loans or
advances or other transfers of assets subsequent to the Issue Date,
in each case to Bucyrus or any Restricted Subsidiary from
Unrestricted Subsidiaries, and (ii) the portion (proportionate to
Bucyrus' equity interest in such Subsidiary) of the fair market value
of the net assets of an Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is redesignated a Restricted Subsidiary;
provided, however, that the foregoing sum shall not exceed, in the
case of any Unrestricted Subsidiary, the amount of Investments
previously made (and treated as a Restricted Payment) by Bucyrus or
any Restricted Subsidiary in such Unrestricted Subsidiary;
provided, however, that the AIP Equity Contribution shall not increase the
Basket.
(b) The provisions of the foregoing paragraph (a) shall not prohibit
the following actions: (i) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would have
been permitted under the Indenture; (ii) any repurchase, redemption,
retirement or other acquisition of Capital Stock or Subordinated
Obligations of Bucyrus made in exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary of Bucyrus) of,
Qualified Stock or, with respect to any such Subordinated Obligations, in
exchange for or out of the proceeds of the substantially concurrent sale
(other than to a Subsidiary of Bucyrus) of other Subordinated Obligations
of Bucyrus; provided, however, that such exchange or sale shall not
increase the Basket; (iii) any repurchase, redemption, retirement or other
acquisition of Capital Stock of Bucyrus held by officers, directors and
employees of Bucyrus or any Restricted Subsidiary upon such persons' death,
retirement or other termination of employment or directorship, as the case
may be; provided, however, that the aggregate amount of Restricted Payments
pursuant to this clause (iii) shall not exceed $5.0 million; and (iv)
Restricted Payments not to exceed $5.0 million in the aggregate since the
Issue Date; provided, however, that in the case of clauses (ii), (iii) and
(iv), no Default shall have occurred and be continuing or would arise
therefrom.
Limitation on Liens. Bucyrus shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, Incur or permit to exist any Lien (other
than Permitted Liens) of any nature whatsoever on any property of Bucyrus or any
Restricted Subsidiary (including Capital Stock of a Restricted Subsidiary),
whether owned at the Issue Date or thereafter acquired, or any income or profits
therefrom or assign or convey any right to receive income therefrom, unless the
Notes and the Guarantees are secured on an equal and ratable basis with the
obligations so secured until such time as such obligations are no longer secured
by a Lien (and if the obligations so secured are subordinated to the Notes and
the Guarantees, the Lien securing such obligations are also so subordinated at
least to the same extent).
Limitation on Transactions with Affiliates.
(a) Bucyrus shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into or permit to exist any transaction
or series of related transactions (including, without limitation, the
purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with any Affiliate of Bucyrus
(an "Affiliate Transaction") unless the terms thereof (1) are no less
favorable to Bucyrus or such
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Restricted Subsidiary than those that could be obtained at the time of such
transaction in arm's-length dealings with a Person who is not such an
Affiliate, (2) if such Affiliate Transaction involves aggregate value in
excess of $1.0 million in any one year, (i) are set forth in writing, (ii)
comply with clause (1), and (iii) have been approved by a majority of the
Independent Directors, and (3) if such Affiliate Transaction involves
aggregate value in excess of $5.0 million in any one year, (i) comply with
clause (2), and (ii) have been determined by a nationally recognized
investment banking, appraisal, valuation or accounting firm to be fair,
from a financial standpoint, to Bucyrus and the Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not prohibit
(i) any Restricted Payment permitted to be made pursuant to the covenant
described under "-- Limitation on Restricted Payments," (ii) any issuance
of securities or other payments, awards or grants in cash, securities or
otherwise, pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans in the ordinary course of business (as
determined in good faith by the Board of Directors) and approved by the
Board of Directors, (iii) the grant of stock options or similar rights to
employees and directors of Bucyrus in the ordinary course of business (as
determined in good faith by the Board of Directors) and pursuant to plans
approved by the Board of Directors, (iv) loans or advances to employees in
the ordinary course of business of Bucyrus and the Restricted Subsidiaries,
(v) fees, compensation or employee benefit arrangements paid to and
indemnity provided for the benefit of directors, officers or employees of
Bucyrus or any Subsidiary in the ordinary course of business, (vi) any
transaction solely between or among Bucyrus and/or one or more Guarantors
and/or Wholly Owned Subsidiaries, (vii) performance or discharge by Bucyrus
of its obligations under agreements as in effect on the Issue Date, (viii)
repayment of the AIP Bridge Loan upon consummation of the AIP Merger or
(ix) payment of $4.0 million to AIP in connection with the AIP Merger or
payment of fees to AIP pursuant to the Management Agreement in an amount
not to exceed $1.5 million per year.
Limitation on Sales of Assets and Subsidiary Stock. Bucyrus shall not, and
shall not permit any Restricted Subsidiary to, consummate any Asset Disposition
unless (i) Bucyrus or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Disposition at least equal to the fair
market value (including as to the value of all non-cash consideration), as
determined in good faith by the Board of Directors, of the assets or other
property subject to such Asset Disposition, and (ii) at least 75% of the
consideration therefor received by Bucyrus or such Restricted Subsidiary is in
the form of cash or Temporary Cash Investments. For the purposes of this
covenant, the following are deemed to be cash: (x) amount of any liabilities
(other than liabilities that are subordinated to any other Indebtedness of
Bucyrus or such Restricted Subsidiary, as the case may be) of Bucyrus or such
Restricted Subsidiary (as shown on Bucyrus' or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto) that are assumed by the transferee
of any such assets or other property in such Asset Disposition, but only to the
extent that such assumption is effected on a basis under which there is no
further recourse to Bucyrus or any Restricted Subsidiary with respect to such
liabilities and (y) securities received by Bucyrus or any Restricted Subsidiary
from the transferee that are immediately converted by Bucyrus or such Restricted
Subsidiary into cash.
With respect to any Asset Disposition occurring on or after the Issue Date
from which Bucyrus or any Restricted Subsidiary receives Net Available Cash,
Bucyrus or such Restricted Subsidiary may within 270 days after the date such
Net Available Cash is received: (i) apply an amount equal to such Net Available
Cash to permanently prepay, repay or purchase Indebtedness under the Bank Credit
Facility; or (ii) invest an equal amount, or the amount not so applied pursuant
to clause (i), in Additional Assets (including by means of an Investment in
Additional Assets by a Restricted Subsidiary with Net Available Cash received by
Bucyrus or another Restricted Subsidiary). The amount of Net Available Cash not
applied pursuant to clause (ii) above shall constitute "Excess
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Proceeds." Pending application of Net Available Cash pursuant to this provision,
such Net Available Cash shall be invested in Temporary Cash Investments.
If at any time the aggregate amount of Excess Proceeds not theretofore
subject to an Excess Proceeds Offer (as defined below) totals at least $5.0
million, Bucyrus shall, not later than 10 business days after the end of the
period during which Bucyrus is required to apply such Excess Proceeds pursuant
to clause (i) of the immediately preceding paragraph (or, if Bucyrus so elects,
at any time within such period), make an offer (an "Excess Proceeds Offer") to
purchase from the holders of Notes and Other Qualified Notes (determined on a
pro rata basis according to the accreted value or principal amount, as the case
may be, of the Notes and the Other Qualified Notes) that may be purchased out of
the Excess Proceeds (rounded down to the nearest multiple of $1,000) on such
date, at a purchase price (x) in the case of the Notes, equal to 100% of the
principal amount of such Notes, plus accrued and unpaid interest, if any, to the
date of purchase and (y) in the case of each issue of Other Qualified Notes,
based on the terms set forth in the indenture related to such issue. Upon
completion of an Excess Proceeds Offer the amount of Excess Proceeds remaining
after application pursuant to such Excess Proceeds Offer (including payment of
the purchase price for Notes and Other Qualified Notes duly tendered) may be
used by Bucyrus for any corporate purpose (to the extent not otherwise
prohibited by the Indenture).
Bucyrus shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
thereunder in the event that such Excess Proceeds are received by Bucyrus under
the covenant described hereunder and Bucyrus is required to repurchase Notes as
described above. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described hereunder,
Bucyrus shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
Limitation on Dividend and Other Restrictions Affecting Restricted
Subsidiaries. Bucyrus shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or consensual restriction on the
ability of any Restricted Subsidiary (i) to pay dividends or make any other
distributions on its Capital Stock to Bucyrus or any other Restricted Subsidiary
or pay any Indebtedness owed to Bucyrus or any other Restricted Subsidiary, (ii)
to make any loans or advances to, or guarantee any Indebtedness of, Bucyrus or
any other Restricted Subsidiary, or (iii) transfer any of its property or assets
to Bucyrus or any other Restricted Subsidiary, except: (A) any encumbrance or
restriction pursuant to an agreement in effect at or entered into on the Issue
Date (including, without limitation, the Bank Credit Facility), as such
encumbrance or restriction is in effect on the Issue Date; (B) any encumbrance
or restriction with respect to a Restricted Subsidiary pursuant to an agreement
relating to any Indebtedness Incurred by such Restricted Subsidiary which was
entered into on or prior to the date on which such Restricted Subsidiary was
acquired by Bucyrus (other than as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was acquired by Bucyrus) and outstanding on
such date; (C) any encumbrance or restriction pursuant to an agreement effecting
a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in
clause (A) or (B) of this covenant (or effecting a Refinancing of such
Refinancing Indebtedness pursuant to this clause (C)) or contained in any
amendment to an agreement referred to in clause (A) or (B) of this covenant or
this clause (C); provided, however, that the encumbrances and restrictions with
respect to such Restricted Subsidiary contained in any such refinancing
agreement or amendment are no more restrictive in any material respect than the
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in such agreements; (D) any such encumbrance or restriction consisting
of customary non-assignment provisions in leases governing leasehold interests
to the extent such provisions restrict the transfer of the lease or the property
leased thereunder; (E) restrictions contained in security agreements or
mortgages on property acquired in the ordinary
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course of business to the extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages; (F) any restriction
with respect to a Restricted Subsidiary imposed pursuant to an agreement entered
into for the sale or disposition of the Capital Stock or assets of such
Restricted Subsidiary; provided, however, that such restriction is applicable
only to such Capital Stock or assets, as applicable, and such sale or
disposition otherwise is permitted under the covenant described under "--
Limitation on Sales of Assets and Subsidiary Stock" and (G) any restriction
imposed by applicable law.
Limitation on the Issuance or Sale of Capital Stock of Wholly Owned
Subsidiaries. Bucyrus (i) will not, and will not permit any Wholly Owned
Subsidiary (other than any Guarantor) to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary (other
than any Guarantor) to any Person (other than Bucyrus or another Wholly Owned
Subsidiary), unless (a) such transfer, conveyance, sale, lease or other
disposition consists of all of the Capital Stock of such Wholly Owned Subsidiary
and (b) the net cash proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with the covenant described above
under "Limitation on Sales of Assets and Subsidiary Stock," and (ii) will not
permit any Wholly Owned Subsidiary to issue any Capital Stock (other than, if
necessary, shares constituting directors' qualifying shares) to any Person other
than to Bucyrus or another Wholly Owned Subsidiary.
Limitation on Sale and Leaseback Transactions. Bucyrus will not, and will
not permit any Restricted Subsidiary to, enter into any Sale and Leaseback
Transaction; provided, however, that Bucyrus may enter into a Sale and Leaseback
Transaction if (i) Bucyrus could have (a) Incurred Indebtedness in an amount
equal to the Attributable Debt relating to such Sale and Leaseback Transaction
pursuant to the covenant described under "-- Limitation on Incurrence of
Indebtedness," and (b) Incurred a Lien to secure such Indebtedness pursuant to
the covenant described under "-- Limitation on Liens," (ii) the gross cash
proceeds of such Sale and Leaseback Transaction are at least equal to the fair
market value (as determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee) of the property that
is the subject of such Sale and Leaseback Transaction and (iii) the transfer of
assets in such Sale and Leaseback Transaction is permitted by, and Bucyrus
applies the proceeds of such transaction in compliance with, the covenant
described under "-- Limitation on Sales of Assets and Subsidiary Stock."
Merger, Consolidation and Sale of Assets. Bucyrus shall not consolidate
with or merge with or into, or convey, transfer or lease, in one transaction or
a series of transactions, all or substantially all its assets to, any Person,
unless: (i) the resulting, surviving or transferee Person (the "Successor
Company"), whether or not Bucyrus, shall be a Person organized and existing
under the laws of the United States of America, any State thereof or the
District of Columbia and the Successor Company (if not Bucyrus) shall expressly
assume, by an indenture supplemental thereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of Bucyrus
under the Notes, the Indenture and the Registration Agreement; (ii) immediately
after giving effect to such transaction (and treating any Indebtedness which
becomes an obligation of the Successor Company or any Subsidiary as a result of
such transaction as having been Incurred by such Successor Company or such
Subsidiary at the time of such transaction), no Default shall have occurred and
be continuing; (iii) except in the case of a merger the sole purpose of which is
to change Bucyrus' jurisdiction of incorporation, immediately after giving
effect to such transaction, the Successor Company would be able to Incur an
additional $1.00 of Indebtedness pursuant to paragraph (a) of the covenant
described under "-- Limitation on Incurrence of Indebtedness" (treating the
Successor Company as Bucyrus); (iv) immediately after giving effect to such
transaction, the Successor Company shall have Consolidated Net Worth in an
amount that is not less than the Consolidated Net Worth of Bucyrus immediately
prior to such transaction; and (v) Bucyrus shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture.
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Notwithstanding the foregoing clauses (ii), (iii) and (iv), any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to Bucyrus.
The Successor Company shall be the successor to Bucyrus and shall succeed
to, and be substituted for, and may exercise every right and power of, Bucyrus
under the Indenture, but the predecessor Company in the case of a conveyance,
transfer or lease shall not be released from the obligation to pay the principal
of and interest on the Notes.
SEC Reports. Whether or not Bucyrus is then subject to Section 13(a) or
15(d) of the Exchange Act, Bucyrus shall file with the Commission, so long as
the Notes are outstanding, the annual reports, quarterly reports and other
periodic reports that Bucyrus would be required to file with the Commission
pursuant to Section 13(a) or 15(d) if Bucyrus were so subject, and such
documents shall be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which Bucyrus would be required so to file such
documents if Bucyrus were so subject, unless, in any case, such filing is not
then permitted by the Commission. Bucyrus will also in any event (i) within 15
days of each Required Filing Date, (a) transmit by mail to holders of Notes, as
their names and addresses appear in the Note register, without cost to such
holders, and (b) file with the Trustees copies of the annual reports, quarterly
reports and other periodic reports that Bucyrus would be required to file with
the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if Bucyrus
were subject to such Section 13(a) or 15(d), and (ii) if such filing with
Commission is not then permitted by the Commission promptly upon written
request, supply copies of such documents to any prospective holder at Bucyrus'
cost.
EVENTS OF DEFAULT
Any of the following shall constitute an Event of Default:
(i) default for 30 days in the payment when due of interest on any
Note;
(ii) default in the payment when due of principal on any Note, whether
upon maturity, acceleration, optional redemption, required repurchase or
otherwise;
(iii) failure to perform or comply with any covenant, agreement or
warranty in the Indenture (other than any specified in clause (i) or (ii)
above) which failure continues for 30 days after written notice thereof has
been given to Bucyrus by the Trustee or to Bucyrus and the Trustee by the
holders of at least 25% in aggregate principal amount of the then
outstanding Notes;
(iv) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Bucyrus or any Restricted Subsidiary
whether such Indebtedness now exists, or is created after the Issue Date,
which default (x)(a) is caused by a failure to pay such Indebtedness at
Stated Maturity (giving effect to any grace period related thereto) (a
"Payment Default") or (b) results in the acceleration of such Indebtedness
prior to its stated maturity and (y) in each case, the principal amount of
any such Indebtedness as to which a Payment Default or acceleration shall
have occurred, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10.0 million or more;
(v) one or more judgments, orders or decrees for the payment of money
of $10.0 million or more, individually or in the aggregate, shall be
entered against Bucyrus or any Restricted Subsidiary or any of their
respective properties and which judgments, orders or decrees are not paid,
discharged, bonded or stayed within 60 days after their entry;
(vi) certain events of bankruptcy, dissolution, insolvency,
reorganization, administration or similar proceedings with respect to
Bucyrus, any Significant Restricted Subsidiary or any group of Restricted
Subsidiaries that together would constitute a Significant Restricted
Subsidiary; or
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(vii) any Guarantee ceases to be in full force and effect (other than
in accordance with its terms or the Indenture) or any Guarantor denies or
disaffirms its obligations under its Guarantee.
If an Event of Default occurs and is continuing (other than an Event of
Default described in clause (vi) above with respect to Bucyrus), the Trustee or
the holders of at least 25% in principal amount of the outstanding Notes may
declare the principal of and accrued but unpaid interest on all the Notes to be
due and payable. Upon such a declaration, such principal and interest shall be
due and payable immediately. If an Event of Default described in clause (vi)
above occurs with respect to Bucyrus, the principal of and interest on all the
Notes will ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders of the Notes.
Under certain circumstances, the Holders of a majority in principal amount of
the outstanding Notes may rescind any such acceleration with respect to the
Notes and its consequences.
Except to enforce the right to receive payment of principal or interest
when due, no holder may pursue any remedy with respect to the Indenture or the
Notes unless (i) such holder has previously given the Trustee notice that an
Event of Default is continuing, (ii) holders of at least 25% in principal amount
of the outstanding Notes have requested the Trustee to pursue the remedy, (iii)
such holders have offered the Trustee reasonable security or indemnity against
any loss, liability or expense, (iv) the Trustee has not complied with such
request within 60 days after the receipt thereof and the offer of security or
indemnity and (v) the holders of a majority in principal amount of the
outstanding Notes have not given the Trustee a direction inconsistent with such
request within such 60-day period. Subject to certain restrictions, the holders
of a majority in principal amount of the outstanding Notes are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other holder or that would involve the Trustee in personal
liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the Default
within 90 days after it occurs. Notwithstanding the foregoing, except in the
case of a Default in the payment of principal of or interest on any Note, the
Trustee may withhold notice if and so long as a committee of its trust officers
determines that withholding notice is in the interest of the holders. In
addition, Bucyrus is required to deliver to the Trustee, within 120 days after
the end of each fiscal year, a certificate indicating whether the signers
thereof know of any Default that occurred during the previous year. Bucyrus also
is required to deliver to the Trustee, within 30 days after the occurrence
thereof, written notice of any event which would constitute certain Defaults,
their status and what action Bucyrus is taking or proposes to take in respect
thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the holders of a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange for the Notes) and any past default or compliance with any provisions
may also be waived with the consent of the holders of a majority in principal
amount of the Notes then outstanding. However, without the consent of each
holder of an outstanding Note affected thereby, no amendment may, among other
things, (i) reduce the principal amount of Notes whose holders must consent to
an amendment, supplement or waiver; (ii) reduce the principal of or change the
fixed maturity of any Note, or alter the provisions with respect to the
redemption or repurchase provisions of any Note or the Indenture in a manner
adverse to the holders of the Notes (other than the provisions of the Indenture
relating to any offer to purchase required under the covenants described under
"-- Certain Covenants -- Limitation on Sales of Assets and Subsidiary Stock" or
"-- Change of Control"); (iii) reduce the rate of or change the time for payment
of interest on any Note; (iv) waive a Default in the payment of principal or
interest on, the Notes
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(except that holders of at least a majority in aggregate principal amount of the
then outstanding Notes may (x) rescind an acceleration of the Notes that
resulted from a non-payment default and (y) waive the payment default that
resulted from such acceleration); (v) make any Note payable in money other than
that stated in the Notes; (vi) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of holders of Notes
to receive payments of principal of or interest on, the Notes; (vii) waive a
redemption payment with respect to any Note; (viii) release any Guarantor from
its Guarantee except in compliance with the Indenture or (ix) make any change in
the foregoing amendment and waiver provisions; provided, further, however, that
no such modification or amendment may, without the consent of the holders of
two-thirds of the aggregate principal amount of Notes affected thereby, modify
any of the provisions (including the definitions thereto) relating to the
covenant described under "-- Change of Control" in a manner materially adverse
to the holders.
Without the consent of any holder, Bucyrus and Trustee may amend the
Indenture to cure any ambiguity, defect or inconsistency, to provide for the
assumption by a successor corporation of the obligations of Bucyrus under the
Indenture in the event of any transaction in compliance with the covenant
described under "-- Certain Covenants -- Merger, Consolidation and Sale of
Assets" in which Bucyrus is not the Surviving Person, to provide for
uncertificated Notes in addition to or in place of certificated Notes (provided
that the uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the uncertificated Notes
are as described in Section 163(f)(2)(B) of the Code), to add Guarantees with
respect to the Notes, to release Guarantors when permitted by the Indenture, to
secure the Notes, to add to the covenants of Bucyrus for the benefit of the
holders or to surrender any right or power conferred upon Bucyrus, to make any
change that does not adversely affect the rights of any holder or to comply with
any requirement of the SEC in connection with the qualification of the Indenture
under the Trust Indenture Act.
The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, Bucyrus is
required to mail to holders a notice briefly describing such amendment. However,
the failure to give such notice to all holders, or any defect therein, will not
impair or affect the validity of the amendment.
TRANSFER
Notes are issued in registered form and are transferable only upon the
surrender of the Notes being transferred for registration of transfer. No
service charge will be made for any registration of transfer or exchange of
Notes, but Bucyrus may require payment of a sum sufficient to cover any transfer
tax or other similar governmental charge payable in connection therewith.
DISCHARGE OF INDENTURE AND DEFEASANCE
When (i) Bucyrus delivers to the Trustee all outstanding Notes (other than
Notes replaced because of mutilation, loss, destruction or wrongful taking) for
cancellation or (ii) all outstanding Notes have become due and payable, whether
at maturity or as a result of the mailing of a notice of redemption as described
above, and Bucyrus irrevocably deposits with the Trustee funds sufficient to pay
at maturity or upon redemption all outstanding Notes, including interest
thereon, and if in either case Bucyrus pays all other sums payable hereunder by
Bucyrus, then the Indenture shall, subject to certain surviving provisions,
cease to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of the Indenture on demand of Bucyrus accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of Bucyrus.
Subject to the conditions to defeasance described below and in the
Indenture and the survival of certain provisions, Bucyrus at any time may
terminate (i) all its obligations under the Notes and the
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Indenture ("legal defeasance option") or (ii) its obligations under certain
restrictive covenants and the related Events of Default ("covenant defeasance
option"). Bucyrus may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option.
If Bucyrus exercises its legal defeasance option, payment of the Notes may
not be accelerated because of an Event of Default. If Bucyrus exercises its
covenant defeasance option, payment of the Notes may not be accelerated because
of an Event of Default referred to in clause (ii) of the immediately preceding
paragraph.
In order to exercise either defeasance option, Bucyrus must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the Notes to
redemption or maturity, as the case may be, and must comply with certain other
conditions, including delivery to the Trustee of an Opinion of Counsel to the
effect that holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and will
be subject to Federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or change in
applicable Federal income tax law).
CONCERNING THE TRUSTEE
Harris Trust and Savings Bank is the Trustee under the Indenture and has
been appointed by Bucyrus as Registrar and Paying Agent with regard to the
Notes.
The holders of a majority in principal amount of the outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that if an Event of Default occurs (and is
not cured), the Trustee will be required, in the exercise of its power, to use
the degree of care of a prudent person in the conduct of such person's own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of Notes, unless such holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense and then
only to the extent required by the terms of the Indenture.
GOVERNING LAW
The Indenture provides that it and the Notes are to be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; or (ii) the Capital Stock
of a Person that becomes a Restricted Subsidiary as a result of the acquisition
(including by merger, consolidation, combination or otherwise) of such Capital
Stock by Bucyrus or another Restricted Subsidiary; provided, however, that any
such Restricted Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under "-- Certain Covenants -- Limitation
on Restricted Payments," "-- Certain Covenants --
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Limitation on Affiliate Transactions" and "-- Certain Covenants -- Limitations
on Sales of Assets and Subsidiary Stock" only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of Bucyrus or of rights or
warrants to purchase such Capital Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
"AIP Bridge Loan" means the loan to BAC from AIP the proceeds of which were
used by BAC to purchase shares of Common Stock of Bucyrus in the AIP Tender
Offer.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by Bucyrus or
any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of (i) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares and, to the
extent required by local ownership laws in foreign countries, shares owned by
foreign shareholders), (ii) all or substantially all the assets of any division,
business segment or comparable line of business of Bucyrus or any Restricted
Subsidiary or (iii) any other assets of Bucyrus or any Restricted Subsidiary
outside of the ordinary course of business of Bucyrus or such Restricted
Subsidiary. Notwithstanding the foregoing, the term "Asset Disposition" shall
not include (x) a disposition by a Restricted Subsidiary to Bucyrus or by
Bucyrus or a Restricted Subsidiary to a Wholly Owned Subsidiary, (y) for
purposes of the covenant described under "-- Certain Covenants -- Limitation on
Sales of Assets and Subsidiary Stock," a disposition (a) that constitutes a
Permitted Investment or a Restricted Payment permitted by the covenant described
under "-- Certain Covenants -- Limitation on Restricted Payments" or (b)
consummated in compliance with "-- Certain Covenants -- Merger, Consolidation
and Sale of Assets" and (z) a disposition of assets having a fair market value
and a sale price of less than $500,000.
"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Notes, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale and Leaseback Transaction (including any period for which such lease
has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Bank Credit Facility" means the Credit Agreement dated as of September 24,
1997 among Bucyrus, Bank One, Wisconsin, and the other lenders named therein, as
the same may be amended, supplemented, amended and restated, extended or
Refinanced from time to time, including pursuant to term loan and revolving
credit facilities (except to the extent that any such amendment, supplement,
amendment and restatement, extension or Refinancing would be prohibited by the
terms of the Indenture), including (i) any related notes, letters of credit,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as refinanced from time to time, and (ii)
any notes, guarantees, collateral documents, instruments and agreements executed
in connection with any such refinancing.
"Basket" has the meaning set forth under "-- Certain
Covenants -- Limitation on Restricted Payments."
"Board of Directors" means the Board of Directors of Bucyrus or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
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"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP. The amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following events:
(i) prior to a Public Equity Offering after the Issue Date after which
there is a Public Market, the Permitted Holders cease to own, or to have
the power to vote or direct the voting of, Voting Stock representing a
majority of the voting power of the total outstanding Voting Stock of
Bucyrus;
(ii) following a Public Equity Offering after the Issue Date after
which there is a Public Market, any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other than one or
more Permitted Holders, is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of
this clause such person or group shall be deemed to have "beneficial
ownership" of all securities that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of Voting Stock representing more
than 35% of the voting power of the total outstanding Voting Stock of
Bucyrus; provided, however, that such event shall not be deemed to be a
Change of Control so long as the Permitted Holders own Voting Stock
representing in the aggregate a greater percentage of the total voting
power of the Voting Stock of Bucyrus than such other person or group;
(iii) following a Public Equity Offering after the Issue Date after
which there is a Public Market, during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election to such Board of
Directors or whose nomination for election by the shareholders of Bucyrus
was approved by a vote of 66 2/3% of the directors of Bucyrus then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in
office; or
(iv) the merger or consolidation of Bucyrus with or into another
Person or the merger of another Person with or into Bucyrus, or the sale of
all or substantially all the assets of Bucyrus and the Restricted
Subsidiaries, taken as a whole, to another Person (other than a Person that
is controlled by the Permitted Holders), and, in the case of any such
merger or consolidation, the securities of Bucyrus that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of Bucyrus are changed into or
exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in addition
to any other consideration, securities of the surviving corporation that
represent immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" or "SEC" means the Securities and Exchange Commission.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters for
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which financial statements are available to (ii) Consolidated Fixed Charges for
such four fiscal quarters; provided, however, that (1) if Bucyrus or any
Restricted Subsidiary has Incurred any Indebtedness since the beginning of such
period that remains outstanding on such date of determination or if the
transaction giving rise to the need to calculate the Consolidated Coverage Ratio
is an Incurrence of Indebtedness, or both, EBITDA and Consolidated Fixed Charges
for such period shall be calculated after giving effect on a pro forma basis to
such Indebtedness as if such Indebtedness had been Incurred on the first day of
such period and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period (except that, in
the case of Indebtedness used to finance working capital needs incurred under a
revolving credit or similar arrangement, the amount thereof shall be deemed to
be the average daily balance of such Indebtedness during such
four-fiscal-quarter period), (2) if since the beginning of such period Bucyrus
or any Restricted Subsidiary shall have made any Asset Disposition, the EBITDA
for such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to the EBITDA (if
negative) directly attributable thereto for such period, and Consolidated Fixed
Charges for such period shall be reduced by an amount equal to the Consolidated
Fixed Charges directly attributable to any Indebtedness of Bucyrus or any
Restricted Subsidiary repaid, repurchased, defeased, assumed by a third person
(to the extent Bucyrus and its Restricted Subsidiaries are no longer liable for
such Indebtedness) or otherwise discharged with respect to Bucyrus and its
continuing Restricted Subsidiaries in connection with such Asset Disposition for
such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Fixed Charges for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent Bucyrus and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (3) if since the beginning of such period Bucyrus shall have
consummated a Public Equity Offering following which there is a Public Market,
Consolidated Fixed Charges for such period shall be reduced by an amount equal
to the Consolidated Fixed Charges directly attributable to any Indebtedness of
Bucyrus or any Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to Bucyrus and its Restricted Subsidiaries in connection
with such Public Equity Offering for such period, (4) if since the beginning of
such period Bucyrus or any Restricted Subsidiary (by merger or otherwise) shall
have made an Investment in any Restricted Subsidiary (or any Person which
becomes a Restricted Subsidiary) or an acquisition of assets, which acquisition
constitutes all or substantially all of an operating unit of a business,
including any such Investment or acquisition occurring in connection with a
transaction requiring a calculation to be made hereunder, EBITDA and
Consolidated Fixed Charges for such period shall be calculated after giving pro
forma effect thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period and (5) if
since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary or was merged with or into Bucyrus or any Restricted
Subsidiary since the beginning of such period) shall have made any Asset
Disposition, any Investment or acquisition of assets that would have required an
adjustment pursuant to clause (3) or (4) above if made by Bucyrus or a
Restricted Subsidiary during such period, EBITDA and Consolidated Fixed Charges
for such period shall be calculated after giving pro forma effect thereto as if
such Asset Disposition, Investment or acquisition occurred on the first day of
such period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income, earnings or expense
relating thereto and the amount of Consolidated Fixed Charges associated with
any Indebtedness Incurred in connection therewith, the pro forma calculations
shall be prepared in accordance with Article II of Regulation S-X promulgated by
the Commission as determined in good faith by a responsible financial or
accounting Officer of Bucyrus. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest of such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period (taking into account any Interest
Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement
has a remaining term in excess of 12 months).
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"Consolidated Fixed Charges" means, with respect to any period, the sum
(without duplication) of (i) the interest expense of Bucyrus and the Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP consistently applied, including, without limitation, (a) amortization
of debt discount, (b) the net payments, if any, under interest rate contracts
(including amortization of discounts), (c) the interest portion of any deferred
payment obligation and (d) accrued interest, plus (ii) the interest component of
the Capital Lease Obligations paid or accrued during such period, plus (iii) all
interest capitalized during such period, plus (iv) all dividends on Preferred
Stock (other than to Bucyrus or a Wholly Owned Subsidiary) paid, accrued,
declared or accumulated during such period.
"Consolidated Net Income (Loss)" means, for any period, the net income (or
loss) of Bucyrus and the Restricted Subsidiaries for such period, determined on
a consolidated basis in accordance with GAAP consistently applied; provided,
however, that there shall not be included in such Consolidated Net Income: (i)
any extraordinary gains (but not, other than for purposes of calculating the
Basket, losses) (less all fees and expenses relating thereto); (ii) any net
income or loss of any Person if such Person is not a Restricted Subsidiary,
except that, subject to the exclusion contained in clause (iv) below, the equity
of Bucyrus or any Restricted Subsidiary in the net income of any such Person for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Person during such period
to Bucyrus or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution paid to a Restricted
Subsidiary, to the limitations contained in clause (iv) below); (iii) any net
income (or loss) of any Person acquired by Bucyrus or a Subsidiary in a pooling
of interests transaction for any period prior to the date of such acquisition;
(iv) the net income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income to Bucyrus is not at the time permitted, directly or indirectly,
without prior approval (that has not been obtained), pursuant to the terms of
its charter or any agreement, instrument and governmental regulation applicable
to such Restricted Subsidiary or its stockholders; (v) gain (but not loss) (less
all fees and expenses relating thereto) realized upon the sale or other
disposition of (x) any assets (including pursuant to Sale and Leaseback
Transactions) which is not sold or otherwise disposed of in the ordinary course
of business or (y) any Capital Stock of any Person; and (vi) the cumulative
effect of a change in accounting principles.
"Consolidated Net Worth" means with respect to any Person on any date, the
equity of the common and preferred stockholders of such Person and its
Restricted Subsidiaries as of such date, determined on a consolidated basis in
accordance with GAAP consistently applied, less any amount attributable to
Unrestricted Subsidiaries.
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement to which
such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event (i) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
or (ii) is redeemable at the option of the holder thereof, in whole or in part,
in each case on or prior to the date that is one year after the Maturity Date.
"EBITDA" for any period means the sum of Consolidated Net Income for such
period plus, without duplication, the following to the extent deducted in
calculating such Consolidated Net Income: (i) Consolidated Fixed Charges, (ii)
all income tax expense of Bucyrus, (iii) depreciation expense, (iv) amortization
expense, (v) all other non-cash items reducing such Consolidated Net Income
(excluding (x) any non-cash item to the extent it represents an accrual of, or
reserve for, cash disbursements to be made in any subsequent period and (y) the
amount attributable to
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minority interests) less all non-cash items increasing Consolidated Net Income,
and (vi) payments to purchase, redeem or otherwise acquire or retire for value
Capital Stock of Bucyrus in connection with the AIP Merger pursuant to the AIP
Agreement, in each case for such period. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation and
amortization of, a Subsidiary of Bucyrus shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that
the net income of such Subsidiary was included in calculating Consolidated Net
Income and only if a corresponding amount would be permitted at the date of
determination to be dividended or otherwise distributed to Bucyrus by such
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments and governmental
regulations applicable to such Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Subsidiary" means a Restricted Subsidiary that is incorporated in
a jurisdiction other than the United States or a state thereof or the District
of Columbia and with respect to which more than 80% of any of its sales,
earnings or assets (determined on a consolidated basis in accordance with GAAP)
are located in, generated from or derived from operations located in territories
outside the United States of America and jurisdictions outside the United States
of America.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in (i)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board and (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession.
"guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
"guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "guarantee" used as a verb has a
corresponding meaning. The term "guarantor" shall mean any Person guaranteeing
any obligation.
"Guarantor" means each Restricted Subsidiary designated as such on the
signature pages of the Indenture and any other Restricted Subsidiary that has
issued a guarantee of the Notes, in each case, until such Restricted Subsidiary
is released from its Guarantee.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" means issue, create, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary; provided, further, however, that
in the case of a discount security, neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness. The term "Incurrence" when used as a noun shall have a correlative
meaning.
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"Indebtedness" means, with respect to any Person, without duplication, and
whether or not contingent, (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services or which is
evidenced by a note, bond, debenture or similar instrument, to the extent it
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, (ii) all Capital Lease Obligations of such Person, (iii)
all obligations of such Person in respect of letters of credit or bankers'
acceptances issued or created for the account of such Person, (iv) all
obligations of such Person under Interest Rate Agreements or Currency
Agreements, (v) all Disqualified Stock issued by such Person and all preferred
stock issued by any Subsidiary of such Person, in each case, valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends thereon, and (vi) to the extent not otherwise
included, any Guarantee by such Person of any other Person's indebtedness or
other obligations described in clauses (i) through (vi) above. "Indebtedness" of
Bucyrus and the Restricted Subsidiaries shall not include current trade payables
incurred in the ordinary course of business and payable in accordance with
customary practices, and non-interest bearing installment obligations and
accrued liabilities incurred in the ordinary course of business. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Stock which
does not have a fixed repurchase price shall be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to the Indenture, and if such price is based upon, or measured by the
fair market value of, such Disqualified Stock, such fair market value is to be
determined in good faith by the board of directors of the issuer of such
Disqualified Stock. The amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations as
described above at such date; provided, however, that the amount outstanding at
any time of any Indebtedness issued with original issue discount shall be deemed
to be the face amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP.
"Independent Director" means a director of Bucyrus other than a director
(i) who (apart from being a director of Bucyrus or any Subsidiary) is an
employee, associate or Affiliate of Bucyrus or a Subsidiary or has held any such
position during the previous five years, or (ii) who has, or is a director,
employee, associate or Affiliate of another party who has, a material direct or
indirect pecuniary interest in the transaction in question.
"interest" means, with respect to the Notes, the sum of any interest and
any Liquidated Damages on the Notes.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement designed to
protect Bucyrus or any Restricted Subsidiary against fluctuations in interest
rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person) or other
extensions of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and the
covenant described under "-- Certain Covenants -- Limitation on Restricted
Payments," (i) "Investment" shall include the portion (proportionate to Bucyrus'
equity interest in such Subsidiary) of the fair market value of the net assets
of any Subsidiary of Bucyrus at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, Bucyrus shall be deemed to continue to
have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount
(if positive) equal to (x) Bucyrus' "Investment" in such Subsidiary at the time
of such redesignation less (y) the portion
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(proportionate to Bucyrus' equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time of such
redesignation; (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer; and (iii) an "Investment" shall be deemed to be made at the time that
the ownership or voting power of Bucyrus and the Restricted Subsidiaries in any
Restricted Subsidiary is reduced to below majority (but greater than zero) in an
amount equal to the fair market value of such former Restricted Subsidiary at
such time multiplied by the percentage ownership or voting power (whichever is
less) of Bucyrus and the Restricted Subsidiaries in such former Restricted
Subsidiary; provided, however, that in each case fair market value shall be
determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Existing Notes were originally
issued, namely September 24, 1997.
"Leasing Program" means arrangements in existence from time to time
pursuant to which Bucyrus or a Restricted Subsidiary sells or leases (including
pursuant to Sale and Leaseback Transactions) equipment used in large-scale
surface mining operations manufactured and distributed by Bucyrus or a
Restricted Subsidiary in the ordinary course of its business.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in any asset and any filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or equivalent statutes) of any
jurisdiction other than to evidence a lease.
"Liquidated Damages" has the meaning set forth in the Registration
Agreement.
"Management Agreement" means the Management Agreement between Bucyrus and
AIP, as such agreement may be amended or supplemented from time to time;
provided, however, that all obligations of Bucyrus and its Subsidiaries under
the Management Agreement shall be subordinated to their obligations under the
Indenture, the Notes and the Guarantees.
"Net Available Cash" from an Asset Disposition means the aggregate cash
proceeds received by such Person and/or its Affiliates in respect of such Asset
Disposition, which amount is equal to the excess, if any, of (i) the cash
received by such Person and/or its Affiliates (including any cash payments
received by way of deferred payment pursuant to, or monetization of, a note or
installment receivable or otherwise, but only as and when received) in
connection with such Asset Disposition, over (ii) the sum of (a) the amount of
any Indebtedness that is secured by such asset and which is required to be
repaid by such person in connection with such Asset Disposition, plus (b) all
fees, commissions, and other expenses incurred by such Person in connection with
such Asset Disposition, plus (c) provision for taxes, including income taxes,
attributable to the Asset Disposition or attributable to required prepayments or
repayments of Indebtedness with the proceeds of such Asset Disposition, plus (d)
a reasonable reserve for the after-tax cost of any indemnification payments
(fixed or contingent) attributable to seller's indemnities to purchaser in
respect of such Asset Disposition undertaken by Bucyrus or any of its Restricted
Subsidiaries in connection with such Asset Disposition, plus (e) if such Person
is a Restricted Subsidiary, any dividends or distributions payable to holders of
minority interests in such Restricted Subsidiary from the proceeds of such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
direct result thereof.
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"Other Qualified Notes" means any outstanding senior indebtedness of
Bucyrus issued pursuant to an indenture having a provision substantially similar
to the Excess Proceeds Offer provision contained in the Indenture.
"Permitted Holders" means American Industrial Partners Capital Fund II,
L.P. or any Affiliate thereof.
"Permitted Investment" means an Investment by Bucyrus or any Restricted
Subsidiary in (i) a Guarantor or a Person that will, upon the making of such
Investment, become a Guarantor; provided, however, that the primary business of
such Guarantor is a Related Business; (ii) Temporary Cash Investments; (iii)
receivables owing to Bucyrus or any Restricted Subsidiary if created or acquired
in the ordinary course of business and payable or dischargeable in accordance
with customary trade terms; (iv) loans or advances to employees of Bucyrus or
any Restricted Subsidiary that are made in the ordinary course of business
consistent with past practices of Bucyrus or such Restricted Subsidiary in an
aggregate amount not to exceed $2.5 million outstanding at any time; (v) any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition as permitted pursuant to the
covenant described under "-- Certain Covenants -- Limitation on Sales of Assets
and Subsidiary Stock"; (vi) Investments in Foreign Subsidiaries in an aggregate
amount not to exceed $15.0 million outstanding at any time; (vii) Investments in
Foreign Subsidiaries Incurred to effect the Marion Acquisition; (viii)
Investments in Foreign Subsidiaries for the purposes of financing inventory or
accounts receivable at such Foreign Subsidiaries in the ordinary course of
business; and (ix) customers of Bucyrus or any Restricted Subsidiary made in the
form of loans pursuant to the Leasing Program, to the extent permitted under
clause (9) of paragraph (b) under "-- Certain Covenants -- Limitation on
Incurrence of Indebtedness."
"Permitted Liens" means (i) Liens securing Indebtedness Incurred under
clause (1), (7), (8), (9) or (10) of paragraph (b) under "-- Certain Covenants
- -- Limitation on Incurrence of Indebtedness" on property or assets of Bucyrus
and the Restricted Subsidiaries (other than for purposes of clause (1) only, any
Liens on real property); (ii) Liens in favor of Bucyrus or any Guarantor; (iii)
pledges or deposits by such Person under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or United
States government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import duties or for the
payment of rent or deposits as security for the payment of insurance-related
obligations (including, but not limited to, in respect of deductibles,
self-insured retention amounts and premiums and adjustments thereto), in each
case incurred in the ordinary course of business; (iv) Liens imposed by law,
such as carriers', warehousemen's, mechanics', landlords', materialmen's,
employees', laborers', employers', suppliers', banks', repairmen's and other
like Liens, in each case for sums not yet due or being contested in good faith
by appropriate proceedings, or other Liens arising out of any judgment, award,
decree or order of any court or other governmental authority against such Person
with respect to which such Person shall then be prosecuting an appeal or other
proceedings for review or the period within which such proceedings may be
instituted shall not have expired; (v) Liens for taxes not yet due or payable or
subject to penalties for non-payment and that are being contested in good faith
by appropriate proceedings; (vi) Liens in favor of issuers of surety,
performance, judgment, appeal and like bonds or letters of credit issued
pursuant to the request of and for the account of such Person in the ordinary
course of its business; (vii) Liens existing on the Issue Date; (viii) Liens on
property or shares of stock of a Person at the time such Person becomes a
Subsidiary of Bucyrus; provided, however, that such Lien was not incurred in
anticipation of or in connection with the transaction or series of related
transactions pursuant to which such Person became a Subsidiary; (ix) Liens
securing Purchase Money Indebtedness; (x) Liens securing an Interest Rate
Agreement or Currency Agreement so long as the related Indebtedness is permitted
to
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be Incurred under the Indenture; (xi) zoning restrictions, easements,
rights-of-way, restrictions on the use of property, other similar encumbrances
incurred in the ordinary course of business and minor irregularities of title
that do not materially interfere with the ordinary conduct of the business of
Bucyrus and its Restricted Subsidiaries taken as a whole; (xii) pledges of or
Liens on raw materials or on manufactured products as security for any drafts or
bills of exchange drawn in connection with the importation of such raw materials
or manufactured products; (xiii) Liens on property or assets of the Company and
the Restricted Subsidiaries securing obligations of the Company or a Restricted
Subsidiary under operating leases so long as the lessor is a financial
institution party to the Bank Credit Facility, or an Affiliate of such financial
institution, and the aggregate amount so secured, together with the principal
amount of Indebtedness outstanding under the Bank Credit Facility, does not
exceed the limit set forth in the proviso to clause (1) of paragraph (b) under
"-- Certain Covenants -- Limitation on Incurrence of Indebtedness" and (xiv)
Liens securing Refinancing Indebtedness permitted to be Incurred under the
Indenture; provided, however, that such Liens extend only to the assets securing
the Indebtedness being Refinanced.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of Bucyrus pursuant to an effective registration statement under
the Securities Act (other than any registration statement filed on Form S-8 or
similar form).
"Public Market" means any time after (i) a Public Equity Offering has been
consummated and (ii) at least 10% of the total issued and outstanding common
stock of Bucyrus has been distributed by means of an effective registration
statement under the Securities Act or sales pursuant to Rule 144 under the
Securities Act.
"Purchase Money Indebtedness" mean Indebtedness (i) consisting of the
deferred purchase price of property, conditional sale obligations, obligations
under any title retention agreement, other purchase money obligations and
obligations in respect of industrial revenue bonds or similar Indebtedness, in
each case where the maturity of such Indebtedness does not exceed the
anticipated useful life of the asset being financed, and (ii) Incurred to
finance the acquisition by Bucyrus or a Restricted Subsidiary of such asset,
including additions and improvements; provided, however, that any Lien arising
in connection with any such Indebtedness shall be limited to the specified asset
being financed or, in the case of real property or fixtures, including additions
and improvements, the real property on which such asset is attached; provided,
further, however, that such Indebtedness is Incurred within 90 days after such
acquisition of such asset by Bucyrus or Restricted Subsidiary.
"Qualified Stock" means any Capital Stock of Bucyrus other than
Disqualified Stock.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
increase, replace, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
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"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of Bucyrus or any Restricted Subsidiary existing on the Issue Date
or Incurred in compliance with the Indenture; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced, (iii) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value) then outstanding or
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced, and (iv) in the case of any
Indebtedness that is subordinated to the Notes, such Refinancing Indebtedness is
subordinated to at least the same extent; provided, further, however, that
Refinancing Indebtedness shall not include Indebtedness of a Subsidiary that
Refinances Indebtedness of Bucyrus.
"Related Business" means the manufacture, distribution and sale of
excavation equipment, or components for such equipment, used in large-scale
surface mining operations and activities reasonably related thereto, including,
without limitation, aftermarket parts sales and services, and such other
businesses as the Board of Directors determines in good faith are reasonably
related to the foregoing.
"Restricted Payment" means (i) any dividend or other distribution declared
or paid on any Capital Stock of Bucyrus or any Restricted Subsidiary (other than
dividends or distributions payable solely in Qualified Stock or dividends or
distributions payable to Bucyrus or any Wholly Owned Subsidiary); (ii) any
payment to purchase, redeem or otherwise acquire or retire for value (other than
in connection with the AIP Tender Offer and the AIP Merger pursuant to the AIP
Agreement) any Capital Stock of Bucyrus or any Restricted Subsidiary or other
Affiliate of Bucyrus (other than any Capital Stock owned by Bucyrus or any
Wholly Owned Subsidiary); provided, however, that payments to purchase, redeem
or otherwise acquire or retire for value Capital Stock of Bucyrus in connection
with the AIP Merger pursuant to the AIP Agreement shall not be deemed a
Restricted Payment so long as such payments in excess of $54.0 million are paid
with cash existing at BAC prior to the AIP Merger; (iii) any payment to
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated in right of payment to the Notes or the
Guarantees other than a purchase, redemption, defeasance or other acquisition or
retirement for value that is paid for with the proceeds of Refinancing
Indebtedness that is permitted under the covenant described under "-- Certain
Covenants -- Limitations on Incurrence of Indebtedness" above; (iv) the making
of an Investment (other than a Permitted Investment), including any Investment
in an Unrestricted Subsidiary (including by the designation of a Subsidiary of
Bucyrus as an Unrestricted Subsidiary); or (v) payment of any interest accrued
on the AIP Bridge Loan.
"Restricted Subsidiary" means any Subsidiary of Bucyrus that is not an
Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby Bucyrus or a Restricted Subsidiary
transfers such property to a Person and Bucyrus or a Restricted Subsidiary
leases it from such Person.
"Significant Restricted Subsidiary" means (i) any Restricted Subsidiary
that would be a "Significant Subsidiary" of Bucyrus within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC or (ii) any group of Restricted
Subsidiaries that together would constitute a Significant Restricted Subsidiary.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the
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repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of Bucyrus (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement to that
effect. "Subordinated Obligation" of any Guarantor has a correlative meaning.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof,
(ii) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50,000,000 (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
investments in commercial paper, maturing not more than 90 days after the date
of acquisition, issued by a corporation (other than an Affiliate of Bucyrus)
organized and in existence under the laws of the United States of America, any
State thereof or the District of Columbia or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's Investors
Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings
Group, and (v) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or "A" by Moody's Investors Service, Inc.
"Unrestricted Subsidiary" means (i) any Subsidiary of Bucyrus that at the
time of determination shall have been designated an Unrestricted Subsidiary by
the Board of Directors and (ii) any Subsidiary of an Unrestricted Subsidiary.
Western Gear Machinery Co. and BWC Gear, Inc. have been designated Unrestricted
Subsidiaries as of the Issue Date.
The Board of Directors may designate any Subsidiary of Bucyrus (including
any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, Bucyrus or any other
Subsidiary of Bucyrus that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that (i) no Default shall have occurred and be
continuing, (ii) Bucyrus could incur $1.00 of additional Indebtedness under
paragraph (a) of the covenant described under "-- Certain Covenants --
Limitation on Incurrence of Indebtedness" and (iii) either (x) the Subsidiary to
be so designated has total assets of $1,000 or less or (y) if such Subsidiary
has assets greater than $1,000, such designation would be permitted under the
covenant described under "-- Certain Covenants -- Limitation on Restricted
Payments" (treating the fair market value of Bucyrus' proportionate interest in
the net worth of such Subsidiary on such date calculated in accordance with GAAP
as the amount of the Investment).
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The Board of Directors may redesignate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that (i) no Default shall have
occurred and be continuing and (ii) Indebtedness of such Unrestricted Subsidiary
and all Liens on any asset of such Unrestricted Subsidiary outstanding
immediately following such redesignation would, if Incurred at such time, be
permitted to be Incurred under the Indenture.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by Bucyrus
and/or one or more Wholly Owned Subsidiaries.
EXCHANGE OFFER; REGISTRATION RIGHTS
REGISTRATION RIGHTS
Bucyrus and the Guarantors (together, the "Issuers") have entered into a
registration rights agreement with the Initial Purchasers dated as of September
24, 1997 (the "Registration Agreement"), pursuant to which Issuers agree, for
the benefit of the holders of the Existing Notes, at the Issuers' cost, to (i)
file a registration statement (the "Exchange Offer Registration Statement")
within 60 days after the Issue Date with the Commission with respect to a
registered offer to exchange the Existing Notes for the Exchange Notes that will
be issued under the Indenture in the same aggregate principal amount as and with
terms that will be identical in all respects to the Existing Notes (except that
the Exchange Notes will not contain terms with respect to the liquidated damages
provision and transfer restrictions); (ii) use their best efforts to cause the
Exchange Offer Registration Statement to be declared effective under the
Securities Act within 150 days after the Issue Date; and (iii) use their best
efforts to consummate the Exchange Offer within 180 days after the Issue Date.
Promptly after the Exchange Offer Registration Statement being declared
effective, the Issuers will offer the Exchange Notes in exchange for surrender
of the Notes (the "Exchange Offer"). The Issuers will keep the Exchange Offer
open for not less than 30 days (or longer if required by applicable law) after
the date notice of the Exchange Offer is mailed to the Noteholders. For each
Existing Note tendered to the Issuers pursuant to the Exchange Offer and not
validly withdrawn by the holder thereof, the holder of such Existing Note will
receive an Exchange Note having a principal amount equal to the principal amount
of such surrendered Existing Note.
Based on existing interpretations of the Securities Act by the staff of the
Commission set forth in several no-action letters to third parties, and subject
to the immediately following sentence, the Issuers believe that the Exchange
Notes issued pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by the holders thereof without further compliance with
the registration and prospectus delivery provisions of the Securities Act.
However, any purchaser of Existing Notes who is an "affiliate" (within the
meaning of the Securities Act) of any of the Issuers or who intends to
participate in the Exchange Offer for the purpose of distributing the Exchange
Notes, a broker-dealer (within the meaning of the Securities Act) that acquired
Existing Notes in a transaction other than as part of its market-making or other
trading activities and who has arranged or has an understanding with any person
to participate in the distribution of the Exchange Notes: (i) will not be able
to rely on the interpretation by the staff of the Commission set forth in the
above-mentioned no-action letters; (ii) will not be able to tender its Existing
Notes in the Exchange Offer; and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or transfer of Existing Notes unless such sale or transfer is made pursuant
to an exemption from such requirements.
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Each holder of Existing Notes (other than certain specified holders) who
wishes to exchange Existing Notes for Exchange Notes in the Exchange Offer will
be required to represent that (i) it is not an affiliate of any of the Issuers;
(ii) any Exchange Notes to be received by it were acquired in the ordinary
course of its business; and (iii) at the time of commencement of the Exchange
Offer, it has no arrangement or understanding with any person to participate in
the distribution (within the meaning of the Securities Act) of the Exchange
Notes. In addition, in connection with any resales of Exchange Notes, any
broker-dealer (an "Exchanging Dealer") who acquired Existing Notes for its own
account as a result of market-making activities or other trading activities must
deliver a prospectus meeting the requirements of the Securities Act. The
Commission has taken the position that Exchanging Dealers may fulfill their
prospectus delivery requirements with respect to the Exchange Notes (other than
a resale of an unsold allotment from the original sale of the Existing Notes)
with the prospectus contained in the Exchange Offer Registration Statement.
Under the Registration Agreement, the Issuers are required to allow Exchanging
Dealers to use the prospectus contained in the Exchange Offer Registration
Statement in connection with the resale of such Exchange Notes for a period of
one year following the Issue Date.
In the event that any changes in law or applicable interpretations of the
staff of the Commission do not permit the Issuers to effect the Exchange Offer,
or if for any reason the Exchange Offer Registration Statement is not declared
effective within 150 days following the Issue Date, the Issuers will, in lieu
of, or upon the request of an Initial Purchaser under certain circumstances, in
addition to, effecting the registration of the Exchange Notes pursuant to the
Exchange Offer Registration Statement and at their cost: (i) as promptly as
practicable, file with the Commission a shelf registration statement (the "Shelf
Registration Statement") covering resales of the Existing Notes; (ii) use their
best efforts to cause the Shelf Registration Statement to be declared effective
under the Securities Act by the 180th day after the Issue Date (or promptly in
the event of a request by an Initial Purchaser); and (iii) keep effective the
Shelf Registration Statement until two years after its effective date (or until
one year after its effective date if such Shelf Registration Statement is filed
at the request of an Initial Purchaser). The Issuers will, in the event of the
filing of a Shelf Registration Statement, provide to each holder covered by the
Shelf Registration Statement copies of the prospectus that is a part of the
Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement for the Existing Notes has become effective, and take
certain other actions as are required to permit unrestricted resales of Existing
Notes. A holder that sells such Existing Notes pursuant to the Shelf
Registration Statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to the
purchaser, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Agreement that are applicable to such holder
(including certain indemnification obligations). In addition, each holder will
be required to deliver information to be used in connection with the Shelf
Registration Statement and to benefit from the provisions regarding Special
Interest set forth in the following paragraph.
If (i) within 60 days after the Issue Date, neither the Exchange Offer
Registration Statement nor the Shelf Registration Statement has been filed with
the Commission; (ii) within 150 days after the Issue Date, the Exchange Offer
Registration Statement has not been declared effective; (iii) within 180 days
after the Issue Date, neither the Exchange Offer has been consummated nor the
Shelf Registration Statement has been declared effective; or (iv) after either
the Exchange Offer Registration Statement or the Shelf Registration Statement
has been declared effective, such Registration Statement thereafter ceases to be
effective or usable (subject to certain exceptions) in connection with resales
of Existing Notes or Exchange Notes in accordance with and during the periods
specified in the Registration Agreement (each such event referred to in clauses
(i) through (iv), a "Registration Default"), liquidated damages ("Liquidated
Damages") will accrue on the Existing Notes and the Exchange Notes from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured.
Liquidated Damages will accrue at a rate of $0.05 per week per $1,000 principal
amount of the Existing Notes during the 90-day period immediately following the
occurrence of any Registration Default and shall increase $0.05 per
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week per $1,000 principal amount of the Existing Notes at the end of each
subsequent 90-day period, but in no event shall such Liquidated Damages exceed
$0.25 per week per $1,000 principal amount of Existing Notes.
The summary herein of certain provisions of the Registration Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Agreement, a copy of
which is available upon request to Bucyrus as provided under "Available
Information."
CERTAIN FEDERAL TAX CONSIDERATIONS
Following is a general discussion of the principal United States federal
income tax consequences of the purchase, ownership and disposition of the Notes
to initial investors who are United States holders (that is, a holder that is,
for United States federal income tax purposes, (i) a citizen or resident of the
United States; (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof; (iii) an estate the income of which is subject to United
States federal income taxation regardless of its source; (iv) a trust if (X) a
U.S. court is able to exercise primary supervision over the administration of
the trust, and (Y) one or more U.S. persons have the authority to control all
substantial decisions of the trust; or (v) any other person whose income or gain
in respect of a Note is effectively connected with the conduct of a U.S. trade
or business).
This discussion is based on currently existing provisions of the Internal
Revenue Code of 1986, as amended, existing and proposed U.S. Treasury
regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as in effect or proposed on the date hereof and all
of which are subject to change, possibly with retroactive effect, or different
interpretations (the "Code"). This discussion does not address the tax
consequences to subsequent purchasers of Notes, and is limited to investors who
hold the Notes as capital assets. Moreover, the discussion is for general
information only, and does not address all of the tax consequences that may be
relevant to particular investors in light of their personal circumstances, or to
certain types of investors (such as certain financial institutions, insurance
companies, tax exempt entities, dealers in securities or foreign currencies or
persons who hold the Notes as a position in a straddle or as part of a
"conversion transaction" or who have hedged the interest rate on the Notes).
In general, interest paid or payable on a Note will be taxable to a United
States holder as ordinary interest income at the time it is received or accrued,
in accordance with such holder's method of accounting for federal income tax
purposes. In addition, under certain circumstances the Code may require that a
holder accrue and include as ordinary (interest) income each year a portion of
any "original issue discount" attributable to the Note in advance of the cash
payments attributable to such income, regardless of such holder's regular method
of tax accounting. Assuming that the original issue discount on the Note is not
greater than or equal to a de minimis amount (equal to 0.25% of its stated
principal amount multiplied by the number of complete years to its maturity),
any such original issue discount will be deemed to be zero, and a holder will
not be required to accrue a portion of such discount as income in each taxable
year.
Holders of so-called "contingent payment debt instruments" are required to
accrue all payments thereon (including de minimis original issue discount and
projected contingent payments) on a constant yield basis, to treat gain
recognized on the disposition of the debt instrument as interest income and in
certain circumstances to include market discount in income sooner than otherwise
required. It is not clear under applicable Regulations whether the Liquidated
Damages payable on the Notes in certain circumstances described above under
"Registration Rights" would result in the Notes being treated as contingent
payment debt instruments. The Regulations provide that a payment under a debt
instrument that is payable on the occurrence of a remote or incidental
contingency will not be treated as a contingent payment, but the Regulations do
not provide definitive guidance on whether a contingency such as that which
governs the payment of the Liquidated Damages under the Notes will be regarded
as remote or incidental. Investors should
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<PAGE> 109
consult their tax advisors as to the tax considerations relating to the
Liquidated Damages and the possibility that the Notes may be characterized as
contingent payment debt instruments under the Regulations.
Upon the sale, exchange, redemption, retirement at maturity or other
disposition of a Note, a United States holder will generally recognize taxable
gain or loss equal to the difference between the sum of the cash plus the fair
market value of all other property received on such disposition and such
holder's adjusted tax basis in the Note (except to the extent such cash or
property is attributable to accrued interest, which will be taxable as ordinary
income).
In the case of Notes held as capital assets, gain or loss recognized on the
disposition of a Note generally will be capital gain or loss (except to the
extent the gain is attributable to accrued market discount, as described below)
and will be long-term capital gain or loss subject to a maximum rate of 20%, in
the case of individuals, if, at the time of such disposition, the United States
holder's holding period for the Note is more than 18 months. In addition, an
individual will be taxed on his or her net capital gain at a maximum rate of (i)
28%, for property held for 18 months or less but more than one year, and (ii)
18%, for property (X) acquired after December 31, 2000 and (Y) held for more
than five years. Special rules (and generally lower maximum rates) apply for
individuals in lower tax brackets. However, if under the Regulations the Notes
are treated as contingent payment debt instruments, as discussed above, then any
gain realized on such sale, exchange, redemption or retirement will be taxable
as ordinary (interest) income, while any loss realized will be an ordinary loss
to the extent of any amounts previously treated as ordinary (interest) income
under the Regulations.
The exchange of an Existing Note for an Exchange Note should not constitute
a taxable exchange of the Existing Note if the interest rate on the Exchange
Note is equal to the interest rate on the Existing Note. Although there is no
definitive guidance on the issue, even if the interest rate on the Exchange Note
is not equal to the interest rate on the Existing Note because Liquidated
Damages are payable on the Existing Note but not on the Exchange Note, the
exchange should not constitute a taxable exchange of the Existing Note.
An investor who acquires a Note at a cost in excess of its principal amount
will be considered to have purchased the Note at a premium, and may make an
election, applicable to all Notes held by such holder, to amortize such premium,
using a constant yield method, over the remaining term of the Note (or, if a
smaller amortization allowance would result, by computing such allowance with
reference to the amount payable on an earlier call date, and by amortizing such
allowances over the shorter period to such call date).
Although the market discount provisions of the Code generally do not apply
to initial investors in Notes, those provisions may apply to initial investors
who acquire Notes for an amount less than the issue price of the Notes.
Generally, these rules require the holder of a "market discount bond" (as
defined in the Code) to treat any gain realized upon its disposition as interest
income to the extent of the market discount that accrued during the period such
holder held it. A holder may also be required to recognize as ordinary income
any principal payments with respect to a Note to the extent such payments do not
exceed the accrued market discount on the Note. For these purposes, market
discount generally equals the excess (if any) of the stated redemption price of
the Note at its maturity over the basis of the Note in the hands of the holder
immediately after its acquisition. However, market discount is deemed not to
exist if the market discount is less than a statutorily defined de minimis
amount equal to 0.25% of the Note's contract redemption price at maturity
multiplied by the number of complete years to the Note's maturity after the
holder acquired the Note.
The market discount rules also provide that any holder of Notes that were
acquired at a market discount may be required to defer the deduction of a
portion of the interest expense on any indebtedness incurred or maintained to
acquire or carry the Notes, until the Notes are disposed of. A holder of a Note
acquired at market discount may elect to include market discount in income as
the discount accrues. In such a case, the foregoing rules with respect to the
recognition of ordinary
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income on dispositions and with respect to the deferral of interest deductions
on indebtedness related to such Note would not apply.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE NOTES, INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE OR GIFT TAX LAWS
OR ANY STATE, LOCAL OR FOREIGN TAX LAWS, ANY CHANGES IN APPLICABLE TAX LAWS AND
ANY PENDING OR PROPOSED LEGISLATION OR REGULATIONS. IN ADDITION, INDIVIDUAL
NOTEHOLDERS WHO ARE NOT CITIZENS OF THE UNITED STATES SHOULD CONSULT THEIR TAX
ADVISORS AS TO WHETHER THEY WILL OR WILL NOT BE DEEMED TO BE "RESIDENTS" OF THE
UNITED STATES FOR PURPOSES OF THE CODE.
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<PAGE> 111
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer in exchange for Existing Notes, where such
Existing Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge and agree that it will
deliver a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
for a period of one year after the Expiration Date by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Existing
Notes where such Existing Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date and ending on the close of business one year after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through broker-dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any person that participates in the
distribution of such Exchange Notes may be deemed to be an "underwriter" within
the meaning of the Securities Act, and any profit on any such resale of Exchange
Notes and any commissions or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging and agreeing that it will deliver and
by delivering this Prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
By acceptance of this Exchange Offer, each broker-dealer agrees that, upon
receipt of notice from the Company of the happening of any event which makes any
statement in the Prospectus untrue in any material respect or which requires the
making of any changes in the Prospectus in order to make the statements therein
not misleading, such broker-dealer will suspend use of the Prospectus until (i)
the Company has amended or supplemented the Prospectus to correct such
misstatement or omission and (ii) either the Company has furnished copies of the
amended or supplemented Prospectus to such broker-dealer or, if the Company has
not otherwise agreed to furnish such copies and declines to do so after such
broker-dealer so requests, such broker-dealer has obtained a copy of such
amended or supplemented Prospectus as filed with the Commission. The Company has
agreed to deliver such notice and such amended or supplemented Prospectus
promptly to any Participating Broker-Dealer that has so notified the Company.
Pursuant to the Registration Agreement, the Company and the Guarantors have
jointly and severally agreed to indemnify the Initial Purchasers against certain
liabilities, including certain liabilities incurred in connection with the
offering of the Existing Notes, and contribute to payments the Initial
Purchasers may be required to make in respect thereof.
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LEGAL MATTERS
Certain legal matters with respect to the legality of the issuance of the
Exchange Notes offered hereby will be passed upon for the Company by Whyte
Hirschboeck Dudek S.C., 111 East Wisconsin Avenue, Suite 2100, Milwaukee,
Wisconsin, 53202.
INDEPENDENT AUDITORS
The consolidated financial statements of Bucyrus International, Inc. as of
December 31, 1996 and 1995, and for each of the two years in the period ended
December 31, 1996, included in this Prospectus, have been audited by Arthur
Andersen LLP, Milwaukee, Wisconsin, independent accountants, as stated in their
reports appearing herein.
The consolidated financial statements of Bucyrus International, Inc. for
the period from December 14, 1994 to December 31, 1994, and the consolidated
financial statements of the Predecessor Company as of and for the period from
January 1, 1994 to December 13, 1994, included in this Prospectus, have been
audited by Deloitte & Touche LLP, Milwaukee, Wisconsin, as stated in their
report appearing herein.
The combined financial statements of the Surface Mining and Equipment
Business of Global Industrial Technologies, Inc. as of October 31, 1996, and for
the year then ended, included in this Prospectus, have been audited by Arthur
Andersen LLP, Milwaukee, Wisconsin, independent accountants, as stated in their
report appearing herein.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act for the registration of the Exchange Notes offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
and certain information contained in the Registration Statement has been
omitted, as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the Exchange Notes offered
hereby, reference is made to the Registration Statement, including the exhibits
and financial statements, notes and schedules thereto filed as a part thereof or
incorporated by reference therein. This Prospectus contains summaries of
material terms and provisions of certain documents, including the Registration
Agreement and the Indenture. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved. The Registration
Statement and the exhibits and schedules thereto may be inspected without charge
and copied at prescribed rates at the Public Reference Section maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, the
Commission's regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street
(Suite 1400), Chicago, Illinois 60661-2511. The Commission maintains a Web Site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of such site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents or reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in
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any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
and superseded, to constitute a part of this Prospectus.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO EXCHANGE, OR A SOLICITATION OF
AN OFFER TO EXCHANGE, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES OR AN OFFER TO EXCHANGE OR A SOLICITATION OF AN OFFER TO EXCHANGE SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
The Indenture provides that Bucyrus shall each file with the Trustee and
provide holders of Notes, within 15 days after they file them with the
Commission, copies of their annual reports and the information, documents and
other reports that they are required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. To the extent permitted by the Exchange
Act, Bucyrus shall continue to file with the Commission and provide the Trustee
and holders with the annual reports and the information, documents and other
reports that are specified in Sections 13 and 15(d) of the Exchange Act. In the
event that Bucyrus is not permitted to file such reports, documents and
information with the Commission or Bucyrus has subsidiaries that individually or
in the aggregate would be deemed to be "substantial subsidiaries" (as defined in
Rule 1-02 of Regulation S-X, as in effect at the Issue Date), Bucyrus will
provide substantially similar information with respect to itself and its
subsidiaries to the Trustee, holders and prospective holders (upon written
request) as if Bucyrus were subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act. Bucyrus and the Subsidiaries shall also comply
with the other provisions of Trust Indenture Act Section 314(a).
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INDEX TO FINANCIAL STATEMENTS
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
AUDITED AND UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The following audited and unaudited consolidated financial statements of
Bucyrus International, Inc. and Subsidiaries are presented herein on the pages
indicated below:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED FINANCIAL STATEMENTS:
Report of Independent Public Accountants.................. F-2
Independent Auditors' Report.............................. F-3
Consolidated Balance Sheets at December 31, 1996 and
1995................................................... F-4
Consolidated Statements of Operations for the Years Ended
December 31, 1996 and 1995 and Periods Ended December
31, 1994 and December 13, 1994......................... F-5
Consolidated Statements of Common Shareholders' Investment
(Deficiency in Assets) for the Years Ended December 31,
1996 and 1995 and Periods Ended December 31, 1994 and
December 13, 1994...................................... F-6
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995 and Periods Ended December
31, 1994 and December 13, 1994......................... F-7
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1996 and 1995 and Periods Ended
December 31, 1994 and December 13, 1994................ F-9
UNAUDITED FINANCIAL STATEMENTS:
Consolidated Condensed Balance Sheets at June 30, 1997 and
December 31, 1996...................................... F-36
Consolidated Condensed Statements of Earnings for the Six
Months Ended June 30, 1997 and 1996.................... F-37
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1997 and 1996........................... F-38
Notes to Consolidated Condensed Financial Statements...... F-39
</TABLE>
THE SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES,
INC.
AUDITED AND UNAUDITED FINANCIAL STATEMENTS
The following audited and unaudited combined financial statements of the
Surface Mining and Equipment Business of Global Industrial Technologies, Inc.
are presented herein on the pages indicated below:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED FINANCIAL STATEMENTS:
Report of Independent Public Accountants.................. F-45
Combined Balance Sheet at October 31, 1996................ F-46
Combined Statement of Operations for the Year Ended
October 31, 1996....................................... F-47
Combined Statement of Equity for the Year Ended October
31, 1996............................................... F-48
Combined Statement of Cash Flows for the Year Ended
October 31, 1996....................................... F-49
Notes to Combined Financial Statements.................... F-50
UNAUDITED FINANCIAL STATEMENTS:
Combined Balance Sheets at June 30, 1997 and October 31,
1996................................................... F-58
Combined Statements of Operations for the Eight Months
Ended June 30, 1997 and 1996........................... F-59
Combined Statements of Cash Flows for the Eight Months
Ended June 30, 1997 and 1996........................... F-60
Notes to Combined Financial Statements.................... F-61
</TABLE>
F-1
<PAGE> 115
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Bucyrus International, Inc.:
We have audited the accompanying balance sheets of Bucyrus International,
Inc. (Delaware Corporation) as of December 31, 1996 and 1995 and the related
statements of operations, common shareholders' investment and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bucyrus International, Inc.
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
January 31, 1997
F-2
<PAGE> 116
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Bucyrus International, Inc.:
We have audited the accompanying consolidated statements of operations,
common shareholders' investment (deficiency in assets) and cash flows of Bucyrus
International, Inc. (formerly Bucyrus-Erie Company) and subsidiaries (the
"Company") for the period from December 14, 1994 to December 31, 1994 and the
period from January 1, 1994 to December 13, 1994 (Predecessor Company
operations). These financial statements are the responsibility of Company
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note B to the consolidated financial statements, on
December 1, 1994, the Bankruptcy Court entered an order confirming an Amended
Joint Plan of Reorganization which became effective on December 14, 1994.
Accordingly, the accompanying consolidated financial statements have been
prepared in conformity with AICPA Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code," for the
Company as a new entity with assets, liabilities, and a capital structure having
carrying values not comparable with prior periods as discussed in Note B to the
consolidated financial statements. Under the Amended Joint Plan of
Reorganization, the Company's parent, B-E Holdings, Inc., was merged with and
into the Company as of the effective date. The consolidated financial statements
for the period prior to December 14, 1994 includes the operating results of the
merged entities (Predecessor Company).
In our opinion, the Company's consolidated financial statements present
fairly, in all material respects, the results of operations and cash flows of
Bucyrus International, Inc. and subsidiaries for the period December 14, 1994 to
December 31, 1994 in conformity with generally accepted accounting principles.
Further, in our opinion, the Predecessor Company consolidated financial
statements referred to above present fairly, in all material respects, the
results of operations and cash flows of the Predecessor Company for the period
January 1, 1994 to December 13, 1994 in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
April 10, 1995
F-3
<PAGE> 117
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS; EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents... $ 15,763 $ 11,150
Receivables................. 32,085 35,603
Inventories................. 70,889 73,566
Prepaid expenses and other
current assets............ 2,504 1,414
-------- --------
Total Current Assets........ 121,241 121,733
OTHER ASSETS:
Restricted funds on
deposit................... 1,079 2,877
Intangible assets........... 8,545 9,021
Other assets................ 6,003 4,760
-------- --------
15,627 16,658
PROPERTY, PLANT AND
EQUIPMENT:
Land........................ 2,752 1,507
Buildings and
improvements.............. 6,698 5,630
Machinery and equipment..... 33,959 32,250
Less accumulated
depreciation.............. (7,382) (3,740)
-------- --------
36,027 35,647
-------- --------
$172,895 $174,038
======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and accrued
expenses.................. $ 33,765 $ 37,487
Liabilities to customers on
uncompleted contracts and
warranties................ 3,579 8,222
Income taxes................ 1,469 3,463
Short-term obligations...... 3,186 5,573
Current maturities of
long-term debt............ 428 1,658
-------- --------
Total Current Liabilities... 42,427 56,403
LONG-TERM LIABILITIES:
Deferred income taxes....... 148 183
Liabilities to customers on
uncompleted contracts and
warranties................ 3,277 3,127
Postretirement benefits..... 11,064 11,527
Deferred expenses and
other..................... 11,891 10,097
-------- --------
26,380 24,934
LONG-TERM DEBT, less current
maturities................ 66,627 58,021
COMMON SHAREHOLDERS'
INVESTMENT:
Common stock -- par value
$.01 per share, authorized
20,000,000 shares, issued
and outstanding 10,534,574
and 10,234,574 shares,
respectively.............. 105 102
Additional paid-in
capital................... 57,739 54,259
Unearned stock
compensation.............. (2,815) --
Accumulated deficit......... (16,446) (19,324)
Cumulative translation
adjustment................ (1,122) (357)
-------- --------
37,461 34,680
-------- --------
$172,895 $174,038
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE> 118
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
------------
YEARS ENDED DECEMBER 31, DECEMBER 14 - JANUARY 1 -
------------------------- DECEMBER 31, DECEMBER 13,
1996 1995 1994 1994
---- ---- ------------- ------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales................................... $263,786 $231,921 $7,810 $186,174
Other income................................ 1,003 1,295 79 2,976
-------- -------- ------ --------
264,789 233,216 7,889 189,150
-------- -------- ------ --------
COSTS AND EXPENSES:
Cost of products sold....................... 215,126 205,552 6,933 157,181
Product development, selling, administrative
and miscellaneous expenses................ 36,470 34,172 1,099 30,158
Interest expense (Predecessor Company
contractual interest not recognized in
1994 $20,250)............................. 8,557 6,254 284 13,911
Restructuring expenses...................... -- 2,577 -- --
Reorganization items........................ -- 919 -- 9,338
-------- -------- ------ --------
260,153 249,474 8,316 210,588
-------- -------- ------ --------
Earnings (loss) before income taxes and
extraordinary gain.......................... 4,636 (16,258) (427) (21,438)
Income taxes.................................. 1,758 2,514 125 1,395
-------- -------- ------ --------
Earnings (loss) before extraordinary gain..... 2,878 (18,772) (552) (22,833)
Extraordinary gain............................ -- -- -- 142,480
-------- -------- ------ --------
Net earnings (loss)........................... 2,878 (18,772) (552) 119,647
Redeemable preferred stock dividends.......... -- -- -- (40)
Preferred stock accretion..................... -- -- -- (106)
Reorganization item -- preferred stock........ -- -- -- (40,555)
-------- -------- ------ --------
Net earnings (loss) attributable to common
shareholders................................ $ 2,878 $(18,772) $ (552) $ 78,946
======== ======== ====== ========
Net earnings (loss) per share of common stock:
Earnings (loss) before extraordinary gain..... $ 0.28 $ (1.84) $(0.05) $ (2.46)
Extraordinary gain............................ -- -- -- 15.37
-------- -------- ------ --------
Net earnings (loss)........................... 0.28 (1.84) (0.05) 12.91
Preferred stock dividends, accretion and
reorganization item......................... -- -- -- (4.39)
-------- -------- ------ --------
Net earnings (loss) per share attributable to
common shareholders......................... $ 0.28 $ (1.84) $(0.05) $ 8.52
======== ======== ====== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE> 119
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS'
INVESTMENT (DEFICIENCY IN ASSETS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------- ADDITIONAL CUMULATIVE
COMMON PAID-IN ACCUMULATED TRANSLATION
CLASS C CLASS D STOCK WARRANTS CAPITAL DEFICIT ADJUSTMENT
------- ------- ------ -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Predecessor Company
Balance at January 1, 1994....... $ 92 $ 1 $ -- $ 1 $ -- $(138,994) $(4,209)
Exercise of warrants
(6,392 shares)................. -- -- -- (1) 1 -- --
Net earnings..................... -- -- -- -- -- 119,647 --
Preferred stock accretion........ -- -- -- -- -- (106) --
Preferred stock dividends........ -- -- -- -- -- (129) --
Reorganization item --
preferred stock................ -- -- -- -- -- (40,555) --
Translation adjustments.......... -- -- -- -- -- -- 991
Cancellation of former equity and
elimination of accumulated
deficit and cumulative foreign
currency translation
adjustments.................... (92) (1) -- -- (1) 60,137 3,218
Issuance of new common stock
(10,170,417 shares)............ -- -- 102 -- 53,898 -- --
---- --- ---- --- ------- --------- -------
Balance at December 13, 1994..... $ -- $-- $102 $-- $53,898 $ -- $ --
==== === ==== === ======= ========= =======
</TABLE>
<TABLE>
<CAPTION>
ADDITIONAL UNEARNED CUMULATIVE
COMMON PAID-IN STOCK ACCUMULATED TRANSLATION
STOCK CAPITAL COMPENSATION DEFICIT ADJUSTMENT
------ ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 14, 1994.............. $102 $53,898 $ -- $ -- $ --
Net loss -- December 14 to December 31,
1994.................................... -- -- -- (552) --
Translation adjustments -- December 14 to
December 31, 1994....................... -- -- -- -- 169
---- ------- ------- -------- -------
Balance at December 31, 1994.............. 102 53,898 -- (552) 169
Issuance of common stock
(64,157 shares)......................... -- 361 -- -- --
Net loss.................................. -- -- -- (18,772) --
Translation adjustments................... -- -- -- -- (526)
---- ------- ------- -------- -------
Balance at December 31, 1995.............. 102 54,259 -- (19,324) (357)
Grants under stock compensation plans..... 3 3,480 (3,483) -- --
Amortization of unearned stock
compensation............................ -- -- 668 -- --
Net earnings.............................. -- -- -- 2,878 --
Translation adjustments................... -- -- -- -- (765)
---- ------- ------- -------- -------
Balance at December 31, 1996.............. $105 $57,739 $(2,815) $(16,446) $(1,122)
==== ======= ======= ======== =======
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE> 120
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
YEARS ENDED ------------
DECEMBER 31, DECEMBER 14 - JANUARY 1 -
------------------- DECEMBER 31, DECEMBER 13,
1996 1995 1994 1994
---- ---- ------------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)................................ $ 2,878 $(18,772) $ (552) $ 119,647
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Inventory obsolescence provision (see Note
E).......................................... -- 4,416 -- --
Depreciation................................... 3,882 3,671 145 7,356
Amortization................................... 1,142 1,194 23 3,679
Stock compensation expense..................... 668 -- -- --
Deferred rent (interest) on sale and leaseback
financing arrangement....................... -- -- -- 7,287
In kind interest on the Secured Notes due
December 14, 1999........................... 7,783 5,691 258 --
Amortization of debt discount.................. -- -- -- 71
(Gain) loss on sale of property, plant and
equipment................................... 362 (166) 5 37
Non-cash reorganization items.................. -- -- -- 1,680
Extraordinary gain............................. -- -- -- (142,480)
Changes in assets and liabilities:
Receivables................................. 3,021 (9,651) 4,318 (4,616)
Inventories................................. 2,026 3,769 (61) (7,539)
Other current assets........................ (1,114) 564 (73) 125
Other assets................................ (1,145) (578) (12) (13)
Current liabilities other than income taxes,
short-term obligations and current
maturities of long-term debt.............. (5,332) 8,073 (5,197) 17,326
Income taxes................................ (1,991) 740 302 543
Long-term liabilities other than deferred
income taxes.............................. (2,093) (1,035) (93) (1,372)
------- -------- ------- ---------
Net cash provided by (used in) operating
activities......................................... 10,087 (2,084) (937) 1,731
------- -------- ------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in restricted funds on deposit............ 1,798 798 -- 2,863
Purchases of property, plant and equipment......... (4,996) (3,006) (190) (2,616)
Proceeds from sale of property, plant and
equipment........................................ 1,058 263 -- 125
------- -------- ------- ---------
Net cash (used in) provided by investing
activities......................................... (2,140) (1,945) (190) 372
------- -------- ------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of project financing
obligations...................................... 5,402 6,012 1,620 7,891
Reduction of project financing obligations......... (8,104) (7,117) -- (6,933)
Net (decrease) increase in other bank borrowings... (1,350) 304 -- (1,210)
Proceeds from issuance of long-term debt........... 849 -- -- --
------- -------- ------- ---------
Net cash (used in) provided by financing
activities......................................... (3,203) (801) 1,620 (252)
------- -------- ------- ---------
Effect of exchange rate changes on cash.............. (131) (229) (5) 174
------- -------- ------- ---------
Net increase (decrease) in cash and cash
equivalents........................................ 4,613 (5,059) 488 2,025
Cash and cash equivalents at beginning of period..... 11,150 16,209 15,721 13,696
------- -------- ------- ---------
Cash and cash equivalents at end of period........... $15,763 $ 11,150 $16,209 $ 15,721
======= ======== ======= =========
Cash paid (received) during the period for:
Interest........................................... $ 491 $ 289 $ 20 $ 345
Income taxes(1).................................... 3,246 1,270 12 (259)
</TABLE>
- -------------------------
(1) These amounts are net of federal and state income tax refunds of $1 in
1996, $416 in 1995 and $908 (including $907 for the Predecessor Company) in
1994.
F-7
<PAGE> 121
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
(A) On June 27, 1995, the Company issued 64,157 shares of common stock as
payment in full of $361 of liabilities for certain legal and professional
fees incurred in connection with the Company's reorganization under Chapter
11 of the Bankruptcy Code.
(B) In 1994, the Predecessor Company increased the carrying amount of the Series
A redeemable preferred stock by $129, which represented the estimated fair
value of the pre-petition dividends not declared or paid, but were payable
under mandatory redemption features. The Predecessor Company also recorded
preferred stock discount accretion of $106 in 1994 on these securities. As
of the Petition Date (see Note B), the Predecessor Company increased the
carrying amount of the Series A redeemable preferred stock by $40,555 to the
amount of the allowed claim in the Amended Plan.
(C) Pursuant to the Amended Plan, the Company issued shares of Common Stock in
exchange for the unsecured debt securities of Holdings and the Company and
the equity securities of Holdings.
See Notes to Consolidated Financial Statements.
F-8
<PAGE> 122
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF ACCOUNTING POLICIES
NATURE OF OPERATIONS
Bucyrus International, Inc. (the "Company"), formerly known as Bucyrus-Erie
Company, is a Delaware corporation and a leading manufacturer of surface mining
equipment, principally walking draglines, electric mining shovels and blast hole
drills, and related replacement parts. Major markets for the surface mining
industry are coal mining, copper and iron ore mining and phosphate production.
BASIS OF PRESENTATION
As discussed in Note B, the Company accounted for the reorganization under
Chapter 11 of the Bankruptcy Code effective December 14, 1994 (the "Effective
Date") using the principles of fresh start reporting as required by AICPA
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" ("SOP 90-7"). Accordingly, the consolidated financial
statements of the Company are not comparable to the consolidated financial
statements of periods prior to the Effective Date. The Predecessor Company
consolidated financial statements are those of B-E Holdings, Inc. ("Holdings"),
the former parent of the Company, which include the accounts and operating
results of the Company.
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of all
subsidiaries. All significant intercompany transactions, profits and accounts
have been eliminated.
CASH EQUIVALENTS
All highly liquid investments with maturities of three months or less when
purchased are considered to be cash equivalents. The carrying amount of these
investments approximates fair value.
RESTRICTED FUNDS ON DEPOSIT
Restricted funds on deposit represent cash and temporary investments used
to support the issuance of standby letters of credit and other obligations. The
carrying amount of these funds approximates fair value.
INVENTORIES
Inventories are stated at lower of cost (first-in, first-out method) or
market (replacement cost or estimated net realizable value). Advances from
customers are netted against inventories to the extent of related accumulated
costs. Advances in excess of related costs and earnings on uncompleted contracts
are classified as a liability to customers.
INTANGIBLES
As of the Effective Date, intangible assets were recorded at estimated fair
value to the extent of available reorganization value and accumulated
amortization was eliminated in accordance with the
F-9
<PAGE> 123
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
principles of fresh start reporting. Intangible assets consist of engineering
drawings and bill-of-material listings which are being amortized on a
straight-line basis over 20 years (30 years for the Predecessor Company). At
December 31, 1996 and 1995, accumulated amortization for intangible assets was
$975,000 and $499,000, respectively.
PROPERTY, PLANT AND EQUIPMENT
As of the Effective Date, property, plant and equipment was recorded at
estimated fair value to the extent of available reorganization value and
accumulated depreciation was eliminated in accordance with the principles of
fresh start reporting. Additions made subsequent to the Effective Date are
recorded at cost. Depreciation is provided over the estimated useful lives of
respective assets using the straight-line method for financial reporting and
accelerated methods for income tax purposes. Estimated useful lives used for
financial reporting purposes range from ten to forty years for buildings and
improvements and three to seventeen years for machinery and equipment.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of foreign subsidiaries are generally translated
into U.S. dollars using year-end exchange rates. Revenues and expenses are
translated at average rates during the year. Adjustments resulting from this
translation, except for one foreign subsidiary which operates in a highly
inflationary economy, are deferred and reflected as a separate component of
Common Shareholders' Investment. For the one subsidiary operating in a highly
inflationary economy, adjustments resulting from the translation of financial
statements are reflected in the Consolidated Statements of Operations.
REVENUE RECOGNITION
Revenue from long-term sales contracts is recognized using the
percentage-of-completion method. At the time a loss on a contract becomes known,
the amount of the estimated loss is recognized in the consolidated financial
statements. Included in the current portion of liabilities to customers on
uncompleted contracts and warranties are advances in excess of related costs and
earnings on uncompleted contracts of $575,000 and $790,000 at December 31, 1996
and 1995, respectively.
IMPAIRMENT OF LONG-LIVED ASSETS
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121").
SFAS 121 requires that long-lived assets and certain identifiable intangibles to
be held and used by an entity be reviewed for impairment when certain events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. The Company adopted SFAS 121 in 1996. Upon completion of a
review of all long-lived assets and intangibles, management determined that no
adjustment to the carrying value of these assets is necessary.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 and 1994 consolidated
financial statements to present them on a basis consistent with the current
year.
F-10
<PAGE> 124
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE B -- FINANCIAL REPORTING RELATING TO REORGANIZATION PROCEEDINGS
On February 18, 1994 (the "Petition Date"), Holdings and the Company, which
at such time was a wholly-owned subsidiary of Holdings, commenced voluntary
petitions under Chapter 11 of the Bankruptcy Code and filed a prepackaged joint
plan of reorganization in the United States Bankruptcy Court, Eastern District
of Wisconsin (the "Bankruptcy Court"). No other subsidiaries of Holdings or the
Company were included in the filing. On December 1, 1994, the Bankruptcy Court
entered an order confirming the Second Amended Joint Plan of Reorganization of
Holdings and the Company as modified on December 1, 1994 (the "Amended Plan").
The Amended Plan became effective on December 14, 1994.
On December 14, 1994, Holdings merged with and into the Company pursuant to
the Amended Plan and the Agreement and Plan of Merger dated as of December 14,
1994 between Holdings and the Company (the "Merger Agreement"). Pursuant to the
Amended Plan and the Merger Agreement, the Company issued 10,170,417 shares of
its common stock, par value $.01 per share (the "Common Stock"), which included
10,000,004 shares of Common Stock issued to holders of Holdings' and the
Company's unsecured debt securities and Holdings' equity securities (including
preferred stock) in exchange for such securities. The Company also issued
170,413 shares of Common Stock and paid $350,000 in cash to Bell Helicopter
Textron, Inc. ("Bell Helicopter") in settlement of Bell Helicopter's claims
against the Company and an inactive subsidiary of the Company asserted in a
civil action.
Also on the Effective Date pursuant to the Amended Plan, the Company issued
an aggregate principal amount of $52,072,000 of Secured Notes due December 14,
1999 (the "Secured Notes") in exchange for the outstanding Series A 10.65%
Senior Secured Notes due July 1, 1995 of the Company, the outstanding Series B
16.5% Senior Secured Notes due January 1, 1996 of the Company, the obligations
of the Company under its sale and leaseback financing arrangement and accrued
interest, the sum of said items being $54,571,000.
As a result of these transactions pursuant to the Amended Plan, an
extraordinary gain on debt discharge of $142,480,000 was recognized, which
consists of the following:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
Carrying value of unsecured debt securities of Holdings
and the Company........................................ $158,350
Accrued interest on unsecured debt securities of Holdings
and the Company........................................ 31,663
Concession on Series A and B Senior Secured Notes and
obligation under sale and leaseback financing
arrangement............................................ 2,499
Settlement of Bell Helicopter claim...................... 3,000
Write-off of previously recorded capitalized financing
costs.................................................. (309)
--------
195,203
Estimated fair value of Common Stock issued for unsecured
debt securities and Bell Helicopter claim.............. 52,723
--------
Total Extraordinary Gain................................. $142,480
========
</TABLE>
For financial statement purposes, there was no income tax expense
recognized.
Reorganization items included in the Consolidated Statements of Operations
represent the expenses incurred as a result of the Company's efforts to
reorganize under Chapter 11 of the
F-11
<PAGE> 125
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Bankruptcy Code. In 1995, reorganization items consist entirely of legal and
professional fees. Reorganization items in 1994 consist of $8,023,000 of legal
and professional fees, $41,122,000 to adjust debt and redeemable preferred stock
to the amount of the allowed claims in the Amended Plan and a $1,113,000
write-off of capitalized financing costs. These expenses were partially offset
by $365,000 of interest income earned from the Petition Date through December
13, 1994 on accumulated cash balances of Holdings and the Company.
The Company accounted for the reorganization by using the principles of
fresh start reporting as required by SOP 90-7. Under the principles of fresh
start reporting, total assets were recorded at their assumed reorganization
value, with the reorganization value allocated to identifiable tangible and
intangible assets on the basis of their estimated fair value, and liabilities
were adjusted to the present values of amounts to be paid where appropriate. The
consolidated financial statements for periods subsequent to the Effective Date
include the related amortization charges associated with the fair value
adjustments.
NOTE C -- RESTRUCTURING EXPENSES
Restructuring expenses of $2,577,000 for the year ended December 31, 1995
consist of employee severance expenses recorded to reflect the cost of reduced
employment and the severance costs related to the resignation of three officers
of the Company.
NOTE D -- RECEIVABLES
Receivables at December 31, 1996 and 1995 include $6,830,000 and
$6,994,000, respectively, of revenues from long-term contracts which were not
billable at that date. Billings on long-term contracts are made in accordance
with the payment terms as defined in the individual contracts.
Current receivables are reduced by an allowance for losses of $539,000 and
$667,000 at December 31, 1996 and 1995, respectively.
NOTE E -- INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Raw materials and parts................................. $10,628 $12,138
Costs relating to uncompleted contracts................. 4,183 5,861
Customers' advances offset against costs incurred on
uncompleted contracts................................. (1,816) (2,440)
Work in process......................................... 13,746 13,511
Finished products (primarily replacement parts)......... 44,148 44,496
------- -------
$70,889 $73,566
======= =======
</TABLE>
Inventory was recorded at estimated fair value as of the Effective Date in
accordance with the principles of fresh start reporting. The remaining estimated
fair value adjustment of $10,065,000 was charged to cost of products sold in
1995 as the inventory was sold.
During 1995, the Company completed an evaluation of its inventory and
recorded a charge of $4,416,000 to cost of products sold for the scrapping and
disposal of excess inventory which related to certain older and discontinued
machine models.
F-12
<PAGE> 126
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE F -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Trade accounts payable.................................. $14,270 $16,703
Wages and salaries...................................... 5,495 4,005
Service and erection.................................... 2,138 1,802
Reorganization items.................................... 1,071 1,602
Excess refund from Internal Revenue Service............. 373 2,700
Other................................................... 10,418 10,675
------- -------
$33,765 $37,487
======= =======
</TABLE>
In 1996, the Company reached an agreement with the Internal Revenue Service
to repay the excess refund in semi-annual payments over five years at 8%
interest commencing September 15, 1996. Accordingly, a portion of the liability
has been included in long-term liabilities in the Consolidated Balance Sheet at
December 31, 1996.
NOTE G -- LONG-TERM DEBT AND FINANCING ARRANGEMENTS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Secured Notes due December 14, 1999..................... $65,785 $58,021
Bridge Loan Account at Bucyrus Europe at floating
interest rate (8.625% at December 31, 1996 and 1995),
due 1997.............................................. 428 1,600
Construction Loan at Bucyrus Chile, Ltda................ 842 58
------- -------
67,055 59,679
Less current maturities of long-term debt............... (428) (1,658)
------- -------
Long-term debt.......................................... $66,627 $58,021
======= =======
</TABLE>
Interest on the Secured Notes accrued at a rate of 10.5% per annum until
December 14, 1995. Thereafter, interest accrues at a rate of 10.5% per annum, if
paid in cash, or 13.0% per annum, if paid in kind. The Credit Agreement (as
defined below) required accrued interest on the Secured Notes to be paid in kind
prior to January 1, 1996, and thereafter restricts the cash payment of principal
and interest on the Secured Notes unless certain ratios and conditions are met.
Otherwise, interest on the Secured Notes is payable in kind at the discretion of
the Company during the term of the Secured Notes. All interest through June 30,
1996 was accrued at 13% since the Company paid this interest in kind. For the
quarter ended September 30, 1996, interest was accrued at 10.5% since at that
time it was the Company's intention to pay the December 31, 1996 interest
payment in cash. During the fourth quarter of 1996, the Company decided to pay
the December 31, 1996 interest payment in kind. As a result, interest expense of
$386,000 related to the third quarter of 1996 was recorded during the fourth
quarter of 1996.
The Secured Notes are secured by a security interest on substantially all
of the Company's property (other than land and buildings), the shares of the
Company's United States subsidiaries and 65% of the shares of certain non-United
States subsidiaries (collectively, the "Pledged Shares"). The Secured Notes are
subordinated to the security interest in favor of Bank One,
F-13
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BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Milwaukee, National Association ("Bank One") up to $16,000,000 in indebtedness
and other amounts owing under the Credit Agreement (as defined below).
During 1996, there were two trades of the Secured Notes, which are
privately held. In February, 1996, 97.2% of the Secured Notes were purportedly
sold for 94.67% of face value. In March, 1996, the remaining 2.8% of the Secured
Notes were purportedly sold for 98% of face value. Based on these trades,
management believes that the carrying value of the Secured Notes approximates
fair value.
The Construction Loan outstanding at Bucyrus Chile, Ltda. at December 31,
1996 bears interest at 9.24% and is due in February, 1997. However, this loan
will be refinanced with a new $2,000,000 construction loan which will be payable
commencing in 1999. Therefore, the amount outstanding at December 31, 1996 is
classified as long-term debt and the maturities below reflect the refinancing.
Maturities of long-term debt are the following for each of the next five
years:
<TABLE>
<S> <C>
1997............................................. $ 428,000
1998............................................. --
1999............................................. 66,356,000
2000............................................. 271,000
2001............................................. --
</TABLE>
The Company has a Credit Agreement dated as of December 14, 1994 (the
"Credit Agreement"), with Bank One. The Credit Agreement, as amended, contains a
credit facility for working capital and general corporate purposes (the "Loan
Facility"), a letter of credit facility (the "L/C Facility") and a project
financing loan facility (the "Project Financing Facility"). Under the Loan
Facility, the Company may borrow up to $2,500,000, provided that it meets
certain earnings before interest, taxes, depreciation and amortization tests, as
defined. Borrowings under the Loan Facility mature on April 30, 1998 and
interest is payable at the Company's option either at a rate equal to Bank One's
reference rate plus 0.75% per annum or an adjusted LIBOR rate plus 2.75% per
annum. Under the L/C Facility, Bank One has agreed to issue letters of credit
through April 30, 1998 in an aggregate amount not in excess of $15,000,000 minus
the then outstanding aggregate borrowings by the Company under the Loan
Facility, provided that no letter of credit may expire after April 30, 1999.
Under the Project Financing Facility, Bank One may make project financing loans
to the Company from time to time. Borrowings under the Project Financing
Facility bear interest at the Company's option either at a rate equal to Bank
One's reference rate or an adjusted LIBOR rate plus a variable margin.
Borrowings under the Credit Agreement are secured by a security interest on
substantially all of the Company's property (other than land and buildings),
including the Pledged Shares. At December 31, 1996 and 1995, the Company had
borrowings outstanding under the Loan Facility of $357,000 and $269,000,
respectively. At December 31, 1996 and 1995, $7,316,000 and $3,419,000,
respectively, of the L/C Facility was being used. Under the Project Financing
Facility, the Company has a line of credit for $14,000,000 to support one
current order. Bank One has participated a portion of the Project Financing
Facility to The Bank of Nova Scotia. Availability is based on the amount of
inventory being financed and any accounts receivable relating to such project.
Availability at December 31, 1996 was approximately $3,300,000. There were no
borrowings under the Project Financing Facility at December 31, 1996 and 1995.
The Credit Agreement prohibits the Company from making any dividends or
other distributions upon the Common Stock, other than dividends payable solely
in Common Stock or other equity securities of the Company. The Indenture
relating to the Secured Notes prohibits the Company from declaring or paying any
dividend or making any distribution in respect of the Common Stock (other than
dividends or distributions payable solely in shares of Common Stock or in
options, warrants or
F-14
<PAGE> 128
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
other rights to acquire Common Stock), if at the time thereof an Event of
Default (as defined in such Indenture) or an event that with the lapse of time
or the giving of notice, or both, would constitute an Event of Default (as
defined in such Indenture) shall have occurred and be continuing.
The agreements relating to the Secured Notes and the Credit Agreement
permit additional project financing from other lenders to manufacture mining
machinery or other products pursuant to binding purchase contracts. Project
financing borrowings are secured by the inventory being financed and any
accounts receivable relating to such project. Project financing borrowings
mature not later than the date of the final payment by the customer under the
applicable purchase contract. At December 31, 1996 and 1995, the Company had
$2,431,000 and $5,132,000, respectively, of outstanding project financing
borrowings not related to the Project Financing Facility. The outstanding
project financing borrowings at December 31, 1996 and 1995 bear interest at
8.25% and 7.75%, respectively, and are included in Short-Term Obligations in the
Consolidated Balance Sheets.
As required under various agreements, Equipment Assurance Limited, an
off-shore insurance subsidiary of the Company, has pledged $1,056,000 and
$2,856,000 of its cash to secure its reimbursement obligations for outstanding
letters of credit at December 31, 1996 and 1995, respectively. Bucyrus Chile
Ltda. has pledged $23,000 and $21,000 of its cash for a bank guarantee at
December 31, 1996 and 1995, respectively. These collateral amounts are
classified as Restricted Funds on Deposit in the Consolidated Balance Sheets.
NOTE H -- COMMON SHAREHOLDERS' INVESTMENT
In 1995, the Company's Board of Directors adopted the Bucyrus
International, Inc. Non-Employee Directors' Stock Option Plan (the "Directors'
Stock Option Plan"). The Directors' Stock Option Plan provides for the automatic
grant of non-qualified stock options to non-employee members of the Board of
Directors for up to 60,000 shares of Common Stock at an exercise price based on
the last sale price of the Common Stock on the date of grant. Options granted
vest and are exercisable immediately on the date of grant and terminate on the
earlier of ten years after the date of grant, six months after the non-employee
director ceases to be a director of the Company by reason of death, or three
months after the non-employee director ceases to be a director of the Company
for any reason other than death. The following summary shows activity and
outstanding balances of options exercisable for shares of Common Stock under the
Directors' Stock Option Plan:
<TABLE>
<CAPTION>
OUTSTANDING AVAILABLE FOR
OPTIONS FUTURE GRANTS
----------- -------------
<S> <C> <C>
At plan inception.................................... -- 60,000
Granted on February 16, 1995 ($6.00 per share)....... 8,000 (8,000)
------ ------
Balances at December 31, 1995........................ 8,000 52,000
Granted on February 8, 1996 ($9.25 per share)........ 8,000 (8,000)
Granted on March 11, 1996 ($9.00 per share).......... 4,000 (4,000)
------ ------
Balances at December 31, 1996 ($6.00-$9.25 per
share)............................................. 20,000 40,000
====== ======
</TABLE>
At December 31, 1996, all of the options outstanding were exercisable at a
weighted average exercise price of $7.90 per share and have a weighted average
remaining contractual life of 8.7 years. The weighted average exercise price of
options granted in 1996 was $9.17 per share.
In 1996, the Company's Board of Directors adopted the Bucyrus
International, Inc. 1996 Employees' Stock Incentive Plan (the "1996 Employees'
Plan"). The 1996 Employees' Plan
F-15
<PAGE> 129
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
authorizes the granting to key employees of: (a) stock options, which may be
either incentive stock options or non-qualified stock options, at an exercise
price per share not less than 55% of the fair market value of the Common Stock
on the date of grant; (b) stock appreciation rights at a grant price of not less
than 100% of the fair market value of the Common Stock on the date of grant; (c)
restricted stock; and (d) performance shares. The 1996 Employees' Plan provides
that up to a total of 1,000,000 shares of Common Stock, subject to adjustment
under plan provisions, will be available for the granting of awards thereunder.
The following summary shows activity and outstanding balances of grants
under the 1996 Employees' Plan:
<TABLE>
<CAPTION>
AVAILABLE FOR
GRANTED FUTURE GRANTS
------- -------------
<S> <C> <C>
At plan inception...................................... -- 1,000,000
Non-qualified stock options granted on March 11, 1996
($5.0875 per share).................................. 200,000 (200,000)
Restricted stock granted on March 11, 1996............. 300,000 (300,000)
Non-qualified stock options granted on November 7, 1996
($8.75 per share).................................... 30,000 (30,000)
Stock appreciation rights granted on November 7, 1996
($8.75 per share).................................... 50,000 (50,000)
------- ---------
Balances at December 31, 1996.......................... 580,000 420,000
======= =========
</TABLE>
At December 31, 1996, options for 200,000 shares were exercisable at an
exercise price of $5.0875 per share. The weighted average exercise price of the
options granted in 1996 was $5.57 per share. The weighted average remaining
contractual life of the options at December 31, 1996 was 9.3 years.
The restricted stock vests in installments over a period of time as
determined in each individual grant and is subject to restrictions imposed by
the Board of Directors. The stock appreciation rights may be settled in cash,
Common Stock or other consideration as determined in each individual grant. The
remaining contractual life of the stock appreciation rights at December 31, 1996
was 9.8 years.
Certain grants under the 1996 Employees' Plan result in additional
compensation expense to the Company. Compensation related to future periods is
reported as an offset within Common Shareholders' Investment in the Consolidated
Balance Sheet. Stock compensation expense recognized for the year ended December
31, 1996 was $668,000.
The Company accounts for the Directors' Stock Option Plan and the 1996
Employees' Plan in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," as allowed by Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). Had compensation expense for these plans been
F-16
<PAGE> 130
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
determined consistent with SFAS 123, the Company's net earnings (loss) and net
earnings (loss) per share would have been reduced to the following pro forma
amounts:
<TABLE>
<CAPTION>
1996 1995
------- ---------
(DOLLARS IN THOUSANDS;
EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Net Earnings (Loss) As Reported......................... $2,878 $(18,772)
Pro Forma............................................. 2,688 (18,808)
Net Earnings (Loss) Per Share As Reported............... $ 0.28 $ (1.84)
Pro Forma............................................. 0.26 (1.84)
</TABLE>
The weighted average grant-date fair value of stock options granted in 1996
and 1995 under the Directors' Stock Option Plan was $4.93 and $4.44 per option,
respectively. The weighted average grant-date fair value of stock options
granted under the 1996 Employees' Plan whose exercise price was less than market
price of the Common Stock on the date of grant was $6.55 per option. The
weighted average grant-date fair value of stock options granted under the 1996
Employees' Plan whose exercise price was equal to the market price of the Common
Stock on the date of grant was $6.00 per option. The grant-date fair value of
the restricted stock was $9.00 per share. The grant-date fair value of the stock
appreciation rights was $6.00 per right. The fair value of grants is estimated
on the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions:
<TABLE>
<CAPTION>
1996
DIRECTORS' EMPLOYEES'
STOCK OPTION PLAN PLAN
--------------------- ----------
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
Risk-free interest rate..................... 6.48% 6.41% 6.34%
Expected dividend yield..................... 0% 0% 0%
Expected life............................... 7 years 7 years 5.6 years
Calculated volatility....................... 67.07% 73.92% 66.10%
</TABLE>
NOTE I -- INCOME TAXES
Deferred taxes are provided to reflect temporary differences between the
financial and tax basis of assets and liabilities using presently enacted tax
rates and laws. A valuation allowance is recognized if it is more likely than
not that some or all of the deferred tax assets will not be realized.
Earnings (loss) before income taxes and extraordinary gain consists of the
following:
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
YEARS ENDED ------------
DECEMBER 31, DECEMBER 14 - JANUARY 1 -
----------------- DECEMBER 31, DECEMBER 13,
1996 1995 1994 1994
---- ---- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
United States................... $ 232 $(22,749) $(199) $(23,972)
Foreign......................... 4,404 6,491 (228) 2,534
------ -------- ----- --------
Total...................... $4,636 $(16,258) $(427) $(21,438)
====== ======== ===== ========
</TABLE>
F-17
<PAGE> 131
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
YEARS ENDED ------------
DECEMBER 31, DECEMBER 14 - JANUARY 1 -
---------------- DECEMBER 31, DECEMBER 13,
1996 1995 1994 1994
---- ---- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Foreign income taxes:
Current......................... $1,902 $ 4,080 $ 90 $ 956
Deferred........................ (430) (1,717) -- 259
------ ------- ---- ------
Total...................... 1,472 2,363 90 1,215
Other (state and local taxes):
Current......................... 274 163 35 180
Deferred........................ 12 (12) -- --
------ ------- ---- ------
Total...................... 286 151 35 180
------ ------- ---- ------
Total income tax expense.......... $1,758 $ 2,514 $125 $1,395
====== ======= ==== ======
</TABLE>
Total income tax expense differs from amounts expected by applying the
Federal statutory income tax rate to earnings (loss) before income taxes and
extraordinary gain as set forth in the following table:
<TABLE>
<CAPTION>
PREDECESSOR
YEARS ENDED DECEMBER 31, COMPANY
--------------------------------------------- ---------------------
DECEMBER 14 - JANUARY 1 -
1996 1995 DECEMBER 31, 1994 DECEMBER 13, 1994
--------------------- --------------------- --------------------- ---------------------
TAX EXPENSE TAX EXPENSE TAX EXPENSE TAX EXPENSE
(BENEFIT) PERCENT (BENEFIT) PERCENT (BENEFIT) PERCENT (BENEFIT) PERCENT
----------- ------- ----------- ------- ----------- ------- ----------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tax benefit at Federal
statutory rate.............. $1,622 35.0% $(5,690) (35.0)% $(150) (35.0)% $(7,503) (35.0)%
Valuation allowance
adjustments................. (81) (1.7) 7,189 44.2 92 21.5 5,310 24.8
Impact of foreign subsidiary
income, tax rates and tax
credits..................... 7 0.2 419 2.6 179 41.9 187 0.9
State income taxes net of
Federal income tax
benefit..................... 136 2.9 27 0.2 (7) (1.6) 66 0.3
Nondeductible reorganization
expenses.................... -- -- 322 2.0 -- -- 3,268 15.2
Bell Helicopter settlement.... -- -- -- -- -- -- (439) (2.0)
Other items................... 74 1.5 247 1.5 11 2.5 506 2.3
------ ---- ------- ----- ----- ----- ------- -----
Total income tax expense...... $1,758 37.9% $ 2,514 15.5% $ 125 29.3% $ 1,395 6.5%
====== ==== ======= ===== ===== ===== ======= =====
</TABLE>
F-18
<PAGE> 132
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Significant components of deferred tax assets and deferred tax liabilities
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Postretirement benefits............................... $ 4,777 $ 4,905
Inventory valuation provisions........................ 3,978 4,687
Accrued and other liabilities......................... 7,286 9,003
Research and development expenditures................. 8,711 6,239
Tax loss carryforward................................. 27,644 27,788
Tax credit carryforward............................... 479 479
Other items........................................... 524 450
-------- --------
Total deferred tax assets............................... 53,399 53,551
-------- --------
Deferred tax liabilities:
Excess of book basis over tax basis of property, plant
and equipment and intangible assets................ (9,008) (9,966)
Valuation allowance................................... (41,637) (41,249)
-------- --------
Net deferred tax asset recognized in the Consolidated
Balance Sheets..................................... $ 2,754 $ 2,336
======== ========
</TABLE>
Due to the recent history of net operating losses, a valuation allowance
has been used to reduce the net deferred tax assets (after giving effect to
deferred tax liabilities) for domestic operations to an amount that is more
likely than not to be realized. For the year ended December 31, 1996, the
valuation allowance was increased by $388,000 to offset an increase in net
deferred tax assets for which no tax benefit was recognized.
Because the consummation of the Amended Plan on the Effective Date resulted
in an "ownership change" within the meaning of Section 382 of the Internal
Revenue Code, the net operating loss carryforwards ("NOL") available to the
Company as of the Effective Date were limited to $53,460,000, the annual use of
which is limited to $3,564,000 plus any unused annual NOL limitation amounts
from years subsequent to the Effective Date. NOL incurred subsequent to the
Effective Date is not subject to the annual Section 382 limitation. At December
31, 1996, the Company has available approximately $69,109,000 of federal NOL,
expiring in years 2003 through 2011, to offset against future taxable income.
The total federal NOL available for 1997, including the 1997 annual NOL
limitation amount, is approximately $26,341,000.
Additionally, the Company has available for federal income tax purposes
approximately $479,000 of alternative minimum tax credit carryforward which
carries forward indefinitely. However, because the credit arose prior to the
Effective Date, it will be subject to the annual limitations discussed above and
will not be usable until the year 2010.
The Company also has a significant amount of state NOL's (which expire in
the years 1997 through 2011) available to offset future state taxable income in
states where it has significant operations. Since the majority of states in
which the Company files its state returns follow rules similar to federal rules,
it is expected that the usage of state NOL's will be limited to approximately
$61,000,000.
Cumulative undistributed earnings of foreign subsidiaries that are
considered to be permanently reinvested, and on which U.S. income taxes have not
been provided by the Company, amounted to approximately $19,000,000 at December
31, 1996. It is not practicable to estimate the amount of
F-19
<PAGE> 133
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
additional tax which would be payable upon repatriation of such earnings;
however, due to foreign tax credit limitations, higher effective U.S. income tax
rates and foreign withholding taxes, additional taxes could be incurred.
NOTE J -- PENSION AND RETIREMENT PLANS
The Company has several pension and retirement plans covering substantially
all employees. The plan covering domestic salaried and certain non-union hourly
employees provides pension benefits that are based on final average pay
formulas. The funding policy for that plan is to contribute amounts at least
equal to the minimum annual amount required by applicable regulations. Plans
covering hourly and certain union members generally provide benefits of stated
amounts for each year of service. Contributions to these plans are funded based
on normal cost plus amortization of unfunded past service cost over 30 to 40
years. In addition, the Company has certain unfunded supplemental retirement
plans for which benefits are payable out of the general funds of the Company.
The following tables set forth the domestic plans' funded status and
amounts recognized in the consolidated financial statements at December 31, 1996
and 1995:
<TABLE>
<CAPTION>
STATUS OF ALL PLANS
--------------------------------------------------------------------
1996 1995
-------------------------------- --------------------------------
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS EXCEED ACCUMULATED BENEFITS EXCEED
BENEFITS ASSETS BENEFITS ASSETS
------------- --------------- ------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Accumulated benefit obligation:
Vested........................ $(54,487) $(362) $(47,057) $(186)
Non-vested.................... (4,357) -- (5,052) --
-------- ----- -------- -----
Total accumulated benefit
obligation.................... $(58,844) $(362) $(52,109) $(186)
======== ===== ======== =====
Projected benefit obligation for
services rendered to date..... $(66,760) $(478) $(58,458) $(769)
Plan assets at fair value,
primarily listed stocks and
corporate and U.S. government
bonds............................ 63,718 -- 59,589 --
-------- ----- -------- -----
Projected benefit obligation less
than (in excess of) plan
assets........................... (3,042) (478) 1,131 (769)
Unrecognized net (gain) loss....... 2,219 14 (2,635) 84
-------- ----- -------- -----
Net pension liability recognized in
the Consolidated Balance
Sheets........................... $ (823) $(464) $ (1,504) $(685)
======== ===== ======== =====
</TABLE>
The weighted average discount rate, rate of increase in future compensation
levels, and expected long-term rate of return on assets used to develop the
projected benefit obligation at December 31, 1996 were 7.5%, 4.5% and 9%,
respectively. The corresponding rates used at December 31, 1995 were 7.75%, 5%
and 9%, respectively. Mortality assumptions were also updated in 1996. The
changes in the various assumptions resulted in a $6,581,000 increase in the
projected benefit obligation.
F-20
<PAGE> 134
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The foreign subsidiaries do not have a material pension liability at
December 31, 1996 and 1995.
Net domestic periodic pension cost includes the following components:
<TABLE>
<CAPTION>
YEARS ENDED PREDECESSOR
DECEMBER 31, COMPANY
------------------- -------------
DECEMBER 14 - JANUARY 1 -
DECEMBER 31, DECEMBER 13,
1996 1995 1994 1994
---- ---- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Service cost................................ $ 1,554 $ 1,308 $ 79 $ 1,591
Interest cost............................... 4,431 4,259 186 3,714
Actual return on plan assets................ (7,697) (10,483) (27) (533)
Net amortization and deferral............... 2,527 6,219 (194) (4,231)
------- -------- ----- -------
Net periodic pension cost................... $ 815 $ 1,303 $ 44 $ 541
======= ======== ===== =======
</TABLE>
The Company has 401(k) Savings Plans available to substantially all United
States employees. Matching employer contributions are made in accordance with
plan provisions subject to certain limitations. Matching employer contributions
made were $801,000 in 1996, $611,000 in 1995 and $655,000 (including $622,000
for the Predecessor Company) in 1994.
NOTE K -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides certain health care benefits to age 65 and life
insurance benefits for certain eligible retired United States employees.
Substantially all current employees may become eligible for those benefits if
they reach early retirement age while working for the Company. The majority of
the costs of such benefits are funded as they are incurred.
The following table sets forth the plan's status and amounts recognized in
the consolidated financial statements at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.............................................. $ (8,165) $ (7,511)
Fully eligible active plan participants............... (746) (792)
Other active plan participants........................ (5,958) (5,506)
-------- --------
(14,869) (13,809)
Unrecognized net loss................................... 2,280 873
-------- --------
Accrued postretirement benefit cost recognized in the
Consolidated Balance Sheets........................... $(12,589) $(12,936)
======== ========
</TABLE>
F-21
<PAGE> 135
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
YEARS ENDED PREDECESSOR
DECEMBER 31, COMPANY
---------------- -------------
DECEMBER 14 - JANUARY 1 -
DECEMBER 31, DECEMBER 13,
1996 1995 1994 1994
---- ---- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Service cost..................... $ 323 $ 266 $15 $ 303
Interest cost.................... 1,039 1,064 51 1,003
------ ------ --- ------
Net periodic post-retirement
benefit cost................... $1,362 $1,330 $66 $1,306
====== ====== === ======
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation at December 31, 1996 and 1995 was 7.5% and
7.75%, respectively. The decrease in the discount rate resulted in a $271,000
increase in the accumulated postretirement benefit obligation. The assumed
health care cost trend rate used in measuring the accumulated postretirement
benefit obligation was 10% at December 31, 1996, declining 1% each year
thereafter, to 5% in the year 2002 and beyond. A 1% increase in the assumed
health care cost trend rate for each year would increase the accumulated
postretirement benefit obligation at December 31, 1996 by $972,000 and would
increase the net periodic postretirement benefit cost for 1996 by $109,000.
NOTE L -- RESEARCH AND DEVELOPMENT
Expenditures for design and development of new products and improvements of
existing mining machinery products, including overhead, aggregated $6,930,000 in
1996, $5,739,000 in 1995 and $4,181,000 (including $3,945,000 for the
Predecessor Company) in 1994. All engineering and product development costs are
charged to product development expense as incurred.
NOTE M -- CALCULATION OF NET EARNINGS (LOSS) PER SHARE OF COMMON STOCK
1996 net earnings per share of common stock is based on the weighted
average number of common and common equivalent shares outstanding during the
year. Restricted common stock (see Note H) is considered to be issued and
outstanding and is included in the net earnings per share calculation using the
treasury stock method. Previous years' net earnings (loss) per share of common
stock are based on the weighted average number of common shares outstanding
since common stock equivalents were not significant. Stock options outstanding
in 1994 under the B-E Holdings, Inc. 1988 Stock Option Plan were not included in
the per share calculations because they were anti-dilutive. The weighted average
number of common and common equivalent shares outstanding for the years ended
December 31, 1996 and 1995, the period December 14, 1994 to December 31, 1994
and the period January 1, 1994 to December 13, 1994, were 10,258,604,
10,203,462, 10,170,417 and 9,268,627, respectively.
Net earnings attributable to common shareholders for the Predecessor
Company includes redeemable preferred stock dividends declared and paid as well
as dividends earned but not declared.
NOTE N -- FOREIGN OPERATIONS, EXPORT SALES AND SIGNIFICANT CUSTOMERS
The Company designs, manufactures and sells products in a single industry
segment, Energy and Industrial Products. Operations are conducted in the United
States and through subsidiaries located throughout the world.
F-22
<PAGE> 136
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Financial information by geographical area is summarized in the following
table. Each geographic area represents the origin of the financial information
presented. Transfers between geographic areas represent intercompany export
sales of goods produced in the United States and are accounted for based on
established sales prices between the related companies. In computing operating
earnings for non-United States subsidiaries, no allocations of interest or
income taxes have been made. Eliminations for operating earnings (loss) include
elimination of general corporate expenses. Identifiable assets of subsidiaries
are those related to the operations of those subsidiaries. United States assets
consist of all other operating assets.
<TABLE>
<CAPTION>
TRANSFERS
SALES TO BETWEEN OPERATING
UNAFFILIATED GEOGRAPHIC TOTAL NET EARNINGS IDENTIFIABLE
CUSTOMERS AREAS SALES (LOSS) ASSETS
------------ ---------- --------- --------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996
United States.............................. $175,675 $ 24,451 $200,126 $ 7,830 $118,375
South America.............................. 27,602 -- 27,602 2,270 19,358
Australia, Far East and South Africa....... 40,896 134 41,030 4,190 22,135
Other Foreign.............................. 19,613 (14) 19,599 1,126 15,556
Eliminations............................... -- (24,571) (24,571) (2,223) (2,529)
-------- -------- -------- -------- --------
$263,786 $ -- $263,786 $ 13,193 $172,895
======== ======== ======== ======== ========
1995
United States.............................. $132,320 $ 29,847 $162,167 $(17,689) $119,791
South America.............................. 29,954 -- 29,954 3,326 18,775
Australia, Far East and South Africa....... 46,923 -- 46,923 4,151 18,127
Other Foreign.............................. 22,724 289 23,013 2,208 20,342
Eliminations............................... -- (30,136) (30,136) (2,000) (2,997)
-------- -------- -------- -------- --------
$231,921 $ -- $231,921 $(10,004) $174,038
======== ======== ======== ======== ========
1994
United States.............................. $122,765 $ 23,019 $145,784 $(11,709) $132,430
South America.............................. 17,016 7 17,023 1,859 15,700
Australia, Far East and South Africa....... 36,179 23 36,202 2,890 19,674
Other Foreign.............................. 18,024 234 18,258 1,129 14,818
Eliminations............................... -- (23,283) (23,283) (1,839) (2,749)
-------- -------- -------- -------- --------
$193,984 $ -- $193,984 $ (7,670) $179,873
======== ======== ======== ======== ========
</TABLE>
Export sales from United States operations, excluding sales to affiliates,
amounted to $103,777,000 in 1996, $69,476,000 in 1995 and $60,627,000 (including
$57,898,000 for the Predecessor Company) in 1994.
In 1996, one customer received approximately 14% of the Company's
consolidated net sales. In 1995 and 1994, a different customer received
approximately 22% and 20%, respectively, of the Company's consolidated net
sales. The Company is not dependent upon any one customer.
NOTE O -- COMMITMENTS, CONTINGENCIES AND CREDIT RISKS
Jackson National Life Insurance Company ("JNL"), the holder of
approximately 40.14% of the outstanding Common Stock and 97.2% of the Secured
Notes, has filed a claim (the "JNL 503(b) Claim") against the Company for
reimbursement of approximately $3,300,000 of professional fees and disbursements
incurred in connection with the Company's Chapter 11 proceedings pursuant to
Section 503(b) of the Bankruptcy Code. Pursuant to a settlement agreement dated
May 23, 1995,
F-23
<PAGE> 137
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
JNL agreed that, in the event that the JNL 503(b) Claim is allowed in whole or
in part by the Bankruptcy Court, in lieu of requiring payment of any award in
cash, JNL will accept payment in Common Stock at a price equal to $5.6375 per
share. By order dated June 3, 1996, the Bankruptcy Court ruled that JNL would be
awarded the sum of $500. JNL has appealed the decision. The Company has been
advised by its reorganization counsel that in said counsel's opinion the JNL
503(b) Claim is without merit; however, the ultimate outcome of this matter
cannot presently be determined. Accordingly, no provision for any loss that may
result upon resolution of this matter has been made in the consolidated
financial statements.
Concurrently with the trial of the JNL 503(b) Claim, the Bankruptcy Court
considered the final fee application of the law firm of Milbank, Tweed, Hadley &
McCloy ("Milbank"), who rendered services as reorganization counsel for the
Company in connection with the Chapter 11 proceedings. The Milbank fee
application was for approximately $2,330,000, of which 80% had previously been
paid by the Company on an interim basis. By order dated June 3, 1996, the
Bankruptcy Court ruled that Milbank would receive 80% of the claimed amount as
full and final compensation, thereby resulting in no further payments being due
and owing to Milbank on the claim. JNL appealed the decision of the Bankruptcy
Court not to order disgorgement of amounts already paid to Milbank. Milbank has
not appealed the decision.
The Company's wholly-owned subsidiary, Boonville Mining Services, Inc.
("BMSI"), was a defendant in an amended complaint filed on September 24, 1992 by
Dresser Industries, Inc. and Global Industrial Technologies, Inc. (the
"Plaintiffs"), alleging that BMSI's purchase of drawings and other assets of C&M
of Indiana, a division of Construction and Mining Services, Inc., and BMSI's use
of these and other drawings allegedly acquired subsequently, constituted a
misappropriation of the Plaintiffs' trade secrets relating to Marion Power
Shovel Company, a division of Global Industrial Technologies, Inc. BMSI had
denied these claims. On June 17, 1996, BMSI settled the litigation which
resulted in an immaterial effect on earnings.
The Company is involved in various other litigation arising in the normal
course of business. It is the view of management that the Company's recovery or
liability, if any, under pending litigation is not expected to have a material
effect on the Company's financial position or results of operations, although no
assurance to that effect can be given.
Expenditures for ongoing compliance with environmental regulations that
relate to current operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past operations and
which do not contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments indicate that remedial
efforts are probable and the costs can be reasonably estimated. Estimates of the
liability are based upon currently available facts, existing technology and
presently enacted laws and regulations. These liabilities are included in the
Consolidated Balance Sheets at their undiscounted amounts. Recoveries are
evaluated separately from the liability and, if appropriate, are recorded
separately from the associated liability in the Consolidated Balance Sheets.
The Company is normally subject to numerous product liability claims, many
of which relate to products no longer manufactured by the Company or its
subsidiaries, and other claims arising in the ordinary course of business. The
Company has insurance covering most of said claims, subject to varying
deductibles ranging from $0.3 million to $3.0 million, and has various limits of
liability depending on the insurance policy year in question. It is the view of
management that the final resolution of said claims and other similar claims
which are likely to arise in the future will not individually or in the
aggregate have a material effect on the Company's financial position or results
of operations, although no assurance to that effect can be given.
The Company has obligations under various operating leases and rental and
service agreements. The expense relating to these agreements was $5,658,000 in
1996, $5,351,000 in 1995 and
F-24
<PAGE> 138
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$4,720,000 (including $4,525,000 for the Predecessor Company) in 1994. Future
minimum annual payments under noncancellable agreements are as follows:
<TABLE>
<S> <C>
1997............................................. $ 5,248,000
1998............................................. 4,256,000
1999............................................. 1,938,000
2000............................................. 1,418,000
2001............................................. 1,063,000
After 2001....................................... 1,187,000
-----------
$15,110,000
===========
</TABLE>
At December 31, 1996, the Company is also committed to acquire
approximately $1,550,000 of equipment. The Company expects to lease the
equipment.
A significant portion of the Company's consolidated net sales are to
customers whose activities are related to the coal, copper and iron ore mining
industries, including some who are located in foreign countries. The Company
generally extends credit to these customers and, therefore, collection of
receivables may be affected by the mining industry economy and the economic
conditions in the countries where the customers are located. However, the
Company closely monitors extension of credit and has not experienced significant
credit losses. Also, most foreign sales are made to large, well-established
companies. The Company generally requires collateral or guarantees on foreign
sales to smaller companies.
NOTE P -- QUARTERLY RESULTS -- UNAUDITED
Quarterly results are as follows:
<TABLE>
<CAPTION>
QUARTERS ENDED AT END OF
-------------------------------------------------
MARCH JUNE SEPTEMBER DECEMBER
------- ------- --------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales:
1996.......................................... $61,456 $69,364 $ 68,077 $64,889
1995.......................................... 56,873 55,709 61,408 57,931
Gross profit:
1996.......................................... $11,793 $12,004 $ 12,785 $12,078
1995.......................................... 7,179 7,927 2,782 8,481
Net earnings (loss):
1996(1)....................................... $ 298 $ 612 $ 1,495 $ 473
1995(2)....................................... (2,059) (2,985) (12,051) (1,677)
Net earnings (loss) per share:
1996.......................................... $ 0.03 $ 0.06 $ 0.14 $ 0.05
1995.......................................... (0.20) (0.29) (1.18) (0.16)
Weighted average shares used in calculation (in
thousands):
1996.......................................... 10,235 10,235 10,235 10,273
1995.......................................... 10,170 10,173 10,235 10,235
</TABLE>
- -------------------------
(1) Interest expense on the Secured Notes of $386,000 related to the quarter
ended September 30, 1996 was recorded during the quarter ended December 31,
1996. See Note G.
(2) Included in the net loss for the quarter ended September 30, 1995 were
inventory obsolescence adjustments of $4,416,000, a $1,018,000 charge for
the reestimation of certain customer warranty reserves, and restructuring
expenses of $2,577,000.
F-25
<PAGE> 139
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE Q -- SUPPLEMENTAL CONSOLIDATING CONDENSED FINANCIAL INFORMATION
The Company's payment obligations under the proposed Notes are to be
guaranteed by certain of the Company's wholly-owned subsidiaries (the "Guarantor
Subsidiaries"). Such guarantees are full, unconditional and joint and several.
Separate financial statements of the Guarantor Subsidiaries are not presented
because the Company's management has determined that they would not be material
to investors. The following supplemental financial information sets forth, on an
unconsolidated basis, statement of operations, balance sheet, and statement of
cash flow information for the Company ("Parent Company"), for the Guarantor
Subsidiaries and for the Company's non-guarantor subsidiaries (the "Other
Subsidiaries"). The supplemental financial information reflects the investments
of the Company in the Guarantor and Other Subsidiaries using the equity method
of accounting. Parent Company amounts for net earnings and common shareholders'
investment differ from consolidated amounts as intercompany profit in subsidiary
inventory has not been eliminated in the Parent Company statement but has been
eliminated in the Consolidated Totals.
Consolidating Condensed Statements of Operations for the Year Ended December 31,
1996
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales....................... $174,677 $32,235 $88,232 $(31,358) $263,786
Other income.................... 1,424 1 582 (1,004) 1,003
-------- ------- ------- -------- --------
176,101 32,236 88,814 (32,362) 264,789
-------- ------- ------- -------- --------
Cost and Expenses:
Cost of products sold........... 149,383 27,308 70,133 (31,698) 215,126
Product development, selling,
administrative and
miscellaneous expenses....... 21,220 1,967 13,266 17 36,470
Interest expense................ 8,277 433 851 (1,004) 8,557
-------- ------- ------- -------- --------
178,880 29,708 84,250 (32,685) 260,153
-------- ------- ------- -------- --------
Earnings (loss) before income
taxes and equity in net income
of consolidated subsidiaries.... (2,779) 2,528 4,564 323 4,636
Income taxes...................... (401) 985 1,174 1,758
-------- ------- ------- -------- --------
Earnings (loss) before equity in
net income of consolidated
subsidiaries.................... (2,378) 1,543 3,390 323 2,878
Equity in net income of
consolidated subsidiaries....... 4,933 (4,933) --
-------- ------- ------- -------- --------
Net earnings...................... $ 2,555 $ 1,543 $ 3,390 $ (4,610) $ 2,878
======== ======= ======= ======== ========
</TABLE>
F-26
<PAGE> 140
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Statements of Operations for the Year Ended December 31,
1995
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales......................... $145,661 $20,809 $ 99,890 $(34,439) $231,921
Other income...................... 1,396 23 836 (960) 1,295
-------- ------- -------- -------- --------
147,057 20,832 100,726 (35,399) 233,216
-------- ------- -------- -------- --------
Cost and Expenses:
Cost of products sold............. 140,666 18,980 79,986 (34,080) 205,552
Product development, selling,
administrative and miscellaneous
expenses........................ 18,536 2,757 12,809 70 34,172
Interest expense.................. 5,957 405 852 (960) 6,254
Restructuring expenses............ 2,440 96 41 2,577
Reorganization items.............. 919 919
-------- ------- -------- -------- --------
168,518 22,238 93,688 (34,970) 249,474
-------- ------- -------- -------- --------
Earnings (loss) before income taxes
and equity in net income of
consolidated subsidiaries......... (21,461) (1,406) 7,038 (429) (16,258)
Income taxes........................ 999 (550) 2,065 2,514
-------- ------- -------- -------- --------
Earnings (loss) before equity in net
income of consolidated
subsidiaries...................... (22,460) (856) 4,973 (429) (18,772)
Equity in net income of consolidated
subsidiaries...................... 4,117 (4,117) --
-------- ------- -------- -------- --------
Net earnings (loss)................. $(18,343) $ (856) $ 4,973 $ (4,546) $(18,772)
======== ======= ======== ======== ========
</TABLE>
Consolidating Condensed Statements of Operations
for the Period December 14, 1994 to December 31, 1994
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales......................... $5,373 $1,039 $2,839 $(1,441) $7,810
Other income...................... 116 4 54 (95) 79
------ ------ ------ ------- ------
5,489 1,043 2,893 (1,536) 7,889
------ ------ ------ ------- ------
Cost and expenses:
Cost of products sold............. 4,892 914 2,306 (1,179) 6,933
Product development, selling,
administrative and miscellaneous
expenses........................ 873 (5) 215 16 1,099
Interest expense.................. 322 19 38 (95) 284
------ ------ ------ ------- ------
6,087 928 2,559 (1,258) 8,316
------ ------ ------ ------- ------
Earnings (loss) before income taxes
and equity in net income of
consolidated subsidiaries......... (598) 115 334 (278) (427)
Income taxes........................ 24 30 71 125
------ ------ ------ ------- ------
Earnings (loss) before equity in net
income of consolidated
subsidiaries...................... (622) 85 263 (278) (552)
Equity in net income of consolidated
subsidiaries...................... 348 (348) --
------ ------ ------ ------- ------
Net earnings (loss)................. $ (274) $ 85 $ 263 $ (626) $ (552)
====== ====== ====== ======= ======
</TABLE>
F-27
<PAGE> 141
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Statements of Operations for the Period January 1, 1994
to December 13, 1994 (Predecessor Company)
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales...................... $118,029 $24,542 $68,643 $(25,040) $186,174
Other income................... 3,064 11 905 (1,004) 2,976
-------- ------- ------- -------- --------
121,093 24,553 69,548 (26,044) 189,150
-------- ------- ------- -------- --------
Cost and Expenses:
Cost of products sold.......... 105,258 21,515 54,606 (24,198) 157,181
Product development, selling,
administrative and
miscellaneous expenses...... 17,030 2,468 10,645 15 30,158
Interest expense............... 13,961 175 779 (1,004) 13,911
Reorganization items........... 9,338 9,338
-------- ------- ------- -------- --------
145,587 24,158 66,030 (25,187) 210,588
-------- ------- ------- -------- --------
Earnings (loss) before income
taxes and extraordinary gain... (24,494) 395 3,518 (857) (21,438)
Income taxes..................... 287 54 1,076 (22) 1,395
-------- ------- ------- -------- --------
Earnings (loss) before
extraordinary gain............. (24,781) 341 2,442 (835) (22,833)
Extraordinary gain............... 142,480 142,480
-------- ------- ------- -------- --------
Earnings before equity in net
income of consolidated
subsidiaries................... 117,699 341 2,442 (835) 119,647
Equity in net income of
consolidated subsidiaries...... 2,783 (2,783) --
-------- ------- ------- -------- --------
120,482 341 2,442 (3,618) 119,647
Redeemable preferred stock
dividends...................... (40) (40)
Preferred stock accretion........ (106) (106)
Reorganization item - preferred
stock.......................... (40,555) (40,555)
-------- ------- ------- -------- --------
Net earnings attributable to
common shareholders............ $ 79,781 $ 341 $ 2,442 $ (3,618) $ 78,946
======== ======= ======= ======== ========
</TABLE>
F-28
<PAGE> 142
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Balance Sheets at December 31, 1996
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...... $ 9,072 $ 149 $ 6,542 $ 15,763
Receivables.................... 15,028 4,941 12,116 32,085
Intercompany receivables....... 20,886 623 1,969 $(23,478) --
Inventories.................... 43,343 1,438 28,554 (2,446) 70,889
Prepaid expenses and other
current assets.............. 366 144 1,994 2,504
-------- ------ ------- -------- --------
Total Current Assets...... 88,695 7,295 51,175 (25,924) 121,241
OTHER ASSETS:
Restricted funds on deposit.... 1,079 1,079
Intangible assets.............. 8,545 8,545
Other assets................... 3,845 2,158 6,003
Investment in subsidiaries..... 30,769 (30,769) --
-------- ------ ------- -------- --------
43,159 3,237 (30,769) 15,627
PROPERTY, PLANT AND EQUIPMENT --
NET............................ 27,226 954 7,847 36,027
-------- ------ ------- -------- --------
$159,080 $8,249 $62,259 $(56,693) $172,895
======== ====== ======= ======== ========
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and accrued
expenses.................... $ 22,219 $2,205 $ 9,361 $ (20) $ 33,765
Intercompany payables.......... 785 5,579 16,141 (22,505) --
Liabilities to customers on
uncompleted contracts and
warranties.................. 2,101 197 1,281 3,579
Income taxes................... 357 63 1,049 1,469
Short-term obligations......... 2,788 398 3,186
Current maturities of long-term
debt........................ 428 428
-------- ------ ------- -------- --------
Total Current
Liabilities............ 28,250 8,044 28,658 (22,525) 42,427
LONG-TERM LIABILITIES:
Deferred income taxes.......... 148 148
Liabilities to customers on
uncompleted contracts and
warranties.................. 2,638 639 3,277
Postretirement benefits........ 10,610 454 11,064
Deferred expenses and other.... 10,937 233 721 11,891
-------- ------ ------- -------- --------
24,185 233 1,962 26,380
LONG-TERM DEBT, less current
maturities..................... 65,785 842 66,627
COMMON SHAREHOLDERS'
INVESTMENT..................... 40,860 (28) 30,797 (34,168) 37,461
-------- ------ ------- -------- --------
$159,080 $8,249 $62,259 $(56,693) $172,895
======== ====== ======= ======== ========
</TABLE>
F-29
<PAGE> 143
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Balance Sheets at December 31, 1995
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...... $ 5,462 $ 355 $ 5,333 $ 11,150
Receivables.................... 16,724 2,602 16,277 35,603
Intercompany receivables....... 20,848 446 1,036 $(22,330) --
Inventories.................... 45,074 1,947 29,373 (2,828) 73,566
Prepaid expenses and other
current assets.............. 569 82 763 1,414
-------- ------ ------- -------- --------
Total Current Assets...... 88,677 5,432 52,782 (25,158) 121,733
OTHER ASSETS:
Restricted funds on deposit.... 2,877 2,877
Intangible assets.............. 9,021 9,021
Other assets................... 2,764 1,996 4,760
Investment in subsidiaries..... 28,740 (28,740) --
-------- ------ ------- -------- --------
40,525 4,873 (28,740) 16,658
PROPERTY, PLANT AND EQUIPMENT --
NET............................ 29,193 1,016 5,438 35,647
-------- ------ ------- -------- --------
$158,395 $6,448 $63,093 $(53,898) $174,038
======== ====== ======= ======== ========
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and accrued
expenses.................... $ 27,326 $1,723 $ 8,906 $ (468) $ 37,487
Intercompany payables.......... 1,024 4,702 15,242 (20,968) --
Liabilities to customers on
uncompleted contracts and
warranties.................. 5,314 3 2,905 8,222
Income taxes................... 386 24 3,053 3,463
Short-term obligations......... 5,493 80 5,573
Current maturities of long-term
debt........................ 1,658 1,658
-------- ------ ------- -------- --------
Total Current
Liabilities............ 39,543 6,452 31,844 (21,436) 56,403
LONG-TERM LIABILITIES:
Deferred income taxes.......... 183 183
Liabilities to customers on
uncompleted contracts and
warranties.................. 2,319 808 3,127
Postretirement benefits........ 11,058 469 11,527
Deferred expenses and other.... 9,052 317 728 10,097
-------- ------ ------- -------- --------
22,429 317 2,188 24,934
LONG-TERM DEBT, less current
maturities..................... 58,021 58,021
COMMON SHAREHOLDERS'
INVESTMENT..................... 38,402 (321) 29,061 (32,462) 34,680
-------- ------ ------- -------- --------
$158,395 $6,448 $63,093 $(53,898) $174,038
======== ====== ======= ======== ========
</TABLE>
F-30
<PAGE> 144
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Statements of Cash Flows for the Year Ended December 31,
1996
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings................................ $2,555 $ 1,543 $ 3,390 $(4,610) $ 2,878
Adjustments to reconcile net earnings to net
cash provided by (used in) operating
activities:
Depreciation.............................. 2,691 150 1,041 -- 3,882
Amortization.............................. 1,142 -- -- -- 1,142
Stock compensation expense................ 668 -- -- -- 668
In kind interest on the Secured Notes due
December 14, 1999....................... 7,783 -- -- -- 7,783
Loss on sale of property, plant and
equipment............................... 350 8 4 -- 362
Changes in assets and liabilities:
Intercompany accounts................... 316 700 (627) (389) --
Receivables............................. 1,696 (2,339) 3,664 -- 3,021
Inventories............................. 1,729 509 170 (382) 2,026
Other current assets.................... 203 (62) (1,255) -- (1,114)
Other assets............................ (1,001) -- (144) -- (1,145)
Current liabilities other than income
taxes, short-term obligations and
current maturities of long-term
debt................................. (5,930) 676 (526) 448 (5,332)
Income taxes............................ (29) 39 (2,001) -- (1,991)
Long-term liabilities other than
deferred income taxes................ (1,401) (84) (608) -- (2,093)
------- ------- ------- ------- -------
Net cash provided by (used in) operating
activities................................ 10,772 1,140 3,108 (4,933) 10,087
------- ------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in restricted funds on deposit..... -- -- 1,798 -- 1,798
Purchases of property, plant and equipment.. (1,929) (96) (2,971) -- (4,996)
Proceeds from sale of property, plant and
equipment................................. 855 -- 203 -- 1,058
Equity in net income of consolidated
subsidiaries.............................. (4,933) -- -- 4,933 --
Dividends paid to parent.................... 1,550 (1,250) (300) -- --
------- ------- ------- ------- -------
Net cash used in investing activities....... (4,457) (1,346) (1,270) 4,933 (2,140)
------- ------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of project financing
obligations............................... 5,402 -- -- -- 5,402
Reduction of project financing
obligations............................... (8,104) -- -- -- (8,104)
Net decrease in other bank borrowings....... (3) -- (1,347) -- (1,350)
Proceeds from issuance of long-term debt.... -- -- 849 -- 849
------- ------- ------- ------- -------
Net cash used in financing activities....... (2,705) -- (498) -- (3,203)
------- ------- ------- ------- -------
Effect of exchange rate changes on cash..... -- -- (131) -- (131)
------- ------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents............................... 3,610 (206) 1,209 -- 4,613
Cash and cash equivalents at beginning of
period.................................... 5,462 355 5,333 -- 11,150
------- ------- ------- ------- -------
Cash and cash equivalents at end of
period.................................... $9,072 $ 149 $ 6,542 $ -- $15,763
======= ======= ======= ======= =======
</TABLE>
F-31
<PAGE> 145
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Statements of Cash Flows for the Year Ended December 31,
1995
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)...................... $(18,343) $ (856) $ 4,973 $(4,546) $(18,772)
Adjustments to reconcile net earnings
(loss) to net cash provided by (used
in) operating activities:
Inventory obsolescence provision....... 4,416 -- -- -- 4,416
Depreciation........................... 2,491 240 940 -- 3,671
Amortization........................... 1,194 -- -- -- 1,194
In kind interest on the Secured Notes
due December 14, 1999.............. 5,691 -- -- -- 5,691
(Gain) loss on sale of property, plant
and equipment........................ (2) 7 (171) -- (166)
Changes in assets and liabilities:
Intercompany accounts.............. (211) (437) 254 394 --
Receivables........................ (1,572) 359 (8,501) 63 (9,651)
Inventories........................ 4,550 (487) (538) 244 3,769
Other current assets............... (77) (29) 670 -- 564
Other assets....................... (193) -- (385) -- (578)
Current liabilities other than
income taxes, short-term
obligations and current
maturities of long-term debt.... 5,779 132 2,434 (272) 8,073
Income taxes....................... 10 (2) 732 -- 740
Long-term liabilities other than
deferred income taxes........... (545) (11) (479) -- (1,035)
-------- ------- ------- ------- --------
Net cash provided by (used in) operating
activities............................. 3,188 (1,084) (71) (4,117) (2,084)
-------- ------- ------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in restricted funds on
deposit................................ -- -- 798 -- 798
Purchases of property, plant and
equipment.............................. (1,919) (258) (829) -- (3,006)
Proceeds from sale of property, plant and
equipment.............................. 45 -- 218 -- 263
Equity in net income of consolidated
subsidiaries........................... (4,117) -- -- 4,117 --
Dividends paid to parent................. 1,171 -- (1,171) -- --
-------- ------- ------- ------- --------
Net cash provided by (used in) investing
activities............................. (4,820) (258) (984) 4,117 (1,945)
-------- ------- ------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of project
financing obligations.................. 6,012 -- -- -- 6,012
Reduction of project financing
obligations............................ (7,117) -- -- -- (7,117)
Net increase (decrease) in other bank
borrowings............................. 361 -- (57) -- 304
-------- ------- ------- ------- --------
Net cash used in financing activities.... (744) -- (57) -- (801)
-------- ------- ------- ------- --------
Effect of exchange rate changes on
cash................................... -- -- (229) -- (229)
-------- ------- ------- ------- --------
Net decrease in cash and cash
equivalents............................ (2,376) (1,342) (1,341) -- (5,059)
Cash and cash equivalents at beginning of
period................................. 7,838 1,697 6,674 -- 16,209
-------- ------- ------- ------- --------
Cash and cash equivalents at end of
period................................. $ 5,462 $ 355 $ 5,333 $ -- $ 11,150
======== ======= ======= ======= ========
</TABLE>
F-32
<PAGE> 146
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Statements of Cash Flows for
the Period December 14, 1994 to December 31, 1994
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net earnings (loss)................ $ (274) $ 85 $ 263 $(626) $ (552)
Adjustments to reconcile net
earnings (loss) to net cash
provided by (used in) operating
activities:
Depreciation..................... 95 37 13 -- 145
Amortization..................... 23 -- -- -- 23
In kind interest on the Secured
Notes due December 14, 1999... 258 -- -- -- 258
(Gain) loss on sale of property,
plant and equipment........... -- -- 5 -- 5
Changes in assets and
liabilities:
Intercompany accounts......... 442 (1,209) 1,117 (350) --
Receivables................... 2,232 792 1,294 -- 4,318
Inventories................... (167) (89) (496) 691 (61)
Other current assets.......... 3 66 132 (274) (73)
Other assets.................. -- -- (35) 23 (12)
Current liabilities other than
income taxes, short-term
obligations and current
maturities of long-term
debt........................ (4,695) (158) (255) (89) (5,197)
Income taxes.................. -- 11 14 277 302
Long-term liabilities other
than deferred income
taxes....................... 1,518 (25) (1,586) -- (93)
------- ------- ------- ----- -------
Net cash provided by (used in)
operating activities............. (565) (490) 466 (348) (937)
------- ------- ------- ----- -------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of property, plant and
equipment........................ (167) -- (23) -- (190)
Equity in net income of
consolidated subsidiaries........ (348) -- -- 348 --
------- ------- ------- ----- -------
Net cash used in investing
activities....................... (515) -- (23) 348 (190)
------- ------- ------- ----- -------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of project
financing obligations............ 1,620 -- -- -- 1,620
------- ------- ------- ----- -------
Net cash provided by financing
activities....................... 1,620 -- -- -- 1,620
------- ------- ------- ----- -------
Effect of exchange rate changes on
cash............................. -- -- (5) -- (5)
------- ------- ------- ----- -------
Net increase (decrease) in cash and
cash equivalents................. 540 (490) 438 -- 488
Cash and cash equivalents at
beginning of period.............. 7,298 2,187 6,236 -- 15,721
------- ------- ------- ----- -------
Cash and cash equivalents at end of
period........................... $ 7,838 $ 1,697 $ 6,674 $ -- $16,209
======= ======= ======= ===== =======
</TABLE>
F-33
<PAGE> 147
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Statements of Cash Flows
for the Period January 1, 1994 to December 13, 1994 (Predecessor Company)
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)................. $ 120,482 $ 341 $ 2,442 $(3,618) $119,647
Adjustments to reconcile net
earnings (loss) to net cash
provided by (used in) operating
activities:
Depreciation...................... 5,869 291 1,196 -- 7,356
Amortization...................... 3,679 -- -- -- 3,679
In kind interest on the Secured
Notes due December 14, 1999.... 7,287 -- -- -- 7,287
Amortization of debt discount..... 71 -- -- -- 71
(Gain) loss on sale of property,
plant and equipment............ 69 16 (48) -- 37
Non-cash reorganization items..... 1,680 -- -- -- 1,680
Extraordinary gain................ (142,480) -- -- -- (142,480)
Changes in assets and liabilities:
Intercompany accounts............. (4,971) 2,838 1,064 1,069 --
Receivables....................... (2,071) (1,226) (1,256) (63) (4,616)
Inventories....................... (4,046) (651) (2,727) (115) (7,539)
Other current assets.............. (234) (63) 148 274 125
Other assets...................... 167 -- (157) (23) (13)
Current liabilities other than
income taxes, short-term
obligations and current
maturities of long-term debt... 16,581 (142) 917 (30) 17,326
Income taxes...................... (175) (20) 1,015 (277) 543
Long-term liabilities other than
deferred income taxes.......... (1,786) 200 214 -- (1,372)
--------- ------- ------- ------- --------
Net cash provided by (used in)
operating activities.............. 122 1,584 2,808 (2,783) 1,731
--------- ------- ------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in restricted funds on
deposit........................... 2,340 -- 523 -- 2,863
Purchases of property, plant and
equipment......................... (1,606) (506) (504) -- (2,616)
Proceeds from sale of property,
plant and equipment............... 19 -- 106 -- 125
Equity in net income of consolidated
subsidiaries...................... (2,783) -- -- 2,783 --
--------- ------- ------- ------- --------
Net cash provided by (used in)
investing activities.............. (2,030) (506) 125 2,783 372
--------- ------- ------- ------- --------
</TABLE>
F-34
<PAGE> 148
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of project
financing obligations............. 7,891 -- -- -- 7,891
Reduction of project financing
obligations....................... (6,933) -- -- -- (6,933)
Net decrease in other bank
borrowings........................ -- -- (1,210) -- (1,210)
--------- ------- ------- ------- --------
Net cash provided by (used in)
financing activities.............. 958 -- (1,210) -- (252)
--------- ------- ------- ------- --------
Effect of exchange rate changes on
cash.............................. -- -- 174 -- 174
--------- ------- ------- ------- --------
Net increase (decrease) in cash and
cash equivalents.................. (950) 1,078 1,897 -- 2,025
Cash and cash equivalents at
beginning of period............... 8,248 1,109 4,339 -- 13,696
--------- ------- ------- ------- --------
Cash and cash equivalents at end of
period............................ $ 7,298 $ 2,187 $ 6,236 $ -- $ 15,721
========= ======= ======= ======= ========
</TABLE>
* * * *
F-35
<PAGE> 149
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..... $ 11,350 $ 15,763
Receivables................... 54,271 32,085
Inventories................... 74,587 70,889
Prepaid expenses and other
current assets.............. 5,091 2,504
-------- --------
Total Current Assets.......... 145,299 121,241
OTHER ASSETS:
Restricted funds on deposit... 1,079 1,079
Intangible assets -- net...... 8,101 8,545
Other assets.................. 6,395 6,003
-------- --------
15,575 15,627
PROPERTY, PLANT AND EQUIPMENT:
Cost.......................... 47,060 43,409
Less accumulated
depreciation................ (9,421) (7,382)
-------- --------
37,639 36,027
-------- --------
$198,513 $172,895
======== ========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
<S> <C> <C>
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and accrued
expenses.................... $ 41,712 $ 33,765
Liabilities to customers on
uncompleted contracts and
warranties.................. 7,170 3,579
Income taxes.................. 2,042 1,469
Short-term obligations........ 11,438 3,186
Current maturities of
long-term debt.............. 416 428
-------- --------
Total Current Liabilities..... 62,778 42,427
LONG-TERM LIABILITIES:
Deferred income taxes......... 138 148
Liabilities to customers on
uncompleted contracts and
warranties.................. 3,239 3,277
Postretirement benefits....... 10,800 11,064
Deferred expenses and other... 12,152 11,891
-------- --------
26,329 26,380
LONG-TERM DEBT, less current
maturities.................. 68,339 66,627
COMMON SHAREHOLDERS'
INVESTMENT:
Common stock -- par value $.01
per share, authorized
20,000,000 shares, issued
and outstanding 10,534,574
shares...................... 105 105
Additional paid-in capital.... 57,739 57,739
Unearned stock compensation... (2,395) (2,815)
Accumulated deficit........... (13,023) (16,446)
Cumulative translation
adjustment.................. (1,359) (1,122)
-------- --------
41,067 37,461
-------- --------
$198,513 $172,895
======== ========
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
F-36
<PAGE> 150
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------
1997 1996
---- ----
<S> <C> <C>
REVENUES:
Net sales................................................. $ 143,762 $ 130,820
Other income.............................................. 615 464
---------- ----------
144,377 131,284
---------- ----------
COSTS AND EXPENSES:
Cost of products sold..................................... 116,261 107,023
Product development, selling, administrative and
miscellaneous expenses................................. 18,345 17,854
Interest expense.......................................... 3,956 4,173
---------- ----------
138,562 129,050
---------- ----------
Earnings before income taxes................................ 5,815 2,234
Income taxes................................................ 2,392 1,324
---------- ----------
Net earnings................................................ $ 3,423 $ 910
========== ==========
Weighted average number of common and common equivalent
shares outstanding........................................ 10,345,443 10,234,574
========== ==========
Net earnings per share of common stock...................... $ 0.33 $ 0.09
========== ==========
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
F-37
<PAGE> 151
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------
1997 1996
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings................................................ $ 3,423 $ 910
Adjustments to reconcile net earnings to net cash used in
operating activities:
Depreciation.............................................. 2,179 1,980
Amortization.............................................. 534 584
Stock compensation expense................................ 420 116
In kind interest on the Secured Notes due December 14,
1999................................................... -- 3,767
(Gain) loss on sale of property, plant and equipment...... (4) 246
Changes in assets and liabilities:
Receivables............................................ (22,176) (8,319)
Inventories............................................ (3,807) 2,727
Other current assets................................... (2,541) (524)
Other assets........................................... 148 (275)
Current liabilities other than income taxes, short-term
obligations and current maturities of long-term
debt.................................................. 11,395 (2,017)
Income taxes........................................... 564 (1,007)
Long-term liabilities other than deferred income
taxes................................................. (651) (1,432)
------- -------
Net cash used in operating activities............. (10,516) (3,244)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in restricted funds on deposit..................... -- 1,800
Purchases of property, plant and equipment.................. (2,433) (1,305)
Proceeds from sale of property, plant and equipment......... 34 806
Purchase of Von's Welding, Inc., net of cash acquired....... (818) --
------- -------
Net cash (used in) provided by investing
activities....................................... (3,217) 1,301
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of project financing obligations..... 5,672 2,971
Reduction of project financing obligations.................. -- (2,701)
Net increase (decrease) in other bank borrowings............ 1,961 (878)
Proceeds from issuance of long-term debt.................... 1,712 --
------- -------
Net cash provided by (used in) financing
activities....................................... 9,345 (608)
------- -------
Effect of exchange rate changes on cash..................... (25) (113)
------- -------
Net (decrease) increase in cash and cash equivalents........ (4,413) (2,664)
Cash and cash equivalents at beginning of period............ 15,763 11,150
------- -------
Cash and cash equivalents at end of period.................. $11,350 $ 8,486
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest.................................................... $ 334 $ 122
Income taxes -- net of refunds.............................. 839 1,401
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
The Company purchased all of the common stock of Von's
Welding, Inc. In conjunction with the acquisition,
liabilities were assumed as follows:...................... $ 1,956
Purchase of common stock.................................... (885)
-------
Liabilities assumed......................................... $ 1,071
=======
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
F-38
<PAGE> 152
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of Bucyrus International, Inc. (the "Company"), the
consolidated condensed financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial results for the interim periods. Certain items are included in
these statements based on estimates for the entire year.
2. Certain notes and other information have been condensed or omitted from these
interim consolidated condensed financial statements. Therefore, these
statements should be read in conjunction with the Company's 1996 annual
report on Form 10-K filed with the Securities and Exchange Commission on
March 20, 1997.
3. Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Raw materials and parts................................ $10,201 $10,628
Costs relating to uncompleted contracts................ 5,881 4,183
Customers' advances offset against costs incurred on
uncompleted contracts................................ (2,704) (1,816)
Work in process........................................ 13,115 13,746
Finished products (primarily replacement parts)........ 48,094 44,148
------- -------
$74,587 $70,889
======= =======
</TABLE>
4. Net earnings per share of common stock for the six months ended June 30, 1997
is based on the weighted average number of common and common equivalent
shares outstanding during the period. Restricted common stock is considered
to be issued and outstanding and is included in the net earnings per share
calculation using the treasury stock method. Net earnings per share of common
stock for the six months ended June 30, 1996 is based on the weighted average
number of common shares outstanding since common stock equivalents were not
significant.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share". The Company will adopt
this statement for the year ending December 31, 1997 and will restate prior
period earnings per share as required. Adoption of this statement will not
have an impact on the Company's reported earnings per share for the six months
ended June 30, 1997 and 1996.
5. The Company's payment obligations under the proposed Notes are to be
guaranteed by certain of the Company's wholly-owned subsidiaries (the
"Guarantor Subsidiaries"). Such guarantees are full, unconditional and joint
and several. Separate financial statements of the Guarantor Subsidiaries are
not presented because the Company's management has determined that they would
not be material to investors. The following supplemental financial
information sets forth, on an unconsolidated basis, statement of operations,
balance sheet, and statement of cash flow information for the Company
("Parent Company"), for the Guarantor Subsidiaries and for the Company's
non-guarantor subsidiaries (the "Other Subsidiaries"). The supplemental
financial information reflects the investments of the Company in the
Guarantor and Other Subsidiaries using the equity method of accounting.
Parent Company amounts for net earnings and common shareholders' investment
differ from consolidated amounts as intercompany profit in subsidiary
inventory has not been eliminated in the Parent Company statement but has
been eliminated in the Consolidated Totals.
F-39
<PAGE> 153
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Statements of Operations for the Six Months Ended June
30, 1997
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales........................ $87,590 $16,591 $55,812 $(16,231) $143,762
Other income..................... 922 1 168 (476) 615
------- ------- ------- -------- --------
88,512 16,592 55,980 (16,707) 144,377
------- ------- ------- -------- --------
Cost and Expenses:
Cost of products sold............ 74,144 14,004 44,269 (16,156) 116,261
Product development, selling,
administrative and
miscellaneous expenses........ 10,302 1,312 6,709 22 18,345
Interest expense................. 3,775 159 498 (476) 3,956
------- ------- ------- -------- --------
88,221 15,475 51,476 (16,610) 138,562
------- ------- ------- -------- --------
Earnings before income taxes and
equity in net income of
consolidated subsidiaries........ 291 1,117 4,504 (97) 5,815
Income taxes....................... 363 435 1,594 2,392
------- ------- ------- -------- --------
Earnings (loss) before equity in
net income of consolidated
subsidiaries..................... (72) 682 2,910 (97) 3,423
Equity in net income of
consolidated subsidiaries........ 3,592 (3,592) --
------- ------- ------- -------- --------
Net earnings....................... $ 3,520 $ 682 $ 2,910 $ (3,689) $ 3,423
======= ======= ======= ======== ========
</TABLE>
Consolidating Condensed Statements of Operations for the Six Months Ended June
30, 1996
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales........................ $84,096 $16,939 $44,750 $(14,965) $130,820
Other income..................... 680 1 253 (470) 464
------- ------- ------- -------- --------
84,776 16,940 45,003 (15,435) 131,284
------- ------- ------- -------- --------
Cost and Expenses:
Cost of products sold............ 72,910 14,210 35,293 (15,390) 107,023
Product development, selling,
administrative and
miscellaneous expenses........ 10,831 965 6,051 7 17,854
Interest expense................. 4,017 208 418 (470) 4,173
------- ------- ------- -------- --------
87,758 15,383 41,762 (15,853) 129,050
------- ------- ------- -------- --------
Earnings (loss) before income taxes
and equity in net income of
consolidated subsidiaries........ (2,982) 1,557 3,241 418 2,234
Income taxes....................... (310) 607 1,027 1,324
------- ------- ------- -------- --------
Earnings (loss) before equity in
net income of consolidated
subsidiaries..................... (2,672) 950 2,214 418 910
Equity in net income of
consolidated subsidiaries........ 3,164 (3,164) --
------- ------- ------- -------- --------
Net earnings....................... $ 492 $ 950 $ 2,214 $ (2,746) $ 910
======= ======= ======= ======== ========
</TABLE>
F-40
<PAGE> 154
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Balance Sheets at June 30, 1997
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...... $ 4,781 $ 379 $ 6,190 $ 11,350
Receivables.................... 28,839 4,716 20,716 54,271
Intercompany receivables....... 21,435 792 2,080 $(24,307) --
Inventories.................... 46,251 1,359 29,261 (2,284) 74,587
Prepaid expenses and other
current assets.............. 2,331 263 2,497 5,091
-------- ------- ------- -------- --------
Total Current Assets........ 103,637 7,509 60,744 (26,591) 145,299
OTHER ASSETS:
Restricted funds on deposit.... 1,079 1,079
Intangible assets.............. 7,801 300 8,101
Other assets................... 4,126 34 2,235 6,395
Investment in subsidiaries..... 35,440 (35,440) --
-------- ------- ------- -------- --------
47,367 334 3,314 (35,440) 15,575
PROPERTY, PLANT AND EQUIPMENT --
NET............................ 26,296 2,336 9,007 37,639
-------- ------- ------- -------- --------
$177,300 $10,179 $73,065 $(62,031) $198,513
======== ======= ======= ======== ========
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and accrued
expenses.................... $ 26,581 $ 2,935 $12,237 $ (41) $ 41,712
Intercompany payables.......... 515 4,446 18,093 (23,054) --
Liabilities to customers on
uncompleted contracts and
warranties.................. 6,402 102 666 7,170
Income taxes................... 208 77 1,757 2,042
Short-term obligations......... 9,253 650 1,535 11,438
Current maturities of long-term
debt........................ 416 416
-------- ------- ------- -------- --------
Total Current Liabilities... 42,959 8,210 34,704 (23,095) 62,778
LONG-TERM LIABILITIES:
Deferred income taxes.......... 138 138
Liabilities to customers on
uncompleted contracts and
warranties.................. 2,599 640 3,239
Postretirement benefits........ 10,359 441 10,800
Deferred expenses and other.... 11,035 430 687 12,152
-------- ------- ------- -------- --------
23,993 430 1,906 26,329
LONG-TERM DEBT, less current
maturities..................... 65,785 2,554 68,339
COMMON SHAREHOLDERS'
INVESTMENT..................... 44,563 1,539 33,901 (38,936) 41,067
-------- ------- ------- -------- --------
$177,300 $10,179 $73,065 $(62,031) $198,513
======== ======= ======= ======== ========
</TABLE>
F-41
<PAGE> 155
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Balance Sheets at December 31, 1996
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...... $ 9,072 $ 149 $ 6,542 $ 15,763
Receivables.................... 15,028 4,941 12,116 32,085
Intercompany receivables....... 20,886 623 1,969 $(23,478) --
Inventories.................... 43,343 1,438 28,554 (2,446) 70,889
Prepaid expenses and other
current assets.............. 366 144 1,994 2,504
-------- ------ ------- -------- --------
Total Current Assets........ 88,695 7,295 51,175 (25,924) 121,241
OTHER ASSETS:
Restricted funds on deposit.... 1,079 1,079
Intangible assets.............. 8,545 8,545
Other assets................... 3,845 2,158 6,003
Investment in subsidiaries..... 30,769 (30,769) --
-------- ------ ------- -------- --------
43,159 3,237 (30,769) 15,627
PROPERTY, PLANT AND EQUIPMENT --
NET............................ 27,226 954 7,847 36,027
-------- ------ ------- -------- --------
$159,080 $8,249 $62,259 $(56,693) $172,895
======== ====== ======= ======== ========
LIABILITIES AND COMMON
SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable and accrued
expenses.................... $ 22,219 $2,205 $ 9,361 $ (20) $ 33,765
Intercompany payables.......... 785 5,579 16,141 (22,505) --
Liabilities to customers on
uncompleted contracts and
warranties.................. 2,101 197 1,281 3,579
Income taxes................... 357 63 1,049 1,469
Short-term obligations......... 2,788 398 3,186
Current maturities of long-term
debt........................ 428 428
-------- ------ ------- -------- --------
Total Current Liabilities...... 28,250 8,044 28,658 (22,525) 42,427
LONG-TERM LIABILITIES:
Deferred income taxes.......... 148 148
Liabilities to customers on
uncompleted contracts and
warranties.................. 2,638 639 3,277
Postretirement benefits........ 10,610 454 11,064
Deferred expenses and other.... 10,937 233 721 11,891
-------- ------ ------- -------- --------
24,185 233 1,962 26,380
LONG TERM DEBT, less current
maturities..................... 65,785 842 66,627
COMMON SHAREHOLDERS'
INVESTMENT..................... 40,860 (28) 30,797 (34,168) 37,461
-------- ------ ------- -------- --------
$159,080 $8,249 $62,259 $(56,693) $172,895
======== ====== ======= ======== ========
</TABLE>
F-42
<PAGE> 156
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Statements of Cash Flows for the Six Months Ended June
30, 1997
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings............................. $ 3,520 $ 682 $ 2,910 $(3,689) $ 3,423
Adjustments to reconcile net earnings to
net cash provided by (used in)
operating activities:
Depreciation........................... 1,472 8 699 -- 2,179
Amortization........................... 534 -- -- -- 534
Stock compensation expense............. 420 -- -- -- 420
(Gain) loss on sale of property, plant
and equipment........................ 13 -- (17) -- (4)
Changes in assets and liabilities:
Intercompany accounts................ (1,318) (1,234) 2,272 280 --
Receivables.......................... (13,810) 352 (8,718) -- (22,176)
Inventories.......................... (2,907) 212 (950) (162) (3,807)
Other current assets................. (1,965) (88) (488) -- (2,541)
Other assets......................... 226 -- (78) -- 148
Current liabilities other than income
taxes, short-term obligations and
current maturities of long-term
debt.............................. 8,660 363 2,393 (21) 11,395
Income taxes........................... (149) 14 699 -- 564
Long-term liabilities other than
deferred income taxes................ (488) 47 (210) -- (651)
-------- ------ ------- ------- --------
Net cash provided by (used in) operating
activities............................. (5,792) 356 (1,488) (3,592) (10,516)
-------- ------ ------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and
equipment.............................. (560) (126) (1,747) -- (2,433)
Proceeds from sale of property, plant and
equipment.............................. 5 -- 29 -- 34
Purchase of Von's Welding, Inc. ......... (818) -- -- -- (818)
Equity in net income of consolidated
subsidiaries........................... (3,592) -- -- 3,592 --
-------- ------ ------- ------- --------
Net cash used in investing activities.... (4,965) (126) (1,718) 3,592 (3,217)
-------- ------ ------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of project
financing obligations.................. 5,672 -- -- -- 5,672
Net increase in other bank borrowings.... 794 -- 1,167 -- 1,961
Proceeds from issuance of long-term
debt................................... -- -- 1,712 -- 1,712
-------- ------ ------- ------- --------
Net cash provided by financing
activities............................. 6,466 -- 2,879 -- 9,345
-------- ------ ------- ------- --------
Effect of exchange rate changes on
cash................................... -- -- (25) -- (25)
-------- ------ ------- ------- --------
Net increase (decrease) in cash and cash
equivalents............................ (4,291) 230 (352) -- (4,413)
Cash and cash equivalents at beginning of
period................................. 9,072 149 6,542 -- 15,763
-------- ------ ------- ------- --------
Cash and cash equivalents at end of
period................................. $ 4,781 $ 379 $ 6,190 $ -- $ 11,350
======== ====== ======= ======= ========
</TABLE>
F-43
<PAGE> 157
BUCYRUS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating Condensed Statements of Cash Flows for the Six Months Ended June
30, 1996
<TABLE>
<CAPTION>
PARENT GUARANTOR OTHER CONSOLIDATED
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss).......................... $ 492 $ 950 $ 2,214 $(2,746) $ 910
Adjustments to reconcile net earnings (loss)
to net cash provided by (used in) operating
activities:
Depreciation............................... 1,356 58 566 -- 1,980
Amortization............................... 584 -- -- -- 584
Stock compensation expense................. 116 -- -- -- 116
In kind interest on the Secured Notes due
December 14, 1998........................ 3,767 -- -- -- 3,767
(Gain) loss on sale of property, plant and
equipment................................ 256 -- (10) -- 246
Changes in assets and liabilities:
Intercompany accounts...................... 4,817 (998) (5,539) 1,720 --
Receivables................................ (10,015) (1,961) 3,657 -- (8,319)
Inventories................................ 933 538 3,313 (2,057) 2,727
Other current assets....................... (324) (33) (167) -- (524)
Other assets............................... (208) -- (67) -- (275)
Current liabilities other than income
taxes, short-term obligations and current
maturities of long-term debt............. (368) 823 (2,391) (81) (2,017)
Income taxes............................... (186) 61 (882) -- (1,007)
Long-term liabilities other than deferred
income taxes............................. (1,167) (116) (149) -- (1,432)
-------- ------- ------- ------- -------
Net cash provided by (used in) operating
activities................................. 53 (678) 545 (3,164) (3,244)
-------- ------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in restricted funds on deposit...... -- -- 1,800 -- 1,800
Purchases of property, plant and equipment... (867) (57) (381) -- (1,305)
Proceeds from sale of property, plant and
equipment.................................. 745 -- 61 -- 806
Equity in net income of consolidated
subsidiaries............................... (3,164) -- -- 3,164 --
Dividend paid to parent...................... 200 (200) --
-------- ------- ------- ------- -------
Net cash provided by (used in) investing
activities................................. (3,086) (57) 1,280 3,164 1,301
-------- ------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of project financing
obligations................................ 2,971 -- -- -- 2,971
Reduction of project financing obligations... (2,701) -- -- -- (2,701)
Net decrease in other bank borrowings........ (68) -- (810) -- (878)
-------- ------- ------- ------- -------
Net cash provided by (used in) financing
activities................................. 202 -- (810) -- (608)
-------- ------- ------- ------- -------
Effect of exchange rate changes on cash...... -- -- (113) -- (113)
-------- ------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents................................ (2,831) (735) 902 -- (2,664)
Cash and cash equivalents at beginning of
period..................................... 5,462 355 5,333 -- 11,150
-------- ------- ------- ------- -------
Cash and cash equivalents at end of period... $ 2,631 $ (380) $ 6,235 $ -- $ 8,486
======== ======= ======= ======= =======
</TABLE>
F-44
<PAGE> 158
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Global Industrial Technologies, Inc.:
We have audited the accompanying combined balance sheet of the Surface
Mining and Equipment Business of Global Industrial Technologies, Inc. (the
"Company") as of October 31, 1996, and the related combined statements of
operations, equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Surface Mining and
Equipment Business of Global Industrial Technologies, Inc., as of October 31,
1996 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
June 27, 1997
F-45
<PAGE> 159
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
COMBINED BALANCE SHEET
OCTOBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash.............................. $ 910
Trade receivables................. 17,032
Receivable from affiliated
entity.......................... 41
Inventories....................... 37,438
Prepaid expenses and other current
assets.......................... 228
-------
Total Current Assets......... 55,649
OTHER ASSETS:
Intangible assets................. 1,372
Other assets...................... 940
-------
2,312
PROPERTY, PLANT AND EQUIPMENT:
Land.............................. 625
Buildings and improvements........ 12,040
Machinery and equipment........... 45,021
Less accumulated depreciation..... (49,098)
-------
8,588
-------
$66,549
=======
LIABILITIES AND COMBINED EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
expenses........................ $12,132
Payable to affiliated entity...... 684
Liabilities to customers on
uncompleted contracts and
warranties...................... 4,310
-------
Total Current Liabilities.... 17,126
LONG-TERM LIABILITIES:
Postretirement benefits........... 6,725
Deferred expenses and other....... 4,343
-------
11,068
COMBINED EQUITY................... 38,355
=======
$66,549
=======
</TABLE>
See notes to combined financial statements.
F-46
<PAGE> 160
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
COMBINED STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
REVENUES:
Net sales................................................. $ 109,625
Other income.............................................. 555
---------
110,180
---------
COSTS AND EXPENSES:
Cost of products sold..................................... 93,026
Product development, selling, administrative and
miscellaneous expenses................................. 16,514
Allocated administrative expenses......................... 2,200
Allocated interest expense................................ 228
---------
111,968
---------
LOSS BEFORE INCOME TAXES.................................... (1,788)
ALLOCATED INCOME TAX BENEFIT................................ (662)
---------
NET LOSS.................................................... $ (1,126)
=========
</TABLE>
See notes to combined financial statements.
F-47
<PAGE> 161
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
COMBINED STATEMENT OF EQUITY
YEAR ENDED OCTOBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
INVESTMENT CUMULATIVE PENSION TOTAL
BY TRANSLATION LIABILITY COMBINED
GLOBAL ADJUSTMENT ADJUSTMENT EQUITY
---------- ----------- ---------- --------
<S> <C> <C> <C> <C>
Balance at November 1, 1995...................... $25,850 $(3,889) $(2,413) $19,548
Net loss....................................... (1,126) -- -- (1,126)
Capital contribution from Global............... 19,601 -- -- 19,601
Translation adjustments........................ -- (287) -- (287)
Additional minimum liability................... -- -- 619 619
------- ------- ------- -------
Balance at October 31, 1996...................... $44,325 $(4,176) $(1,794) $38,355
======= ======= ======= =======
</TABLE>
See notes to combined financial statements.
F-48
<PAGE> 162
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED OCTOBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................. $ (1,126)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................. 2,028
Gain on sale of property, plant and equipment............. (34)
Changes in assets and liabilities:
Trade receivables...................................... (2,316)
Receivable from affiliated entity...................... (41)
Inventories............................................ (4,149)
Other current assets................................... 5,327
Other assets........................................... 131
Current liabilities.................................... (18,002)
Payable to affiliated entity........................... 684
--------
Net cash used in operating activities............. (17,498)
--------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment................ (1,761)
Proceeds from sale of property, plant and equipment....... 69
--------
Net cash used in investing activities............. (1,692)
--------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions from Global......................... 19,601
--------
Effect of exchange rate changes on cash................... (287)
--------
Net increase in cash........................................ 124
Cash at beginning of year................................... 786
--------
Cash at end of year......................................... $ 910
========
</TABLE>
See notes to combined financial statements.
F-49
<PAGE> 163
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE A -- SUMMARY OF ACCOUNTING POLICIES
NATURE OF OPERATIONS
The accompanying combined financial statements include all of the
operations, assets and liabilities of the surface mining and equipment business
(the "Marion Business") of Global Industrial Technologies, Inc. ("Global"). The
Marion Business consists principally of walking draglines and electric mining
shovels and related replacement parts. Major markets for the surface mining
industry are coal mining, copper and iron ore mining and phosphate production.
USE OF ESTIMATES
The preparation of the combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.
PRINCIPLES OF COMBINATION AND PRESENTATION
These financial statements combine subsidiaries, branches or divisions of
Global that operate in the surface mining and equipment business as if they were
organized under one business unit. Such statements include the following:
- The Marion Power Shovel Company
- Marion Power Shovel Pty. Ltd.
- The South Africa Branch of INTOOL International B.V.
- The Canadian mining division of Global-GIX Canada, Inc.
The historical equity of these operations as well as permanent advances
from Global have been reported as "Combined Equity" in the Combined Balance
Sheet. Within Combined Equity, the Investment by Global account represents the
net assets invested in the Marion Business by Global including the advances that
will not be repaid.
INVENTORIES
Inventories are stated at lower of cost (last-in, first-out method) or
market (market or estimated net realizable value). The excess of replacement
cost over the carrying value of inventories determined on a last-in, first-out
basis was $10,939,000. Advances from customers are netted against inventories to
the extent of related accumulated costs.
PROPERTY, PLANT AND EQUIPMENT
Fixed assets are recorded at cost. Depreciation is provided over the
estimated useful lives of respective assets using the straight-line method for
financial reporting and accelerated methods for income tax purposes. Estimated
useful lives used for financial reporting purposes range from ten to forty years
for buildings and improvements and five to fifteen years for machinery and
equipment.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of foreign operations are translated into U.S.
dollars using year-end exchange rates. Revenues and expenses are translated at
the average rates during the year. Adjustments resulting from this translation
are deferred and reflected as a separate component of Combined Equity.
F-50
<PAGE> 164
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
REVENUE RECOGNITION
Revenue from dragline contracts is recognized using the
percentage-of-completion method. Revenue from shovel contracts and all other
sales is recognized at time of shipment. At the time a loss on a contract
becomes known, the amount of the estimated loss is recognized in the combined
financial statements. Included in current liabilities as liabilities to
customers on uncompleted contracts are advances collected under shovel contracts
of $1,041,000.
IMPAIRMENT OF LONG-LIVED ASSETS
In 1995, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121").
SFAS 121 requires that long-lived assets and certain identifiable intangibles to
be held and used by an entity be reviewed for impairment when certain events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. This pronouncement is required to be adopted by the Marion
Business for the fiscal year beginning November 1, 1996. As of November 1, 1996,
adoption did not have a significant effect on the financial position or results
of operations of the Marion Business. See Note L.
NOTE B -- TRADE RECEIVABLES
Trade receivables include the excess of revenues over advances of $426,000
related to a dragline contract. Billings on long-term contracts are made in
accordance with the payment terms as defined in the individual contracts.
Trade receivables are reduced by an allowance for losses of $213,000.
NOTE C -- INVENTORIES
Inventories at cost include material, labor and overhead and consist of the
following:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Raw materials and parts.................................. $ 5,254
Work in process.......................................... 8,799
Finished products (primarily replacement parts).......... 34,324
--------
48,377
LIFO and other reserves.................................. (10,939)
--------
$ 37,438
========
</TABLE>
NOTE D -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Trade accounts payable................................... $ 6,492
Wages and salaries....................................... 2,411
Insurance reserves....................................... 1,410
Other.................................................... 1,819
-------
$12,132
=======
</TABLE>
F-51
<PAGE> 165
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE E -- INCOME TAXES
The income and expenses of the Marion Business are included in the
consolidated local tax returns of various Global entities.The tax benefit or
liability incurred by Global for such inclusion in its consolidated tax returns
is to be reimbursed to or paid by the Marion Business. For purposes of the
combined financial statements, current taxes payable or receivable as well as
net deferred tax assets are recorded as part of the Investment by Global account
in Combined Equity.
Loss before income taxes consists of the following:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
United States............................................ $(4,406)
Foreign.................................................. 2,618
-------
Total.................................................... $(1,788)
=======
</TABLE>
The allocated income tax benefit consists of the following:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Foreign income taxes:
Current................................................ $ 921
Deferred............................................... 72
-------
Total.................................................. 993
-------
U.S. and state income taxes:
Current................................................ (1,307)
Deferred............................................... (348)
-------
Total.................................................. (1,655)
-------
Total allocated income tax benefit....................... $ (662)
=======
</TABLE>
The total allocated income tax benefit differs from amounts expected by
applying the Federal statutory income tax rate to loss before income taxes as
set forth in the following table:
<TABLE>
<CAPTION>
TAX
EXPENSE
(BENEFIT) PERCENT
--------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Tax benefit at Federal statutory rate.................... $(626) (35.0)%
State income taxes net of Federal income tax benefit..... (48) (2.7)
Other items.............................................. 12 0.7
----- ------
Total income tax benefit................................. $(662) (37.0)%
===== ======
</TABLE>
F-52
<PAGE> 166
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Significant components of net deferred tax assets which are included in the
Investment by Global account in Combined Equity are as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Deferred tax assets:
Accrued and other liabilities............................. $3,524
Postretirement benefits................................... 2,435
Inventory valuation provisions............................ 2,319
Other items............................................... 63
--------
Total deferred tax assets................................... 8,341
Deferred tax liabilities -- Excess of book basis over tax
basis of property, plant and equipment.................... (503)
--------
Net deferred tax asset recognized in the Combined Balance
Sheet as a reduction of the Investment by Global account
in Combined Equity........................................ $7,838
========
</TABLE>
Cumulative undistributed earnings of foreign operations that are considered
to be permanently reinvested, and on which U.S. income taxes have not been
provided by the Marion Business, amounted to approximately $23,700,000 at
October 31, 1996. It is not practicable to estimate the amount of additional tax
which would be payable upon repatriation of such earnings; however, due to
foreign tax credit limitations, higher effective U.S. income tax rates and
foreign withholding taxes, additional taxes could be incurred.
NOTE F -- PENSION AND RETIREMENT PLANS
The Marion Business has two defined benefit pension plans which cover
substantially all hourly bargaining and nonbargaining unit employees in the
United States. Plan benefits are based primarily on years of service. In
addition, the Marion Business' salaried employees participate in the Global
Industrial Technologies, Inc. RIP Plan, which benefits are based primarily on
years of service and employees' qualifying compensation during the final years
of employment. All plans are funded in accordance with applicable laws and
regulations. Substantially all plan assets are invested in cash, short-term
investments, equity securities and fixed-income instruments. The remaining plan
assets are primarily invested in real estate.
F-53
<PAGE> 167
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the domestic plans' funded status as of the
August 1, 1996 measurement date:
<TABLE>
<CAPTION>
GLOBAL MARION BUSINESS
SALARIED PLAN HOURLY PLANS
------------- ---------------
ASSETS
EXCEED ACCUMULATED
ACCUMULATED BENEFITS EXCEED
BENEFITS(1) ASSETS(2)
----------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation:
Vested........................................... $(36,474) $(23,673)
Non-vested....................................... (1,547) (573)
-------- --------
Total accumulated benefit obligation............. $(38,021) $(24,246)
======== ========
Projected benefit obligation for services rendered
to date.......................................... $(54,300) $(24,246)
Plan assets at fair value.......................... 39,556 19,903
-------- --------
Projected benefit obligation in excess of plan
assets........................................... (14,744) (4,343)
Unrecognized prior service cost.................... (76) 1,371
Unrecognized net loss.............................. 16,020 3,121
Unrecognized transition asset...................... (402) (310)
Adjustment for minimum liability................... -- (4,182)
-------- --------
Prepaid (accrued) pension cost..................... $ 798 $ (4,343)
======== ========
</TABLE>
- -------------------------
(1) Consists of the Global Industrial Technologies, Inc. RIP Plan. The Marion
Business' portion of the accumulated benefit obligation of this plan is
estimated to be $7,839,000. The Marion Business' year end accrual is
included in the Investment by Global account in Combined Equity.
(2) Consists of the two defined benefit plans for hourly employees. Included in
the Combined Balance Sheet is an intangible asset and a reduction of
Combined Equity of $1,372,000 (net of tax) and $1,794,000 (net of tax),
respectively, to reflect the additional minimum liability.
The weighted average discount rate, rate of increase in future compensation
levels, and expected long-term rate of return on assets used to develop the
projected benefit obligation were 8%, 4.5% and 9%, respectively.
Net domestic periodic pension cost for the two hourly defined benefit plans
includes the following components:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Service cost............................................... $ 218
Interest cost.............................................. 1,864
Actual return on plan assets............................... (1,879)
Net amortization and deferral.............................. 35
-------
Net periodic pension cost.................................. $ 238
=======
</TABLE>
The Marion Business' portion of the net periodic pension cost for the
Global Industrial Technologies, Inc. RIP Plan was $532,000 for 1996.
The Marion Business participates in Global's 401(k) savings plan. The
Marion Business' expense for 1996 was $227,000 for its portion of the matching
contribution.
F-54
<PAGE> 168
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE G -- POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Marion Business provides certain health care and life insurance
benefits for substantially all retired United States bargaining and
nonbargaining unit employees meeting eligibility requirements. The Marion
Business' policy is to fund these benefits as claims and premiums are paid.
The following table sets forth the Plan's status and amounts recognized in
the combined financial statements:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $(4,612)
Fully eligible active plan participants.................. (1,450)
Other active plan participants........................... (994)
-------
(7,056)
Unrecognized prior service cost............................ (1,036)
Unrecognized net loss...................................... 875
-------
Accrued postretirement benefit cost recognized in the
Combined Balance Sheet................................... $(7,217)
=======
</TABLE>
Net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
Service cost............................................... $ 107
Interest cost.............................................. 503
Amortization of prior service cost......................... (120)
--------
Net periodic postretirement benefit cost................... $ 490
========
</TABLE>
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5%. The assumed health care cost trend
rate used in measuring the accumulated postretirement benefit obligation was 11%
at October 31, 1996, declining .5% each year thereafter, to 5% in the year 2008
and beyond. A 1% increase in the assumed health care cost trend rate for each
year would increase the accumulated postretirement benefit obligation by
$270,000 and would increase the net periodic postretirement benefit cost for
1996 by $13,000.
NOTE H -- RESEARCH AND DEVELOPMENT
Expenditures for design and development of new products and improvements of
existing mining machinery products, including overhead, are charged to product
development expense as incurred and aggregated $5,713,000 in 1996.
NOTE I -- FOREIGN OPERATIONS, EXPORT SALES AND SIGNIFICANT CUSTOMERS
The Marion Business designs, manufactures and sells products in a single
industry segment, surface mining and equipment. Operations are conducted
primarily in the United States, Australia, Canada and South Africa.
Financial information by geographical area is summarized in the following
table. Each geographic area represents the origin of the financial information
presented. Transfers between geographic areas represent intercompany export
sales of goods produced in the United States and are accounted for based on
established sales prices between the related entities. Eliminations for
operating earnings (loss) include elimination of intercompany profit in
inventory and general
F-55
<PAGE> 169
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
corporate expenses. Identifiable assets of each entity are those related to the
operations of those entities. United States assets consist of all other
operating assets.
<TABLE>
<CAPTION>
TRANSFERS
SALES TO BETWEEN OPERATING
UNAFFILIATED GEOGRAPHIC TOTAL EARNINGS IDENTIFIABLE
CUSTOMERS AREAS NET SALES (LOSS) ASSETS
------------ ---------- --------- --------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
United States.......................... $ 66,081 $ 27,984 $ 94,065 $(4,076) $42,983
Australia.............................. 27,191 -- 27,191 1,682 19,922
South Africa........................... 14,448 -- 14,448 887 5,218
Other Foreign.......................... 1,905 651 2,556 157 6,238
Eliminations........................... -- (28,635) (28,635) (210) (7,812)
-------- -------- -------- ------- -------
10$9,625... $ -- $109,625 $(1,560) $66,549
======== ======== ======== ======= =======
</TABLE>
Export sales from United States operations, excluding sales to affiliates,
amounted to $44,164,000 in 1996.
Two customers accounted for approximately 42% of the Marion Business' net
sales in 1996. The Marion Business is not dependent upon any one customer.
NOTE J -- TRANSACTIONS WITH GLOBAL
The Marion Business has historically depended on Global for substantial
support, particularly financial. Global also performs certain services such as
insurance claim processing, data processing, and legal and tax support. Total
costs allocated to the Marion Business and included in the combined financial
statements are the following:
(a) Administrative costs of $2,200,000 allocated based on the Marion
Business' percentage of Global's total working capital, gross property,
plant and equipment and goodwill.
(b) Interest expense of $228,000 allocated on the same basis as (a) above.
(c) Pension expense for salaried employees as discussed in Note F.
(d) Income taxes as discussed in Note E.
Global provides financing to the Marion Business through a non-interest
bearing intercompany account. This intercompany account has been classified with
the Investment by Global account in Combined Equity.
NOTE K -- COMMITMENTS, CONTINGENCIES AND CREDIT RISKS
The Marion Business is involved in various litigation arising in the normal
course of business. It is the view of management that the Marion Business'
recovery or liability, if any, under pending litigation is not expected to have
a material effect on the Marion Business' financial position or results of
operations, although no assurance to that effect can be given.
The Marion Business has product liability insurance subject to a deductible
of $1,000,000 per occurrence and has various limits of liability depending on
the insurance policy year in question. It is the view of management that the
final resolution of said claims and other similar claims which are likely to
arise in the future will not individually or in the aggregate have a material
effect on the Marion Business' financial position or results of operations,
although no assurance to that effect can be given.
F-56
<PAGE> 170
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The Marion Business has obligations under various operating leases and
rental and service agreements. The expense relating to these agreements was
$639,000 in 1996. Future minimum annual payments under noncancellable agreements
are as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
1997......................................... $405
1998......................................... 273
1999......................................... 159
2000......................................... 24
2001......................................... --
After 2001................................... --
----
$861
====
</TABLE>
A significant portion of the Marion Business' combined net sales are to
customers whose activities are related to the coal, copper and iron ore mining
industries, including some who are located in foreign countries. The Marion
Business generally extends credit to these customers and, therefore, collection
of receivables may be affected by the mining industry economy and the economic
conditions in the countries where the customers are located. However, the Marion
Business closely monitors extension of credit and has not experienced
significant credit losses. Also, most foreign sales are made to large,
well-established companies. The Marion Business generally requires collateral or
guarantees on foreign sales to smaller companies.
NOTE L -- DIVESTITURE
In January, 1997, Global announced its strategic decision to divest itself
of the surface mining equipment business (i.e. the Marion Business). See
"Business -- The Marion Acquisition" included elsewhere in this Prospectus.
F-57
<PAGE> 171
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
COMBINED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, OCTOBER 31,
1997 1996
-------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash..................... $ 240 $ 910
Receivables.............. 9,679 17,032
Receivable from
affiliated entity...... -- 41
Inventories.............. 37,427 37,438
Prepaid expenses and
other current assets... 91 228
-------- --------
Total Current
Assets............. 47,437 55,649
OTHER ASSETS:
Intangible assets........ 1,372 1,372
Other assets............. 361 940
-------- --------
1,733 2,312
PROPERTY, PLANT AND
EQUIPMENT:
Land..................... 625 625
Buildings and
improvements........... 12,040 12,040
Machinery and
equipment.............. 46,103 45,021
Less accumulated
depreciation........... (49,622) (49,098)
-------- --------
9,146 8,588
-------- --------
$ 58,316 $ 66,549
======== ========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, OCTOBER 31,
1997 1996
-------- -----------
<S> <C> <C>
LIABILITIES AND COMBINED EQUITY
CURRENT LIABILITIES:
Accounts payable and
accrued expenses........ $ 9,401 $12,132
Payable to affiliated
entity.................. 839 684
Liabilities to customers
on uncompleted contracts
and warranties.......... 4,011 4,310
------- -------
Total Current
Liabilities......... 14,251 17,126
LONG-TERM LIABILITIES:
Postretirement benefits... 6,725 6,725
Deferred expenses and
other................... 4,344 4,343
------- -------
11,069 11,068
COMBINED EQUITY........... 32,996 38,355
------- -------
$58,316 $66,549
======= =======
</TABLE>
See notes to combined financial statements.
F-58
<PAGE> 172
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED JUNE 30,
---------------------------
1997 1996
---- ----
<S> <C> <C>
REVENUES:
Net sales................................................. $41,032 $65,019
Other income.............................................. 37 131
------- -------
41,069 65,150
------- -------
COSTS AND EXPENSES:
Cost of products sold..................................... 37,082 55,177
Product development, selling, administrative
and miscellaneous expenses................................ 10,122 10,886
Allocated administrative expenses......................... 1,622 1,406
Allocated interest expense................................ 1,040 152
------- -------
49,866 67,621
------- -------
LOSS BEFORE INCOME TAXES.................................... (8,797) (2,471)
ALLOCATED INCOME TAX BENEFIT................................ (3,373) (966)
------- -------
NET LOSS.................................................... $(5,424) $(1,505)
======= =======
</TABLE>
See notes to combined financial statements.
F-59
<PAGE> 173
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED
JUNE 30,
------------------
1997 1996
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................... $(5,424) $(1,505)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization............................... 1,024 1,255
Changes in assets and liabilities:
Trade receivables......................................... 7,353 663
Receivable from affiliated entity......................... 41 --
Inventories............................................... 11 (11,264)
Other current assets...................................... 137 4,780
Other assets.............................................. 80 51
Current liabilities....................................... (3,030) (14,067)
Payable to affiliated entity.............................. 155 463
------- -------
Net cash provided by (used in) operating activities......... 347 (19,624)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment.................. (1,082) (846)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions from Global........................... 448 19,264
------- -------
Effect of exchange rate changes on cash..................... (383) 420
------- -------
Net decrease in cash........................................ (670) (786)
Cash at beginning of period................................. 910 786
------- -------
Cash at end of period....................................... $ 240 $ --
======= =======
</TABLE>
See notes to combined financial statements.
F-60
<PAGE> 174
SURFACE MINING AND EQUIPMENT BUSINESS OF GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited combined financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. Adjustments consisted of only normal recurring accruals.
Operating results for the eight months ended June 30, 1997 are not necessarily
indicative of the results that may be expected for the year ending October 31,
1997.
NOTE B -- DIVESTITURE
In January, 1997, Global Industrial Technologies, Inc. announced its
strategic decision to divest itself of the surface mining equipment business.
See "Business -- The Marion Acquisition" included elsewhere in this Prospectus.
NOTE C -- INVENTORIES
Inventories at cost include material, labor and overhead and consist of the
following:
<TABLE>
<CAPTION>
JUNE 30, OCTOBER 31,
1997 1996
-------- -----------
<S> <C> <C>
Raw materials and parts................................. $ 5,919 $ 5,254
Work-in-process......................................... 10,183 8,799
Finished products (primarily replacement parts)......... 32,264 34,324
-------- --------
48,366 48,377
LIFO and other reserves................................. (10,939) (10,939)
======== ========
$ 37,427 $ 37,438
======== ========
</TABLE>
F-61
<PAGE> 175
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended, provides
in regards to indemnification of directors and officers as follows:
145. Indemnification of Officers, Directors, Employees and Agents;
Insurance.
(a) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b), or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in subsections (a) and (b). Such determination shall be
made (1) by a majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (2) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (3) by the stockholders.
II-1
<PAGE> 176
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this Section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnity him against
such liability under the provisions of this section.
(h) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this Section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
Section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Subarticle E of Article 8 of the Wyoming Business Corporation Act, as
amended, provides in regards to indemnification of directors and officers as
follows:
sec. 17-16-850 Subarticle definitions.
(a) In this subarticle:
(i) "Corporation" includes any domestic or foreign predecessor entity
of a corporation in a merger;
II-2
<PAGE> 177
(ii) "Director" or "officer" means an individual who is or was a
director or officer, respectively, of a corporation or who, while a
director or officer of the corporation, is or was serving at the
corporation's request as a director, officer, partner, trustee, employee or
agent of another domestic or foreign corporation, partnership, joint
venture, trust, employee benefit plan or other entity. A director or
officer is considered to be serving an employee benefit plan at the
corporation's request if his duties to the corporation also impose duties
on, or otherwise involve services by, him to the plan or to participants in
or beneficiaries of the plan. "Director" or "officer" includes, unless the
context requires otherwise, the estate or personal representative of a
director or officer;
(iii) "Disinterested director" means a director who, at the time of a
vote referred to in W.S. 17-16-853 (c) or a vote or selection referred to
in W.S. 17-16-855(b) or (c), is not: (A) A party to the proceeding; or (B)
An individual having a familial, financial, professional or employment
relationship with the director whose indemnification or advance for
expenses is the subject of the decision being made, which relationship
would, in the circumstances, reasonably be expected to exert an influence
on the director's judgment when voting on the decision being made.
(iv) "Expenses" includes counsel fees;
(v) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses incurred with respect to a
proceeding;
(vi) "Party" means an individual who was, is or is threatened to be
made, a defendant or respondent in a proceeding;
(vii) "Proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative and whether formal or informal.
sec. 17-16-851 Authority to indemnify.
(a) Except as otherwise provided in this section, a corporation may
indemnify an individual who is a party to a proceeding because he is a director
against liability incurred in the proceeding if: (i) He conducted himself in
good faith; and (ii) He reasonably believed that his conduct was in or at least
not opposed to the corporation's best interests; and (iii) In the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful; or (iv) He engaged in conduct for which broader indemnification has
been made permissible or obligatory under a provision of the articles of
incorporation, as authorized by W.S. 17-16-202(b)(v).
(b) A director's conduct with respect to an employee benefit plan for a
purpose he reasonably believed to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement of paragraph
(a)(ii) of this section.
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(d) Unless ordered by a court under W.S. 17-16-854(a)(iii) a corporation
may not indemnify a director under this section: (i) In connection with a
proceeding by or in the right of the corporation, except for reasonable expenses
incurred in connection with the proceeding if it is determined that the director
has met the standard of conduct under subsection (a) of this section; or (ii) In
connection with any proceeding with respect to conduct for which he was adjudged
liable on the basis that he received a financial benefit to which he was not
entitled.
(e) Repealed by Laws 1997, ch. 190, s 3.
sec. 17-16-852 Mandatory indemnification.
II-3
<PAGE> 178
A corporation shall indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he was a party
because he was a director of the corporation against reasonable expenses
incurred by him in connection with the proceeding.
sec. 17-16-853 Advance for expenses.
(a) A corporation may, before final disposition of a proceeding, advance
funds to pay for or reimburse the reasonable expenses incurred by a director who
is a party to a proceeding because he is a director if he delivers to the
corporation: (i) A written affirmation of his good faith belief that he has met
the standard of conduct described in W.S. 17-16-851 or that the proceeding
involves conduct for which liability has been eliminated under a provision of
the articles of incorporation as authorized by W.S. 17-16-202(b)(iv); and
(ii) His written undertaking to repay any funds advanced if he is not entitled
to mandatory indemnification under W.S. 17-16-852 and it is ultimately
determined that he has not met the standard of conduct described in W.S.
17-16-851. (iii) Repealed by Laws 1997, ch. 190, s 3.
(b) The undertaking required by paragraph (a)(ii) of this section shall be
an unlimited general obligation of the director but need not be secured and may
be accepted without reference to the financial ability of the director to make
repayment.
(c) Authorizations under this section shall be made: (i) By the board of
directors: (A) If there are two (2) or more disinterested directors, by a
majority vote of all the disinterested directors (a majority of whom shall for
such purpose constitute a quorum) or by a majority of the members of a committee
of two (2) or more disinterested directors appointed by such a vote; or (B) If
there are fewer than two (2) disinterested directors, by the vote necessary for
action by the board in accordance with W.S. 17-16-824(c), in which authorization
directors who do not qualify as disinterested directors may participate; or (ii)
By the shareholders, but shares owned by or voted under the control of a
director who at the time does not qualify as a disinterested director may not be
voted on the authorization.
sec. 17-16-854 Court-ordered indemnification and advance for expenses.
(a) A director who is a party to a proceeding because he is a director may
apply for indemnification or an advance for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. After receipt of an
application and after giving any notice it considers necessary, the court shall:
(i) Order indemnification if the court determines that the director is entitled
to mandatory indemnification under W.S. 17-16-852; (ii) Order indemnification or
advance for expenses if the court determines that the director is entitled to
indemnification or advance for expenses pursuant to a provision authorized by
W.S. 17-16-858(a); or (iii) Order indemnification or advance for expenses if the
court determines, in view of all the relevant circumstances, that it is fair and
reasonable: (A) To indemnify the director; or (B) To advance expenses to the
director, even if he has not met the standard of conduct set forth in W.S.
17-16-851(a), failed to comply with W.S. 17-16-853 or was adjudged liable in a
proceeding referred to in W.S. 17-16-851(d)(i) or (ii), but if he was adjudged
so liable his indemnification shall be limited to reasonable expenses incurred
in connection with the proceeding.
(b) If the court determines that the director is entitled to
indemnification under paragraph (a)(i) of this section or to indemnification or
advance for expenses under paragraph (a)(ii) of this section, it shall also
order the corporation to pay the director's reasonable expenses incurred in
connection with obtaining court-ordered indemnification or advance for expenses.
If the court determines that the director is entitled to indemnification or
advance for expenses under paragraph (a)(iii) of this section, it may also order
the corporation to pay the director's reasonable expenses to obtain
court-ordered indemnification or advance for expenses.
sec. 17-16-855 Determination and authorization of indemnification.
II-4
<PAGE> 179
(a) A corporation may not indemnify a director under W.S. 17-16-851 unless
authorized for a specific proceeding after a determination has been made that
indemnification of the director is permissible because he has met the standard
of conduct set forth in W.S. 17-16-851.
(b) The determination shall be made: (i) If there are two (2) or more
disinterested directors, by the board of directors by majority vote of all the
disinterested directors (a majority of whom shall for such purpose constitute a
quorum), or by a majority of the members of a committee of two (2) or more
disinterested directors appointed by such a vote; (ii) Repealed by Laws 1997,
ch. 190, s 3. (iii) By special legal counsel: (A) Selected in the manner
prescribed in paragraph (i) of this subsection; or (B) If there are fewer than
two (2) disinterested directors, selected by the board of directors (in which
selection directors who do not qualify as disinterested directors may
participate); or (iv) By the shareholders, but shares owned by or voted under
the control of a director who at the time does not qualify as a disinterested
director may not be voted on the determination.
(c) Authorization of indemnification shall be made in the same manner as
the determination that indemnification is permissible, except that if there are
fewer than two (2) disinterested directors, authorization of indemnification
shall be made by those entitled under paragraph (b)(iii) of this section to
select special legal counsel.
sec. 17-16-856 Officers.
(a) A corporation may indemnify and advance expenses under this subarticle
to an officer of the corporation who is a party to a proceeding because he is an
officer of the corporation: (i) To the same extent as a director; and (ii) If he
is an officer but not a director, to such further extent as may be provided by
the articles of incorporation, the bylaws, a resolution of the board of
directors or contract, except for: (A) Liability in connection with a proceeding
by or in the right of the corporation other than for reasonable expenses
incurred in connection with the proceeding; or (B) Liability arising out of
conduct that constitutes: (I) Receipt by him of a financial benefit to which he
is not entitled; (II) An intentional infliction of harm on the corporation or
the shareholders; or (III) An intentional violation of criminal law. (iii) A
corporation may also indemnify and advance expenses to a current or former
officer, employee or agent who is not a director to the extent, consistent with
public policy, that may be provided by its articles of incorporation, bylaws,
general or specific action of its board of directors or contract.
(b) The provisions of paragraph (a)(ii) of this section shall apply to an
officer who is also a director if the basis on which he is made a party to the
proceeding is an act or omission solely as an officer.
(c) An officer of a corporation who is not a director is entitled to
mandatory indemnification under W.S. 17-16-852, and may apply to a court under
W.S. 17-16-854 for indemnification or an advance for expenses, in each case to
the same extent to which a director may be entitled to indemnification or
advance for expenses under those provisions.
sec. 17-16-857 Insurance.
A corporation may purchase and maintain insurance on behalf of an
individual who is a director or officer of the corporation, or who, while a
director or officer of the corporation, serves at the corporation's request as a
director, officer, partner, trustee, employee or agent of another domestic or
foreign corporation, partnership, joint venture, trust, employee benefit plan,
or other entity, against liability asserted against or incurred by him in that
capacity or arising from his status as a director or officer whether or not the
corporation would have power to indemnify or advance expenses to him against the
same liability under this subarticle.
sec. 17-16-858 Variation by corporate action; application of subarticle.
(a) A corporation may, by a provision in its articles of incorporation or
bylaws or in a resolution adopted or a contract approved by its board of
directors or shareholders, obligate itself in advance of the act or omission
giving rise to a proceeding to provide indemnification in accordance with W.S.
II-5
<PAGE> 180
17-16-851 or advance funds to pay for or reimburse expenses in accordance with
W.S. 17-16-853. Any such obligatory provision shall be deemed to satisfy the
requirements for authorization referred to in W.S. 17-16-853(c) and 17-16-
855(c). Any provision that obligates the corporation to provide indemnification
to the fullest extent permitted by law shall be deemed to obligate the
corporation to advance funds to pay for or reimburse expenses in accordance with
W.S. 17-16-853 to the fullest extent permitted by law, unless the provision
specifically provides otherwise.
(b) Any provision pursuant to subsection (a) of this section shall not
obligate the corporation to indemnify or advance expenses to a director of a
predecessor of the corporation, pertaining to conduct with respect to the
predecessor, unless otherwise specifically provided. Any provision for
indemnification or advance for expenses in the articles of incorporation,
bylaws, or a resolution of the board of directors or shareholders of a
predecessor of the corporation in a merger or in a contract to which the
predecessor is a party, existing at the time the merger takes effect, shall be
governed by W.S. 17-16-1106(a)(iii).
(c) A corporation may, by provision in its articles of incorporation, limit
any of the rights to indemnification or advance for expenses created by or
pursuant to this subarticle.
(d) This subarticle does not limit a corporation's power to pay or
reimburse expenses incurred by a director or officer in connection with his
appearance as a witness in a proceeding at a time when he is not a party.
(e) This subarticle does not limit a corporation's power to indemnify,
advance expenses to or provide or maintain insurance on behalf of an employee or
agent.
sec. 17-16-859 Exclusivity of subarticle.
A corporation may provide indemnification or advance expenses to a director
or an officer only as permitted by this subarticle.
Section(b)(iv) and (v) of Article 2 of the Wyoming Business Corporation
Act, as amended, provides in regard to indemnification and the limitation of
liability of directors and officers as follows:
(b) The articles of incorporation may set forth:
****
(iv) A provision eliminating or limiting the liability of a director to the
corporation or its shareholders for money damages for any action taken, or any
failure to take any action, as a director, except liability for: (A) The amount
of financial benefit received by a director to which he is not entitled; (B) An
intentional infliction of harm on the corporation or shareholders; (C) A
violation of W.S. 17-16-833; or (D) An intentional violation of criminal law;
and
(v) A provision permitting or making obligatory indemnification of a
director for liability (as defined in W.S. 17-16-850(a)(v)) to any person for
any action taken, or failure to take any action, as a director, except liability
for: (A) Receipt of a financial benefit to which he is not entitled; (B) An
intentional infliction of harm on the corporation or shareholders; (C) A
violation of W.S. 17-16-833; or (D) An intentional violation of criminal law.
Article VII of Von's By-laws provide in regard to indemnification of
directors, officers and employees as follows:
Any person made a party to any civil or criminal action, suit or proceeding
by reason of the fact that he, his testator or interstate, is or was a director,
officer or employee of his corporation or of any corporation which he served as
such at the request of this corporation, shall be indemnified by the corporation
against the reasonable expenses, including without limitation, attorney's fees
and amounts paid to the corporation by him, actually and necessarily incurred by
or imposed upon him in connection with, or resulting from the defense of such
civil, criminal actions, suit or proceedings that such officer, director or
employee is liable for negligence or misconduct, in the performance of his
II-6
<PAGE> 181
duties. In the case of a criminal action suit or proceedings, a conviction
(whether based on a plea of guilty or nolo contenders or its equivalent, or
after trial) shall not of itself be deemed an adjudication that such officer,
director or employee is liable for negligence or misconduct in the performance
of his duties. Any amount payable pursuant to this article may be determined and
paid, at the option of the person to be indemnified, pursuant to procedure set
forth from time to time in the by-laws or by any of the following procedures:
(a) order of the court having jurisdiction of any such civil or criminal action,
suit or proceedings, (b) resolution adopted by a majority of a quorum of the
board of directors of the corporation without counting in such majority or
quorum any interested directors, (c) resolution adopted by the holders of record
or a majority of the outstanding shares of capital stock of the corporation
having powers, or (d) order of any court having jurisdiction over the
corporation. Such right of indemnification shall not be exclusive of any other
right of the corporation, and the other persons above-mentioned, may have or
hereafter acquire, and without limiting the generality of such statement, they
shall be entitled to their respective rights of indemnification under any
charter provisions, by-laws, agreements, vote of stockholders, provisions of law
or otherwise as their rights under this article.
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
provides in regard to the limitation of liability of directors and officers as
follows --
(b) In addition to the matters required to be set forth in the certificate
of incorporation by subsection (a) of this section, the certificate of
incorporation may also contain any or all of the following matters:
* * * *
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director, (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of this title, or (iv) for any
transaction from which the director derived an improper personal benefit. No
such provision shall eliminate or limit the liability of a director for any act
or omission occurring prior to the date when such provision becomes effective.
All references to this Paragraph to a director shall also be deemed to refer (x)
to a member of the governing body of a corporation which is not authorized to
issue capital stock, and (y) to such other person or persons, if any, who,
pursuant to a provision of the certificate of incorporation in accordance with
subsection (a) of sec.141 of this title, exercise or perform any of the powers
or duties otherwise conferred or imposed upon the board of directors by this
title.
Article FIFTH of Bucyrus' Certificate of Incorporation, as amended,
provides in regard to the limitation of liability of directors and officers as
follows:
(4) No director shall be personally liable to the Corporation or any
of its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders; (ii) for acts or omissions
not in good faith or which involved intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any
transaction from which the director derived an improper personal benefit.
Any repeal or modification of this Article FIFTH by the stockholders of the
Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to such
repeal or modification.
Provisions in the Certificate of Incorporation of Boonville relating to
liability of its officers and directors are similar to those of Bucyrus in all
material respects. The Certificate of Incorporation of Minserco does not contain
any similar provisions.
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<PAGE> 182
Section (b)(iv) of Article 2 of the Wyoming Business Corporation Act, as
amended, provides in regard to indemnification and the limitation of liability
of directors and officers as follows:
(b) The articles of incorporation may set forth:
* * * *
(iv) A provision eliminating or limiting the liability of a
director to the corporation or its shareholders for money damages for
any action taken, or any failure to take any action, as a director,
except liability for: (A) The amount of financial benefit received by a
director to which he is not entitled; (B) An intentional infliction of
harm on the corporation or shareholders; (C) A violation of W.S.
17-16-833; or (D) An intentional violation of criminal law; and
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The Exhibit Index attached hereto following the Signature Pages is
incorporated herein by reference.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Company's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be the initial bona fide offering
thereof.
(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and persons controlling the
Registrants pursuant to the foregoing provisions or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or person controlling the Registrants in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer, or person in connection with the securities being registered,
the Registrants will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(3) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4,
within one business day of receipt of such request, and to send the incorporated
documents by first-class mail or equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date responding to the request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
II-8
<PAGE> 183
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, BUCYRUS
INTERNATIONAL, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF SOUTH MILWAUKEE, STATE OF WISCONSIN, ON THIS 3RD DAY OF NOVEMBER, 1997.
By: /s/ WILLARD R. HILDEBRAND
--------------------------------------
Name: Willard R. Hildebrand
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby constitutes and appoints Daniel J. Smoke or Craig R. Mackus, or either of
them, as his or her attorney in fact, to sign and to file any amendments,
including post effective amendments, to this Registration Statement.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER
/s/ WILLARD R. HILDEBRAND President and Chief Executive November 3, 1997
- --------------------------------------------- Officer
Willard R. Hildebrand
PRINCIPAL FINANCIAL OFFICER
/s/ DANIEL J. SMOKE Vice President and Chief November 3, 1997
- --------------------------------------------- Financial Officer
Daniel J. Smoke
PRINCIPAL ACCOUNTING OFFICER
/s/ CRAIG R. MACKUS Secretary and Controller October 31, 1997
- ---------------------------------------------
Craig R. Mackus
BOARD OF DIRECTORS OF BUCYRUS
INTERNATIONAL, INC.
/s/ KIM A. MARVIN Director October 31, 1997
- ---------------------------------------------
Kim A. Marvin
/s/ KENNETH A. PEREIRA Director October 31, 1997
- ---------------------------------------------
Kenneth A. Pereira
/s/ LAWRENCE W. WARD, JR. Director October 31, 1997
- ---------------------------------------------
Lawrence W. Ward, Jr.
</TABLE>
II-9
<PAGE> 184
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, BOONVILLE
MINING SERVICES, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF SOUTH MILWAUKEE, STATE OF WISCONSIN, ON THIS 31ST DAY OF OCTOBER, 1997.
By: /s/ TIMOTHY W. SULLIVAN
--------------------------------------
Name: Timothy W. Sullivan
Title: Chairman of the Board, Chief
Executive Officer, President and
General Manager
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby constitutes and appoints Daniel J. Smoke or Craig R. Mackus, or either of
them, as his or her attorney in fact, to sign and to file any amendments,
including post effective amendments, to this Registration Statement.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER
/s/ TIMOTHY W. SULLIVAN Chief Executive Officer, October 31, 1997
- --------------------------------------------- President and General Manager
Timothy W. Sullivan
PRINCIPAL FINANCIAL OFFICER
/s/ CRAIG R. MACKUS Vice President - Finance, October 31, 1997
- --------------------------------------------- Treasurer and Assistant
Craig R. Mackus Secretary
PRINCIPAL ACCOUNTING OFFICER
/s/ TRACY A. GORE Controller October 31, 1997
- ---------------------------------------------
Tracy A. Gore
BOARD OF DIRECTORS OF BOONVILLE
MINING SERVICES, INC.
/s/ TIMOTHY W. SULLIVAN Chairman of the Board and October 31, 1997
- --------------------------------------------- Director
Timothy W. Sullivan
/s/ CRAIG R. MACKUS Director October 31, 1997
- ---------------------------------------------
Craig R. Mackus
/s/ RONALD H. BEHLENDORF Director November 3, 1997
- ---------------------------------------------
Ronald H. Behlendorf
</TABLE>
II-10
<PAGE> 185
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MINSERCO, INC.
HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SOUTH
MILWAUKEE, STATE OF WISCONSIN, ON THIS 31ST DAY OF OCTOBER, 1997.
By: /s/ TIMOTHY W. SULLIVAN
--------------------------------------
Name: Timothy W. Sullivan
Title: Chairman of the Board, Chief
Executive Officer, President and
General Manager
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby constitutes and appoints Daniel J. Smoke or Craig R. Mackus, or either of
them, as his or her attorney in fact, to sign and to file any amendments,
including post effective amendments, to this Registration Statement.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER
/s/ TIMOTHY W. SULLIVAN Chief Executive Officer, President October 31, 1997
- --------------------------------------------- and General Manager
Timothy W. Sullivan
PRINCIPAL FINANCIAL OFFICER
/s/ CRAIG R. MACKUS Vice President - Finance, October 31, 1997
- --------------------------------------------- Treasurer, Assistant Secretary and
Craig R. Mackus Assistant Treasurer
PRINCIPAL ACCOUNTING OFFICER
/s/ RICHARD A. SIEBOLD Controller October 31, 1997
- ---------------------------------------------
Richard A. Siebold
BOARD OF DIRECTORS OF MINSERCO, INC.
/s/ TIMOTHY W. SULLIVAN Chairman of the Board and Director October 31, 1997
- ---------------------------------------------
Timothy W. Sullivan
/s/ CRAIG R. MACKUS Director October 31, 1997
- ---------------------------------------------
Craig R. Mackus
</TABLE>
II-11
<PAGE> 186
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, VON'S WELDING,
INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SOUTH
MILWAUKEE, STATE OF WISCONSIN, ON THIS 31ST DAY OF OCTOBER, 1997.
By: /s/ TIMOTHY W. SULLIVAN
--------------------------------------
Name: Timothy W. Sullivan
Title: Chairman of the Board, Chief
Executive Officer, President and
General Manager
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby constitutes and appoints Daniel J. Smoke or Craig R. Mackus, or either of
them, as his or her attorney in fact, to sign and to file any amendments,
including post effective amendments, to this Registration Statement.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER
/s/ TIMOTHY W. SULLIVAN Chief Executive Officer, President October 31, 1997
- --------------------------------------------- and General Manager
Timothy W. Sullivan
PRINCIPAL FINANCIAL OFFICER
/s/ CRAIG R. MACKUS Vice President - Finance, October 31, 1997
- --------------------------------------------- Treasurer, Assistant Secretary and
Craig R. Mackus Assistant Treasurer
PRINCIPAL ACCOUNTING OFFICER
/s/ RICHARD A. SIEBOLD Controller October 31, 1997
- ---------------------------------------------
Richard A. Siebold
BOARD OF DIRECTORS OF VON'S
WELDING, INC.
/s/ TIMOTHY W. SULLIVAN Chairman of the Board and Director October 31, 1997
- ---------------------------------------------
Timothy W. Sullivan
/s/ CRAIG R. MACKUS Director October 31, 1997
- ---------------------------------------------
Craig R. Mackus
</TABLE>
II-12
<PAGE> 187
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE HEREBY, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE INITIAL PURCHASERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH INFORMATION IS GIVEN IN
THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary................................ 1
Risk Factors........................... 13
The Exchange Offer..................... 19
Acquisition of the Company by AIP...... 29
Capitalization......................... 30
Unaudited Pro Forma Combined Condensed
Financial Statements................. 31
Selected Historical Consolidated
Financial Information................ 42
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 44
Business............................... 51
Management............................. 67
Certain Relationships and Related
Transactions......................... 71
Principal Shareholders................. 72
Revolving Credit Facility.............. 73
Description of the Notes............... 74
Exchange Offer; Registration Rights.... 100
Plan of Distribution................... 105
Legal Matters.......................... 106
Independent Auditors................... 106
Available Information.................. 106
Index to Financial Statements.......... F-1
</TABLE>
$150,000,000
BUCYRUS
INTERNATIONAL, INC.
9 3/4% SENIOR NOTES
DUE 2007
LOGO
PROSPECTUS
DATED NOVEMBER , 1997
<PAGE> 188
EXHIBIT INDEX
TO REGISTRATION STATEMENT ON FORM S-4
FOR
BUCYRUS INTERNATIONAL, INC.
BOONVILLE MINING SERVICES, INC.
MINSERCO, INC.
VON'S WELDING, INC.
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN BY FILED
NUMBER DESCRIPTION REFERENCE FROM HEREWITH
------- ----------- ---------------------- --------
<C> <S> <C> <C>
2.1 Agreement and Plan of Merger dated August 21, Exhibit 1 to Bucyrus
1997, between Bucyrus International, Inc., International, Inc.'s
American Industrial Partners Acquisition Company, Tender Offer
LLC and Bucyrus Acquisition Corp. Solicitation/
Recommendation Statement
on Schedule 14D-9 filed
with the Commission on
August 26, 1997
2.2 Certificate of Merger dated September 26, 1997, Exhibit 2.2 to Bucyrus
issued by the Secretary of State of the State of International, Inc.'s
Delaware Current Report on Form
8-K filed with the
Commission on October 10,
1997
2.3 Asset Purchase Agreement dated July 21, 1997, by Exhibit 2.1 to Bucyrus
and among The Marion Power Shovel Company, Marion International, Inc.'s
Power Shovel Pty Ltd, Intool International B.V., Current Report on Form
Global-GIX Canada Inc., and Global Industrial 8-K filed with the
Technologies, Inc. (Sellers) and Bucyrus Commission on September
International, Inc., Bucyrus (Australia) 2, 1997
Proprietary Ltd., Bucyrus (Africa) (Proprietary)
Limited, and Bucyrus Canada Limited (Buyers)
[REDACTED PORTIONS ARE SUBJECT TO A REQUEST FOR
CONFIDENTIAL TREATMENT ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION]
2.4 Second Amended Joint Plan of Reorganization of Exhibit 2.1 to Bucyrus
B-E Holdings, Inc. And Bucyrus-Erie Company under International, Inc.'s
Chapter 11 of the Bankruptcy Code, as modified on Current Report on Form
December 1, 1994, including Exhibits 8-K filed with the
Commission and dated
December 1, 1994
2.5 Order dated December 1, 1994 of the U.S. Exhibit 2.2 to Bucyrus
Bankruptcy Court, Eastern District of Wisconsin International, Inc.'s
confirming the Second Amended Joint Plan of Current Report on Form
Reorganization of B-E Holdings, Inc. And Bucyrus- 8-K filed with the
Erie Company under Chapter 11 of the Bankruptcy Commission and dated
Code, as modified on December 1, 1994, including December 1, 1994
Exhibits
</TABLE>
EI-1
<PAGE> 189
<TABLE>
<C> <S> <C> <C>
3.1 Restated Certificate of Incorporation of Bucyrus Exhibit 3.1 to Bucyrus
International, Inc. International, Inc.'s Current
Report on Form 8-K filed with
the Commission on October 10,
1997
3.2 By-laws of Bucyrus International, Inc. Exhibit 3.2 to Bucyrus
International, Inc.'s Current
Report on Form 8-K filed with
the Commission on October 10,
1997
3.3 Certificate of Incorporation of Boonville Mining Services, x
Inc.
3.4 By-laws of Boonville Mining Services, Inc. x
3.5 Certificate of Incorporation of Minserco, Inc. x
3.6 By-laws of Minserco, Inc. x
3.7 Articles of Incorporation of Von's Welding, Inc. x
3.8 By-laws of Von's Welding, Inc. x
4.1 Indenture of Trust dated as of September 24, 1997 among x
Bucyrus International, Inc., Boonville Mining Services, Inc.,
Minserco, Inc., and Von's Welding, Inc. and Harris Trust and
Savings Bank, Trustee
4.2 Form of Guarantee of Boonville Mining Services, Inc., x
Minserco, Inc. and Von's Welding, Inc. dated as of September
24, 1997 in favor of Harris Trust and Savings Bank as Trustee
under the Indenture
[INCLUDED AS EXHIBIT E TO EXHIBIT 4.1 ABOVE]
4.3 Form of Bucyrus International, Inc.'s 9 3/4% Senior Note due x
2007 to be issued in the Exchange Offer subject to this
Registration Statement of Form S-4
[INCLUDED AS EXHIBIT B TO EXHIBIT 4.1 ABOVE]
4.4 Form of Bucyrus International, Inc.'s 9 3/4% Senior Note due
2007 issued as of September 24, 1997
[INCLUDED AS EXHIBIT A TO EXHIBIT 4.1 ABOVE]
x
5.1 Opinion of Whyte Hirschboeck Dudek S.C. as to legality of the x *
9 3/4% Senior Notes to be issued in the Exchange Offer
subject to this Registration Statement on Form S-4
</TABLE>
EI-2
<PAGE> 190
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN BY FILED
NUMBER DESCRIPTION REFERENCE FROM HEREWITH
------- ----------- ---------------------- --------
<C> <S> <C> <C>
10.1 Credit Agreement dated September 24, 1997 between Bank One, Exhibit 3.2 to Bucyrus
Wisconsin and Bucyrus International, Inc. International, Inc.'s Current
Report on Form 8-K filed with
the Commission on October 10,
1997
10.2 Management Services Agreement by and among Bucyrus x
International, Inc., Boonville Mining Services, Inc.,
Minserco, Inc. and Von's Welding, Inc. and American
Industrial Partners
10.3 Registration Agreement dated September 24, 1997 by and among x
Bucyrus International, Inc., Boonville Mining Services, Inc.,
Minserco, Inc. and Von's Welding, Inc. and Salomon Brothers,
Inc., Jefferies & Company, Inc. and Donaldson, Lufkin &
Jenrette Securities Corporation
10.4 Joint Prosecution Agreement dated as of August 21, 1997 by Exhibit 9 to Bucyrus
and among Bucyrus International, Inc. and Jackson National International, Inc.'s Tender
Life Insurance Company Offer Solicitation/
Recommendation Statement on
Schedule 14D-9 filed with the
Commission on August 26, 1997
10.5 Employment Agreement between Bucyrus International, Inc. and Exhibit 10.27 to Bucyrus
W.R. Hildebrand dated as of March 11, 1996 International, Inc.'s Annual
Report on Form 10-K for the
year ended December 31, 1995
10.6 Employment Agreement between Bucyrus International, Inc. and Exhibit 10.38 to Bucyrus
D.J. Smoke dated as of November 7, 1996 International, Inc.'s Annual
Report on Form 10-K for the
year ended December 31, 1996
10.7 Employment Agreement between Bucyrus International, Inc. and Exhibit 10.17 to Bucyrus
C.R. Mackus dated as of May 21, 1997 International, Inc.'s Quarterly
Report on Form 10Q for the
quarter ended June 30, 1997
10.8 Employment Agreement between Bucyrus International, Inc. and Exhibit 10.18 to Bucyrus
M.G. Onsager dated as of May 21, 1997 International, Inc.'s Quarterly
Report on Form 10Q for the
quarter ended June 30, 1997
</TABLE>
EI-3
<PAGE> 191
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN BY FILED
NUMBER DESCRIPTION REFERENCE FROM HEREWITH
------- ----------- ---------------------- --------
<C> <S> <C> <C>
10.9 Employment Agreement between Bucyrus International, Inc. and Exhibit 10.19 to Bucyrus
T.B. Phillips dated as of May 21, 1997 International, Inc.'s Quarterly
Report on Form 10Q for the
quarter ended June 30, 1997
10.10 Employment Agreement between Bucyrus International, Inc. and Exhibit 10.20 to Bucyrus
T.W. Sullivan dated as of May 21, 1997 International, Inc.'s Quarterly
Report on Form 10Q for the
quarter ended June 30, 1997
10.11 Annual Management Incentive Plan for 1996, adopted by Board Exhibit 10.41 to Bucyrus
of Directors February 29, 1996 International, Inc.'s Annual
Report on Form 10-K for the
year ended December 31,
12.1 Statements regarding Computations of Ratios x*
21.1 Subsidiaries of Bucyrus International, Inc. x
23.1 Consent of Deloitte & Touche LLP x
23.2 Consent of Arthur Andersen LLP x
23.3 Consent of Whyte Hirschboeck Dudek S.C. x*
[INCLUDED IN EXHIBIT 5.1 ABOVE]
24.1 Powers of Attorney x
[INCLUDED AS PART OF THE SIGNATURE PAGES TO THIS REGISTRATION
STATEMENT ON FORM S-4]
25.1 Statement of Eligibility of Harris Trust and Savings Bank as x
Trustee under the Indenture on Form T-1 under the Trust
Indenture Act of 1939, as amended
27.1 Financial Data Schedule x
99.1 Letter of Transmittal x*
99.2 Notice of Guaranteed Delivery x*
99.3 Instructions to Holders of Bucyrus International, Inc.'s x*
Outstanding 9 3/4% Senior Notes Due 2007
</TABLE>
- -------------------------
* To be filed by Amendment
EI-4
<PAGE> 1
EXHIBIT 3.3
[SEAL]
CERTIFICATE OF INCORPORATION
OF
BOONVILLE MINING SERVICES, INC.
1. The name of the corporation is
BOONVILLE MINING SERVICES, INC.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000); all of such shares shall be without
par value.
5A. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
V. A. Brookens Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
M. C. Kinnamon Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
T. L. Ford Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
5B. The name and mailing address of each person, who is to serve as a
director until the first annual meeting of the stockholders or until a
successor is elected and qualified,
<PAGE> 2
is as follows:
NAME MAILING ADDRESS
William B. Winter 1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172
Ray G. Olander 1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172
Phillip W. Mork 1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172
Norbert J. Verville 1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter or
repeal the by-laws of the corporation.
8. Elections of directors need not be by written ballot unless the by-laws
of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
9. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
10. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this 3rd day of April, 1990.
V. A. Brookens
-------------------------
V. A. Brookens
M. C. Kinnamon
-------------------------
M. C. Kinnamon
T. L. Ford
-------------------------
T. L. Ford
<PAGE> 3
its stockholders for monetary damages for breach of fiduciary duty as a
director except for liability, (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived any improper personal
benefit.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this 3rd day of April , 1990.
V.A. Brookens
-------------
V.A. Brookens
M.C. Kinnamon
-------------
M.C. Kinnamon
T.L. Ford
-------------
T.L. Ford
<PAGE> 1
EXHIBIT 3.4
BY-LAWS
OF
BOONVILLE MINING SERVICES, INC.
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I. Stockholders
Sec. 1.1 Annual Meeting 1
Sec. 1.2 Special Meetings 1
Sec. 1.3 Notice of Meetings 1
Sec. 1.4 Quorum 2
Sec. 1.5 Voting 2
Sec. 1.6 Presiding Officer and Secretary 3
Sec. 1.7 Proxies 3
Sec. 1.8 List of Stockholders 3
Sec. 1.9 Written Consent of Stockholders
in Lieu of Meeting 4
ARTICLE II. Directors
Sec. 2.1 Number of Directors 5
Sec. 2.2 Election and Term of Directors 5
Sec. 2.3 Resignation 5
Sec. 2.4 Removal 5
Sec. 2.5 Meetings 5
Sec. 2.6 Quorum and Voting 6
Sec. 2.7 Written Consent of Directors in
Lieu of a Meeting 6
Sec. 2.8 Compensation 7
Sec. 2.9 Contracts and Transactions
Involving Directors 7
ARTICLE III. Committees of the Board of Directors
Sec. 3.1 Appointment and Powers 7
ARTICLE IV. Officers, Agents and Employees
Sec. 4.1 Appointment and Term of Office 8
Sec. 4.2 Resignation and Removal 9
Sec. 4.3 Compensation and Bond 9
Sec. 4.4 Chairman of the Board 9
Sec. 4.5 Vice Chairman of the Board 10
i
<PAGE> 3
Sec. 4.6 President 10
Sec. 4.7 General Manager 10
Sec. 4.8 Vice Presidents 10
Sec. 4.9 Treasurer 11
Sec. 4.10 Controller 11
Sec. 4.11 Secretary 11
Sec. 4.12 Assistant Treasurers 12
Sec. 4.13 Assistant Controllers 12
Sec. 4.14 Assistant Secretaries 12
Sec. 4.15 Loans to Officers and Employees;
Guaranty of Obligations of Officers
and Employees 12
ARTICLE V. Capital Stock
Sec. 5.1 Certificates 13
Sec. 5.2 Transfers of Stock 13
Sec. 5.3 Lost, Stolen or Destroyed
Certificates 13
Sec. 5.4 Stockholder Record Date 14
ARTICLE VI. Seal
Sec. 6.1 Seal 15
ARTICLE VII. Waiver of Notice
Sec. 7.1 Waiver of Notice 15
ARTICLE VIII. Checks, Notes, Drafts, Etc.
Sec. 8.1 Checks, Notes, Drafts, Etc. 15
ARTICLE IX. Amendments
Sec. 9.1 Amendments 16
ii
<PAGE> 4
BY-LAWS
OF
BOONVILLE MINING SERVICES, INC.
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting. Except as otherwise provided in Section 1.9
of these By- Laws, an annual meeting of stockholders of the Corporation for the
election of directors and for the transaction of any other proper business
shall be held on the last Wednesday in April in each year, unless such day
shall fall on a legal holiday, in which case such meeting shall be held on the
next day thereafter not a legal holiday. The annual meeting in each year shall
be held at such hour on said day and at such place within or without the State
of Delaware as may be fixed by the Board of Directors, or, if not so fixed, at
1:00 P.M. at the principal business office of the Corporation at 1100 Milwaukee
Avenue, South Milwaukee, Wisconsin 53172.
Section 1.2 Special Meetings. A special meeting of the holders of stock
of the Corporation entitled to vote an any business to be considered at any
such meeting may be called by the Chairman of the Board, the Vice Chairman of
the Board, or the President, and shall be called by the Chairman of the Board,
Vice Chairman of the Board or the Secretary when directed to do so by
resolution of the Board of Directors or at the written request of a majority of
the Directors. Any such request shall state the purpose or purposes of the
proposed meeting.
Section 1.3 Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, unless notice is waived in writing
by all stockholders entitled to
<PAGE> 5
vote at the meeting, a written notice of the meeting shall be given which shall
state the place, date and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by law, and except as to any stockholder duly
waiving notice, the written notice of any meeting shall be given personally or
by mail, not less than seven nor more than thirty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed,
notice shall be deemed given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If, however, the adjournment is for more than thirty days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 1.4 Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation or by these By-Laws in respect of the vote
required for a specified action, at any meeting of stockholders the holders of
a majority of the outstanding stock entitled to vote thereat, either present or
represented by proxy, shall constitute a quorum for the transaction of any
business, but the stockholders present, although less than a quorum, may
adjourn the
2
<PAGE> 6
meeting to another time or place and, except as provided in the last paragraph
at Section 1.3 of these By-Laws, notice need not be given of the adjourned
meeting.
Section 1.5 Voting. Whenever directors are to be elected at a meeting,
they shall be elected by a plurality of the votes cast at the meeting by the
holders of the class or classes of stock entitled to vote for them. Whenever
any corporate action, other than the election of directors, is to be taken by
vote of stockholders at a meeting, it shall, except as otherwise required by
law or by the Certificate of Incorporation or by these By-Laws, be authorized
by a majority of the votes cast at the meeting by the holders of stock entitled
to vote thereon.
Except as otherwise provided by law, or by the Certificate of
Incorporation, each holder of record of stock of the Corporation entitled to
vote on any matter at any meeting of stockholders shall be entitled to one vote
for each share of such stock standing in the name of such holder on the stock
ledger of the Corporation on the record date for the determination of the
stockholders entitled to vote at the meeting.
Upon demand of any stockholder entitled to vote, the vote for directors or
the vote on any other matter at a meeting shall be by written ballot, but
otherwise the method of voting and the manner in which votes are counted shall
be discretionary with the presiding officer at the meeting.
Section 1.6 Presiding Officer and Secretary. At every meeting of
stockholders the Chairman of the Board, or in his absence the Vice Chairman, or
in his absence the President, or if none be present, the appointee of the
meeting, shall preside. The Secretary, or in his absence an Assistant
Secretary, or if none be present, the appointee of the presiding officer of the
meeting, shall act as secretary of the meeting.
3
<PAGE> 7
Section 1.7 Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. Every proxy shall be
signed by the stockholder or by his duly authorized attorney.
Section 1.8 List of Stockholders. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this Section or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 1.9 Written Consent of Stockholders in Lieu of Meeting. Any
action required by statute to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of the
4
<PAGE> 8
stockholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of each class of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt written notice of the taking of the corporation action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing. Any such written consent
may be given by one or any number of substantially concurrent written
instruments of substantially similar tenor signed by such stockholders, in
person or by attorney or proxy duly appointed in writing, and filed with the
Secretary or an Assistant Secretary of the Corporation. Any such written
consent shall be effective as of the effective date thereof as specified
therein, provided that such date is not more than thirty days prior to the date
such written consent is filed as aforesaid, or, if no such date is so
specified, on the date such written consent is filed as aforesaid.
ARTICLE II
DIRECTORS
Section 2.1 Number of Directors. The Board of Directors shall consist of
four directors as provided in Section 5B of the of the Certificate of
Incorporation of the Corporation (hereafter called the "Certificate of
Incorporation").
Section 2.2 Election and Term of Directors. Directors shall be elected
annually, by election at the annual meeting of stockholders or by written
consent of the holders of stock entitled to vote thereon in lieu of such
meeting. If the annual election of directors is not held
5
<PAGE> 9
on the date designated thereof, the directors shall cause such election to be
held as soon thereafter as convenient. Each director shall hold office from
the time of his election and qualification until his successor is elected and
qualified or until his earlier resignation or removal.
Section 2.3 Resignation. Any director may resign at any time upon written
notice to the Corporation. Any such resignation shall take effect at the time
specified therein or, if time be not specified, upon receipt thereof, and the
acceptance of such resignation, unless required by the terms thereof, shall not
be necessary to make such resignation effective.
Section 2.4 Removal. Any and all directors may be removed at any time,
with or without cause, by vote at a meeting or by written consent of the
holders of the class or classes of stock entitled to vote on the election of
such directors.
Section 2.5 Meetings. Meetings of the Board of Directors, regular or
special, may be held at any place within or without the State of Delaware.
Members of the Board of Directors, or of any Committee designated by the Board,
may participate in a meeting of such Board or Committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting. An
annual meeting of the Board of Directors shall be held after each annual
election of directors. If such election occurs at an annual meeting of
stockholders, the annual meeting of the Board of Directors shall be held at the
same place and immediately following such meeting of stockholders, and no
notice thereof need be given. If an annual election of directors occurs by
written consent in lieu of the annual meeting of stockholders, the annual
meeting of the Board of Directors shall take place as soon after such written
consent is duly filed with the Corporation as is practicable, either at the
6
<PAGE> 10
next regular meeting of the Board of Directors or at a special meeting. The
Board of Directors may fix times and places for regular meetings of the Board
and no notice of such meetings need be given. A special meeting of the Board
of Directors shall be held whenever called by the Chairman of the Board, Vice
Chairman or a majority of the directors for the time being in office, at such
time and place as shall be specified in the notice or waiver thereof. Notice
of each special meeting shall be given by the Secretary or by a person calling
the meeting to each director by mailing the same, postage prepaid, not later
than the second day before the meeting, or personally or by telegraphing or
telephoning the same not later than the day before the meeting.
Section 2.6 Quorum and Voting. One-half of the directors entitled to vote
on any matter shall constitute a quorum for the transaction of business
pertaining to such matter, but if there be less than a quorum at any meeting of
the Board of Directors, a majority of the directors present may adjourn the
meeting from time to time, and no further notice thereof need be given other
than announcement at the meeting which shall be so adjourned. Except as
otherwise provided by law, by the Certificate of Incorporation, or by these
By-Laws, the vote of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.
Section 2.7 Written Consent of Directors in Lieu of a Meeting. Any action
required or permitted to be taken at any meeting of the Board of Directors or
of any Committee thereof may be taken without a meeting if all members of the
Board or of such Committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or Committee.
7
<PAGE> 11
Section 2.8 Compensation. Directors may receive compensation for services
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board of
Directors.
Section 2.9 Contracts and Transactions Involving Directors. No contract
or transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board of Directors or
Committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (1) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board or Committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (2) the material facts as to
his relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a Committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting
of the Board of Directors or of a Committee which authorizes the contract or
transaction.
8
<PAGE> 12
ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS
Section 3.1 Appointment and Powers. The Board of Directors may from time
to time, by resolution passed by a majority of the directors, designate one or
more committees, each Committee to consist of one or more directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any Committee, who may replace any absent or disqualified
member at any meeting of the Committee. The resolution of the Board of
Directors may, in addition or alternatively, provide that in the absence or
disqualification of a member of a Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such Committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it, except as
otherwise provided by law. Unless the resolution of the Board of Directors
expressly so provides, no such Committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. Any such Committee
may adopt rules governing the method of calling and time and place of holding
its meetings. Unless otherwise provided by the Board of Directors, a majority
of any such Committee (or the member thereof, if only one) shall constitute a
quorum for the transaction of business, and the vote of a majority of the
members of such Committee present at
9
<PAGE> 13
a meeting at which a quorum is present shall be the act of such Committee.
Each such Committee shall keep a record of its acts and proceedings and shall
report thereon to the Board of Directors whenever requested so to do. Any or
all members of any such Committee may be removed, with or without cause, by
resolution of the Board of Directors.
ARTICLE IV
OFFICERS, AGENTS AND EMPLOYEES
Section 4.1 Appointment and Term of Office. The officers of the
corporation shall include a Chairman of the Board, a Vice Chairman of the
Board, a President, a General Manager, a Secretary, a Treasurer and a
Controller, and may include one or more Vice Presidents. All such officers
shall be elected by the Board of Directors and the Chairman of the Board and
Vice Chairman of the Board shall be chosen from among the directors. Any
number of such offices may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity.
Except as may be prescribed otherwise by the Board of Directors, all such
officers shall hold their offices at the pleasure of the Board for an unlimited
term and need not be re-elected annually or at any other periodic interval.
The Board of Directors may appoint, and may delegate power to appoint, such
other officers, agents and employees as it may deem necessary or proper, who
shall hold their offices or positions for such terms, have such authority and
perform such duties as may from time to time be determined by or pursuant to
authorization of the Board of Directors.
Section 4.2 Resignation and Removal. Any officer may resign at any time
upon written notice to the Corporation. Any officer, agent or employee of the
Corporation may be removed by the Board of Directors with or without cause at
any time. The Board of Directors may
10
<PAGE> 14
delegate such power of removal as to officers, agents and employees whose
appointment was delegated by the Board of Directors. Such removal shall be
without prejudice to a persons's contract rights, if any, but the election or
appointment of any person as an officer, agent or employee of the Corporation
shall not of itself create contract rights.
Section 4.3 Compensation and Bond. The compensation of the officers of
the Corporation shall be fixed by the Board of Directors. The Corporation may
secure the fidelity of any or all of its officers, agents or employees by bond
or otherwise.
Section 4.4 Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the Corporation. He shall have general charge of
the business and affairs of the Corporation. He may employ and discharge
employees and agents of the Corporation, except such as shall be elected or
appointed by the Board of Directors, and he may delegate these powers. He
shall preside at all meetings of stockholders and of the Board of Directors at
which he is present. He may vote the stock or other securities of any other
domestic or foreign corporation of any type or kind which may at any time be
owned by the Corporation, may execute any stockholders' or other consents in
respect thereof and may in his discretion delegate such powers by executing
proxies, or otherwise, on behalf of the Corporation. The Chairman shall also
have such other powers and duties as may be delegated to him by the Board of
Directors.
Section 4.5 Vice Chairman of the Board. The Vice Chairman of the Board,
in the absence of the Chairman of the Board, shall preside at all meetings of
the stockholders and of the Board of Directors at which he is present. In the
absence or inability to act of the Chairman of the Board, the Vice Chairman of
the Board shall perform all of the duties and may exercise
11
<PAGE> 15
any of the powers of the Chairman of the Board. In addition, the Vice Chairman
of the Board shall assist the Chairman of the Board in the discharge of his
executive, managerial and supervisory functions and shall have such other
powers and duties as may from time to time be prescribed by the By-Laws, by
Resolution of the Board of Directors, or by the Chairman of the Board.
Section 4.6 President. The President shall have charge of such division
or divisions of the Corporation and shall have such other powers and duties as
may from time to time be prescribed by the By-Laws, by Resolution of the Board
of Directors, or by the Chairman of the Board. In the absence or inability to
act of both the Chairman and Vice Chairman of the Board, he shall perform all
of the duties and may exercise any of the powers of the Chairman of the Board.
Section 4.7 General Manager. The General Manager shall have general and
active management of the business of the Corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect and
shall have such other powers and duties as may from time to time be prescribed
by the By-Laws, by Resolution of the Board of Directors, or by the Chairman or
Vice Chairman of the Board or the President.
Section 4.8 Vice Presidents. Each Vice President shall have such powers
and perform such duties as may be prescribed by the By-Laws, by Resolution of
the Board of Directors, or by the Chairman of the Board. The performance of
any duty by a Vice President shall, in respect of any other person dealing with
the Corporation, be conclusive evidence of his power to act. Any Vice
President may, by Resolution of the Board of Directors, be designated an
Executive Vice President or a Senior Vice President.
12
<PAGE> 16
Section 4.9 Treasurer. The Treasurer shall have charge of all funds and
securities of the Corporation, shall endorse the same for deposit or collection
when necessary and deposit the same to the credit of the Corporation in such
banks or depositories as the Board of Directors may authorize. He may endorse
all commercial documents requiring endorsements for or on behalf of the
Corporation and may sign all receipts and vouchers for payments made to the
Corporation. He shall have all such further powers and duties as generally are
incident to the office of Treasurer or as may be prescribed by the By-Laws, by
Resolution of the Board of Directors, or by the Chairman of the Board.
Section 4.10 Controller. The Controller shall be the principal officer in
charge of the accounts of the Corporation. He shall render to the Vice
President - Finance (if any) regularly and to said Vice President and to the
Board of Directors whenever otherwise required in account of the operation and
financial conditions of the Corporation. He shall perform all the duties
incidental to the office of Controller, and shall have such other powers and
duties as may be prescribed by the By-Laws, by Resolution of the Board of
Directors, or by the Chairman of the Board.
Section 4.11 Secretary. The Secretary shall attend, and record all the
proceedings of meetings of, the stockholders and the Board of Directors in
books to be kept for that purpose and shall also record therein all action
taken by written consent of the stockholders or the Board of Directors in lieu
of a meeting. He shall attend to the giving and serving of all notices of the
corporation. He shall have custody of the seal of the Corporation and shall
attest the same by his signature whenever required. He shall have charge of
the stock ledger and such other books and papers as the Board of Directors may
direct. He shall have all such further powers and
13
<PAGE> 17
duties as generally are incident to the office of Secretary or as may be
prescribed by the By-Laws, by Resolution of the Board of Directors, or by the
Chairman of the Board.
Section 4.12 Assistant Treasurers. In the absence or inability to act of
the Treasurer, any duly appointed Assistant Treasurer may perform all the
duties and exercise all the powers of the Treasurer. The performance of any
such duty shall, in respect of any other person dealing with the Corporation,
be conclusive evidence of his power to act. An Assistant Treasurer shall also
perform such other duties as the Treasurer or the Chairman of the Board may
assign to him.
Section 4.13 Assistant Controllers. In the absence or inability to act of
the Controller, any duly appointed Assistant Controller may perform all of the
duties and exercise all the powers of the Controller. The performance of any
such duty shall, in respect of any other person dealing with the Corporation,
be conclusive evidence of his power to act. An Assistant Controller shall
perform such other duties as the Controller or the Chairman of the Board may
assign to him.
Section 4.14 Assistant Secretaries. In the absence or inability to act of
the Secretary, any duly appointed Assistant Secretary may perform all the
duties and exercise all the powers of the Secretary. The performance of any
such duty shall, in respect of any other person dealing with the Corporation,
be conclusive evidence of his power to act. An Assistant Secretary shall also
perform such other duties as the Secretary or the Chairman of the Board may
assign to him.
Section 4.15 Loans to Officers and Employees; Guaranty of Obligations of
Officers and Employees. The Corporation may lend money to, or guarantee any
obligation off or otherwise assist any officer or other employee of the
Corporation or any subsidiary, including any officer or employee who is a
director of the Corporation or any subsidiary, whenever, in the judgment of a
majority of the directors, such loan, guaranty or assistance may reasonably be
expected to
14
<PAGE> 18
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as a majority
of the directors shall approve, including, without limitation, a pledge of
shares of stock of the Corporation.
ARTICLE V
CAPITAL STOCK
Section 5.1 Certificates. Certificates for stock of the Corporation shall
be in such form as shall be approved by the Board of Directors and shall be
signed in the name of the Corporation by the Chairman or Vice Chairman of the
Board, and by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary. Such certificates may be sealed with the seal of the
Corporation or a facsimile thereof. Any of or all the signatures on a
certificate may be a facsimile. In case any officer, who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of
issue.
Section 5.2 Transfers of Stock. Transfer of stock shall be made only upon
the books of the Corporation by the holder, in person or by duly authorized
attorney, and on the surrender of the certificate or certificates for such
stock properly endorsed. The Board of Directors shall have the power to make
all such rules and regulations, not inconsistent with the Certificate of
Incorporation and these By-Laws and the law, as the Board of Directors may
deemed appropriate concerning the issue, transfer and registration of
certificates for stock of the Corporation. The Board may appoint one or more
transfer agents or registrars of transfers, or both, and may require all stock
certificates to bear the signature of either or both.
15
<PAGE> 19
Section 5.3 Lost, Stolen or Destroyed Certificates. The Corporation may
issue a new stock certificate in the place of any stock certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed stock
certificate or his legal representative to give the Corporation a bond
sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or
the issuance of any such new certificate. The Board of Directors may require
such owner to satisfy other reasonable requirements.
Section 5.4 Stockholder Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor less than
seven days before the date of such meeting, nor more than sixty days prior to
any other action. Only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to notice of, and to vote at, such meeting
and any adjournment thereof, or to give such consent, or to receive payment of
such dividend or other distribution, or to exercise such rights in respect of
any such change, conversion or exchange of stock, or to participate in such
action, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any record date so fixed.
If no record date is fixed by the Board of Directors, (1) the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of
16
<PAGE> 20
business on the day next preceding the date on which notice is given, or, if
notice is waived by all stockholders entitled to vote at the meeting, at the
close of business on the day next preceding the day on which the meeting is
held, (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is necessary, shall be at the close of business on
the day on which the first written consent is expressed by the filing thereof
with the Corporation as provided in Section 1.9 of these By-Laws, and (3) the
record date for determining stockholders for any other purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
ARTICLE VI
SEAL
Section 6.1 Seal. The seal of the Corporation shall be circular in form
and shall bear, in addition to any other emblem or device approved by the Board
of Directors, the name of the Corporation, the year of its incorporation and
the words "Corporate Seal" and "Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
17
<PAGE> 21
ARTICLE VII
WAIVER OF NOTICE
Section 7.1 Waiver of Notice. Whenever notice is required to be given by
statute, or under any provision of the Certificate of Incorporation or these
By-Laws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. In the case of a stockholder, such waiver of notice may be signed by
such stockholder's attorney or proxy duly appointed in writing. Attendance of
a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of business because the
meeting was not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.
ARTICLE VIII
CHECKS, NOTES, DRAFTS, ETC.
Section 8.1 Checks, Notes, Drafts, Etc. Checks, notes, drafts,
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as
the Board of Directors or a duly authorized Committee thereof may from time to
time designate.
18
<PAGE> 22
ARTICLE IX
AMENDMENTS
Section 9.1 Amendments. These By-Laws or any of them may be altered or
repealed, and new By-Laws may be adopted, by a majority of the stockholders of
the Corporation by vote at a meeting or by written consent without a meeting.
The Board of Directors shall also have power, by a majority vote of the
directors, to alter or repeal any of these By-Laws, and to adopt new By-Laws.
19
<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
MINSERCO, INC.
1. The name of the corporation is
MINSERCO, INC.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000); all of such shares shall be without
par value.
5A. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
V. A. Brookens Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
J. L. Austin Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
<PAGE> 2
M. C. Kinnamon Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
5B. The name and mailing address of each person, who is to serve as a
director until the first annual meeting of the stockholders or until a
successor is elected and qualified, is as follows:
NAME MAILING ADDRESS
William B. Winter 1100 Milwaukee Avenue
South Milwaukee, WI 53172
Ray G. Olander 1100 Milwaukee Avenue
South Milwaukee, WI 53172
Norris K. Ekstrom 1100 Milwaukee Avenue
South Milwaukee, WI 53172
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter or
repeal the by-laws of the corporation.
8. Elections of directors need not be by written ballot unless the by-laws
of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the
<PAGE> 3
by-laws may provide. The books of the corporation may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at such
place or places as may be designated from time to time by the board of
directors or in the by-laws of the corporation.
9. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this 11th day of January, 1988.
V. A. Brookens
-------------------
V. A. Brookens
J. L. Austin
-------------------
J. L. Austin
M. C. Kinnamon
-------------------
M. C. Kinnamon
<PAGE> 4
Received for Record
January 13th, A.D. 1988.
William M. Honey, Recorder.
STATE OF DELAWARE :
SS.:
NEW CASTLE COUNTY :
Recorded in the Recorder's Office at
Wilmington, Vol. Page &c., the
13th day of January, A. D. 1988.
Witness my hand and official seal.
William M. Honey Recorder.
[SEAL]
<PAGE> 1
Exhibit 3.6
BY-LAWS
OF
MINSERCO, INC.
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I. Stockholders
Sec. 1.1 Annual Meeting 1
Sec. 1.2 Special Meetings 1
Sec. 1.3 Notice of Meetings 1
Sec. 1.4 Quorum 2
Sec. 1.5 Voting 2
Sec. 1.6 Presiding officer and Secretary 3
Sec. 1.7 Proxies 3
Sec. 1.8 List of stockholders 3
Sec. 1.9 Written Consent of Stockholders
in Lieu of Meeting 4
ARTICLE II. Directors
Sec. 2.1 Number of Directors 5
Sec. 2.2 Election and Term of Directors 5
Sec. 2.3 Resignation 5
Sec. 2.4 Removal 5
Sec. 2.5 Meetings 5
Sec. 2.6 Quorum and Voting 6
Sec. 2.7 Written Consent of Directors in
Lieu of a Meeting 6
Sec. 2.8 Compensation 7
Sec. 2.9 Contracts and Transactions
Involving Directors 7
ARTICLE III. Committees of the Board of Directors
Sec. 3.1 Appointment and Powers 7
ARTICLE IV. Officers, Agents and Employees
Sec. 4.1 Appointment and Term of Office 8
Sec. 4.2 Resignation and Removal 9
Sec. 4.3 Compensation and Bond 9
Sec. 4.4 Chairman of the Board 9
Sec. 4.5 Vice Chairman of the Board 10
Sec. 4.6 President 10
Sec. 4.7 General Manager 10
<PAGE> 3
Sec. 4.8 Vice Presidents 10
Sec. 4.9 Treasurer 11
Sec. 4.10 Controller 11
Sec. 4.11 Secretary 11
Sec. 4.12 Assistant Treasurers 12
Sec. 4.13 Assistant Controllers 12
Sec. 4.14 Assistant Secretaries 12
Sec. 4.15 Loans to Officers and Employees;
Guaranty of Obligations of Officers
and Employees 12
ARTICLE V. Capital Stock
Sec. 5.1 Certificates 13
Sec. 5.2 Transfers of Stock 13
Sec. 5.3 Lost, Stolen or Destroyed
Certificates 13
Sec. 5.4 Stockholder Record Date 14
ARTICLE VI. Seal
Sec. 6.1 Seal 15
ARTICLE VII. Waiver of Notice
Sec. 7.1 Waiver of Notice 15
ARTICLE VIII. Checks, Notes, Drafts, Etc.
Sec. 8.1 Checks, Notes, Drafts, Etc 15
ARTICLE IX. Amendments
Sec. 9.1 Amendments 16
ii
<PAGE> 4
BY-LAWS
OF
MINSERCO, INC.
ARTICLE I
Stockholders
Section 1.1 Annual Meeting. Except as otherwise provided in Section 1.9
of these By- Laws, an annual meeting of stockholders of the Corporation for the
election of directors and for the transaction of any other proper business
shall be held on the last Wednesday in April in each year, unless such day
shall fall on a legal holiday, in which case such meeting shall be held on the
next day thereafter not a legal holiday. The annual meeting in each year shall
be held at such hour on said day and at such place within or without the State
of Delaware as may be fixed by the Board of Directors, or, if not so fixed, at
1:00 P.M. at the principal business office of the Corporation at 1100 Milwaukee
Avenue, South Milwaukee, Wisconsin 53172.
Section 1.2 Special Meetings. A special meeting of the holders of stock
of the Corporation entitled to vote on any business to be considered at any
such meeting may be called by the Chairman of the Board, the Vice Chairman of
the Board, or the President, and shall be called by the Chairman of the Board,
Vice Chairman of the Board or the Secretary when directed to do so by
resolution of the Board of Directors or at the written request of a majority of
the Directors. Any such request shall state the purpose or purposes of the
proposed meeting.
Section 1.3 Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, unless notice is waived in writing
by all stockholders entitled to
<PAGE> 5
vote at the meeting, a written notice of the meeting shall be given which shall
state the place, date and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by law, and except as to any stockholder duly
waiving notice, the written notice of any meeting shall be given personally or
by mail, not less than seven nor more than thirty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed,
notice shall be deemed given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken. At the adjourned meeting the
Corporation may transact any business which might have been transacted at the
original meeting. If, however, the adjournment is for more than thirty days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 1.4 Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation or by these By-Laws in respect of the vote
required for a specified action, at any meeting of stockholders the holders of
a majority of the outstanding stock entitled to vote thereat, either present or
represented by proxy, shall constitute a quorum for the transaction of any
business, but the stockholders present, although less than a quorum, may
adjourn the
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<PAGE> 6
meeting to another time or place and, except as provided in the last paragraphs
of Section 1.3 of these By-Laws, notice need not be given of the adjourned
meeting.
Section 1.5 Voting. Whenever directors are to be elected at a meeting,
they shall be elected by a plurality of the votes cast at the meeting by the
holders of the class or classes of stock entitled to vote for them. Whenever
any corporate action, other than the election of directors, is to be taken by
vote of stockholders at a meeting, it shall, except as otherwise required by
law or by the Certificate of Incorporation or by these By-Laws, be authorized
by a majority of the votes cast at the meeting by the holders of stock entitled
to vote thereon.
Except as otherwise provided by law, or by the Certificate of
Incorporation, each holder of record of stock of the Corporation entitled to
vote on any matter at any meeting of stockholders shall be entitled to one vote
for each share of such stock standing in the name of such holder on the stock
ledger of the Corporation on the record date for the determination of the
stockholders entitled to vote at the meeting.
Upon demand of any stockholder entitled to vote, the vote for directors or
the vote on any other matter at a meeting shall be by written ballot, but
otherwise the method of voting and the manner in which votes are counted shall
be discretionary with the presiding officer at the meeting.
Section 1.6 Presiding Officer and Secretary. At every meeting of
stockholders the Chairman of the Board, or in his absence the Vice Chairman, or
in his absence the President, or if none be present, the appointee of the
meeting, shall preside. The Secretary, or in his absence an Assistant
Secretary, or if none be present, the appointee of the presiding officer of the
meeting, shall act as secretary of the meeting.
3
<PAGE> 7
Section 1.7 Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. Every proxy shall be
signed by the stockholder or by his duly authorized attorney.
Section 1.8 List of Stockholders. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
The stock ledger shall be the only evidence as to who are the stockholders
entitled to examine the stock ledger, the list required by this Section or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 1.9 Written Consent of Stockholders in Lieu of Meeting. Any
action required by statute to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of the
4
<PAGE> 8
stockholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of each class of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt written notice of the taking of the corporation action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing. Any such written consent
may be given by one or any number of substantially concurrent written
instruments of substantially similar tenor signed by such stockholders, in
person or by attorney or proxy duly appointed in writing, and filed with the
Secretary or an Assistant Secretary of the Corporation. Any such written
consent shall be effective as of the effective date thereof as specified
therein, provided that such date is not more than thirty days prior to the date
such written consent is filed as aforesaid, or, if no such date is so
specified, on the date such written consent is filed as aforesaid.
ARTICLE II
DIRECTORS
Section 2.1 Number of Directors. The Board of Directors shall consist of
three directors as provided in Section 5B of the of the Certificate of
Incorporation of the Corporation (hereafter called the "Certificate of
Incorporation").
Section 2.2 Election and Term of Directors. Directors shall be elected
annually, by election at the annual meeting of stockholders or by written
consent of the holders of stock entitled to vote thereon in lieu of such
meeting. If the annual election of directors is not held on the date
designated thereof, the directors shall cause such election to be held as soon
5
<PAGE> 9
thereafter as convenient. Each director shall hold office from the time of his
election and qualification until his successor is elected and qualified or
until his earlier resignation or removal.
Section 2.3 Resignation. Any director may resign at any time upon written
notice to the Corporation. Any such resignation shall take effect at the time
specified therein or, if time be not specified, upon receipt thereof, and the
acceptance of such resignation, unless required by the terms thereof, shall not
be necessary to make such resignation effective.
Section 2.4 Removal. Any and all directors may be removed at any time,
with or without cause, by vote at a meeting or by written consent of the
holders of the class or classes of stock entitled to vote on the election of
such directors.
Section 2.5 Meetings. Meetings of the Board of Directors, regular or
special, may be held at any place within or without the State of Delaware.
Members of the Board of Directors, or of any Committee designated by the Board,
may participate in a meeting of such Board or Committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting. An
annual meeting of the Board of Directors shall be held after each annual
election of directors. If such election occurs at an annual meeting of the
stockholders, the annual meting of the Board of Directors shall be held at the
same place and immediately following such meeting of stockholders, and no
notice thereof need be given. If an annual election of directors occurs by
written consent in lieu of the annual meeting of stockholders, the annual
meeting of the Board of Directors shall take place as soon after such written
consent is duly
6
<PAGE> 10
filed with the Corporation as is practicable, either at the next regular
meeting of the Board of Directors or at a special meeting. The Board of
Directors may fix times and places for regular meetings of the Board and no
notice of such meetings need be given. A special meeting of the Board of
Directors shall be held whenever called by the Chairman of the Board, Vice
Chairman or a majority of the directors for the time being in office, at such
time and place as shall be specified in the notice or waiver thereof. Notice
of each special meeting shall be given by the Secretary or by a person calling
the meeting to each director by mailing the same, postage prepaid, not later
than the second day before the meeting, or personally or by telegraphing or
telephoning the same not later than the day before the meeting.
Section 2.6 Quorum and Voting. One-half of the directors entitled to vote
on any matter shall constitute a quorum for the transaction of business
pertaining to such matter, but if there be less than a quorum at any meeting of
the Board of Directors, a majority of the directors present may adjourn the
meeting from time to time, and no further notice thereof need be given other
than announcement at the meeting which shall be so adjourned. Except as
otherwise provided by law, by the Certificate of Incorporation, or by these
By-Laws, the vote of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.
Section 2.7 Written Consent of Directors in Lieu of a Meeting. Any action
required or permitted to be taken at any meeting of the Board of Directors or
of any Committee thereof may be taken without a meeting if all members of the
Board or of such Committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or Committee.
7
<PAGE> 11
Section 2.8 Compensation. Directors may receive compensation for services
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board of
Directors.
Section 2.9 Contracts and Transactions Involving Directors. No contract
or transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer
is present at or participates in the meeting of the Board of Directors or
Committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if: (1) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the Committee, and the
Board or Committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (2) the material facts as to
his relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a Committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting
of the Board of Directors or of a Committee which authorizes the contract or
transaction.
8
<PAGE> 12
ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS
Section 3.1 Appointment and Powers. The Board of Directors may from time
to time, by resolution passed by a majority of the directors, designate one or
more Committees, each Committee to consist of one or more directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any Committee, who may replace any absent or disqualified
member at any meeting of the Committee. The resolution of the Board of
Directors may, in addition or alternatively, provide that in the absence or
disqualification of a member of a Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such Committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation and may authorize the seal of the
Corporation to be affixed to all papers which may require it, except as
otherwise provided by law. Unless the resolution of the Board of Directors
expressly so provides, no such Committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. Any such Committee
may adopt rules governing the method of calling and time and place of holding
its meetings. Unless otherwise provided by the Board of Directors, a majority
of any such Committee (or the member thereof, if only one) shall constitute a
quorum for the transaction of business, and the vote of a majority of the
members of such Committee present at a meeting at which a
9
<PAGE> 13
quorum is present shall be the act of such Committee. Each such Committee
shall keep a record of its acts and proceedings and shall report thereon to the
Board of Directors whenever requested so to do. Any or all members of any such
Committee may be removed, with or without cause, by resolution of the Board of
Directors.
ARTICLE IV
OFFICERS, AGENTS AND EMPLOYEES
Section 4.1 Appointment and Term of Office. The officers of the
Corporation shall include a Chairman of the Board, a Vice Chairman of the
Board, a President, a General Manager, a Secretary, a Treasurer and a
Controller, and may include one or more Vice Presidents. All such officers
shall be elected by the Board of Directors and the Chairman of the Board and
Vice Chairman of the Board shall be chosen from among the directors. Any
number of such offices may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity.
Except as may be prescribed otherwise by the Board of Directors, all such
officers shall hold their offices at the pleasure of the Board for an unlimited
term and need not be re-elected annually or at any other periodic interval.
The Board of Directors may appoint, and may delegate power to appoint, such
other officers, agents and employees as it may deem necessary or proper, who
shall hold their offices or positions for such terms, have such authority and
perform such duties as may from time to time be determined by or pursuant to
authorization of the Board of Directors.
10
<PAGE> 14
Section 4.2 Resignation and Removal. Any officer may resign at any time
upon written notice to the Corporation. Any officer, agent or employee of the
Corporation may be removed by the Board of Directors with or without cause at
any time. The Board of Directors may delegate such power of removal as to
officers, agents and employees whose appointment was delegated by the Board of
Directors. Such removal shall be without prejudice to a persons's contract
rights, if any, but the election or appointment of any person as an officer,
agent or employee of the Corporation shall not of itself create contract
rights.
Section 4.3 Compensation and Bond. The compensation of the officers of
the Corporation shall be fixed by the Board of Directors. The Corporation may
secure the fidelity of any or all of its officers, agents or employees by bond
or otherwise.
Section 4.4 Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the Corporation. He shall have general charge of
the business and affairs of the Corporation. He may employ and discharge
employees and agents of the Corporation, except such as shall be elected or
appointed by the Board of Directors, and he may delegate these powers. He
shall preside at all meetings of stockholders and of the Board of Directors at
which he is present. He may vote the stock or other securities of any other
domestic or foreign corporation of any type or kind which may at any time be
owned by the Corporation, may execute any stockholders' or other consents in
respect thereof and may in his discretion delegate such powers by executing
proxies, or otherwise, on behalf of the Corporation. The Chairman shall also
have such other powers and duties as may be delegated to him by the Board of
Directors.
11
<PAGE> 15
Section 4.5 Vice Chairman of the Board. The Vice Chairman of the Board,
in the absence of the Chairman of the Board, shall preside at all meetings of
the stockholders and of the Board of Directors at which he is present. In the
absence or inability to act of the Chairman of the Board, the Vice Chairman of
the Board shall perform all of the duties and may exercise any of the powers of
the Chairman of the Board. In addition, the Vice Chairman of the Board shall
assist the Chairman of the Board in the discharge of his executive, managerial
and supervisory functions and shall have such other powers and duties as may
from time to time be prescribed by the By-Laws, by Resolution of the Board of
Directors, or by the Chairman of the Board.
Section 4.6 President. The President shall have charge of such division
or divisions of the Corporation and shall have such other powers and duties as
may from time to time be prescribed by the By-Laws, by Resolution of the Board
of Directors, or by the Chairman of the Board. In the absence or inability to
act of both the Chairman and Vice Chairman of the Board, he shall perform all
of the duties and may exercise any of the powers of the Chairman of the Board.
Section 4.7 General Manager. The General Manager shall have general and
active management of the business of the Corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect and
shall have such other powers and duties as may from time to time be prescribed
by the By-Laws, by Resolution of the Board of Directors, or by the Chairman or
Vice Chairman of the Board or the President.
Section 4.8 Vice Presidents. Each Vice President shall have such powers
and perform such duties as may be prescribed by the By-Laws, by Resolution of
the Board of
12
<PAGE> 16
Directors, or by the Chairman of the Board. The performance of any duty by a
Vice President shall, in respect of any other person dealing with the
Corporation, be conclusive evidence of his power to act. Any Vice President
may, by Resolution of the Board of Directors, be designated an Executive Vice
President or a Senior Vice President.
Section 4.9 Treasurer. The Treasurer shall have charge of all funds and
securities of the Corporation, shall endorse the same for deposit or collection
when necessary and deposit the same to the credit of the corporation in such
banks or depositories as the Board of Directors may authorize. He may endorse
all commercial documents requiring endorsements for or on behalf of the
Corporation and may sign all receipts and vouchers for payments made to the
Corporation. He shall have all such further powers and duties as generally are
incident to the office of Treasurer or as may be prescribed by the By-Laws, by
Resolution of the Board of Directors, or by the chairman of the Board.
Section 4.10 Controller. The Controller shall be the principal officer in
charge of the accounts of the Corporation. He shall render to the Vice
President - Finance (if any) regularly and to said Vice President and to the
Board of Directors whenever otherwise required an account of the operation and
financial condition of the Corporation. He shall perform all the duties
incidental to the office of Controller, and shall have such other powers and
duties as may be prescribed by the By-Laws, by Resolution of the Board of
Directors, or by the Chairman of the Board.
Section 4.11 Secretary. The Secretary shall attend, and record all the
proceedings of meetings of, the stockholders and the Board of Directors in
books to be kept for that purpose and shall also record therein all action
taken by written consent of the stockholders or the
13
<PAGE> 17
Board of Directors in lieu of a meeting. He shall attend to the giving and
serving of all notices of the corporation. He shall have custody of the seal
of the Corporation and shall attest the same by his signature whenever
required. He shall have charge of the stock ledger and such other books and
papers as the Board of Directors may direct. He shall have all such further
powers and duties as generally are incident to the office of Secretary or as
may be prescribed by the By-Laws, by Resolution of the Board of Directors, or
by the Chairman of the Board.
Section 4.12 Assistant Treasurers. In the absence or inability to act of
the Treasurer, any duly appointed Assistant Treasurer may perform all the
duties and exercise all the powers of the Treasurer. The performance of any
such duty shall, in respect of any other person dealing with the Corporation,
be conclusive evidence of his power to act. An Assistant Treasurer shall also
perform such other duties as the Treasurer or the Chairman of the Board may
assign to him.
Section 4.13 Assistant Controllers. In the absence or inability to act of
the Controller, any duly appointed Assistant Controller may perform all of the
duties and exercise all the powers of the Controller. The performance of any
such duty shall, in respect of any other person dealing with the Corporation,
be conclusive evidence of his power to act. An Assistant Controller shall
perform such other duties as the Controller or the Chairman of the Board may
assign to him.
Section 4.14 Assistant Secretaries. In the absence or inability to act of
the Secretary, any duly appointed Assistant Secretary may perform all the
duties and exercise all the powers of the Secretary. The performance of any
such duty shall, in respect of any other person
14
<PAGE> 18
dealing with the Corporation, be conclusive evidence of his power to act. An
Assistant Secretary shall also perform such other duties as the Secretary or
the Chairman of the Board may assign to him.
Section 4.15 Loans to Officers and Employees; Guaranty of Obligations of
Officers and Employees. The Corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or any subsidiary, including any officer or employee who is a
director of the Corporation or any subsidiary, whenever, in the judgment of a
majority of the directors, such loan, guaranty or assistance may reasonably be
expected to benefit the Corporation. The loan, guaranty or other assistance
may be with or without interest, and may be unsecured, or secured in such
manner as a majority of the directors shall approve, including, without
limitation, a pledge of shares of stock of the Corporation.
ARTICLE V
CAPITAL STOCK
Section 5.l Certificates. Certificates for stock of the Corporation shall
be in such form as shall be approved by the Board of Directors and shall be
signed in the name of the Corporation by the Chairman or Vice Chairman of the
Board, and by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary. Such certificates may be sealed with the seal of the
Corporation or a facsimile thereof. Any of or all the signatures on a
certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such
15
<PAGE> 19
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of issue.
Section 5.2 Transfers of Stock. Transfer of stock shall be made only upon
the books of the Corporation by the holder, in person or by duly authorized
attorney, and on the surrender of the certificate or certificates for such
stock properly endorsed. The Board of Directors shall have the power to make
all such rules and regulations not inconsistent with the Certificate of
Incorporation and these By-Laws and the law, as the Board of Directors may deem
appropriate concerning the issue, transfer and registration of certificates for
stock of the Corporation. The Board may appoint one or more transfer agents or
registrars of transfers, or both, and may require all stock certificates to
bear the signature of either or both.
Section 5.3 Lost, Stolen or Destroyed Certificates. The Corporation may
issue a new stock certificate in the place of any stock certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed stock
certificate or his legal representative to give the Corporation a bond
sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or
the issuance of any such new certificate. The Board of Directors may require
such owner to satisfy other reasonable requirements.
Section 5.4 Stockholder Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or
16
<PAGE> 20
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than
sixty nor less than seven days before the date of such meeting, nor more than
sixty days prior to any other action. Only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to notice of, and
to vote at, such meeting and any adjournment thereof, or to give such consent,
or to receive payment of such dividend or other distribution, or to exercise
such rights in respect of any such change, conversion or exchange of stock, or
to participate in such action, as the case may be, notwithstanding any transfer
of any stock on the books of the Corporation after any record date so fixed.
If no record date is fixed by the Board of Directors, (1) the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
date on which notice is given, or, if notice is waived by all stockholders
entitled to vote at the meeting, at the close of business on the day next
preceding the day on which the meeting is held, (2) the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be at the close of business on the day on which the first
written consent is expressed by the filing thereof with the Corporation as
provided in Section 1.9 of these By-Laws, and (3) the record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
17
<PAGE> 21
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
ARTICLE VI
SEAL
Section 6.1 Seal. The seal of the Corporation shall be circular in form
and shall bear, in addition to any other emblem or device approved by the Board
of Directors, the name of the Corporation, the year of its incorporation and
the words "Corporate Seal" and "Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
ARTICLE VII
WAIVER OF NOTICE
Section 7.1 Waiver of Notice. Whenever notice is required to be given by
statute, or under any provision of the Certificate of Incorporation or these
By-Laws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. In the case of a stockholder, such waiver of notice may be signed by
such stockholder's attorney or proxy duly appointed in writing. Attendance of
a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of business because the
meeting was not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special
18
<PAGE> 22
meeting of the stockholders, directors or members of a Committee of directors
need be specified in any written waiver of notice.
ARTICLE VIII
CHECKS, NOTES, DRAFTS, ETC.
Section 8.1 Checks, Notes, Drafts, Etc. Checks, notes, drafts,
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as
the Board of Directors or a duly authorized Committee thereof may from time to
time designate.
ARTICLE IX
AMENDMENTS
Section 9.1 Amendments. These By-Laws or any of them may be altered or
repealed, and new By-Laws may be adopted, by a majority of the stockholders of
the Corporation by vote at a meeting or by written consent without a meeting.
The Board of Directors shall also have power, by a majority vote of the
directors, to alter or repeal any of these By-Laws, and to adopt new By-Laws.
19
<PAGE> 1
EXHIBIT 3.7
ARTICLES OF INCORPORATION
OF
VON'S WELDING, INC.
I, the undersigned natural person of the age of twenty-one (21) years or
more, acting as incorporator of the corporation under Wyoming Business
Corporation Act, adopt the following Articles of Incorporation for such
corporation.
FIRST: The name of the corporation is VON'S WELDING, INC.
SECOND: The period of its duration is perpetual.
THIRD: The purpose or purposes for which the corporation is organized
are: The corporation shall have unlimited power to engage in and do lawful acts
concerning any and all lawful business for which said corporation may be
organized under Section 46(c), Wyoming Business Corporation Act.
FORTH: The aggregate number of shares which the corporation shall have
authority to issue is 45,000 shares of common stock with no par value.
FIFTH: The corporation will not commence business until at least Five
Hundred ($500.00) dollars has been received by it as consideration for the
issuance of shares.
SIXTH: Provisions limiting or denying to shareholder the preemptive right
to acquire additional or treasury shares of the corporation are: None.
SEVENTH: Provisions for the regulations of the internal affairs of the
corporation are: None.
EIGHTH: The address of the initial registered agent corporation is 400 S.
Kendrick, Suite 301, Gillette, Wyoming and the name of the initial registered
agent at such address is Felix J. Sowada.
<PAGE> 2
NINTH: The number of directors will be three (3). The names and addresses
of the persons who are to serve as directors until the first annual meeting of
shareholders, or until their successors are elected and qualify are:
Michael VonFlatern P.O. Box 2876
Gillette, Wyoming 82716
Linda VonFlatern P.O. Pox 2876
Gillette, Wyoming 82716
Jan VonFlatern 1887 Newton Street N.W.
Washington, D.C.
TENTH: The name and address of the incorporator is:
Linda VonFlatern P.O. Box 2876
Gillette, Wyoming 82716
/s/ Linda Von Flatern
------------------------------
Linda Von Flatern
STATE OF WYOMING )
)
COUNTY OF CAMPBELL )
A Notary Public, in and for said County of Campbell, and State of Wyoming,
hereby certify that on the 11 day of February, 1981, before me personally
appeared LINDA S. VONFLATERN, who, being by me first duly sworn, declared that
he is the person who signed the foregoing document as the incorporator and that
the statements contained therein are true and correct.
/s/ Jackie Lee K. Klug
------------------------------
NOTARY PUBLIC
[SEAL]
<PAGE> 3
TO: Secretary of State, Corporations Division
NOTICE OF CHANGE OF REGISTERED OFFICE
REGISTERED AGENT FOR VON'S WELDING, INC.
Von's Welding, Inc., a Wyoming Corporation, gives notice pursuant to WS
17-1-110 that it intends to change the registered office and the registered
agent of the corporation.
Michael Von Flatern, president of Von's Welding, Inc., having been duly
sworn upon his oath states:
1. The name of the Corporation is Von's Welding, Inc.
2. The address of its then registered office is 400 South Kendrick, Suite
301, Gillette, Wyoming 82716.
3. The new address of the registered office is 1197 Swanson Road,
Gillette, Wyoming 82716, mailing address is P.O. Box 2876, Gillette, Wyoming
82716.
4. The name of the then registered agent is Felix Sowada.
5. The name of the successor registered agent is Michael Von Flatern.
6. The address of the registered office and the address of the registered
agent, as changed, are identical.
7. That this change was authorized by resolution duly adopted by the board
of directors.
/s/ Michael Von Flatern
----------------------------------
Michael Von Flatern
President of Von's Welding, Inc.
ATTEST: /s/ Linda Von Flatern
--------------------------------
Linda Von Flatern
Secretary of Von's Welding, Inc.
[SEAL]
Subscribed and sworn to before me this 29th day of June, 1987, by Michael
Von Flatern, President of Von's Welding, Inc.
Witness my hand and official seal.
/s/ Debra J. Orluck
--------------------------------
Notary Public
[SEAL]
My Commission Expires: July 1, 1998
<PAGE> 1
EXHIBIT 3.8
BY-LAWS
OF
VON'S WELDING, INC.
ARTICLE I
OFFICE
Section 1. The principal office shall be in Gillette, Wyoming.
Section 2. The corporation may have offices also at such other places
within and without the State of Wyoming as the board of directors may from time
to time determine.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in Gillette, Wyoming, at such place as may be fixed from time to
time by the board of directors. Meetings of stockholders for any other purpose
may be held at such time and place, within or without the State of Wyoming, as
shall be stated in the notice of meetings.
Section 2. Annual meetings of stockholders shall be held on the Third
Tuesday in April each year if not a legal holiday, and if a legal holiday, then
on the next full business day following, at 1:00 P.M., at which they shall
elect by a plurality vote a board of directors, and transaction such other
business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting shall be given to each
stockholder entitled to vote thereat at least ten (10) days before the day of
the meeting.
Section 4. The officer who has charge of the stock book of the corporation
shall prepare and make, at least ten days before every election of directors, a
complete list of the stockholders entitled to vote at said election, arrange in
alphabetical order with the residence of and the number of voting shares held
by each. Such list shall be open for ten days to the examination of any
stockholder at the place where said election is to be held and shall be
produced and kept at the time and place of election during the whole time
thereof, and subject to the inspection of any stockholder who may be present.
Section 5. Special meeting of the stockholders may be called by the
president and shall be called by the president or secretary by resolution of
the board of directors or at the request in writing of stockholders owing a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such resolution or request shall state the
purpose or purposes of the proposed meeting.
<PAGE> 2
Section 6. Written notice of a special meeting of stockholders, stating
the time, place and object thereof, shall be given to each stockholder entitled
to vote thereat, at least ten days before the date fixed for the meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from tire to time without notice other than announcement at the
meeting, until. a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented by business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meetings
Unless the question is one of incorporation, a different vote is required in
which case such express provision shall govern and control the decision of such
question.
Section 10. Each stockholder shall at every meeting of the stockholders
be entitled to one vote in person or by proxy for each share of the capital
stock having power held by such stockholders, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period,
and, except where the transfer books of the corporation have been closed or
date has been fixed as a record date, date for the determination of its
stockholders entitled to vote, no share of stock shall be voted on at any
election for directors which has been transferred on the books of the
corporation within twenty days preceding such election of directors.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by
any provisions of statutes or of the certificate of incorporation, the meeting
and vote of stockholders may be dispensed with, if all the stockholders who
would have been entitled to vote upon the action if such meeting were held,
shall consent in writing to such corporate action being taken.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
be THREE (3). The first board shall consist of three (3) director.
Thereafter, within the limits above specified, the number of directors shall be
determined by the stockholders at the annual
<PAGE> 3
meeting. The directors shall be elected at the annual meeting of the
stockholders except as provided in Section 2 of this article, and each director
elected shall hold office until his successor is elected. Directors need not
be stockholders.
Section 2. Vacancies and newly created directorship resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, and the directors so
chosen shall hold office until the next annual election and until their
successors are duly elected, unless sooner displaced.
Section 3. The business of the corporation shall be managed by its board
of directors which may exercise all such powers the corporation and do all such
lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
Section 4. The board of directors may hold meetings, both regular and
special, either within or without the State of Wyoming.
Section 5. The first meeting of each newly elected board of directors
shall be held immediately following the adjournment of the meeting of
stockholders and at the place thereof. No notice of such meeting shall be
necessary to the directors in order legally to constitute the meeting, provided
a quorum is present. In the event such meeting is not so held, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the board of directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board of directors.
Section 7. Special meetings of the board of directors may be called by
the president and shall be called by the secretary on the written request of
two directors. Notice of special meetings of the board of directors shall be
given to each director at least three days before the meeting if by mail or if
in person or by telephone or telegraph at least 24 hours before the meeting.
The notice need not specify the business to be transacted.
Section 8. At all meetings of the board a majority of the directors at
the time in office but in no event less than one-third of the full board of
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 9. The board of directors may be resolution passes by a majority
of the whole board, designate one or more of the directors of the corporation,
which, to the extent provided in the resolution, shall have and may exercise
the powers of the board of directors in the management of the business and
affairs of the corporation and may authorize the seal of the
<PAGE> 4
corporation to be affixed to all papers which may require it. Such committee
or committees shall have such names or names as may be determined from time by
resolution adopted by the board of directors.
Section 10. The committees shall keep regular minutes of their
proceedings and report the same to the board of directors.
Section 11. The directors may be paid their expenses of attendance at
each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of Directors or a stated salary as
director. To such payment shall preclude the director from serving the
corporation in any other capacity and receiving compensation therefore.
Members of special or standing committee may be allowed compensation for
attending committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders mailed to them at their
addresses appearing on the books of the corporation shall be deemed to be given
at the time when mailed.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation, or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice-president, a secretary and
treasurer. The board of directors may also choose additional vice-presidents,
and one or more offices may be held by the same person, except that the offices
of president and secretary may not be held by the same person.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president from among the directors, and
shall choose one or more vice-presidents, a secretary and a treasurer, none of
whom need be a member of the board.
Section 3. The board of directors may appoint such other officers and
agent as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers of the corporation shall be fixed
by the board of directors.
<PAGE> 5
Section 5. The officers of the corporation shall hold office at the
pleasure of the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the board of directors. Any
vacancy occurring in any office of the corporation by death, resignation,
removal or otherwise shall be filled by the board of directors.
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation shall see that all orders and resolutions of the board of directors
are carried into effect. He shall execute on behalf of the corporation and may
affix or cause the seal to be affixed to all instruments requiring such
execution except to the extent the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation.
Section 7. The vice-president shall act under the direction of the
president and in 'the order of their seniority, unless otherwise determined by
the board of directors, and in the absence or disability of the president,
shall perform the duties and have such other powers as the president of the
board of directors may from time to time prescribe.
Section 8. The secretary shall act under the direction of the president.
Subject to the direction of the president, he shall attend all meetings of the
board of directors and all meeting of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, cause to be given, notice of
all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the
president or the board of directors. He shall keep in a safe custody the seal
of the corporation and, when authorized by the president or the board of
directors cause it to be affixed to any instrument requiring it and when so
affixed, it shall be attested by his signature or by the signature of the
treasurer or an assistant secretary or an assistant treasurer.
Section 9. The assistant secretaries in the order of seniority, unless
otherwise determined by the president or the board of directors, shall, in the
absence or disability of the secretary, perform the duties and exercise the
powers of the secretary. They shall perform such other duties and have other
powers as the president of the board of directors may from time to time
prescribe.
Section 10. The treasurer shall act under the direction of the president.
Subject to the direction of the president he shall have the custody of the
corporation funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name of and to the credit
of the corporation in such depositories as may he designated by the board of
directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the president or the board of directors, taking proper vouchers for
such disbursements, and shall render to the president and the board of
directors as its regular meetings, or when the board of
<PAGE> 6
directors so requires an account of all his transactions as treasurer and of
the financial condition of the corporation.
Section 12. The assistant treasurers in the order of their seniority,
unless otherwise determined by the president or the board of directors, shall,
in the absence or disability of the treasurer, perform the duties and exercise
the powers of the treasurer. They shall perform such other duties and have
such other powers as the president of the board of directors may from time to
time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
president or a vice-president and the treasurer or an assistant treasurer, or
the secretary or an. assistant secretary of the corporation, certifying the
amount of shares owned by him in the corporation. If the corporation shall be
authorized to issue more than one class of stock, the designations, preference
and relative, participating, optional or other special rights of each class and
the qualifications, limitations or restrictions of such preference and/or
rights shall be set forth in full or summarized on the face or back of the
certificates.
Section 2. If a certificate is signed (1) by a transfer agent or an
assistant transfer agent or (2) by a transfer clerk acting on behalf of the
corporation and a registrar, the signature of any such president,
vice-president, treasurer, assistant treasurer, secretary or assistant
secretary may be facsimile. In case any officer or officers who have signed,
or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation, whether because of death, resignation, or otherwise, before such
certificate or certificates have been delivered by the corporation such
certificate or certificates may, nevertheless be adopted by the corporation and
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signatures or signatures have
been used thereon had not ceased to be such officer or officers of the
corporation.
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any corporation alleged to have been lost
or destroyed, upon the making of an affidavit to that fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing
such issue to a new certificate or certificates, the board of directors may, in
its discretion and as a condition precedent to the issuance thereof, require
the owner of such lot or destroyed certificate or certificates,, or his legal
representative to give the corporation a bond in such sum as it may direct to
as indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost or destroyed.
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new
<PAGE> 7
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 5. The board of directors may close the stock transfer books of
the corporation for a period not exceeding fifty days preceding the date of any
meeting of stockholders or the date for payment of any dividend or the date for
the allotment of rights or the date when any change or conversion or exchange
of capital stock shall go into effect or for a period of not exceeding fifty
days in connection with obtaining the consent of stockholders for any purpose.
In lieu of closing the stock transfer books as aforesaid, the board of
directors may fix in advance a date, not exceeding fifty days preceding the
date of any meeting of stockholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent, as a record date for the determination
of the stockholders entitled to notice of, and to vote at, any such meeting,
and any adjournment thereof, or entitled or received payment of any such
dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent, and in such case such stockholders and only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to such
notice, and to vote at such meeting and any adjournment thereof, or to receive
payment of such dividend, or to receive such allotment of rights, or to give
such consent, as the case may be notwithstanding any transfer of any stock on
the books of the corporation after any such record date fixed as aforesaid
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares of the part of
any other person whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Wyoming.
ARTICLE VIII
MISCELLANEOUS
Section 1. There may be set aside out of any funds of the corporation
available for dividends such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property, or for such other purposes as the board of directors may think
conductive to the interest of the corporation and directors may modify or
abolish any such reserve.
Section 2. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
Section 3. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
<PAGE> 8
Section 4. The corporate seal shall have inscribed thereon the name of
the corporation and words "Corporate Seal, Wyoming". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Any person made a party to any civil or criminal action, suit
or proceeding by reason of the fact that he, his testator or interstate, is or
was a director, officer or employee of his corporation or of any corporation
which he served as such at the request of this corporation, shall be
indemnified by the corporation against the reasonable expenses, including
without limitation, attorney's fees and amounts paid to the corporation by him,
actually and necessarily incurred by or imposed upon him in connection with, or
resulting from the defense of such civil, criminal action, suit or proceedings
that such officer, director or employee is liable for negligence or misconduct,
in the performance of his duties. In the case of a criminal action suit or
proceedings, a conviction (whether based on a plea of guilty or nolo contenders
or its equivalent, or after trial) shall not of itself be deemed an
adjudication that such officer, director or employee is liable for negligence
or misconduct in the performance of his duties. Any amount payable pursuant to
this article may be determined and paid, at the option of the person to be
indemnified, pursuant to procedure set forth from time to time in the by-laws
or by any of the following procedures: (a) order of the court having
jurisdiction of any such civil or criminal action, suit or proceedings, (b)
resolution adopted by a majority of a quorum of the board of directors of the
corporation without counting in such majority or quorum any interested
directors, (c) resolution adopted by the holders of record or a majority of the
outstanding shares of capital stock of the corporation having powers, or (d)
order of any court having jurisdiction over the corporation. Such right of
indemnification shall not be exclusive of any other right of the corporation,
and the other persons above-mentioned, may have or hereafter acquire, and
without limiting the generality of such statement, they shall be entitled to
their respective rights of indemnification under any charter provisions,
by-laws, agreements, vote of stockholders, provisions of law or otherwise as
their rights under this article.
ARTICLE IX
AMENDMENTS
Section 1. The by-laws may be amended by a majority vote of all the stock
issued and outstanding and entitled to vote at any annual or special meeting of
the stockholders, provided notice of intention to amend shall have been
contained in the notice of the meeting.
Section 2. The board of directors by a majority vote of the whole board
at any regular meeting or at any duly called special meeting may amend these
by-laws, including by-laws , adopted by the stockholders, provided that the
stockholders may from time to time specify particular provisions of the by-laws
which shall not be amended by the board of directors.
<PAGE> 9
Secretary
_______________________________
<PAGE> 1
EXHIBIT 4.1
BUCYRUS INTERNATIONAL, INC.,
as Company,
THE GUARANTORS party hereto
and
HARRIS TRUST AND SAVINGS BANK,
as Trustee
9-3/4% Senior Notes Due 2007
____________________
INDENTURE
Dated as of September 24, 1997
____________________
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Section Indenture Section
- ----------- -----------------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9; 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
312(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5; 11.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6; 4.7; 11.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5; 11.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . 11.6
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
</TABLE>
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 1.3. Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 1.4. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 2
THE SECURITIES
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.4. Paying Agent To Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.7. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.9. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.13. Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.14. Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 3
REDEMPTION
SECTION 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.2. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.6. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.2. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.3. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
SECTION 4.4. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.5. Future Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.6. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.7. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.8. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.9. Limitation on Incurrence of Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.10. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.11. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.12. Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.13. Limitation on Sales of Assets and
Subsidiary Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.14. Limitation on Dividend and Other
Restrictions Affecting Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 4.15. Limitation on Issuance or Sale of Capital
Stock of Wholly Owned Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.16. Limitation on Sale and Leaseback
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.1. Merger, Consolidation and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 6.7. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 7
TRUSTEE
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C>
SECTION 7.5. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 7.9. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.11. Preferential Collection of Claims Against
Bucyrus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. Discharge of Liability on Securities;
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 8.2. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 8.3. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.4. Repayment to Bucyrus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.5. Indemnity for Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.6. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE 9
AMENDMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 9.3. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 9.4. Revocation and Effect of Consents and Waivers . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 9.5. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 9.6. Trustee to Sign Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 10
GUARANTEES
SECTION 10.1. Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 10.2. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 10.3. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.4. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.5. Modification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.6. Release of Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 10.7. Execution of Supplemental Indenture for
Future Subsidiary Guarantors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
</TABLE>
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<PAGE> 6
ARTICLE 11
MISCELLANEOUS
<TABLE>
<S> <C>
SECTION 11.1. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 11.3. Communication by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.4. Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.5. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.6. When Securities Disregarded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.8. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.13. Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.14. Severability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Exhibit A - Form of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Form of Exchange Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Form of Certificate To Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D - Form of Certificate To Be Delivered in
Connection with Transfers Pursuant to
Regulation S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
Exhibit E - Form of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
</TABLE>
Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture.
-iv-
<PAGE> 7
INDENTURE dated as of September 24, 1997, among BUCYRUS
INTERNATIONAL, INC., a Delaware corporation ("Bucyrus" or the "Company"),
certain of Bucyrus' subsidiaries party hereto (each a "Guarantor" and,
collectively, the "Guarantors") and HARRIS TRUST AND SAVINGS BANK, an Illinois
banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of Bucyrus' 9-3/4%
Senior Notes Due 2007:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Related Business; or (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition (including by merger, consolidation, combination or otherwise) of
such Capital Stock by Bucyrus or another Restricted Subsidiary; provided,
however, that any such Restricted Subsidiary is primarily engaged in a Related
Business.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Sections 4.10, 4.12 and 4.13 only, "Affiliate"
shall also mean any beneficial owner of Capital Stock representing 10% or more
of the total voting power of the Voting Stock (on a fully diluted basis) of
Bucyrus or of rights or warrants to purchase such Capital Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"AIP" means American Industrial Partners Capital Fund II,
L.P., a Delaware limited partnership, and its successors.
"AIPAC" means American Industrial Partners Acquisition
Company, LLC, a Delaware limited liability company, and its successors.
<PAGE> 8
-2-
"AIP Agreement" means the Agreement and Plan of Merger dated
as of August 21, 1997 among Bucyrus, BAC and AIPAC.
"AIP Bridge Loan" means a loan to BAC from, or arranged by,
AIP or its Affiliates; provided, however, that (i) the proceeds thereof are
used by BAC solely to purchase shares of common stock of Bucyrus in the AIP
Tender Offer and (ii) the rate of interest thereon shall not exceed 6.0% per
annum.
"AIP Equity Contribution" means the contribution by AIP to BAC
of $143.0 million in cash as common equity in connection with the AIP Tender
Offer.
"AIP Merger" means the merger of BAC with and into Bucyrus
pursuant to the AIP Agreement.
"AIP Tender Offer" means the offer by BAC that commenced
August 26, 1997 to purchase for cash 100% of the common stock of Bucyrus at a
price of $18.00 per share.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
Bucyrus or any Restricted Subsidiary, including any disposition by means of a
merger, consolidation or similar transaction (each referred to for the purposes
of this definition as a "disposition"), of (i) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares and, to the
extent required by local ownership laws in foreign countries, shares owned by
foreign shareholders), (ii) all or substantially all the assets of any
division, business segment or comparable line of business of Bucyrus or any
Restricted Subsidiary or (iii) any other assets of Bucyrus or any Restricted
Subsidiary outside of the ordinary course of business of Bucyrus or such
Restricted Subsidiary. Notwithstanding the foregoing, the term "Asset
Disposition" shall not include (x) a disposition by a Restricted Subsidiary to
Bucyrus or by Bucyrus or a Restricted Subsidiary to a Wholly Owned Subsidiary,
(y) for purposes of Section 4.13, a disposition (a) that constitutes a
Permitted Investment or a Restricted Payment permitted by Section 4.10 or (b)
consummated in compliance with Section 5.1 and (z) a disposition of assets
having a fair market value and a sale price of less than $500,000.
"Attributable Debt" in respect of a Sale and Leaseback
Transaction means, as of the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included
<PAGE> 9
-3-
in such Sale and Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all
such payments.
"BAC" means Bucyrus Acquisition Corp., a Delaware corporation,
and its successors.
"Bank Credit Facility" means the Credit Agreement dated as of
September 24, 1997 among Bucyrus, Bank One, Wisconsin, and the other lenders
named therein, as the same may be amended, supplemented, amended and restated,
extended or Refinanced from time to time, including pursuant to term loan and
revolving credit facilities (except to the extent that any such amendment,
supplement, amendment and restatement, extension or Refinancing would be
prohibited by the terms of this Indenture), including (i) any related notes,
letters of credit, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as refinanced from time to
time, and (ii) any notes, guarantees, collateral documents, instruments and
agreements executed in connection with any such refinancing.
"Basket" has the meaning set forth in Section 4.10(a).
"Board of Directors" means the Board of Directors of Bucyrus
or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP. The amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP, and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under
such lease prior to the first date upon which such lease may be terminated by
the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations
<PAGE> 10
-4-
or other equivalents of or interests in (however designated) equity of such
Person, including any Preferred Stock, but excluding any debt securities
convertible into such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) prior to a Public Equity Offering after the Issue
Date after which there is a Public Market, the Permitted Holders cease
to own, or to have the power to vote or direct the voting of, Voting
Stock representing a majority of the voting power of the total
outstanding Voting Stock of Bucyrus;
(ii) following a Public Equity Offering after the Issue
Date after which there is a Public Market, any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
other than one or more Permitted Holders, is or becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that for purposes of this clause such person or group shall be
deemed to have "beneficial ownership" of all securities that any such
person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly
or indirectly, of Voting Stock representing more than 35% of the
voting power of the total outstanding Voting Stock of Bucyrus;
provided, however, that such event shall not be deemed to be a Change
of Control so long as the Permitted Holders own Voting Stock
representing in the aggregate a greater percentage of the total voting
power of the Voting Stock of Bucyrus than such other person or group;
(iii) following a Public Equity Offering after the Issue
Date after which there is a Public Market, during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors
whose election to such Board of Directors or whose nomination for
election by the shareholders of Bucyrus was approved by a vote of 66
2/3% of the directors of Bucyrus then still in office who were either
directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors then in
office; or
(iv) the merger or consolidation of Bucyrus with or into
another Person or the merger of another Person with or into Bucyrus,
or the sale of all or substantially all the assets of Bucyrus and the
Restricted Subsidiaries, taken as a whole, to another Person (other
than a Person that is
<PAGE> 11
-5-
controlled by the Permitted Holders), and, in the case of any such
merger or consolidation, the securities of Bucyrus that are
outstanding immediately prior to such transaction and which represent
100% of the aggregate voting power of the Voting Stock of Bucyrus are
changed into or exchanged for cash, securities or property, unless
pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of
the surviving corporation that represent immediately after such
transaction, at least a majority of the aggregate voting power of the
Voting Stock of the surviving corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" or "SEC" means the Securities and Exchange
Commission.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the
most recent four consecutive fiscal quarters for which financial statements are
available to (ii) Consolidated Fixed Charges for such four fiscal quarters;
provided, however, that (1) if Bucyrus or any Restricted Subsidiary has
Incurred any Indebtedness since the beginning of such period that remains
outstanding on such date of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio is an Incurrence of
Indebtedness, or both, EBITDA and Consolidated Fixed Charges for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day of such
period and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period (except that, in
the case of Indebtedness used to finance working capital needs incurred under a
revolving credit or similar arrangement, the amount thereof shall be deemed to
be the average daily balance of such Indebtedness during such
four-fiscal-quarter period), (2) if since the beginning of such period Bucyrus
or any Restricted Subsidiary shall have made any Asset Disposition, the EBITDA
for such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to the EBITDA (if
negative) directly attributable thereto for such period, and Consolidated Fixed
Charges for such period shall be reduced by an amount equal to the Consolidated
Fixed Charges directly attributable to any Indebtedness of Bucyrus or any
Restricted Subsidiary repaid,
<PAGE> 12
-6-
repurchased, defeased, assumed by a third person (to the extent Bucyrus and its
Restricted Subsidiaries are no longer liable for such Indebtedness) or
otherwise discharged with respect to Bucyrus and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period (or, if
the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Fixed
Charges for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent Bucyrus and its continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such sale), (3)
if since the beginning of such period Bucyrus shall have consummated a Public
Equity Offering following which there is a Public Market, Consolidated Fixed
Charges for such period shall be reduced by an amount equal to the Consolidated
Fixed Charges directly attributable to any Indebtedness of Bucyrus or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged
with respect to Bucyrus and its Restricted Subsidiaries in connection with such
Public Equity Offering for such period, (4) if since the beginning of such
period Bucyrus or any Restricted Subsidiary (by merger or otherwise) shall have
made an Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, which acquisition
constitutes all or substantially all of an operating unit of a business,
including any such Investment or acquisition occurring in connection with a
transaction requiring a calculation to be made hereunder, EBITDA and
Consolidated Fixed Charges for such period shall be calculated after giving pro
forma effect thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period and (5) if
since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary or was merged with or into Bucyrus or any Restricted
Subsidiary since the beginning of such period) shall have made any Asset
Disposition, any Investment or acquisition of assets that would have required
an adjustment pursuant to clause (3) or (4) above if made by Bucyrus or a
Restricted Subsidiary during such period, EBITDA and Consolidated Fixed Charges
for such period shall be calculated after giving pro forma effect thereto as if
such Asset Disposition, Investment or acquisition occurred on the first day of
such period. For purposes of this definition, whenever pro forma effect is to
be given to an acquisition of assets, the amount of income, earnings or expense
relating thereto and the amount of Consolidated Fixed Charges associated with
any Indebtedness Incurred in connection therewith, the pro forma calculations
shall be prepared in accordance with Article II of Regulation S-X promulgated
by the Commission as determined in good faith by a responsible financial or
accounting Officer of Bucyrus. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest of such Indebtedness
shall be calculated as if the
<PAGE> 13
-7-
rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Agreement applicable
to such Indebtedness if such Interest Rate Agreement has a remaining term in
excess of 12 months).
"Consolidated Fixed Charges" means, with respect to any
period, the sum (without duplication) of (i) the interest expense of Bucyrus
and the Restricted Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP consistently applied, including, without
limitation, (a) amortization of debt discount, (b) the net payments, if any,
under interest rate contracts (including amortization of discounts), (c) the
interest portion of any deferred payment obligation and (d) accrued interest,
plus (ii) the interest component of the Capital Lease Obligations paid or
accrued during such period, plus (iii) all interest capitalized during such
period, plus (iv) all dividends on Preferred Stock (other than to Bucyrus or a
Wholly Owned Subsidiary) paid, accrued, declared or accumulated during such
period.
"Consolidated Net Income (Loss)" means, for any period, the
net income (or loss) of Bucyrus and the Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP consistently
applied; provided, however, that there shall not be included in such
Consolidated Net Income: (i) any extraordinary gains (but not, other than for
purposes of calculating the Basket, losses) (less all fees and expenses
relating thereto); (ii) any net income or loss of any Person if such Person is
not a Restricted Subsidiary, except that, subject to the exclusion contained in
clause (iv) below, the equity of Bucyrus or any Restricted Subsidiary in the
net income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Person during such period to Bucyrus or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations contained in
clause (iv) below); (iii) any net income (or loss) of any Person acquired by
Bucyrus or a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition; (iv) the net income of any Restricted
Subsidiary to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income to Bucyrus is not at
the time permitted, directly or indirectly, without prior approval (that has
not been obtained), pursuant to the terms of its charter or any agreement,
instrument and governmental regulation applicable to such Restricted Subsidiary
or its stockholders; (v) gain (but not loss) (less all fees and expenses
relating thereto) realized upon the sale or other disposition of
<PAGE> 14
-8-
(x) any assets (including pursuant to Sale and Leaseback Transactions) which is
not sold or otherwise disposed of in the ordinary course of business or (y) any
Capital Stock of any Person; and (vi) the cumulative effect of a change in
accounting principles.
"Consolidated Net Worth" means with respect to any Person on
any date, the equity of the common and preferred stockholders of such Person
and its Restricted Subsidiaries as of such date, determined on a consolidated
basis in accordance with GAAP consistently applied, less any amount
attributable to Unrestricted Subsidiaries.
"Corporate Trust Office" means the office of the Trustee
located at 311 West Monroe, 12th Floor, Chicago, Illinois 60606. "Currency
Agreement" means, with respect to any Person, any foreign exchange contract,
currency swap agreement or other similar agreement to which such Person is a
party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, or (ii) is redeemable at the option of the holder
thereof, in whole or in part, in each case on or prior to the date that is one
year after the Maturity Date.
"EBITDA" for any period means the sum of Consolidated Net
Income for such period plus, without duplication, the following to the extent
deducted in calculating such Consolidated Net Income: (i) Consolidated Fixed
Charges, (ii) all income tax expense of Bucyrus, (iii) depreciation expense,
(iv) amortization expense, (v) all other non-cash items reducing such
Consolidated Net Income (excluding (x) any non-cash item to the extent it
represents an accrual of, or reserve for, cash disbursements to be made in any
subsequent period and (y) the amount attributable to minority interests) less
all non-cash items increasing Consolidated Net Income, and (vi) payments to
purchase, redeem or otherwise acquire or retire for value Capital Stock of
Bucyrus in connection with the AIP Merger pursuant to the AIP Agreement, in
each case for such period. Notwithstanding the foregoing, the
<PAGE> 15
-9-
provision for taxes based on the income or profits of, and the depreciation and
amortization of, a Subsidiary of Bucyrus shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that
the net income of such Subsidiary was included in calculating Consolidated Net
Income and only if a corresponding amount would be permitted at the date of
determination to be dividended or otherwise distributed to Bucyrus by such
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments and governmental
regulations applicable to such Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Securities" means the 9-3/4% Senior Notes Due 2007,
Series B, to be issued in exchange for the Initial Securities pursuant to the
Registration Agreement.
"Foreign Subsidiary" means a Restricted Subsidiary that is
incorporated in a jurisdiction other than the United States or a state thereof
or the District of Columbia and with respect to which more than 80% of any of
its sales, earnings or assets (determined on a consolidated basis in accordance
with GAAP) are located in, generated from or derived from operations located in
territories outside the United States of America and jurisdictions outside the
United States of America.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in (i) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board and (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession.
"guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation of such
Person (whether arising by virtue of partnership arrangements, or by agreements
to keep-well, to purchase assets, goods, securities or services, to take-or-pay
or to maintain financial statement conditions or otherwise) or (ii) entered
into for the purpose of assuring in any other manner the obligee of such
Indebtedness or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole
<PAGE> 16
-10-
or in part); provided, however, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "guarantee" used as a verb has a corresponding meaning. The term
"guarantor" shall mean any Person guaranteeing any obligation.
"Guarantor" means each Restricted Subsidiary designated as
such on the signature pages of this Indenture and any other Restricted
Subsidiary that has issued a guarantee of the Securities, in each case, until
such Restricted Subsidiary is released from its Guarantee.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, create, assume, guarantee, incur or
otherwise become liable for; provided, however, that any Indebtedness or
Capital Stock of a Person existing at the time such Person becomes a Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Subsidiary at the time it becomes a Subsidiary; provided,
further, however, that in the case of a discount security, neither the accrual
of interest nor the accretion of original issue discount shall be considered an
Incurrence of Indebtedness. The term "Incurrence" when used as a noun shall
have a correlative meaning.
"Indebtedness" means, with respect to any Person, without
duplication, and whether or not contingent, (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
or which is evidenced by a note, bond, debenture or similar instrument, to the
extent it would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (ii) all Capital Lease Obligations of such
Person, (iii) all obligations of such Person in respect of letters of credit or
bankers' acceptances issued or created for the account of such Person, (iv) all
obligations of such Person under Interest Rate Agreements or Currency
Agreements, (v) all Disqualified Stock issued by such Person and all preferred
stock issued by any Subsidiary of such Person, in each case, valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends thereon, and (vi) to the extent not otherwise
included, any Guarantee by such Person of any other Person's indebtedness or
other obligations described in clauses (i) through (v) above. "Indebtedness"
of Bucyrus and the Restricted
<PAGE> 17
-11-
Subsidiaries shall not include current trade payables incurred in the ordinary
course of business and payable in accordance with customary practices, and
non-interest bearing installment obligations and accrued liabilities incurred
in the ordinary course of business. For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were purchased on any date on
which Indebtedness shall be required to be determined pursuant to this
Indenture, and if such price is based upon, or measured by the fair market
value of, such Disqualified Stock, such fair market value is to be determined
in good faith by the board of directors of the issuer of such Disqualified
Stock. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations as described above at
such date; provided, however, that the amount outstanding at any time of any
Indebtedness issued with original issue discount shall be deemed to be the face
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP.
"Indenture" means this Indenture as amended or supplemented
from time to time by one or more supplemental indentures entered into pursuant
to the applicable provisions hereof or otherwise in accordance with the terms
hereof.
"Independent Director" means a director of Bucyrus other than
a director (i) who (apart from being a director of Bucyrus or any Subsidiary)
is an employee, associate or Affiliate of Bucyrus or a Subsidiary or has held
any such position during the previous five years, or (ii) who has, or is a
director, employee, associate or Affiliate of another party who has, a material
direct or indirect pecuniary interest in the transaction in question.
"Initial Purchasers" means, collectively, Salomon Brothers
Inc, Jefferies & Company, Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation.
"Initial Securities" means the 9-3/4% Senior Notes Due 2007 of
Bucyrus originally issued on the Issue Date.
"interest" means, with respect to the Securities, the sum of
any interest and any Liquidated Damages on the Securities.
<PAGE> 18
-12-
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect Bucyrus or any Restricted Subsidiary against
fluctuations in interest rates.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of such
Person) or other extensions of credit (including by way of guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person. For purposes
of the definition of "Unrestricted Subsidiary," the definition of "Restricted
Payment" and Section 4.10, (i) "Investment" shall include the portion
(proportionate to Bucyrus' equity interest in such Subsidiary) of the fair
market value of the net assets of any Subsidiary of Bucyrus at the time that
such Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary,
Bucyrus shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary equal to an amount (if positive) equal to (x) Bucyrus'
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to Bucyrus' equity interest in such Subsidiary) of the
fair market value of the net assets of such Subsidiary at the time of such
redesignation; (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer; and (iii) an "Investment" shall be deemed to be made at the time that
the ownership or voting power of Bucyrus and the Restricted Subsidiaries in any
Restricted Subsidiary is reduced to below majority (but greater than zero) in
an amount equal to the fair market value of such former Restricted Subsidiary
at such time multiplied by the percentage ownership or voting power (whichever
is less) of Bucyrus and the Restricted Subsidiaries in such former Restricted
Subsidiary; provided, however, that in each case fair market value shall be
determined in good faith by the Board of Directors.
"Issue Date" means September 24, 1997.
"Leasing Program" means arrangements in existence from time to
time pursuant to which Bucyrus or a Restricted Subsidiary sells or leases
(including pursuant to Sale and Leaseback Transactions) equipment used in
large-scale surface mining operations manufactured and distributed by Bucyrus
or a Restricted Subsidiary in the ordinary course of its business.
<PAGE> 19
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"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of New York.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in any asset and any filing of, or agreement to give, any
financing statement under the Uniform Commercial Code or equivalent statutes)
of any jurisdiction other than to evidence a lease.
"Liquidated Damages" has the meaning set forth in the
Registration Agreement.
"Management Agreement" means the Management Agreement to be
entered into on or after the consummation of the AIP Tender Offer between
Bucyrus and AIP, as such agreement may be amended or supplemented from time to
time; provided, however, that all obligations of Bucyrus and its Subsidiaries
under the Management Agreement shall be subordinated to their obligations under
this Indenture, the Securities and the Guarantees.
"Marion Acquisition" means the acquisition on August 26, 1997
by Bucyrus of certain assets and liabilities of The Marion Power Shovel Company
and of certain Subsidiaries and divisions of Global Industrial Technologies,
Inc. that represent its surface mining equipment business in Australia, Canada
and South Africa.
"Maturity Date" means September 15, 2007.
"Net Available Cash" from an Asset Disposition means the
aggregate cash proceeds received by such Person and/or its Affiliates in
respect of such Asset Disposition, which amount is equal to the excess, if any,
of (i) the cash received by such Person and/or its Affiliates (including any
cash payments received by way of deferred payment pursuant to, or monetization
of, a note or installment receivable or otherwise, but only as and when
received) in connection with such Asset Disposition, over (ii) the sum of (a)
the amount of any Indebtedness that is secured by such asset and which is
required to be repaid by such person in connection with such Asset Disposition,
plus (b) all fees, commissions, and other expenses incurred by such Person in
connection with such Asset Disposition, plus (c) provision for taxes, including
income taxes, attributable to the Asset Disposition or attributable to required
prepayments or repayments
<PAGE> 20
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of Indebtedness with the proceeds of such Asset Disposition, plus (d) a
reasonable reserve for the after-tax cost of any indemnification payments
(fixed or contingent) attributable to seller's indemnities to purchaser in
respect of such Asset Disposition undertaken by Bucyrus or any of its
Restricted Subsidiaries in connection with such Asset Disposition, plus (e) if
such Person is a Restricted Subsidiary, any dividends or distributions payable
to holders of minority interests in such Restricted Subsidiary from the
proceeds of such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale, net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a direct result thereof.
"Non-U.S. Person" means a person who is not a U.S. Person, as
defined in Regulation S.
"Obligations" means all present and future obligations for
principal, premium, interest (including, without limitation, any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law), penalties, fees,
indemnifications, reimbursements (including, without limitation, all
reimbursement and other obligation pursuant to any letters of credit, bankers
acceptances or similar instruments or documents), damages and other liabilities
payable under the documentation at any time governing any indebtedness.
"Officer" means the Chairman of the Board, any Vice Chairman,
the Chief Executive Officer, the Chief Financial Officer, the President, any
Executive Vice President, Vice President, the Secretary or any Assistant
Secretary of Bucyrus.
"Officers' Certificate" means with respect to any Person a
certificate signed by two Officers, one of which is the Chairman of the Board,
the Chief Executive Officer, the Chief Financial Officer, the President or any
Executive Vice President.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to Bucyrus or the Trustee.
"Other Qualified Securities" means any outstanding senior
indebtedness of Bucyrus issued pursuant to an indenture
<PAGE> 21
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having a provision substantially similar to the Excess Proceeds Offer provision
contained in Section 4.13.
"Permitted Holders" means American Industrial Partners Capital
Fund II, L.P. or any Affiliate thereof.
"Permitted Investment" means an Investment by Bucyrus or any
Restricted Subsidiary in (i) a Guarantor or a Person that will, upon the making
of such Investment, become a Guarantor; provided, however, that the primary
business of such Guarantor is a Related Business; (ii) Temporary Cash
Investments; (iii) receivables owing to Bucyrus or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (iv) loans or advances
to employees of Bucyrus or any Restricted Subsidiary that are made in the
ordinary course of business consistent with past practices of Bucyrus or such
Restricted Subsidiary in an aggregate amount not to exceed $2.5 million
outstanding at any time; (v) any Person to the extent such Investment
represents the non-cash portion of the consideration received for an Asset
Disposition as permitted pursuant to Section 4.13; (vi) Investments in Foreign
Subsidiaries in an aggregate amount not to exceed $15.0 million outstanding at
any time; (vii) Investments in Foreign Subsidiaries Incurred to effect the
Marion Acquisition; (viii) Investments in Foreign Subsidiaries for the purposes
of financing inventory or accounts receivable at such Foreign Subsidiaries in
the ordinary course of business; and (ix) customers of Bucyrus or any
Restricted Subsidiary made in the form of loans pursuant to the Leasing
Program, to the extent permitted under Section 4.9(b)(9).
"Permitted Liens" means (i) Liens securing Indebtedness
Incurred under Section 4.9(b)(1), (7), (8), (9) or (10) on property or assets
of Bucyrus and the Restricted Subsidiaries (other than for purposes of clause
(1) only, any Liens on real property); (ii) Liens in favor of Bucyrus or any
Guarantor; (iii) pledges or deposits by such Person under workmen's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or deposits
to secure public or statutory obligations of such Person or deposits of cash or
United States government bonds to secure surety or appeal bonds to which such
Person is a party, or deposits as security for contested taxes or import duties
or for the payment of rent or deposits as security for the payment of
insurance-related obligations (including, but not limited to, in respect of
deductibles, self-insured retention amounts and premiums and adjustments
thereto), in each case incurred in the ordinary course of business; (iv) Liens
imposed
<PAGE> 22
-16-
by law, such as carriers', warehousemen's, mechanics', landlords',
materialmen's, employees', laborers', employers', suppliers', banks',
repairmen's and other like Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings, or other Liens arising out
of any judgment, award, decree or order of any court or other governmental
authority against such Person with respect to which such Person shall then be
prosecuting an appeal or other proceedings for review or the period within
which such proceedings may be instituted shall not have expired; (v) Liens for
taxes not yet due or payable or subject to penalties for non-payment and that
are being contested in good faith by appropriate proceedings; (vi) Liens in
favor of issuers of surety, performance, judgment, appeal and like bonds or
letters of credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; (vii) Liens existing on the
Issue Date; (viii) Liens on property or shares of stock of a Person at the time
such Person becomes a Subsidiary of Bucyrus; provided, however, that such Lien
was not incurred in anticipation of or in connection with the transaction or
series of related transactions pursuant to which such Person became a
Subsidiary; (ix) Liens securing Purchase Money Indebtedness; (x) Liens securing
an Interest Rate Agreement or Currency Agreement so long as the related
Indebtedness is permitted to be Incurred under this Indenture; (xi) zoning
restrictions, easements, rights-of-way, restrictions on the use of property,
other similar encumbrances incurred in the ordinary course of business and
minor irregularities of title that do not materially interfere with the
ordinary conduct of the business of Bucyrus and its Restricted Subsidiaries
taken as a whole; (xii) pledges of or Liens on raw materials or on manufactured
products as security for any drafts or bills of exchange drawn in connection
with the importation of such raw materials or manufactured products; (xiii)
Liens on property or assets of Bucyrus and the Restricted Subsidiaries securing
obligations of Bucyrus or a Restricted Subsidiary under operating leases so
long as the lessor is a financial institution party to the Bank Credit
Facility, or an Affiliate of such financial institution, and the aggregate
amount so secured, together with the principal amount of Indebtedness
outstanding under the Bank Credit Facility, does not exceed the limit set forth
in the proviso to Section 4.9(b)(1) and (xiv) Liens securing Refinancing
Indebtedness permitted to be Incurred under the Indenture; provided, however,
that such Liens extend only to the assets securing the Indebtedness being
Refinanced.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
<PAGE> 23
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"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Private Placement Legend" means the legend initially set
forth on the securities in the form set forth in Section 2.13.
"Public Equity Offering" means an underwritten primary public
offering of common stock of Bucyrus pursuant to an effective registration
statement under the Securities Act (other than any registration statement filed
on Form S-8 or similar form).
"Public Market" means any time after (i) a Public Equity
Offering has been consummated and (ii) at least 10% of the total issued and
outstanding common stock of Bucyrus has been distributed by means of an
effective registration statement under the Securities Act or sales pursuant to
Rule 144 under the Securities Act.
"Purchase Money Indebtedness" means Indebtedness (i)
consisting of the deferred purchase price of property, conditional sale
obligations, obligations under any title retention agreement, other purchase
money obligations and obligations in respect of industrial revenue bonds or
similar Indebtedness, in each case where the maturity of such Indebtedness does
not exceed the anticipated useful life of the asset being financed, and (ii)
Incurred to finance the acquisition by Bucyrus or a Restricted Subsidiary of
such asset, including additions and improvements; provided, however, that any
Lien arising in connection with any such Indebtedness shall be limited to the
specified asset being financed or, in the case of real property or fixtures,
including additions and improvements, the real property on which such asset is
attached; provided, further, however, that such Indebtedness is Incurred within
90 days after such acquisition of such asset by Bucyrus or Restricted
Subsidiary.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
<PAGE> 24
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"Qualified Stock" means any Capital Stock of Bucyrus other than
Disqualified Stock.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, increase, replace, renew, refund, repay, prepay, redeem,
defease or retire, or to issue other Indebtedness in exchange or replacement
for, such Indebtedness. "Refinanced" and "Refinancing" shall have correlative
meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of Bucyrus or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture; provided, however, that (i)
such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced, (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or
if Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced, and (iv) in the case
of any Indebtedness that is subordinated to the Securities, such Refinancing
Indebtedness is subordinated to at least the same extent; provided, further,
however, that Refinancing Indebtedness shall not include Indebtedness of a
Subsidiary that Refinances Indebtedness of Bucyrus.
"Registration Agreement" means the Registration Agreement
dated the Issue Date among Bucyrus, the Guarantors party thereto and the
Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Related Business" means the manufacture, distribution and
sale of excavation equipment, or components for such equipment, used in
large-scale surface mining operations and activities reasonably related
thereto, including, without limitation, aftermarket parts sales and services,
and such other businesses as the Board of Directors determines in good faith
are reasonably related to the foregoing.
"Responsible Officer" means, when used with respect to the
Trustee, any officer assigned to the Corporate Trust Office, including any vice
president, assistant vice president, assistant secretary or any other officer
of the Trustee to whom any
<PAGE> 25
-19-
corporate trust matter is referred because of his or her knowledge or
familiarity with the particular subject.
"Restricted Payment" means (i) any dividend or other
distribution declared or paid on any Capital Stock of Bucyrus or any Restricted
Subsidiary (other than dividends or distributions payable solely in Qualified
Stock or dividends or distributions payable to Bucyrus or any Wholly Owned
Subsidiary); (ii) any payment to purchase, redeem or otherwise acquire or
retire for value (other than in connection with the AIP Tender Offer and the
AIP Merger pursuant to the AIP Agreement) any Capital Stock of Bucyrus or any
Restricted Subsidiary or other Affiliate of Bucyrus (other than any Capital
Stock owned by Bucyrus or any Wholly Owned Subsidiary); provided, however, that
payments to purchase, redeem or otherwise acquire or retire for value Capital
Stock of Bucyrus in connection with the AIP Merger pursuant to the AIP
Agreement shall not be deemed a Restricted Payment so long as such payments in
excess of $54.0 million are paid with cash existing at BAC prior to the AIP
Merger; (iii) any payment to purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated in right of payment to
the Securities or the Guarantees other than a purchase, redemption, defeasance
or other acquisition or retirement for value that is paid for with the proceeds
of Refinancing Indebtedness that is permitted under Section 4.9; (iv) the
making of an Investment (other than a Permitted Investment), including any
Investment in an Unrestricted Subsidiary (including by the designation of a
Subsidiary of Bucyrus as an Unrestricted Subsidiary); or (v) payment of any
interest accrued on the AIP Bridge Loan.
"Restricted Security" has the meaning assigned to such term in
Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee
shall be entitled to request and conclusively rely on an Opinion of Counsel
with respect to whether any Security constitutes a SecurityRestricted Security.
"Restricted Subsidiary" means any Subsidiary of Bucyrus that is
not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means an arrangement relating
to property now owned or hereafter acquired whereby Bucyrus or a Restricted
Subsidiary transfers such property to a Person and Bucyrus or a Restricted
Subsidiary leases it from such Person.
"Securities" shall mean the Initial Securities and the
Exchange Securities.
<PAGE> 26
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"Significant Restricted Subsidiary" means (i) any Restricted
Subsidiary that would be a "Significant Subsidiary" of Bucyrus within the
meaning of Rule 1-02 under Regulation S-X promulgated by the SEC or (ii) any
group of Restricted Subsidiaries that together would constitute a Significant
Restricted Subsidiary.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of Bucyrus
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect. "Subordinated Obligation" of any Guarantor
has a correlative meaning.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or any
agency thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50,000,000 (or
the foreign currency equivalent thereof) and has outstanding debt which is
rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act) or any money-market fund sponsored by a registered
broker dealer or mutual fund distributor, (iii) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clause (i) above entered into with a bank meeting the
<PAGE> 27
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qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 90 days after the date of acquisition, issued by
a corporation (other than an Affiliate of Bucyrus) organized and in existence
under the laws of the United States of America, any State thereof or the
District of Columbia or any foreign country recognized by the United States of
America with a rating at the time as of which any investment therein is made of
"P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group, and (v) investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the
United States of America, or by any political subdivision or taxing authority
thereof, and rated at least "A" by Standard & Poor's Ratings Group or "A" by
Moody's Investors Service, Inc. "TIA" means the Trust Indenture Act of 1939
(15 U.S.C. Section Section 77aaa-77bbbb) as in effect on the date of this
Indenture, except as provided in Section 9.3.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of Bucyrus
that at the time of determination shall have been designated an Unrestricted
Subsidiary by the Board of Directors and (ii) any Subsidiary of an Unrestricted
Subsidiary. Western Gear Machinery Co. and BWC Gear, Inc. have been designated
Unrestricted Subsidiaries as of the Issue Date.
The Board of Directors may designate any Subsidiary of Bucyrus
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock or Indebtedness of, or holds any Lien on any property of, Bucyrus or any
other Subsidiary of Bucyrus that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that (i) no Default shall have occurred and be
continuing, (ii) Bucyrus could incur $1.00 of additional Indebtedness under
Section 4.9(a) and (iii) either (x) the Subsidiary to be so designated has
total assets of $1,000 or less or (y) if such Subsidiary has assets greater
than $1,000, such designation would be permitted under Section 4.10 (treating
the fair market value of Bucyrus' proportionate interest in the
<PAGE> 28
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net worth of such Subsidiary on such date calculated in accordance with GAAP as
the amount of the Investment).
The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that (i) no
Default shall have occurred and be continuing and (ii) Indebtedness of such
Unrestricted Subsidiary and all Liens on any asset of such Unrestricted
Subsidiary outstanding immediately following such redesignation would, if
Incurred at such time, be permitted to be Incurred under this Indenture.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees
thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned
by Bucyrus and/or one or more Wholly Owned Subsidiaries.
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Affiliate Transaction" 4.12
"Bankruptcy Law" 6.1
"Basket" 4.10(a)
"covenant defeasance option" 8.1(b)
"Custodian" 6.1
"defeasance trust" 8.2
"Event of Default" 6.1
"Excess Proceeds" 4.13(a)
"Excess Proceeds Offer" 4.13(a)
"Excess Proceeds Offer Amount" 4.13(c)
"Excess Proceeds Offer Period" 4.13(c)
"Global Securities" 2.1(b)
"Guaranteed Obligations" 10.1
"Guarantees" 4.5
"legal defeasance option" 8.1(b)
"Participants" 2.6
"Paying Agent" 2.3
"Payment Default" 6.1
</TABLE>
<PAGE> 29
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<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Permitted Indebtedness" 4.9(b)
"Physical Securities" 2.1(b)
"Private Placement Legend" 2.13
"Purchase Date" 4.13(b)
"Registrar" 2.3
"Required Filing Dates" 4.6
"Securities Register" 2.3
"Successor Company" 5.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA, which
are incorporated by reference in and made a part of this Indenture. The
following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the Securities means Bucyrus and any other obligor
on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in
the plural include the singular;
<PAGE> 30
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(6) the principal amount of any non-interest-bearing or
other discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of Bucyrus dated such date prepared in
accordance with GAAP;
(7) all references to $, US$, dollars or United States
dollars shall refer to the lawful currency of the United States; and
(8) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section
or other subdivision.
ARTICLE 2
THE SECURITIES
SECTION 2.1. Form and Dating.
(a) The Initial Securities and the Trustee's certificate
of authentication relating thereto shall be substantially in the form of
Exhibit A hereto. The Exchange Securities and the Trustee's certificate of
authentication relating thereto shall be substantially in the form of Exhibit B
hereto. The Securities may have notations, legends or endorsements required by
law, stock exchange rules, agreements to which Bucyrus is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to Bucyrus). Each Security shall be dated the date of its
authentication. If required, the Securities may bear the appropriate legend
regarding any original issue discount for federal income tax purposes. Each
Security shall have an executed Guarantee from each of the Guarantors.
The terms and provisions contained in the Securities, annexed
hereto as Exhibits A and B, shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, Bucyrus, the Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby.
(b) Global Securities. The Securities offered and sold
in reliance on Rule 144A and Securities offered and sold in reliance on
Regulation S shall be issued initially in the form of one or more permanent
Global Securities ("Global Securities") in definitive, fully registered form
without interest coupons, in substantially the form of Exhibit A, which shall
be deposited on behalf of the purchasers of the Securities represented thereby
with the Trustee, at the Trustee's office in New York City, as custodian for
the Depository, and registered in the name of the Depository or a nominee of
the Depository, duly executed by
<PAGE> 31
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Bucyrus (and having an executed Guarantee endorsed thereon) and authenticated
by the Trustee as hereinafter provided and shall bear the legend set forth in
Section 2.13. The aggregate principal amount of the Global Securities may from
time to time be increased or decreased by adjustments made on the records of
the Trustee and the Depository or its nominee in the limited circumstances
hereinafter provided.
Securities issued in exchange for interests in Global
Securities pursuant to Section 2.6 may be issued in the form of permanent
certificated Securities in registered form in substantially the form set forth
in Exhibit A (the "Physical Securities").
SECTION 2.2. Execution and Authentication. An Officer of
Bucyrus and each Guarantor shall sign the Securities and the Guarantees,
respectively, by manual or facsimile signature. If an Officer whose signature
is on a Security no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless. A
Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture. The Trustee shall authenticate and make available for
delivery (i) Initial Securities for original issue in an aggregate principal
amount of $150,000,000 and (ii) Exchange Securities from time to time for issue
only in exchange for a like principal amount of Initial Securities, in each
case, upon a written order of Bucyrus signed by an Officer of Bucyrus. Such
order shall specify the amount of the Securities to be authenticated and the
date on which the Securities are to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed $150,000,000 except
as provided in Section 2.7. The Trustee may appoint an authenticating agent
acceptable to Bucyrus to authenticate the Securities, upon the consent of
Bucyrus to such appointment. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Securities whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as
any Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.3. Registrar and Paying Agent. Bucyrus shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar,
acting on behalf of and as agent for Bucyrus, shall keep a register (the
"Securities Register") of the Securities and of their transfer and
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exchange. Bucyrus may have one or more co-registrars and one or more
additional paying agents.
The term "Paying Agent" includes any additional paying agent.
Bucyrus shall enter into an appropriate agency agreement with any Registrar,
Paying Agent or co-registrar not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the provisions
of this Indenture that relate to such agent. Bucyrus shall notify the Trustee
of the name and address of any such agent. If Bucyrus fails to maintain a
Registrar or Paying Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.7. Bucyrus or a
Subsidiary thereof Neither the Company nor any of its Affiliates may act as
Paying Agent, Registrar, co-Registrar or transfer agent.
Bucyrus initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities, until such time as the Trustee has
resigned or a successor has been appointed. Any of the Registrar, the Paying
Agent or any other agent may resign upon 30 days' notice to Bucyrus.
SECTION 2.4. Paying Agent To Hold Money in Trust. On or
prior to each due date of the principal and interest on any Security, Bucyrus
shall deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. Bucyrus shall require each Paying Agent (other
than the Trustee) to agree in writing that the Paying Agent shall hold in trust
for the benefit of Securityholders or the Trustee all money held by the Paying
Agent for the payment of principal of or interest on the Securities and shall
notify the Trustee of any default by Bucyrus in making any such payment. If
Bucyrus or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. Bucyrus at any
time may require a Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed by the Paying Agent. Upon complying with
this Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
SECTION 2.5. Holder Lists. The Trustee shall preserve in
as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Holders. If the Trustee is not the
Registrar, Bucyrus shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders;
provided, however, that as long as the Trustee is the Registrar, no such list
need be furnished.
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SECTION 2.6. Transfer and Exchange. The Securities shall
be issued in registered form and shall be transferable only upon the surrender
of a Security for registration of transfer. When a Security is presented to
the Registrar or a co-registrar with a request to register a transfer, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Registrar shall record
in the Securities Register the transfer as requested if the requirements of
Section 8-401(1) of the Uniform Commercial Code are met, and thereupon one or
more new Securities in the same aggregate principal amount shall be issued to
the designated assignee or transferee and the old Security will be returned to
Bucyrus. When Securities are presented to the Registrar or a co- registrar
with a request to exchange them for an equal principal amount of Securities of
other denominations, the Registrar shall make the exchange as requested, in the
same manner, if the same requirements are met. To permit registration of
transfers and exchanges, Bucyrus shall execute and the Trustee shall
authenticate Securities and each of the Guarantors shall execute a Guarantee
thereon at the Registrar's or co- registrar's request. Bucyrus may require
payment of a sum sufficient to pay all taxes, assessments or other governmental
charges in connection with any transfer or exchange pursuant to this Section.
Bucyrus shall not be required to make and the Registrar need not register
transfers or exchanges of Securities selected for redemption (except, in the
case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.
Prior to the due presentation for registration of transfer of
any Security, Bucyrus, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and none of
Bucyrus, the Trustee, the Paying Agent, the Registrar or any co-registrar shall
be affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture will evidence the same debt and will be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such transfer or exchange.
With respect to Global Securities:
(1) Each Global Security authenticated under this
Indenture shall (i) be registered in the name of the Depository
designated for such Global Security or a nominee
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thereof, (ii) be deposited with such Depository or a nominee thereof
or custodian therefor, (iii) bear legends as set forth in Section 2.13
and (iv) constitute a single Security for all purposes of this
Indenture.
(2) Transfers of a Global Security shall be limited to
transfers in whole but not in part to the Depository, its successors
or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred or exchanged for Physical
Securities in accordance with the rules and procedures of the
Depository and the provisions of Section 2.14. In addition, a Global
Security is exchangeable for certificated Securities if (i) the
Depository notifies Bucyrus that it is unwilling or unable to continue
as a Depository for such Global Security or if at any time the
Depository ceases to be a clearing agency registered under the
Exchange Act, (ii) Bucyrus executes and delivers to the Trustee a
notice that such Global Security shall be so transferable,
registrable, and exchangeable, and such transfers shall be registrable
or (iii) there shall have occurred and be continuing a Default. Any
Global Security that is exchangeable for certificated Securities
pursuant to the preceding sentence will be transferred to, and
registered and exchanged for, certificated Securities in authorized
denominations, without legends applicable to a Global Security, and
registered in such names as the Depository holding such Global
Security may direct. Subject to the foregoing, a Global Security is
not exchangeable, except for a Global Security of like denomination to
be registered in the name of the Depository or its nominee. In the
event that a Global Security becomes exchangeable for certificated
Securities, (i) certificated Securities will be issued only in fully
registered form in denominations of $1,000 or integral multiples
thereof, (ii) payment of principal, any repurchase price, and interest
on the certificated Securities will be payable, and the transfer of
the certificated Securities will be registrable, at the office or
agency of Bucyrus maintained for such purposes, and (iii) no service
charge will be made for any registration or transfer or exchange of
the certificated Securities, although Bucyrus may require payment of a
sum sufficient to cover any tax or governmental charge imposed in
connection therewith.
(3) Securities issued in exchange for a Global Security
or any portion thereof shall have an aggregate principal amount equal
to that of such Global Security or portion thereof to be so exchanged,
shall be registered in such names and be in such authorized
denominations as the Depository shall designate and shall bear the
applicable legends provided for herein. Any Global Security to be
exchanged in whole shall be surrendered by the Depository to
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the Trustee. With respect to any Global Security to be exchanged in
part, either such Global Security shall be so surrendered for exchange
or, if the Trustee is acting as custodian for the Depository or its
nominee with respect to such Global Security, the principal amount
thereof shall be reduced, by an amount equal to the portion thereof to
be so exchanged, by means of an appropriate adjustment made on the
records of the Trustee. Upon any such surrender or adjustment, the
Trustee shall authenticate and deliver the Security issuable on such
exchange to or upon the order of the Depository or an authorized
representative thereof.
(4) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a
Global Security or any portion mutilated thereof, whether pursuant to
this Section 2.6, Section 2.7, 2.9, 2.14 or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person
other than the Depository for such Global Security or a nominee
thereof. Members of, or participants in, the Depository ("
Participants") shall have no rights under this Indenture with respect
to any Global Security held on their behalf by the Depository or by
the Trustee as the custodian of the Depository or under such Global
Security, and the Depository may be treated by Bucyrus, the Trustee
and any agent of Bucyrus or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent Bucyrus, the Trustee or any
agent of Bucyrus or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the
Depository or impair, as between the Depository and its Participants,
the operation of customary practices of such Depository governing the
exercise of the rights of a holder of a beneficial interest in any
Global Security.
SECTION 2.7. Replacement Securities. If a mutilated
Security is surrendered to the Trustee or Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
Bucyrus shall issue and the Trustee shall authenticate a replacement Security
and the Guarantors shall execute a Guarantee thereon if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee and Bucyrus. Such Holder
shall furnish an indemnity bond sufficient in the judgment of Bucyrus, the
Guarantors and the Trustee to protect Bucyrus, the Guarantors, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of
them may suffer if a Security is replaced. Bucyrus and the Trustee may charge
the Holder for their expenses in replacing a Security.
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Every replacement Security issued pursuant to the terms of
this Section shall constitute an additional obligation of Bucyrus and the
Guarantors under this Indenture.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.8. Outstanding Securities. Securities
outstanding at any time are all Securities authenticated by the Trustee except
for those canceled by it, those delivered to it for cancellation and those
described in this Section as not outstanding. Subject to the provisions of
Section 11.6, a Security does not cease to be outstanding because Bucyrus or an
Affiliate of Bucyrus holds the security.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee and Bucyrus receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date or,
pursuant to Section 8.1(a), within 91 days prior thereto, money sufficient to
pay all principal and interest payable on that redemption or maturity date with
respect to the Securities (or portions thereof) to be redeemed or maturing, as
the case may be, then on and after such date such Securities (or portions
thereof) cease to be outstanding and on and after such redemption or maturity
date interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive
Securities are ready for delivery, Bucyrus may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that Bucyrus
considers appropriate for temporary Securities. Without unreasonable delay,
Bucyrus shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary securities.
SECTION 2.10. Cancellation. Bucyrus at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the
Paying Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel all Securities surrendered for registration of transfer, exchange,
payment or cancellation and deliver such canceled Securities to Bucyrus. The
Trustee shall from time to time provide Bucyrus a list of all Securities that
have been canceled as requested by Bucyrus.
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Bucyrus may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If Bucyrus defaults in a
payment of interest on the Securities, Bucyrus shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner in accordance with Section 4.1. Bucyrus may pay the defaulted interest
to the persons who are Securityholders on a subsequent special record date.
Bucyrus shall fix or cause to be fixed any such special record date and payment
date to the reasonable satisfaction of the Trustee and shall promptly mail to
each Holder a notice that states the special record date, the payment date and
the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. Bucyrus in issuing the
Securities may use "CUSIP" numbers (if then generally in use), and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
Bucyrus will promptly notify the Trustee of any change in the CUSIP numbers.
SECTION 2.13. Restrictive Legends. Each Global Security
and Physical Security that constitutes a Restricted Security or is sold in
compliance with Regulation S shall bear the following legend (the "Private
Placement Legend") on the face thereof until after the second anniversary of
the later of the Issue Date and the last date on which Bucyrus or any Affiliate
of Bucyrus was the owner of such Security (or any predecessor security) (or
such shorter period of time as permitted by Rule 144(k) under the Securities
Act or any successor provision thereunder), or such longer period of time as
may be required under the Securities Act or applicable state securities laws in
the opinion of counsel for Bucyrus, unless otherwise agreed by Bucyrus and the
Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF BUCYRUS
INTERNATIONAL, INC. AND ITS SUBSIDIARIES (THE "COMPANY") THAT THIS
SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR
TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR
SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH
TRANSFER, IN EITHER CASE OTHER THAN (1) TO
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THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN
TRANSFERORS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN PRIOR TO THE
EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF
RULE 903(C)(3) OF REGULATION S UNDER THE SECURITIES ACT), A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS
DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE IN THE
FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE (PROVIDED THAT CERTAIN HOLDERS SPECIFIED IN
THE INDENTURE MAY NOT TRANSFER THIS SECURITY PURSUANT TO THIS CLAUSE
(4) PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN
THE MEANING OF RULE 903(C)(3) OF REGULATION S UNDER THE SECURITIES
ACT), (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. AN
INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES IT WILL
FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY
TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2)
AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS
HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION
OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH
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(O)(2) OR RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.
Each Global Security shall also bear the following legend on
the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
securities IN DEFINITIVE FORM, THIS security MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR
BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE
OF SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO AN ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.14 OF THE INDENTURE REFERRED TO
HEREIN.
SECTION 2.14. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall apply with
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to any Institutional Accredited Investor which is not a
QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any
Security constituting a Restricted Security whether or not such
Security bears the Private Placement Legend, if (x) the requested
transfer is after the second anniversary of the Issue Date ( provided,
however , that neither Bucyrus nor any Affiliate of Bucyrus has held
any beneficial interest in such Security, or portion thereof, at any
time on or prior to the second anniversary of the Issue Date) or (y)
(1) in the case of a transfer to an Institutional Accredited Investor
which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Registrar a certificate
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substantially in the form of Exhibit C hereto and any legal opinions
and certifications required thereby or (2) in the case of a transfer to
a Non-U.S. Person, the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit D hereto;
and
(ii) if the proposed transferor is a Participant holding a
beneficial interest in the Global Security, upon receipt by the
Registrar of (x) the certificate, if any, required by paragraph (i)
above and (y) written instructions given in accordance with the
Depository's and the Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical
Securities) a decrease in the principal amount of such Global Security in an
amount equal to the principal amount of the beneficial interest in the Global
Security to be transferred, and (b) Bucyrus shall execute, the Guarantors shall
execute the Guarantees on, and the Trustee shall authenticate and deliver, one
or more Physical Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of a Security
constituting a Restricted Security to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the
box provided for on the form of Security stating, or has otherwise
advised Bucyrus and the Registrar in writing, that the sale has been
made in compliance with the provisions of Rule 144A to a transferee
who has signed the certification provided for on the form of Security
stating, or has otherwise advised Bucyrus and the Registrar in
writing, that it is purchasing the Security for its own account or an
account with respect to which it exercises sole investment discretion
and that it and any such account is a QIB within the meaning of Rule
144A, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information
regarding Bucyrus as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order
to claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is a Participant, and the
Securities to be transferred consist of Physical Securities which
after transfer are to be evidenced by an interest in a Global
Security, upon receipt by the Registrar
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of written instructions given in accordance with the Depository's and
the Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of such
Global Security in an amount equal to the principal amount of the
Physical Securities to be transferred, and the Trustee shall cancel
the Physical Securities so transferred.
(c) Private Placement Legend. Upon the transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless (i) the requested transfer is after the
second anniversary of the Issue Date (provided, however, that neither Bucyrus
nor any Affiliate of Bucyrus has held any beneficial interest in such Security,
or portion thereof, at any time prior to or on the second anniversary of the
Issue Date), or (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to Bucyrus and the Trustee to the effect that neither
such legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Security bearing
the Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.6 or this Section
2.14. Bucyrus shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time during
the Registrar's normal business hours upon the giving of reasonable written
notice to the Registrar.
(e) Transfers of Securities Held by Affiliates. Any
certificate (i) evidencing a Security that has been transferred to an Affiliate
of Bucyrus within two years after the Issue Date, as evidenced by a notation on
the Assignment Form for such transfer or in the representation letter delivered
in respect thereof or (ii) evidencing a Security that has been acquired from an
Affiliate (other than by an Affiliate) in a transaction or a chain of
transactions not involving any public offering, shall, until two years after
the last date on which either Bucyrus or any Affiliate of Bucyrus was an owner
of such Security, in each case, bear a legend in substantially the form set
forth in Section 2.13
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hereof, unless otherwise agreed by Bucyrus (with written notice thereof to the
Trustee).
ARTICLE 3
REDEMPTION
SECTION 3.1. Notices to Trustee. If Bucyrus elects to
redeem Securities pursuant to paragraph 5 thereof, it shall notify the Trustee
in writing of the redemption date, the principal amount of Securities to be
redeemed and the paragraph of the Securities pursuant to which the redemption
will occur. Bucyrus shall give each notice to the Trustee provided for in this
Section at least 45 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from Bucyrus to the effect that such redemption will comply with
the provisions herein.
SECTION 3.2. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by such other method that
complies with applicable legal and securities exchange requirements, if any,
and that the Trustee in its sole discretion shall deem to be fair and
appropriate and in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Securities not previously called for redemption.
Securities and portions of them the Trustee selects shall be in amounts of
$1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities called
for redemption. The Trustee shall notify Bucyrus promptly of the Securities or
portions of Securities to be redeemed. If any Security is to be redeemed in
part only, the notice of redemption relating to such Security shall state the
portion of the principal amount thereof to be redeemed. A new Security in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Security. In the
event Bucyrus is required to make an offer to purchase Securities pursuant to
Section 4.8 or 4.13 and the amount available for such offer is not evenly
divisible by $1,000, the Trustee shall promptly refund to Bucyrus any remaining
funds, which in no event will exceed $1,000.
SECTION 3.3. Notice Of Redemption. At least 30 days but
not more than 60 days before a date for redemption of Securities, Bucyrus shall
mail a notice of redemption by first-class mail to the registered address
appearing in the Security Register of each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall state:
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(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to
be redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless Bucyrus defaults in making such
redemption payment, interest on Securities (or portion thereof) called for
redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Securities
being redeemed; and
(9) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or printed on
the Securities.
At Bucyrus' request, the Trustee shall give the notice of
redemption in Bucyrus' name and at Bucyrus' sole expense. In such event,
Bucyrus shall provide the Trustee with the information required by this
Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice
of redemption is mailed, Securities called for redemption become due and
payable on the redemption date and at the redemption price stated in the
notice. Upon surrender to the Paying Agent, such Securities shall be paid at
the redemption price stated in the notice, plus accrued interest to the
redemption date. Such notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. Failure to give notice or any defect in the notice to any Holder
shall not affect the validity of the notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. Prior to 11:00
a.m. (New York City time) on the redemption date, Bucyrus shall deposit with
the Trustee or Paying Agent (or, if Bucyrus or a Subsidiary is the Paying
Agent, shall segregate and hold in trust) money sufficient to pay the
redemption price of and accrued interest (if any) on all Securities or portions
thereof to be
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redeemed on that date other than Securities or portions of Securities called
for redemption which have been delivered by Bucyrus to the Trustee for
cancellation.
SECTION 3.6. Securities Redeemed in Part. Upon surrender
of a Security that is redeemed in part (with, if Bucyrus or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to Bucyrus and the Trustee duly executed by, the Holder thereof or
his attorney duly authorized in writing), Bucyrus shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered, except that if a Global Security is so surrendered, Bucyrus shall
execute, and the Trustee shall authenticate and deliver to the Depository for
such Global Security, without service charge, a new Global Security in
denomination equal to and in exchange for the unredeemed portion of the
principal of the Global Security so surrendered.
ARTICLE 4
COVENANTS
SECTION 4.1. Payment of Securities. Bucyrus shall
promptly pay the principal of and interest on the Securities on the dates and
in the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee
or the Paying Agent holds in accordance with this Indenture money sufficient to
pay all principal and interest then due. Bucyrus shall pay interest on overdue
principal at 1% per annum in excess of the rate per annum set forth in the
Securities, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful. Interest will be computed on a basis of a
360-day year of twelve 30-day months.
SECTION 4.2. Corporate Existence. Subject to Article 5
and Section 4.13, Bucyrus shall do or caused to be one, at its own cost and
expense, all things necessary to, and will cause each Restricted Subsidiary to,
preserve and keep in full force and effect the corporate or partnership
existence and rights (charter and statutory), licenses and/or franchises of
Bucyrus and each Restricted Subsidiary; provided, however, that neither Bucyrus
nor any Restricted Subsidiary shall be required to preserve any such rights,
licenses or franchises if the Board of Directors shall reasonably determine
that the preservation thereof is no longer desirable in the conduct of the
business of Bucyrus and its Subsidiaries, taken as a whole.
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SECTION 4.3. Maintenance of Office or Agency. Bucyrus
shall maintain in the Borough of Manhattan the City of New York, an office or
agency (which may be an office or agency of the Trustee, Registrar or
co-Registrar), where Securities may be surrendered for registration of transfer
or exchange or for presentation for payment and where notices and demands to or
upon Bucyrus in respect of the Securities and this Indenture may be served.
Bucyrus will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time Bucyrus shall
fail to maintain any such required office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the address of the Trustee's office in New
York City as set forth in Section 11.2.
Bucyrus may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve Bucyrus of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York, for such purposes. Bucyrus will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
Bucyrus hereby initially designates the Trustee's office or
agency in New York City as set forth in Section 11.2 as an agency of Bucyrus in
accordance with Section 2.3.
SECTION 4.4. Payment of Taxes and Other Claims. Bucyrus
shall, and shall cause each of its Subsidiaries to, pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (a)all
taxes, assessments and governmental charges levied or imposed upon its or its
Subsidiaries' income, profits or propertyand (b) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a Lien upon its
property; provided, however, that none of Bucyrus or its Subsidiaries shall be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate negotiations or proceedings and for
which disputed amounts adequate reserves have been made in accordance with
GAAP.
SECTION 4.5. Future Guarantors. Buyers shall cause each
Restricted Subsidiary other than any Foreign Subsidiary to execute and deliver
to the Trustee a supplemental indenture pursuant to which such Restricted
Subsidiary will unconditionally and irrevocably guarantee (the "Guarantees")
payment of the Securities on the same terms and conditions as those set forth
in this Indenture and the Securities.
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SECTION 4.6. SEC Reports. Whether or not Bucyrus is then
subject to Section 13(a) or 15(d) of the Exchange Act, Bucyrus shall file with
the Commission, so long as the Securities are outstanding, the annual reports,
quarterly reports and other periodic reports that Bucyrus would be required to
file with the Commission pursuant to Section 13(a) or 15(d) if Bucyrus were so
subject, and such documents shall be filed with the Commission on or prior to
the respective dates (the "Required Filing Dates") by which Bucyrus would be
required so to file such documents if Bucyrus were so subject, unless, in any
case, such filing is not then permitted by the Commission. Bucyrus will also
in any event (i) within 15 days of each Required Filing Date, (a) transmit by
mail to holders of Securities, as their names and addresses appear in the
Securities Register, without cost to such holders, and (b) file with the
Trustees copies of the annual reports, quarterly reports and other periodic
reports that Bucyrus would be required to file with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act if Bucyrus were subject to such
Section 13(a) or 15(d), and (ii) if such filing with Commission is not then
permitted by the Commission promptly upon written request, supply copies of
such documents to any prospective holder at Bucyrus' cost.
SECTION 4.7. Compliance Certificate. Bucyrus shall
deliver to the Trustee within 120 days after the end of each fiscal year of
Bucyrus an Officers' Certificate, signers of which shall be the principal
executive, financial or accounting officer of Bucyrus, stating that in the
course of the performance by the signers of their duties as Officers of Bucyrus
they would normally have knowledge of any Default and whether or not the
signers know of any Default that occurred during such period. If they do, the
certificate shall describe the Default, its status and what action Bucyrus is
taking or proposes to take with respect thereto. Bucyrus also shall comply
with TIA Section 314(a)(4).
SECTION 4.8. Change of Control.
(a) Upon the occurrence of a Change of Control, each
Holder shall have the right to require Bucyrus to purchase all or a portion of
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on the relevant record
date to receive interest due on an interest payment date that is on or prior to
the date fixed for redemption), in accordance with the terms contemplated in
Section 4.8(b).
(b) Within 30 days following any Change of Control,
Bucyrus shall mail a notice to each Holder with a copy to the Trustee stating:
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(1) that a Change of Control has occurred and that such
Holder has the right to require Bucyrus to purchase such Holder's
Securities at the purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to
the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest on an interest payment date
that is on or prior to the date fixed for purchase);
(2) the circumstances and relevant facts and relevant
financial information regarding such Change of Control;
(3) the purchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the instructions as determined by Bucyrus, consistent
with this Section 4.8, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, together with all necessary endorsements
and other appropriate materials duly completed, to Bucyrus at the address
specified in the notice at least three Business Days prior to the purchase
date. Holders will be entitled to withdraw their election if the Trustee or
Bucyrus receives not later than one Business Day prior to the purchase date, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Security which was delivered for purchase by the Holder
as to which such notice of withdrawal is being submitted and a statement that
such Holder is withdrawing its election to have such Security purchased.
(d) On the purchase date, all Securities purchased by
Bucyrus under this Section 4.8 shall be delivered to the Trustee for
cancellation, and Bucyrus shall pay the purchase price plus accrued and unpaid
interest, if any, to the Holders entitled thereto.
(e) Bucyrus shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.8. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described hereunder,
Bucyrus shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
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(f) Notwithstanding the occurrence of a Change of
Control, Bucyrus shall not be obligated to purchase the Securities or otherwise
comply with this Section 4.8 if Bucyrus has irrevocably elected to redeem all
the Securities in accordance with paragraph 5 thereof; provided that Bucyrus
does not default in its redemption obligations pursuant to such election.
SECTION 4.9. Limitation on Incurrence of Indebtedness.
(a) Bucyrus shall not, and shall not permit any
Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness
except that Bucyrus or any Guarantor may Incur Indebtedness if, immediately
after giving effect to such Incurrence, the Consolidated Coverage Ratio exceeds
2.0 to 1.0.
(b) The foregoing Section 4.9(a) will not prohibit
Incurrence of the following Indebtedness (collectively, "Permitted
Indebtedness"):
(1) Indebtedness of Bucyrus or any Restricted Subsidiary
Incurred pursuant to the Bank Credit Facility; provided, however,
that, after giving effect to any such Incurrence, the aggregate
principal amount of such Indebtedness then outstanding does not exceed
the greater of (i) $75.0 million or (ii) the sum of (x) 60% of the net
book value of the inventory of Bucyrus and the Restricted Subsidiaries
and (y) 85% of the net book value of the accounts receivable of
Bucyrus and the Restricted Subsidiaries, in each case determined on a
consolidated basis in accordance with GAAP;
(2) Indebtedness represented by the Securities (and the
Guarantees thereof) and the Exchange Securities (and the Guarantees
thereof), and Refinancing Indebtedness thereof;
(3) Indebtedness to the extent outstanding on the Issue
Date (other than Indebtedness described in clause (1) above or the AIP
Bridge Loan), and Refinancing Indebtedness thereof;
(4) Indebtedness of Bucyrus owed to and held by any
Wholly Owned Subsidiary or Indebtedness of a Wholly Owned Subsidiary
owed to and held by Bucyrus or another Wholly Owned Subsidiary;
provided, however, that an Incurrence of Indebtedness that is not
permitted by this clause (4) shall be deemed to have occurred upon (a)
the transfer or other disposition of any such Indebtedness to a Person
other than Bucyrus or a Wholly Owned Subsidiary, (b) the sale, lease,
transfer or other disposition of shares of Capital Stock (including by
consolidation or merger) of any Wholly Owned
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Subsidiary that holds Indebtedness of Bucyrus or any other Wholly
Owned Subsidiary to a Person other than Bucyrus or another Wholly
Owned Subsidiary, or (c) the designation of a Wholly Owned Subsidiary
that holds Indebtedness of Bucyrus or any other Wholly Owned
Subsidiary as an Unrestricted Subsidiary;
(5) Indebtedness of Bucyrus owed to and held by any
Guarantor or Indebtedness of a Guarantor owed to and held by Bucyrus
or another Guarantor; provided, however, that an Incurrence of
Indebtedness that is not permitted by this clause (5) shall be deemed
to have occurred upon (a) the transfer or other disposition of any
Indebtedness to a Person other than Bucyrus or a Guarantor or (b) such
Guarantor's ceasing to be a Guarantor;
(6) Hedging Obligations consisting of Interest Rate
Agreements and Currency Agreements entered into in the ordinary course
of business and not for the purpose of speculation; provided, however,
that, in the case of Currency Agreements and Interest Rate Agreements,
such Currency Agreements and Interest Rate Agreements do not increase
the Indebtedness of Bucyrus outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest
rates or by reason of fees, indemnities and compensation payable
thereunder;
(7) Purchase Money Indebtedness and Capital Lease
Obligations Incurred to finance the acquisition or improvement by
Bucyrus or a Restricted Subsidiary of any assets (including capital
expenditures), and Refinancing Indebtedness thereof, in an aggregate
principal amount not to exceed $10.0 million at any time outstanding;
(8) Indebtedness of any Foreign Subsidiary Incurred for
the working capital purposes of such Foreign Subsidiary, and
Refinancing Indebtedness thereof, in an aggregate principal amount not
to exceed $15.0 million at any time outstanding;
(9) Indebtedness of Bucyrus or any Restricted Subsidiary
constituting lease payments or guarantees of lease payments or similar
obligations of a customer of Bucyrus or a Restricted Subsidiary in
connection with a Leasing Program, and Refinancing Indebtedness
thereof, in an aggregate principal amount not to exceed $10.0 million
at any time outstanding; and
(10) Indebtedness of Bucyrus or any Restricted Subsidiary
in addition to that described in clauses (1) through (9) above, so
long as the aggregate principal amount
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of all such Indebtedness incurred pursuant to this clause (10) does
not exceed $10.0 million at any time outstanding.
(c) Notwithstanding the foregoing, Bucyrus shall not, and
shall not permit any Guarantor to, Incur any Indebtedness that purports to be
by its terms (or by the terms of any agreement or instrument governing such
Indebtedness) subordinated to any other Indebtedness of Bucyrus or of such
Guarantor, as the case may be, unless such Indebtedness is also by its terms
(or by the terms of the agreement or instrument governing such Indebtedness)
made expressly subordinated to the Securities or the Guarantee of such
Guarantor, as applicable, to at least the same extent as such Indebtedness is
subordinated to such other Indebtedness of Bucyrus or such Guarantor, as
applicable.
SECTION 4.10. Limitation on Restricted Payments.
(a) Bucyrus shall not, and shall not permit any
Restricted Subsidiary, directly or indirectly, to declare or make a Restricted
Payment if:
(1) a Default shall have occurred and be continuing (or
would result therefrom);
(2) immediately after giving effect to the proposed
Restricted Payment, Bucyrus is not able to Incur an additional $1.00
of Indebtedness pursuant to Section 4.9(a); or
(3) the aggregate amount of such Restricted Payment
together with all other Restricted Payments (the amount of any
payments made in property other than cash to be valued at the fair
market value of such property, as determined in good faith by the
Board of Directors) declared or made since the Issue Date (other than
any Restricted Payment described in clause (ii), (iii) or (iv) of
Section 4.10(b)) would exceed the sum (the "Basket") of:
(A) 50% of the Consolidated Net Income accrued
during the period (treated as one accounting period) from the
beginning of the fiscal quarter immediately following the
fiscal quarter during which the Securities are originally
issued to the end of the most recent fiscal quarter prior to
the date of such Restricted Payment for which financial
statements are available (or, in case such Consolidated Net
Income accrued during such period (treated as one accounting
period) shall be a deficit, minus 100% of such deficit);
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(B) the aggregate Net Cash Proceeds received by
Bucyrus from the issuance or sale (other than to a Subsidiary
of Bucyrus) of Qualified Stock subsequent to the Issue Date;
(C) the principal amount (or accreted value, if
less) by which Indebtedness of Bucyrus or any Restricted
Subsidiary is reduced on Bucyrus' balance sheet upon the
conversion or exchange (other than by a Subsidiary of Bucyrus)
subsequent to the Issue Date into Qualified Stock (less the
amount of any cash, or the fair value of any other property,
distributed by Bucyrus or any Restricted Subsidiary upon such
conversion or exchange); and
(D) to the extent not included in the calculation
of the Consolidated Net Income referred to in (A), an amount
equal to the sum of (i) the net reduction in Investments in
Unrestricted Subsidiaries resulting from dividends, repayments
of loans or advances or other transfers of assets subsequent
to the Issue Date, in each case to Bucyrus or any Restricted
Subsidiary from Unrestricted Subsidiaries, and (ii) the
portion (proportionate to Bucyrus' equity interest in such
Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is redesignated a Restricted Subsidiary; provided,
however, that the foregoing sum shall not exceed, in the case
of any Unrestricted Subsidiary, the amount of Investments
previously made (and treated as a Restricted Payment) by
Bucyrus or any Restricted Subsidiary in such Unrestricted
Subsidiary;
provided, however, that the AIP Equity Contribution shall not increase the
Basket.
(b) The provisions of Section 4.10(a) shall not prohibit
the following actions: (i) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would have
been permitted under this Indenture; (ii) any repurchase, redemption,
retirement or other acquisition of Capital Stock or Subordinated Obligations of
Bucyrus made in exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Subsidiary of Bucyrus) of, Qualified Stock or,
with respect to any such Subordinated Obligations, in exchange for or out of
the proceeds of the substantially concurrent sale (other than to a Subsidiary
of Bucyrus) of other Subordinated Obligations of Bucyrus; provided, however,
that such exchange or sale shall not increase the Basket; (iii) any repurchase,
redemption, retirement or other acquisition of Capital Stock of Bucyrus held by
officers,
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directors and employees of Bucyrus or any Restricted Subsidiary upon such
persons' death, retirement or other termination of employment or directorship,
as the case may be; provided, however, that the aggregate amount of Restricted
Payments pursuant to this clause (iii) shall not exceed $5.0 million; and (iv)
Restricted Payments not to exceed $5.0 million in the aggregate since the Issue
Date; provided, however, that in the case of clauses (ii), (iii) and (iv), no
Default shall have occurred and be continuing or would arise therefrom.
SECTION 4.11. Limitation on Liens. Bucyrus shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or
permit to exist any Lien (other than Permitted Liens) of any nature whatsoever
on any property of Bucyrus or any Restricted Subsidiary (including Capital
Stock of a Restricted Subsidiary), whether owned at the Issue Date or
thereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, unless the Securities and the Guarantees are
secured on an equal and ratable basis with the obligations so secured until
such time as such obligations are no longer secured by a Lien (and if the
obligations so secured are subordinated to the Securities and the Guarantees,
the Lien securing such obligations are also so subordinated at least to the
same extent).
SECTION 4.12. Limitation on Transactions with Affiliates.
(a) Bucyrus shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, enter into or permit to exist
any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property, employee
compensation arrangements or the rendering of any service) with any Affiliate
of Bucyrus (an "Affiliate Transaction") unless the terms thereof (1) are no
less favorable to Bucyrus or such Restricted Subsidiary than those that could
be obtained at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate, (2) if such Affiliate Transaction involves
aggregate value in excess of $1.0 million in any one year, (i) are set forth in
writing, (ii) comply with clause (1), and (iii) have been approved by a
majority of the Independent Directors, and (3) if such Affiliate Transaction
involves aggregate value in excess of $5.0 million in any one year, (i) comply
with clause (2), and (ii) have been determined by a nationally recognized
investment banking, appraisal, valuation or accounting firm to be fair, from a
financial standpoint, to Bucyrus and the Restricted Subsidiaries.
(b) Section 4.12(a) shall not prohibit (i) any Restricted
Payment permitted to be made pursuant to Section 4.10, (ii) any issuance of
securities, or other payments, awards or
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grants in cash, securities or otherwise, pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans in the
ordinary course of business (as determined in good faith by the Board of
Directors) and approved by the Board of Directors, (iii) the grant of stock
options or similar rights to employees and directors of Bucyrus in the ordinary
course of business (as determined in good faith by the Board of Directors) and
pursuant to plans approved by the Board of Directors, (iv) loans or advances to
employees in the ordinary course of business of Bucyrus and the Restricted
Subsidiaries, (v) fees, compensation or employee benefit arrangements paid to
and indemnity provided for the benefit of directors, officers or employees of
Bucyrus or any Subsidiary in the ordinary course of business, (vi) any
transaction solely between or among Bucyrus and/or one or more Guarantors
and/or Wholly Owned Subsidiaries, (vii) performance or discharge by Bucyrus of
its obligations under agreements as in effect on the Issue Date, (viii)
repayment of the AIP Bridge Loan upon consummation of the AIP Merger or (ix)
payment of $4.0 million to AIP in connection with the AIP Merger or payment of
fees to AIP pursuant to the Management Agreement in an amount not to exceed
$1.5 million per year.
SECTION 4.13. Limitation on Sales of Assets and Subsidiary
Stock.
(a) Bucyrus shall not, and shall not permit any
Restricted Subsidiary to, consummate any Asset Disposition unless (i) Bucyrus
or such Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Disposition at least equal to the fair market value
(including as to the value of all non-cash consideration), as determined in
good faith by the Board of Directors, of the assets or other property subject
to such Asset Disposition, and (ii) at least 75% of the consideration therefor
received by Bucyrus or such Restricted Subsidiary is in the form of cash or
Temporary Cash Investments. For the purposes of this Section 4.13, the
following are deemed to be cash: (x) amount of any liabilities (other than
liabilities that are subordinated to any other Indebtedness of Bucyrus or such
Restricted Subsidiary, as the case may be) of Bucyrus or such Restricted
Subsidiary (as shown on Bucyrus' or such Restricted Subsidiary's most recent
balance sheet or in the notes thereto) that are assumed by the transferee of
any such assets or other property in such Asset Disposition, but only to the
extent that such assumption is effected on a basis under which there is no
further recourse to Bucyrus or any Restricted Subsidiary with respect to such
liabilities and (y) securities received by Bucyrus or any Restricted Subsidiary
from the transferee that are immediately converted by Bucyrus or such
Restricted Subsidiary into cash.
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With respect to any Asset Disposition occurring on or after
the Issue Date from which Bucyrus or any Restricted Subsidiary receives Net
Available Cash, Bucyrus or such Restricted Subsidiary may within 270 days after
the date such Net Available Cash is received: (i) apply an amount equal to
such Net Available Cash to permanently prepay, repay or purchase Indebtedness
under the Bank Credit Facility; or (ii) invest an equal amount, or the amount
not so applied pursuant to clause (i), in Additional Assets (including by means
of an Investment in Additional Assets by a Restricted Subsidiary with Net
Available Cash received by Bucyrus or another Restricted Subsidiary). The
amount of Net Available Cash not applied pursuant to clause (ii) above shall
constitute "Excess Proceeds." Pending application of Net Available Cash
pursuant to this provision, such Net Available Cash shall be invested in
Temporary Cash Investments.
If at any time the aggregate amount of Excess Proceeds not
theretofore subject to an Excess Proceeds Offer (as defined below) totals at
least $5.0 million, Bucyrus shall, not later than 10 business days after the
end of the period during which Bucyrus is required to apply such Excess
Proceeds pursuant to clause (i) of the immediately preceding paragraph (or, if
Bucyrus so elects, at any time within such period), make an offer (an "Excess
Proceeds Offer") to purchase from the holders of Securities and Other Qualified
Securities (determined on a pro rata basis according to the accreted value or
principal amount, as the case may be, of the Securities and the Other Qualified
Securities) that may be purchased out of the Excess Proceeds (rounded down to
the nearest multiple of $1,000) on such date, at a purchase price (x) in the
case of the Securities, equal to 100% of the principal amount of such
Securities, plus accrued and unpaid interest, if any, to the date of purchase
and (y) in the case of each issue of Other Qualified Securities, based on the
terms set forth in the indenture related to such issue. Upon completion of an
Excess Proceeds Offer the amount of Excess Proceeds remaining after application
pursuant to such Excess Proceeds Offer (including payment of the purchase price
for Securities and Other Qualified Securities duly tendered) may be used by
Bucyrus for any corporate purpose (to the extent not otherwise prohibited by
this Indenture).
(b) Promptly, and in any event within 30 days after
Bucyrus becomes obligated to make an Excess Proceeds Offer, Bucyrus shall be
obligated to deliver to the Trustee and send, by first-class mail to each
Holder, at the address appearing in the Securities Register, a written notice
stating that the Holder may elect to have his Securities purchased by Bucyrus
either in whole or in part (subject to prorationing as hereinafter described in
the event the Excess Proceeds Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice,
which shall govern the terms of the
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Excess Proceeds Offer, shall include such disclosures as are required by law
and shall specify (i) that the Excess Proceeds Offer is being made pursuant to
this Section 4.13; (ii) the purchase price (including the amount of accrued
interest, if any) for each Security and the purchase date not less than 30 days
nor more than 60 days after the date of such notice (the "Purchase Date");
(iii) that any Security not tendered or accepted for payment will continue to
accrue interest in accordance with the terms thereof; (iv) that, unless Bucyrus
defaults on making the payment, any Security accepted for payment pursuant to
the Excess Proceeds Offer shall cease to accrue interest on and after the
Purchase Date; (v) that Holders electing to have Securities purchased pursuant
to an Excess Proceeds Offer will be required to surrender their Securities to
the Paying Agent at the address specified in the notice at least three Business
Days prior to 5:00 p.m., New York City time, on the Purchase Date and must
complete any form letter of transmittal proposed by Bucyrus and acceptable to
the Trustee and the Paying Agent; (vi) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than one
Business Day prior to the Purchase Date, a telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Securities
the Holder delivered for purchase, the Security certificate number (if any) and
a statement that such Holder is withdrawing its election to have such
Securities purchased; (vii) that if Securities in a principal amount in excess
of the aggregate principal amount which Bucyrus has offered to purchase are
tendered pursuant to the Excess Proceeds Offer, Bucyrus shall purchase
Securities on a pro rata basis among the Securities tendered (with such
adjustments as may be deemed appropriate by Bucyrus so that only Securities in
denominations of $1,000 or integral multiples of $1,000 shall be acquired);
(viii) that Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered; and (ix) the instructions that Holders must follow in
order to tender their Securities.
(c) Not later than the date upon which written notice of
an Excess Proceeds Offer is delivered to the Trustee as provided below, Bucyrus
shall deliver to the Trustee an Officers' Certificate as to (i) the amount of
the Excess Proceeds Offer (the "Excess Proceeds Offer Amount"), (ii) the
allocation of the Net Available Cash from the Asset Dispositions pursuant to
which such Excess Proceeds Offer is being made, and (iii) the compliance of
such allocation with the provisions of Section 4.13(a). Upon the expiration of
the period for which the Excess Proceeds Offer remains open (the "Excess
Proceeds Offer Period"), Bucyrus shall deliver to the Trustee for cancellation
the Securities or portions thereof which have been properly tendered to and are
to be accepted by Bucyrus. Not later than 11:00 a.m. (New York City time) on
the Purchase Date, Bucyrus shall irrevocably deposit with
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the Trustee or with a paying agent (or, if Bucyrus is acting as Paying Agent,
segregate and hold in trust) an amount in cash sufficient to pay the Excess
Proceeds Offer Amount for all Securities properly tendered to and accepted by
Bucyrus. The Trustee shall, on the Purchase Date, mail or deliver payment to
each tendering Holder in the amount of the purchase price.
(d) Holders electing to have a Security purchased will be
required to surrender the Security, together with all necessary endorsements
and other appropriate materials duly completed, to Bucyrus at the address
specified in the notice at least three Business Days prior to the Purchase
Date. Holders will be entitled to withdraw their election in whole or in part
if the Trustee or Bucyrus receives not later than one Business Day prior to the
Purchase Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security (which shall be $1,000 or an
integral multiple thereof) which was delivered for purchase by the Holder, the
aggregate principal amount of such Security (if any) that remains subject to
the original notice of the Excess Proceeds Offer and that has been or will be
delivered for purchase by Bucyrus and a statement that such Holder is
withdrawing his election to have such Security purchased. If at the expiration
of the Excess Proceeds Offer Period the aggregate principal amount of
Securities surrendered by Holders exceeds the Excess Proceeds Offer Amount,
Bucyrus shall select the Securities to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by Bucyrus so that only
securities in denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(e) A Security shall be deemed to have been accepted for
purchase at the time the Trustee, directly or through an agent, mails or
delivers payment therefor to the surrendering Holder.
(f) Bucyrus shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations thereunder in the event that such Excess Proceeds are
received by Bucyrus under the covenant described hereunder and Bucyrus is
required to repurchase Securities described above. To the extent that the
provisions of any securities laws or regulations conflict with the provisions
of the covenants described hereunder, Bucyrus shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the covenant described hereunder by virtue thereof.
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SECTION 4.14. Limitation on Dividend and Other Restrictions
Affecting Restricted Subsidiaries. Bucyrus shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any Restricted Subsidiary
(i) to pay dividends or make any other distributions on
its Capital Stock to Bucyrus or any other Restricted Subsidiary or pay
any Indebtedness owed to Bucyrus or any other Restricted Subsidiary,
(ii) to make any loans or advances to, or guarantee any
Indebtedness of, Bucyrus or any other Restricted Subsidiary, or
(iii) transfer any of its property or assets to Bucyrus or
any other Restricted Subsidiary, except:
(A) any encumbrance or restriction pursuant to an
agreement in effect at or entered into on the Issue Date
(including, without limitation, the Bank Credit Facility), as
such encumbrance or restriction is in effect on the Issue
Date;
(B) any encumbrance or restriction with respect
to a Restricted Subsidiary pursuant to an agreement relating
to any Indebtedness Incurred by such Restricted Subsidiary
which was entered into on or prior to the date on which such
Restricted Subsidiary was acquired by Bucyrus (other than as
consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by Bucyrus) and outstanding on such
date;
(C) any encumbrance or restriction pursuant to an
agreement effecting a Refinancing of Indebtedness Incurred
pursuant to an agreement referred to in clause (A) or (B) of
this Section 4.14 (or effecting a Refinancing of such
Refinancing Indebtedness pursuant to this clause (C)) or
contained in any amendment to an agreement referred to in
clause (A) or (B) of this Section 4.14 or this clause (C);
provided, however, that the encumbrances and restrictions with
respect to such Restricted Subsidiary contained in any such
refinancing agreement or amendment are no more restrictive in
any material respect than the
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encumbrances and restrictions with respect to such Restricted
Subsidiary contained in such agreements;
(D) any such encumbrance or restriction
consisting of customary non-assignment provisions in leases
governing leasehold interests to the extent such provisions
restrict the transfer of the lease or the property leased
thereunder;
(E) restrictions contained in security agreements
or mortgages on property acquired in the ordinary course of
business to the extent such restrictions restrict the transfer
of the property subject to such security agreements or
mortgages;
(F) any restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for
the sale or disposition of the Capital Stock or assets of such
Restricted Subsidiary; provided, however, that such
restriction is applicable only to such Capital Stock or
assets, as applicable, and such sale or disposition otherwise
is permitted under Section 4.13; and
(G) any restriction imposed by applicable law.
SECTION 4.15. Limitation on Issuance or Sale of Capital
Stock of Wholly Owned Subsidiaries. Bucyrus (i) will not, and will not permit
any Wholly Owned Subsidiary (other than any Guarantor) to, transfer, convey,
sell, lease or otherwise dispose of any Capital Stock of any Wholly Owned
Subsidiary (other than any Guarantor) to any Person (other than Bucyrus or
another Wholly Owned Subsidiary), unless (a) such transfer, conveyance, sale,
lease or other disposition consists of all of the Capital Stock of such Wholly
Owned Subsidiary and (b) the net cash proceeds from such transfer, conveyance,
sale, lease or other disposition are applied in accordance with Section 4.13
and (ii) will not permit any Wholly Owned Subsidiary to issue any Capital Stock
(other than, if necessary, shares constituting directors' qualifying shares) to
any Person other than to Bucyrus or another Wholly Owned Subsidiary.
SECTION 4.16. Limitation on Sale and Leaseback
Transactions. Bucyrus will not, and will not permit any Restricted Subsidiary
to, enter into any Sale and Leaseback Transaction; provided, however, that
Bucyrus may enter into a Sale and Leaseback Transaction if (i) Bucyrus could
have (a) Incurred Indebtedness in an amount equal to the Attributable Debt
relating to such Sale and Leaseback Transaction pursuant to Section 4.9, and
(b) Incurred a Lien to secure such Indebtedness pursuant to Section 4.11, (ii)
the gross cash proceeds of such Sale and
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Leaseback Transaction are at least equal to the fair market value (as
determined in good faith by the Board of Directors and set forth in an
Officers' Certificate delivered to the Trustee) of the property that is the
subject of such Sale and Leaseback Transaction, and (iii) the transfer of
assets in such Sale and Leaseback Transaction is permitted by, and Bucyrus
applies the proceeds of such transaction in compliance with, Section 4.13.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.1. Merger, Consolidation and Sale of Assets.
Bucyrus shall not consolidate with or merge with or into, or convey, transfer
or lease, in one transaction or a series of transactions, all or substantially
all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company"), whether or not Bucyrus, shall be a Person
organized and existing under the laws of the United States of America,
any State thereof or the District of Columbia and the Successor
Company (if not Bucyrus) shall expressly assume, by an indenture
supplemental thereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of Bucyrus under the
Securities, this Indenture and the Registration Agreement;
(ii) immediately after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary as a result of such transaction as
having been Incurred by such Successor Company or such Subsidiary at
the time of such transaction), no Default shall have occurred and be
continuing;
(iii) except in the case of a merger the sole purpose of
which is to change Bucyrus' jurisdiction of incorporation, immediately
after giving effect to such transaction, the Successor Company would
be able to Incur an additional $1.00 of Indebtedness pursuant to
Section 4.9(a) (treating the Successor Company as Bucyrus);
(iv) immediately after giving effect to such transaction,
the Successor Company shall have Consolidated Net Worth in an amount
that is not less than the Consolidated Net Worth of Bucyrus
immediately prior to such transaction; and
(v) Bucyrus shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
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that such consolidation, merger or transfer and such supplemental
indenture (if any) comply with this Indenture.
Notwithstanding the foregoing clauses (ii), (iii) and (iv) of
this Section 5.1, any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to Bucyrus.
Opinions of Counsel required to be delivered under this
Section or elsewhere in this Indenture may have qualifications customary for
opinions of the type required, and counsel delivering such Opinions of Counsel
may rely on certificates of Bucyrus or government or other officials customary
for opinions of the type required, including certificates certifying as to
matters of fact.
The Successor Company shall be the successor to Bucyrus and
shall succeed to, and be substituted for, and may exercise every right and
power of, Bucyrus under this Indenture, but the predecessor Company in the case
of a conveyance, transfer or lease shall not be released from the obligation to
pay the principal of and interest on the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default. Any of the following
shall constitute an Event of Default:
(i) default for 30 days in the payment when due of
interest on any Security;
(ii) default in the payment when due of principal on any
Security, whether upon maturity, acceleration, optional redemption,
required repurchase or otherwise;
(iii) failure to perform or comply with any covenant,
agreement, warranty or obligation in this Indenture or the Securities
(other than any specified in clause (i) or (ii) above) which failure
continues for 30 days after written notice thereof has been given to
Bucyrus by the Trustee or to Bucyrus and the Trustee by the Holders of
at least 25% in aggregate principal amount of the then outstanding
Securities;
(iv) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by Bucyrus or any
Restricted Subsidiary whether such Indebtedness now exists, or is
created after the Issue Date,
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which default (x)(a) is caused by a failure to pay such Indebtedness
at Stated Maturity (giving effect to any grace period related thereto)
(a " Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its stated maturity and (y) in each case, the
principal amount of any such Indebtedness as to which a Payment
Default or acceleration shall have occurred, together with the
principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more;
(v) one or more judgments, orders or decrees for the
payment of money of $10.0 million or more, individually or in the
aggregate, shall be entered against Bucyrus or any Restricted
Subsidiary or any of their respective properties and which judgments,
orders or decrees are not paid, discharged, bonded or stayed within 60
days after their entry;
(vi) Bucyrus or any Significant Restricted Subsidiary:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case in which it is the debtor;
(C) consents to the appointment of a Custodian of
it or for any substantial part of its property; or
(D) makes a general assignment for the benefit of
its creditors;
or takes any comparable action under any foreign laws relating
to insolvency;
(vii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against Bucyrus or any
Significant Restricted Subsidiary in an involuntary case;
(B) appoints a Custodian of Bucyrus or any
Significant Restricted Subsidiary or for any substantial part
of the property of Bucyrus or Significant Restricted
Subsidiary; or
(C) orders the winding up or liquidation of
Bucyrus or any Significant Restricted Subsidiary of Bucyrus;
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(or any similar relief is granted under any foreign laws) and the
order or decree remains unstayed and in effect for 60 days; or
(viii) any Guarantee ceases to be in full force and effect
(other than in accordance with its terms or this Indenture) or any
Guarantor denies or disaffirms its obligations under its Guarantee.
The term "Bankruptcy Law" means Title 11, United States Code,
as amended, or any similar federal or state law for the relief of debtors. The
term "Custodian" means any receiver, trustee, assignee, liquidator, custodian
or similar official under any Bankruptcy Law.
Bucyrus shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (iv) of this Section 6.1 and any event which
with the giving of notice or the lapse of time would become an Event of Default
under clause (iii) or (v) of this Section 6.1, its status and what action
Bucyrus is taking or proposes to take with respect thereto.
SECTION 6.2. Acceleration. If an Event of Default occurs
and is continuing (other than an Event of Default described in clause (vi) or
(vii) of Section 6.1 with respect to Bucyrus), the Trustee or the Holders of at
least 25% in principal amount of the outstanding Securities may declare the
principal of and accrued but unpaid interest on all the Securities to be due
and payable. Upon such a declaration, such principal and interest shall be due
and payable immediately. If an Event of Default described in clause (vi) or
(vii) of Section 6.1 occurs with respect to Bucyrus, the principal of and
interest on all the Securities will ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holders of the Securities. The Holders of a majority in aggregate
principal amount of the outstanding Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default
occurs and is continuing, the Trustee may pursue any available remedy to
collect the payment of principal of or interest on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.
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The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are, to the extent
permitted by law, cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a
majority in aggregate principal amount of the Securities then outstanding by
notice to the Trustee may waive any past or existing Default and its
consequences except (i) a Default in the payment of the principal of or
interest on a Security or (ii) a Default in respect of a provision that under
Section 9.2 cannot be amended without the consent of each Holder affected.
When a Default is waived, it is deemed cured, and any Event of Default arising
therefrom shall be deemed to have been cured, but no such waiver shall extend
to any subsequent or other Default or impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a
majority in principal amount of the outstanding Securities may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee. However,
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.1, that the Trustee determines is unduly
prejudicial to the rights of any other Holder (it being understood that the
Trustee shall have no duty to make such determination) or that would involve
the Trustee in personal liability; provided, however, that the Trustee may take
any other action deemed proper by the Trustee that is not inconsistent with
such direction. Prior to taking any action hereunder, the Trustee shall be
entitled to indemnification from the Holders satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking such
action.
SECTION 6.6. Limitation on Suits. A Holder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) such Holder has previously given the Trustee notice
stating that an Event of Default is continuing;
(2) Holders of at least 25% in principal amount of the
outstanding Securities have requested the Trustee to pursue the
remedy;
(3) such Holders have offered the Trustee reasonable
security or indemnity against any loss, liability or expense;
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(4) the Trustee has not complied with such request within
60 days after the receipt thereof and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
outstanding Securities have not given the Trustee a direction
inconsistent with such request during such 60-day period.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal, premium (if any) or interest on the Securities
held by such Holder, on or after the respective due dates therefor, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of
Default specified in Section 6.1(i) or (ii) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against Bucyrus for the whole amount then due and owing (together with interest
on any unpaid interest to the extent lawful) and the amounts provided for in
Section 7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The
Trustee may file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee and the
Holders allowed in any judicial proceedings relative to Bucyrus, its creditors
or its property and, unless prohibited by law or applicable regulations, may
vote on behalf of the Holders in any election of a trustee in bankruptcy or
other Person performing similar functions, and any Custodian in any such
judicial proceeding is hereby authorized by each Holder to make payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel, and any other amounts due the Trustee
under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any
money or property pursuant to this Article 6, it shall pay out the money or
property in the following order, subject to applicable law:
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FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to Bucyrus.
The Trustee may, upon prior written notice to Bucyrus, fix a
record date and payment date for any payment to Holders pursuant to this
Section. At least 15 days before such record date, Bucyrus shall mail to each
Holder and the Trustee a notice that states the record date, the payment date
and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant. This Section
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.7 or a suit by Holders of more than 10% in aggregate principal amount of the
outstanding Securities.
ARTICLE 7
TRUSTEE
SECTION 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this
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Indenture and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph
(b) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Sections 6.2 and 6.5 hereof.
(d) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.2. Rights of Trustee. Subject to Section 7.1,
(a) The Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, Officers' Certificate,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties.
(b) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein
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specifically prescribed) may, in the absence of bad faith on its part, rely
upon an Officers' Certificate.
(c) Before the Trustee acts or refrains from acting, the
Trustee may consult with counsel, and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(d) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity reasonable
to the Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
(e) Prior to the occurrence of an Event of Default
hereunder and after the cure or waiver of all Events of Default, the Trustee
shall not be bound to make any investigation into the facts or matters stated
in any resolution, Officers' Certificate, or other request, consent, order,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document unless requested in writing to do so by the Holders of not less than a
majority in aggregate principal amount of the Securities then outstanding;
provided that, if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigations, in the opinion of the Trustee, is not reasonably assured
to the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of every such
examination shall be paid by Bucyrus or, if advanced by the Trustee, shall be
repaid by Bucyrus on demand.
(f) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(g) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, or where information is
required or necessary to be furnished by Bucyrus in order for the Trustee to
act, the Trustee (unless otherwise evidence by herein specifically prescribed),
shall not be liable for any action it takes or omits to take in good faith in
reliance upon an Officers' Certificate, or for any
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action taken or omitted to be taken by it in good faith and believed by it to
be authorized or within the discretion, rights or powers conferred upon it by
this Indenture.
(h) The Trustee shall not be bound to ascertain or
inquire as to the performance or observance of any covenants, conditions or
agreements on the part of Bucyrus, except as otherwise specifically set forth
in this Indenture, but the Trustee may require of Bucyrus full information and
advice as to the performance of the covenants, conditions and agreements
contained herein.
(i) Except for (i) a default under Section 6.1(i),
6.1(ii) or 4.1, (ii) the failure of Bucyrus to file any financial statements,
documents or certificates specifically required to be filed with the Trustee
pursuant to the provisions of this Indenture or (iii) any other event of which
the Trustee has "actual knowledge" and which event constitutes a Default under
this Indenture, the Trustee shall not be deemed to have notice of any default
or event unless specifically notified in writing by Bucyrus or the holders of
not less than 25% in aggregate principal amount of the Securities then
outstanding; as used herein, the term "actual knowledge" means the actual fact
of knowing, without a duty to make any investigation with regard thereto.
(j) The Trustee shall not be required to give any note,
bond or surety in respect of the execution of the trusts and powers under this
Indenture.
(k) The permissive rights of the Trustee to perform acts
enumerated in this Indenture shall not be construed as a duty.
(l) The Trustee shall not be liable for any interest on
any money received by it except as the Trustee may agree in writing with the
Company.
(m) Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
SECTION 7.3. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with Bucyrus or its respective Affiliates
with the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not
be responsible for and makes no representation as to the validity or adequacy
of this Indenture or the Securities, it shall
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not be accountable for Bucyrus' use of the proceeds from the Securities, and it
shall not be responsible for any statement of Bucyrus in this Indenture or in
any document issued in connection with the sale of the Securities or in the
Securities other than the Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default occurs and
is continuing and if it is known to a Responsible Officer of the Trustee, the
Trustee shall mail to each Holder notice of the Default within 30 days after it
is known by a Trust Officer or written notice is received by the Trustee.
Except in the case of a Default in payment of principal of or interest on any
Security (including payments pursuant to the mandatory redemption provisions of
such Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Holders.
SECTION 7.6. Reports by Trustee to Holders. As promptly
as practicable after each January 1 beginning with the January 1 following the
date of this Indenture, and in any event prior to March 31 in each year, the
Trustee shall mail to each Holder a brief report dated as of January 1 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b). Prior to delivery to the Holders, The Trustee shallpromptly
deliver to Bucyrus a copy of any report it delivers to Holders pursuant to this
Section 7.6.
SECTION 7.7. Compensation and Indemnity. Bucyrus shall
pay to the Trustee from time to time such reasonable compensation for its
services as Bucyrus and the Trustee shall from time to time agree in writing.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. Bucyrus shall reimburse the Trustee upon request
for all reasonable out-of-pocket expenses incurred or made by it, including
costs of collection, in addition to such compensation for its services, except
any such expense, disbursement or advance as may arise from its negligence,
willful misconduct or bad faith. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Trustee shall provide Bucyrus reasonable
notice of any expenditure not in the ordinary course of business. Bucyrus
shall indemnify each of the Trustee and any predecessor Trustees against any
and all loss, damage, claim, liability or expense (including attorneys' fees
and expenses) (other than taxes applicable to the Trustee's compensation
hereunder) incurred by it in connection with the acceptance or administration
of this trust and the performance of its duties hereunder. The Trustee shall
notify Bucyrus promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify Bucyrus shall not relieve Bucyrus of its
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obligations hereunder. Bucyrus shall defend the claim and the Trustee shall
cooperate in the defense of such claim. The Trustee may have separate counsel
at its own expense. If, however, representation in any defense by Bucyrus and
its counsel would in the opinion of counsel to the Trustee create a conflict of
interest, Bucyrus shall pay the expense of separate counsel to the Trustee.
Bucyrus need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee through the Trustee's own willful
misconduct, negligence or bad faith. Bucyrus need not pay for any settlement
made without its written consent.
To secure Bucyrus' payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
Bucyrus' payment obligations pursuant to this Section shall
survive the discharge of this Indenture and the resignation or removal of the
Trustee. When the Trustee incurs expenses after the occurrence of an Event of
Default specified in Section 6.1(vi) or (vii) with respect to Bucyrus, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may
resign at any time upon 30 days notice to Bucyrusby so notifying the Company.
The Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee and may appoint a successor
Trustee. Bucyrus shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by Bucyrus or by the
Holders of a majority in principal amount of the outstanding Securities and
such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), Bucyrus shall promptly
appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Bucyrus.
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Thereupon the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject
to the lien provided for in Section 7.7.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the outstanding Securities may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, Bucyrus' obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee, so long as such corporation is
eligible under this Article 7 and TIA Section 310(a).
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The
Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report
of condition. The Trustee shall comply with TIA Section 310(b); provided,
however, that there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under
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which other securities or certificates of interest or participation in other
securities of Bucyrus are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Bucyrus. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section
311(a) to the extent indicated.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. Discharge of Liability on Securities;
Defeasance.
(a) When (i) Bucyrus delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to Section 2.7)
for cancellation or (ii) all outstanding Securities have become due and
payable, whether at maturity or as a result of the mailing of a notice of
redemption pursuant to Article 3 hereofor the Securities will become due and
payable at their Maturity within 91 days, or the securities are to be called
for redemption within 91 days under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Company, and Bucyrus irrevocably deposits with the Trustee
funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon, and if in either case Bucyrus pays all
other sums payable hereunder by Bucyrus, then the Indenture shall, subject to
Section 8.1(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of Bucyrus accompanied
by an Officers' Certificate and an Opinion of Counsel that all conditions
precedent provided for herein relating to satisfaction and discharge of this
Indenture have been complied with and at the cost and expense of Bucyrus.
(b) Subject to Sections 8.1(c) and 8.2, Bucyrus at any
time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.4 through 4.16, inclusive and the operation of Sections 6.1(iii), 6.1(iv),
6.1(v), 6.1(vi) (but only with respect to Significant Restricted Subsidiaries)
and 6.1(vii) (but only with respect to Significant Restricted Subsidiaries),
6.1(viii) and 5.1(iii) and 5.1(iv) ("covenant defeasance option"). Bucyrus may
exercise its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option.
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If Bucyrus exercises its legal defeasance option, payment of
the Securities may not be accelerated because of an Event of Default. If
Bucyrus exercises its covenant defeasance option, payment of the Securities may
not be accelerated due to a failure to comply with any of Sections 4.4 through
4.16, inclusive, or the operation of Sections 6.1(iii), 6.1(iv), 6.1(v),
6.1(vi) (but only with respect to Significant Restricted Subsidiaries),
6.1(vii) (but only with respect to a Significant Subsidiaries), or 6.1(viii).
If Bucyrus exercises its legal defeasance option or its covenant defeasance
option, each Guarantor will be released from all of its obligations under
Article 11.
Upon satisfaction of the conditions set forth herein and upon
request of Bucyrus, the Trustee shall acknowledge in writing the discharge of
those obligations that Bucyrus terminates.
(c) Notwithstanding clauses (a) and (b) above, Bucyrus'
obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7, 7.8, 8.3, 8.4, 8.5 and
8.6 shall survive until the Securities have been paid in full. Thereafter,
Bucyrus' obligations in Sections 7.7, 8.4 and 8.5 shall survive.
SECTION 8.2. Conditions to Defeasance. Bucyrus may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) Bucyrus irrevocably deposits in trust (the
"defeasance trust") with the Trustee money or U.S. Government
Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will
provide cash (without reinvestment) at such times and in such amounts
as will be sufficient to pay principal and interest on the Securities
(except Securities replaced pursuant to Section 2.7) to redemption or
maturity, as the case may be;
(2) Bucyrus delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and
interest when due on all outstanding Securities (except Securities
replaced pursuant to Section 2.7) to maturity or redemption, as the
case may be;
(3) 91 days pass after the deposit is made and during the
91-day period no Default specified in Section 6.1(vi) or
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(vii) with respect to Bucyrus occurs which is continuing at the end of
the period;
(4) no default exists under any Indebtedness of Bucyrus
or any Restricted Subsidiary;
(5) Bucyrus delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) Bucyrus shall have delivered to the Trustee an
Opinion of Counsel stating that the Holders will not recognize income,
gain or loss for Federal income tax purposes as a result of such
deposit and defeasance and will be subject to Federal income tax on
the same amounts and in the same manner and at the same times as would
have been the case if such deposit and defeasance had not occurred
(and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or change in
applicable Federal income tax law);
(7) Bucyrus delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Securities
as contemplated by this Article 8 have been complied with; and
(8) Bucyrus shall have paid or duly provided for payment
under terms mutually satisfactory to Bucyrus and the Trustee all
amounts then due to the Trustee pursuant to Section 7.7 hereof.
Opinions of Counsel required to be delivered under this
Section may have qualifications customary for opinions of the type required and
counsel delivering such Opinions of Counsel may rely on certificates of Bucyrus
or government or other officials customary for opinions of the type required,
including certificates certifying as to matters of fact.
Before or after a deposit, Bucyrus may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article 3.
SECTION 8.3. Application of Trust Money. The Trustee
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to this Article Eight. It shall apply the deposited money and the
money from U.S. Government Obligations either directly or through the Paying
Agent (including Bucyrus acting as its own Paying Agent as the Trustee may
determine) and
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in accordance with this Indenture to the payment of principal of and interest
on the Securities.
SECTION 8.4. Repayment to Bucyrus. The Trustee and the
Paying Agent shall notify Bucyrus of any excess money or Securities held by
them at any time and shall promptly turn over to Bucyrus upon request any
excess money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to Bucyrus upon written request any money held
by them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to the money must look to Bucyrus for
payment as general creditors.
SECTION 8.5. Indemnity for Government Obligations.
Bucyrus shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations other
than any such tax, fee or other charge which by law is for the account of the
Holders of the defeased Securities; provided that the Trustee shall be entitled
to charge any such tax, fee or other charge to such Holder's account.
SECTION 8.6. Reinstatement. If the Trustee or Paying
Agent is unable to apply any money or U.S. Government Obligations in accordance
with this Article Eight by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, Bucyrus' obligations under this
Indenture and the Securities and the Guarantors' obligations under this
Indenture and the Guarantees shall be revived and reinstated as though no
deposit had occurred pursuant to this Article Eight until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article Eight; provided, however, that, (a)
if Bucyrus has made any payment of interest on or principal of any Securities
following the reinstatement of their obligations, Bucyrus shall be subrogated
to the rights of the Holders of such Securities to receive such payment from
the money or U.S. Government Obligations held by the Trustee or Paying Agent
and (b) unless otherwise required by any legal proceeding or any order or
judgment of any court or governmental authority, the Trustee or Paying Agent
shall return all such money and U.S. Government Obligations to Bucyrus
promptly after receiving a written request therefor at any time, if such
reinstatement of Bucyrus' obligations has occurred and continues to be in
effect.
ARTICLE 9
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AMENDMENTS AND WAIVERS
SECTION 9.1. Without Consent of Holders. Bucyrus and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for the assumption by a successor
corporation of the obligations of Bucyrus under this Indenture in the
event of any transaction in compliance with Article 5 in which Bucyrus
is not the Surviving Person;
(3) to provide for uncertificated Securities in addition
to or in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are as described in Section 163(f)(2)(B) of
the Code;
(4) to add Guarantees with respect to the Securities;
(5) to release Guarantors when permitted by this
Indenture;
(6) to secure the Securities;
(7) to add to the covenants of Bucyrus for the benefit of
the Holders or to surrender any right or power herein conferred upon
Bucyrus;
(8) to make any change that does not adversely affect the
rights of any Holder; or
(9) to comply with any requirements of the SEC in
connection with the qualification of this Indenture under the TIA.
After an amendment under this Section becomes effective,
Bucyrus shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this section.
SECTION 9.2. With Consent of Holders. Bucyrus and the
Trustee may amend this Indenture or the Securities with the consent of the
Holders of a majority in principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Securities) and any past default or compliance with any provisions may also
be waived with the consent of the Holders of a majority in principal
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amount of the Securities then outstanding. However, without the consent of
each Holder of outstanding Security affected thereby, no amendment may:
(1) reduce the principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity
of any Security, or alter the provisions with respect to the
redemption or repurchase provisions of any Security or this Indenture
in a manner adverse to the holders of the Securities (other than the
provisions of this Indenture relating to any offer to purchase
required under Section 4.8 or 4.13);
(3) reduce the rate of or change the time for payment of
interest on any Security;
(4) waive a Default in the payment of principal or
interest on, the Securities (except that holders of at least a
majority in aggregate principal amount of the then outstanding
Securities may (x) rescind an acceleration of the Securities that
resulted from a non-payment default and (y) waive the payment default
that resulted from such acceleration);
(5) make any Security payable in money other than that
stated in the Securities;
(6) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of holders of
Securities to receive payments of principal of or interest on, the
Securities;
(7) waive a redemption payment with respect to any
Security;
(8) release any Guarantor from its Guarantee except in
compliance with this Indenture; or
(9) make any change in the foregoing amendment and waiver
provisions;
provided, further, however, that no such modification or amendment may, without
the consent of the holders of two-thirds of the aggregate principal amount of
Securities affected thereby, modify any of the provisions (including the
definitions thereto) under Section 4.8 in a manner materially adverse to the
Holders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any
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proposed amendment. It is sufficient if such consent approves the substance of
the proposed amendment.
After an amendment under this Section becomes effective,
Bucyrus shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. Revocation and Effect of Consents and
Waivers. A consent to an amendment or a waiver by a Holder of a Security shall
bind the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same debt as the consenting Holder's Security, even
if notation of the consent or waiver is not made on the Security. An amendment
or waiver becomes effective once the requisite number of consents are received
by Bucyrus or the Trustee. After an amendment or waiver becomes effective, it
shall bind every Holder.
Bucyrus may, but shall not be obligated to, fix a record date for the purpose
of determining the Holders entitled to give their consent or take any other
action described above or required or permitted to be taken pursuant to this
Indenture. If a record date is fixed, then notwithstanding the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
give such consent or to revoke any consent previously given or to take any such
action, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 120 days after
such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder.
Alternatively, if Bucyrus or the Trustee so determines,
Bucyrus in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 9.6. Trustee to Sign Amendments. The Trustee
shall sign any amendment authorized pursuant to this Article 9 (other than
Section 9.1(4)) if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the
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Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.1) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment complies with the provisions of Article 9 of this
Indenture.
ARTICLE 10
GUARANTEES
SECTION 10.1. Guarantees. Each Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, to each
Holder and to the Trustee and its successors and assigns as primary obligor and
not merely as a surety, on an unsecured senior basis the performance and
punctual payment when due, whether at Stated Maturity, by acceleration or
otherwise, of all obligations of Bucyrus under this Indenture and the
Securities whether for payment of principal of or interest on the Securities,
expenses, indemnification or otherwise (all such obligations guaranteed by the
Guarantors being herein called the "Guaranteed Obligations"). The Guarantors
will agree to pay, in addition to the amount stated above, any and all expenses
(including reasonable counsel fees and expenses) incurred by the Trustee or the
Holders in enforcing any rights under the Guarantees. Each Guarantor further
agrees that the Guaranteed Obligations may be extended or renewed, in whole or
in part, without notice or further assent from such Guarantor and that such
Guarantor will remain bound under this Article 10 notwithstanding any extension
or renewal of any Guaranteed Obligation.
Each Guarantor waives presentation to, demand of, payment from
and protest to Bucyrus of any of the Guaranteed Obligations and also waives
notice of protest for nonpayment. Each Guarantor waives notice of any default
under the Securities or the Guaranteed Obligations. The obligations of each
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against Bucyrus or any other Person under this Indenture, the Securities or any
other agreement or otherwise; (b) any extension or renewal of any thereof; (c)
any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Guaranteed
Obligations or any of them; (e) the failure of any Holder or the Trustee to
exercise any right or remedy against any other guarantor of the Guaranteed
Obligations; or (f) any change in the ownership of such Guarantor.
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Each Guarantor further agrees that its Subsidiary Guarantee
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Guaranteed Obligations.
Except as expressly set forth in Sections 8.2, 10.2 and 10.6,
the obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of
the Guaranteed Obligations or otherwise. Without limiting the generality of
the foregoing, the obligations of each Guarantor herein shall not be discharged
or impaired or otherwise affected by the failure of any Holder or the Trustee
to assert any claim or demand or to enforce any remedy under this Indenture,
the Securities or any other agreement, by any waiver or modification of any
thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Guaranteed Obligations, or by any other act or thing or
omission or delay to do any other act or thing which may or might in any manner
or to any extent vary the risk of such Guarantor or would otherwise operate as
a discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Guaranteed Obligation is rescinded or must
otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of Bucyrus or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof, upon the failure of Bucyrus to pay any Guaranteed
Obligation when and as the same shall become due, whether at maturity, by
acceleration, by redemption or otherwise, or to perform or comply with any
Guaranteed Obligation, each Guarantor hereby promises to and will, upon receipt
of written demand by the Trustee, forthwith pay, or cause to be paid, in cash,
to the Holders or the Trustee an amount equal to the sum of (i) the unpaid
amount of such Guaranteed Obligations, (ii) accrued and unpaid interest on such
Guaranteed Obligations (but only to the extent not prohibited by law) and (iii)
all other monetary Guaranteed Obligations of Bucyrus to the Holders and the
Trustee.
Each Guarantor agrees that it shall not be entitled to any
right of subrogation in respect of any Guaranteed Obligations
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guaranteed hereby until payment in full of all Guaranteed Obligations. Each
Guarantor further agrees that, as between it, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the Guaranteed
Obligations hereby may be accelerated as provided in Article 6 for the purposes
of such Guarantor's Guarantee herein, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Guaranteed
Obligations, and (y) in the event of any declaration of acceleration of
Guaranteed Obligations as provided in Article 6, the Obligations (whether or
not due and payable) shall forthwith become due and payable by such Guarantor
for the purposes of this Section.
Each Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
SECTION 10.2. Limitation on Liability. Any term or
provision of this Indenture to the contrary notwithstanding, the maximum
aggregate amount of the obligations guaranteed hereunder by any Guarantor shall
not exceed the maximum amount that can be hereby guaranteed without rendering
this Indenture, as it relates to such Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally. To effectuate the foregoing
intention, the obligations of each Guarantor shall be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from
or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations hereunder, result in the obligations of such Guarantor
under its Guarantee not constituting a fraudulent conveyance or fraudulent
transfer under federal, state or foreign law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in an amount based on the consolidated net worth of
each Guarantor.
SECTION 10.3. Successors and Assigns. This Article Ten
shall be binding upon each Guarantor and its successors and assigns and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 10.4. No Waiver. Neither a failure nor a delay on
the part of either the Trustee or the Holders in
<PAGE> 82
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exercising any right, power or privilege under this Article 11 shall operate as
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege. The rights,
remedies and benefits of the Trustee and the Holders herein expressly specified
are cumulative and not exclusive of any other rights, remedies or benefits
which either may have under this Article Ten at law, in equity, by statute or
otherwise.
SECTION 10.5. Modification. No modification, amendment or
waiver of any provision of this Article Ten, nor the consent to any departure
by any Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Guarantor in any case shall entitle such
Guarantor to any other or further notice or demand in the same, similar or
other circumstances.
SECTION 10.6. Release of Guarantor. A Guarantor may, by
execution and delivery to the Trustee of a supplemental indenture satisfactory
to the Trustee, be released from its Guarantee upon the sale of all of its
Capital Stock, or all or substantially all of the assets of the applicable
Guarantor, to any Person that is not a Subsidiary of Bucyrus, if such sale is
made in compliance with this Indenture.
SECTION 10.7. Execution of Supplemental Indenture for
Future Guarantors. Each Subsidiary which is required to become a Guarantor
pursuant to Section 4.5 shall, and Bucyrus shall cause each such Subsidiary to,
promptly execute and deliver to the Trustee a supplemental indenture in the
form of Exhibit F hereto pursuant to which such Subsidiary shall become a
Guarantor under this Article Ten and shall guarantee the Guaranteed
Obligations. Concurrently with the execution and delivery of such supplemental
indenture, Bucyrus shall deliver to the Trustee an Opinion of Counsel to the
effect that such supplemental indenture has been duly authorized, executed and
delivered by such Subsidiary and that, subject to the application of
bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and other
similar laws relating to creditors' rights generally and to the principles of
equity, whether considered in a proceeding at law or in equity, the Guarantee
of such Guarantor is a valid and legally binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms.
ARTICLE 11
MISCELLANEOUS
<PAGE> 83
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SECTION 11.1. Trust Indenture Act Controls. If any
provision of this Indenture limits, qualifies or conflicts with another
provision which is required to be included in this Indenture by the TIA, the
required provision shall control. If this Indenture excludes any provision of
the TIA that is required to be included, such provision shall be deemed
included herein.
SECTION 11.2. Notices. Any notice or communication shall
be in writing and delivered in person, by overnight courier or facsimile (if to
Bucyrus, with receipt confirmed by an Officer) or mailed by first-class mail
addressed as follows:
If to Bucyrus or any Guarantor:
Bucyrus International, Inc.
1100 Milwaukee Avenue
P.O. Box 500
South Milwaukee, Wisconsin 53172
Attention: Chief Financial Officer
If to the Trustee:
c/o Harris Trust and Savings Bank
88 Pine Street
19th Floor
New York, New York 10005
Bucyrus or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed or sent by overnight
courier or facsimile to a Holder shall be sent to the Holder at the Holder's
address as it appears on the registration books of the Registrar and shall be
sufficiently given if so sent within the time prescribed.
Failure to send a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is sent in the manner provided above, it is duly
given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice.
SECTION 11.3. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or
<PAGE> 84
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the Securities. Bucyrus, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by Bucyrus to the Trustee to take
or refrain from taking any action under this Indenture, Bucyrus shall furnish
to the Trustee to the extent required by the TIA or this Indenture:
(1) an Officers' Certificate (which in connection with the
original issuance of the Securities need only be executed by one
Officer for Bucyrus) in form and substance reasonably satisfactory to
the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
SECTION 11.5. Statements Required in Certificate or
Opinion. Each certificate or opinion with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that the individual making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such individual, such covenant or condition has been complied with;
provided, that an Opinion of Counsel can rely as to matters of fact on
an Officers' Certificate or a certificate of a public official.
SECTION 11.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by Bucyrus or
by any Person directly or indirectly controlling or controlled by or under
direct or
<PAGE> 85
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indirect common control with Bucyrus shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at
the time shall be considered in any such determination.
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of Holders.
The Trustee shall provide Bucyrus reasonable notice of such rules; provided
that neither prior notice to the Company of such rules nor prior approval by
the Company of such rules shall be a requirement for their effectiveness. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.8. Legal Holidays. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.9. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York without giving effect to applicable principles of
conflict of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 11.10. No Recourse Against Others. No recourse for
the payment of the principal of or interest on any of the Securities or for any
claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of Bucyrus or any Guarantor in this
Indenture, or in any of the Securities or the Guarantees or because of the
creation of any Indebtedness represented hereby and thereby, shall be had
against any incorporator, stockholder, officer, director, employee or
controlling person of Bucyrus or any of its Subsidiaries. Each Holder, by
accepting a Security, waives and releases all such liability. The waiver and
release shall be part of the consideration for the issuance of the Securities.
SECTION 11.11. Successors. All agreements of Bucyrus in
this Indenture and the Securities shall bind Bucyrus' successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Multiple Originals. The parties may sign any number of copies
of this Indenture. Each signed copy
<PAGE> 86
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shall be an original, but all of them together represent the same agreement.
One signed copy is enough to prove this Indenture.
SECTION 11.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
SECTION 11.14. Severability Clause. In case any provision
in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
<PAGE> 87
S-1
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
BUCYRUS INTERNATIONAL, INC.
By: /s/ Daniel J. Smoke
----------------------------
Name: Daniel J. Smoke
Title: Vice President and
Chief Financial Officer
GUARANTORS:
BOONVILLE MINING SERVICES, INC.
By: /s/ Craig R. Mackus
----------------------------
Name: Craig R. Mackus
Title: Vice President -
Treasurer and Assistant
Secretary
MINSERCO, INC.
By: /s/ Craig R. Mackus
----------------------------
Name: Craig R. Mackus
Title: Vice President -
Treasurer and Assistant
Secretary
VON'S WELDING, INC.
By: /s/ Craig R. Mackus
----------------------------
Name: Craig R. Mackus
Title: Vice President -
Treasurer and Assistant
Secretary
<PAGE> 88
S-2
HARRIS TRUST AND SAVINGS BANK, as
Trustee
By: /s/ D. G. Donovan
-------------------------------
Name: D. G. Donovan
Title: Assistant Vice President
<PAGE> 89
EXHIBIT A
FACE OF SECURITY
No.
CUSIP No.
BUCYRUS INTERNATIONAL, INC.
9-3/4% Senior Notes Due 2007
BUCYRUS INTERNATIONAL, INC., a Delaware corporation (the
"Company"), promises to pay to Cede & Co., or registered assigns, the principal
sum of [ ] Dollars on September 15, 2007.
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 1.
Additional provisions of this Security are set forth on the
reverse side of this Security.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by a duly authorized officer.
BUCYRUS INTERNATIONAL, INC.
By: _____________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Harris Trust and Savings Bank, as Trustee, certifies that this is one of the
Securities referred to in the within-mentioned Indenture.
By: HARRIS TRUST AND SAVINGS BANK,
as Trustee
________________________________
Authorized Signatory
Date of Authentication:
A-1
<PAGE> 90
REVERSE OF SECURITY
9-3/4% SENIOR NOTES DUE 2007
1. Interest
BUCYRUS INTERNATIONAL, INC., a Delaware corporation (such
entity, and its successors and assigns under the Indenture, the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semiannually on March 15
and September 15 of each year, commencing March 15, 1998. Interest on the
Securities will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from September 24, 1997. Interest will
be computed on the basis of a 360-day year of twelve 30-day months. The
Company shall pay interest on overdue principal at 1% per annum in excess of
the rate borne by the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the record date immediately preceding the interest
payment date even if Securities are canceled on registration of transfer or
registration of exchange (including pursuant to an Exchange Offer (as defined
in the Registration Agreement)) after the record date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company will
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by its check
payable in such U.S. Legal Tender. The Company may deliver any such interest
payment to the Paying Agent or to a Holder's registered address.
3. Paying Agent and Registrar
Initially, Harris Trust and Savings Bank, a national banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company may act as Paying Agent, Registrar, co-Registrar
or transfer agent.
4. Indenture
The Company issued the Securities under an Indenture dated as
of September 24, 1997 (the "Indenture"), among the Company, the Guarantors
party thereto and the Trustee. This Security is one of a duly authorized issue
of Initial Securities of the Company designated as its 9-3/4% Senior Notes Due
2007 (the
A-2
<PAGE> 91
"Initial Securities"). The Securities include the Initial Securities and the
Exchange Securities (as defined in the Indenture) issued in exchange for the
Initial Securities pursuant to the Registration Agreement. The Initial
Securities and the Exchange Securities are treated as a single class of
securities under the Indenture. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect
on the date of the Indenture (the "TIA"). Terms defined in the Indenture and
not defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the TIA for a statement of those terms. Any conflict between
this Security and the Indenture will be governed by the Indenture.
The Securities are unsecured senior obligations of the Company
limited to $150,000,000 aggregate principal amount (subject to Section 2.7 of
the Indenture). The Indenture imposes certain limitations on the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries, the existence of
liens, the payment of dividends on, and redemption of, the Capital Stock of the
Company and its Restricted Subsidiaries, the sale or transfer of assets and
Subsidiary stock, the issuance or sale of Capital Stock of Restricted
Subsidiaries, the investments of the Company and its Restricted Subsidiaries,
consolidations, mergers and transfers of all or substantially all the assets of
the Company, and transactions with Affiliates. In addition, the Indenture
limits the ability of the Company and its Restricted Subsidiaries to restrict
distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal,
premium and interest, if any, on the Securities and all other amounts payable
by the Company under the Indenture and the Securities when and as the same
shall be due and payable, whether at maturity, by acceleration or otherwise,
according to the terms of the Securities and the Indenture, the Guarantors have
unconditionally guaranteed the obligations of the Company under the Indenture
and the Securities on an unsecured senior basis pursuant to the terms of the
Indenture.
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may
not be redeemed at the option of the Company prior to, September 15, 2002.
Thereafter, the Securities will be redeemable, at the Company's option, in
whole or in part, at any time or from time to time, at the following redemption
prices (expressed in percentages of principal amount), plus accrued and unpaid
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on an interest
payment date that is on or prior to
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<PAGE> 92
the date fixed for redemption) if redeemed during the 12-month period
commencing on September 15 of the years set forth below:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
2002 104.875%
2003 103.250%
2004 101.625%
2005 and thereafter 100.000%
</TABLE>
In addition, at any time and from time to time on or prior to
September 15, 2000, the Company may redeem Securities with the net cash
proceeds of one or more Public Equity Offerings following which there is a
Public Market, at a redemption price equal to 109.75% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on an interest payment date that is on or prior to the
dated fixed for redemption); provided, however, that at least 66___% of the
original aggregate principal amount of the Securities must remain outstanding
after each such redemption (other that any Securities owned by the Company or
any of its Subsidiaries) and such redemption shall be effected within 60 days
of the consummation of the latest Public Equity Offering.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption. If a notice or communication is sent in the manner provided in
the Indenture, it is duly given, whether or not the addressee receives it.
Failure to send a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
7. Change of Control
Upon a Change of Control, each Holder of Securities will have
the right to require the Company to purchase all or any part of the Securities
of such Holder at a purchase price in cash equal to 101% of the principal
amount of the Securities to be purchased plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on an interest payment date that
is on or prior to the date fixed for redemption) as provided in, and subject to
the terms of, the Indenture.
8. Registration Agreement
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<PAGE> 93
The holder of this Security is entitled to the benefits of a
Registration Agreement, dated as of September 24, 1997, among the Company, the
Guarantors and the Initial Purchasers named therein (as such may be amended
from time to time, the "Registration Agreement"). Capitalized terms used in
this subsection but not defined herein have the meanings assigned to them in
the Registration Agreement.
If (i) within 60 days after the Issue Date, neither the
Exchange Offer Registration Statement nor the Shelf Registration Statement has
been filed with the Commission; (ii) within 150 days after the Issue Date, the
Exchange Offer Registration Statement has not been declared effective; (iii)
within 180 days after the Issue Date, neither the Exchange Offer has been
consummated nor the Shelf Registration Statement has been declared effective;
or (iv) after either the Exchange Offer Registration Statement or the Shelf
Registration Statement has been declared effective, such Registration Statement
thereafter ceases to be effective or usable (subject, in the case of the Shelf
Registration Statement, to the exceptions set forth in Section 3(b)(i) or (ii)
of the Registration Agreement) in connection with resales of Initial Securities
or Exchange Securities in accordance with and during the periods specified in
Sections 2(e) and 3(b) of the Registration Agreement (each such event referred
to in clauses (i) through (iv), a "Registration Default"), liquidated damages
("Liquidated Damages") will accrue on the Initial Securities and the Exchange
Securities from and including the date on which any such Registration Default
shall occur to but excluding the date on which all Registration Defaults have
been cured. Liquidated Damages will accrue at a rate of $0.05 per week per
$1,000 principal amount of the Securities during the 90-day period immediately
following the occurrence of any Registration Default and shall increase $0.05
per week per $1,000 principal amount of the Securities at the end of each
subsequent 90-day period, but in no event shall such Liquidated Damages exceed
$0.25 per week per $1,000 principal amount of Securities.
9. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, and in
denominations of $1,000 and integral multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture, including any transfer tax or other similar
governmental charge payable in connection therewith. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a
selection of Securities to be redeemed or 15 days before an
interest payment date.
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<PAGE> 94
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its written request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the consent of the Holders
of at least a majority in principal amount outstanding of the Securities and
(ii) any past default or noncompliance with any provision may be waived with
the consent of the Holders of a majority in principal amount outstanding of the
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Holder, the Company, the Guarantors and the Trustee may
amend the Indenture or the Securities to cure any ambiguity, defect or
inconsistency, to comply with Article 5 of the Indenture, to provide for
uncertificated Securities in addition to or in place of certificated
Securities, to add Guarantees with respect to the Securities, to release
Guarantors when permitted by the Indenture, to secure the Securities, to add
additional covenants or surrender rights and powers conferred on the Company,
to make any change that does not adversely affect the rights of any Holder or
to comply with any request of the SEC in connection with qualifying the
Indenture under the TIA.
14. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the Securities then
outstanding may declare all the Securities to be due and payable. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Securities being due
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<PAGE> 95
and payable immediately upon the occurrence of such Events of Default.
Holders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it is offered reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of
the Securities may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders notice of any continuing Default (except
a Default in payment of principal or interest) if and so long as a committee of
its trust officers determines that withholding notice is in the interest of the
Holders.
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or any of its Affiliates and may
otherwise deal with the Company or any of its Affiliates with the same rights
it would have if it were not Trustee.
16. No Recourse Against Others
No recourse for the payment of the principal of, premium, if
any, or interest on any of the Securities or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company or any Guarantor in the Indenture, or in
any of the Securities or Guarantees or because of the creation of any
Indebtedness represented hereby and thereby, shall be had against any
incorporator, stockholder, officer, director, employee, agent or controlling
person of the Company or any of its Subsidiaries. Each Holder, by accepting a
Security, waives and releases all such liability.
17. Guarantees
This Security will be entitled to the benefits of certain
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and
the Holders.
18. Governing Law
The Indenture and the Securities shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflict of laws to the extent that the
application of the laws of another jurisdiction would be required thereby.
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<PAGE> 96
19. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with rights of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (=
Uniform Gift to Minors Act).
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge to the Holder a copy of the Indenture. Requests may be made
as follows:
Bucyrus International, Inc.
1100 Milwaukee Avenue
P.O. Box 500
South Milwaukee, Wisconsin 53172
Attention: Chief Financial Officer
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<PAGE> 97
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_________________________________________________________________
(Print or type assignee's name, address and zip code)
_________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date: _______________ Your Signature: _______________
Sign exactly as your name appears
on the other side of this Security.
Signature Guarantee: _______________
(Signature must be guaranteed)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
In connection with any transfer of this Security occurring
prior to the date which is the earlier of (i) the date of the declaration by
the Commission of the effectiveness of a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") covering resales of
this Security (which effectiveness shall not have been suspended or terminated
at the date of the transfer) and (ii) two years from the Issue Date, the
undersigned confirms that it has not utilized any general solicitation or
general advertising in connection with the transfer:
[Check One]
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
(3) __ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended) that has furnished to the
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Trustee a signed letter containing certain representations and
agreements (the form of which letter can be obtained from the
Trustee); or
(4) __ outside the United states to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(5) __ pursuant to the exemption from registration provided by Rule 144 under
the Securities Act of 1933, as amended; or
(6) __ pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or
(7) __ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of the Company.
Unless one of the items is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if
item (3), (4), (5) or (7) is checked, the Company or the Trustee may require,
prior to registering any such transfer of the Securities, in their sole
discretion, such written legal opinions, certifications (including an
investment letter in the case of box (3) or (4)) and other information as the
Trustee or the Company has reasonably requested to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or
Registrar shall not be obligated to register this Security in the name of any
person other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.14 of the Indenture
shall have been satisfied.
Dated: ____________________ Signed:_________________________
(Sign exactly as name
appears on the otherside
of this Security)
Signature Guarantee: ___________________________________________
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SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
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<PAGE> 100
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Issuer as the undersigned has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated: ______________ _______________________________________
NOTICE: To be executed by an executive
officer
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<PAGE> 101
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.8 or 4.13 of the Indenture, check the box: [ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.8 or 4.13 of the Indenture,
state the amount: $
Date: ______________ Your Signature: _________________
(Sign exactly as your name appears on
the other side of the Security)
Signature Guarantee: ________________________________________
(Signature must be guaranteed)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
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<PAGE> 102
EXHIBIT B
FACE OF SECURITY
No.
CUSIP No.
BUCYRUS INTERNATIONAL, INC.
9-3/4% Senior Notes Due 2007, SERIES B
BUCYRUS INTERNATIONAL, INC., a Delaware corporation (the
"Company"), promises to pay to Cede & Co., or registered assigns, the principal
sum of [ ] Dollars on September 15, 2007.
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 1.
Additional provisions of this Security are set forth on the
reverse side of this Security.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by a duly authorized officer.
BUCYRUS INTERNATIONAL, INC.
By: ______________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Harris Trust and Savings Bank, as Trustee, certifies that this is one of the
Securities referred to in the within-mentioned Indenture.
By: HARRIS TRUST AND SAVINGS BANK,
as Trustee
______________________________
Authorized Signatory
Date of Authentication:
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<PAGE> 103
REVERSE OF SECURITY
9-3/4% SENIOR NOTES DUE 2007, SERIES B
1. Interest
BUCYRUS INTERNATIONAL, INC., a Delaware corporation (such
entity, and its successors and assigns under the Indenture, the "Company"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semiannually on March 15
and September 15 of each year, commencing March 15, 1998. Interest on the
Securities will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from September 24, 1997. Interest will
be computed on the basis of a 360-day year of twelve 30-day months. The
Company shall pay interest on overdue principal at 1% per annum in excess of
the rate borne by the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the record date immediately preceding the interest
payment date even if Securities are canceled on registration of transfer or
registration of exchange (including pursuant to an Exchange Offer (as defined
in the Registration Agreement)) after the record date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company will
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by its check
payable in such U.S. Legal Tender. The Company may deliver any such interest
payment to the Paying Agent or to a Holder's registered address.
3. Paying Agent and Registrar
Initially, Harris Trust and Savings Bank, a national banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or co-registrar
without notice. The Company may act as Paying Agent, Registrar, co-Registrar
or transfer agent.
4. Indenture
The Company issued the Securities under an Indenture dated as
of September 24, 1997 (the "Indenture"), among the Company, the Guarantors
party thereto and the Trustee. This Security is one of a duly authorized issue
of Exchange Securities of the Company designated as its 9-3/4% Senior Notes Due
2007 (the
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<PAGE> 104
"Exchange Securities"). The Securities include the Initial Securities (as
defined in the Indenture) and the Exchange Securities issued in exchange for
the Initial Securities pursuant to the Registration Agreement. The Initial
Securities and the Exchange Securities are treated as a single class of
securities under the Indenture. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect
on the date of the Indenture (the "TIA"). Terms defined in the Indenture and
not defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the TIA for a statement of those terms. Any conflict between
this Security and the Indenture will be governed by the Indenture.
The Securities are unsecured senior obligations of the Company
limited to $150,000,000 aggregate principal amount (subject to Section 2.7 of
the Indenture). The Indenture imposes certain limitations on the Incurrence of
Indebtedness by the Company and its Restricted Subsidiaries, the existence of
liens, the payment of dividends on, and redemption of, the Capital Stock of the
Company and its Restricted Subsidiaries, the sale or transfer of assets and
Subsidiary stock, the issuance or sale of Capital Stock of Restricted
Subsidiaries, the investments of the Company and its Restricted Subsidiaries,
consolidations, mergers and transfers of all or substantially all the assets of
the Company, and transactions with Affiliates. In addition, the Indenture
limits the ability of the Company and its Restricted Subsidiaries to restrict
distributions and dividends from Restricted Subsidiaries.
To guarantee the due and punctual payment of the principal,
premium and interest, if any, on the Securities and all other amounts payable
by the Company under the Indenture and the Securities when and as the same
shall be due and payable, whether at maturity, by acceleration or otherwise,
according to the terms of the Securities and the Indenture, the Guarantors have
unconditionally guaranteed the obligations of the Company under the Indenture
and the Securities on an unsecured senior basis pursuant to the terms of the
Indenture.
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may
not be redeemed at the option of the Company prior to, September 15, 2002.
Thereafter, the Securities will be redeemable, at the Company's option, in
whole or in part, at any time or from time to time, at the following redemption
prices (expressed in percentages of principal amount), plus accrued and unpaid
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on an interest
payment date that is on or prior to
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<PAGE> 105
the date fixed for redemption) if redeemed during the 12-month period
commencing on September 15 of the years set forth below:
<TABLE>
<CAPTION>
Period Percentage
------ ----------
<S> <C>
2002 104.875%
2003 103.250%
2004 101.625%
2005 and thereafter 100.000%
</TABLE>
In addition, at any time and from time to time on or prior to
September 15, 2000, the Company may redeem Securities with the net cash
proceeds of one or more Public Equity Offerings following which there is a
Public Market, at a redemption price equal to 109.75% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on an interest payment date that is on or prior to the
dated fixed for redemption); provided, however, that at least 6___% of the
original aggregate principal amount of the Securities must remain outstanding
after each such redemption (other that any Securities owned by the Company or
any of its Subsidiaries) and such redemption shall be effected within 60 days
of the consummation of the latest Public Equity Offering.
6. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption. If a notice or communication is sent in the manner provided in
the Indenture, it is duly given, whether or not the addressee receives it.
Failure to send a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
7. Change of Control
Upon a Change of Control, each Holder of Securities will have
the right to require the Company to purchase all or any part of the Securities
of such Holder at a purchase price in cash equal to 101% of the principal
amount of the Securities to be purchased plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest due on an interest payment date that
is on or prior to the date fixed for redemption) as provided in, and subject to
the terms of, the Indenture.
8. Denominations; Transfer; Exchange
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<PAGE> 106
The Securities are in registered form, without coupons, and in
denominations of $1,000 and integral multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture, including any transfer tax or other similar
governmental charge payable in connection therewith. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a
selection of Securities to be redeemed or 15 days before an interest payment
date.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
10. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its written request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee for payment.
11. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the consent of the Holders
of at least a majority in principal amount outstanding of the Securities and
(ii) any past default or noncompliance with any provision may be waived with
the consent of the Holders of a majority in principal amount outstanding of the
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Holder, the Company, the Guarantors and the Trustee may
amend the Indenture or the Securities to cure any ambiguity, defect or
inconsistency, to comply with Article 5 of the Indenture, to provide for
uncertificated Securities in addition to or in place of certificated
Securities, to add Guarantees with respect to the
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<PAGE> 107
Securities, to release Guarantors when permitted by the Indenture, to secure
the Securities, to add additional covenants or surrender rights and powers
conferred on the Company, to make any change that does not adversely affect the
rights of any Holder or to comply with any request of the SEC in connection
with qualifying the Indenture under the TIA.
13. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the Securities then
outstanding may declare all the Securities to be due and payable. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Securities being due and payable immediately upon the occurrence of such
Events of Default.
Holders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it is offered reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of
the Securities may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders notice of any continuing Default (except
a Default in payment of principal or interest) if and so long as a committee of
its trust officers determines that withholding notice is in the interest of the
Holders.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or any of its Affiliates and may
otherwise deal with the Company or any of its Affiliates with the same rights
it would have if it were not Trustee.
15. No Recourse Against Others
No recourse for the payment of the principal of, premium, if
any, or interest on any of the Securities or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company or any Guarantor in the Indenture, or in
any of the Securities or Guarantees or because of the creation of any
Indebtedness represented hereby and thereby, shall be had against any
incorporator, stockholder, officer, director, employee, agent or controlling
person of the Company or any of its Subsidiaries. Each Holder, by accepting a
Security, waives and releases all such liability.
16. Guarantees
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This Security will be entitled to the benefits of certain
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and
the Holders.
17. Governing Law
The Indenture and the Securities shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflict of laws to the extent that the
application of the laws of another jurisdiction would be required thereby.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with rights of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (=
Uniform Gift to Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge to the Holder a copy of the Indenture. Requests may be made
as follows:
Bucyrus International, Inc.
1100 Milwaukee Avenue
P.O. Box 500
South Milwaukee, Wisconsin 53172
Attention: Chief Financial Officer
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<PAGE> 109
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
___________________________________________________________________
(Print or type assignee's name, address and zip code)
___________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date: _______________ Your Signature: ____________________
Sign exactly as your name appears on
the other side of this Security.
Signature Guarantee: _______________
(Signature must be guaranteed)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
B-8
<PAGE> 110
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.8 or 4.13 of the Indenture, check the box: [ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.8 or 4.13 of the Indenture,
state the amount: $
Date: ______________ Your Signature: ____________________
(Sign exactly as your name appears on
the other side of the Security)
Signature Guarantee: ________________________________________
(Signature must be guaranteed)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
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<PAGE> 111
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
[ ], [ ]
Harris Trust and Savings Bank
111 West Monroe Street
12th Floor
Chicago, Illinois 60603
Ladies and Gentlemen:
In connection with our proposed purchase of 9-3/4% Senior
Notes Due 2007 (the "Securities") of Bucyrus International, Inc., a Delaware
corporation (the "Company"), we confirm that:
1. We have received a copy of the Offering Memorandum
(the "Offering Memorandum"), dated September 17, 1997, relating to the
Securities and such other information as we deem necessary in order to
make our investment decision. We acknowledge that we have read and
agreed to the matters stated in the section entitled "Notice to
Investors" of such Offering Memorandum.
2. We understand that any subsequent transfer of the
Securities is subject to certain restrictions and conditions set forth
in the Indenture relating to the Securities (the "Indenture") as
described in the Offering Memorandum and the undersigned agrees to be
bound by, and not to resell, pledge or otherwise transfer the
Securities except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act"), and
all applicable State securities laws.
3. We understand that the offer and sale of the
Securities have not been registered under the Securities Act, and that
the Securities may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except as permitted
in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that if
we should sell any Securities, we will do so only (i) to the Company
or any subsidiary thereof, (ii) inside the United States in accordance
with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined in Rule 144A promulgated under the Securities Act),
(iii) inside the United States to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to the
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<PAGE> 112
Trustee (as defined in the Indenture) a signed letter containing
certain representations and agreements relating to the restrictions on
transfer of the Securities (the form of which letter can be obtained
from the Trustee), (iv) outside the United States in accordance with
Rule 904 of Regulation S promulgated under the Securities Act to
non-U.S. persons, (v) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available), or (vi)
pursuant to an effective registration statement under the Securities
Act, and we further agree to provide to any person purchasing any of
the Securities from us a notice advising such purchaser that resales
of the Securities are restricted as stated herein.
4. We understand that, on any proposed resale of any
Securities, we will be required to furnish to the Trustee and the
Company such certification, legal opinions and other information as
the Trustee and the Company may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We further
understand that the Securities purchased by us will bear a legend to
the foregoing effect.
5. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of our investment in the Securities, and we and any accounts for
which we are acting are each able to bear the economic risk of our or
their investment, as the case may be.
6. We are acquiring the Securities purchased by us for
our account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise
sole investment discretion.
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<PAGE> 113
You, the Company, the Trustee and others are entitled to rely
upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding
or official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: ____________________________
Name:
Title:
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EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[ ], [ ]
Harris Trust and Savings Bank
111 West Monroe Street 12th
Floor Chicago, Illinois 60603
Re: Bucyrus International, Inc. (the "Company")
9-3/4% Senior Notes Due 2007(the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $[ ]
aggregate principal amount of the Securities, we confirm that such sale has
been effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Securities was not made to a person
in the United States;
(2) either (a) at the time the buy offer was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Securities.
D-1
<PAGE> 115
You, the Company and counsel for the Company are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or
a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.
Terms used in this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: _________________________
Authorized Signature
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<PAGE> 116
EXHIBIT E
GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees, as principal obligor and not only as a surety, to the Holder of
this Security the cash payments in United States dollars of principal of and
interest on this Security in the amounts and at the times when due and interest
on the overdue principal of and interest on this Security, if lawful, and the
payment or performance of all other obligations of the Company under the
Indenture (as defined below) or the Securities, to the Holder of this Security
and the Trustee, all in accordance with and subject to the terms and
limitations of this Security, Article 10 of the Indenture and this Guarantee.
This Guarantee will become effective in accordance with Article 10 of the
Indenture and its terms shall be evidenced therein. The validity and
enforceability of any Guarantee shall not be affected by the fact that it is
not affixed to any particular Security. Terms used but not defined herein
shall have the meanings ascribed to them in the Indenture dated as of September
24, 1997, among Bucyrus International, Inc., a Delaware corporation, as issuer
(the "Company"), the Guarantors party thereto and Harris Trust and Savings
Bank, as trustee (the "Trustee"), as amended or supplemented from time to time
(the "Indenture").
The obligations of the undersigned to the Holders of
Securities and to the Trustee pursuant to this Guarantee and the Indenture are
expressly set forth in Article 10 of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Guarantee and all of the other
provisions of the Indenture to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW. Each Guarantor hereby agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth in the Indenture.
E-1
<PAGE> 117
IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to be duly
executed.
BOONVILLE MINING SERVICES, INC.
By: _____________________________
Name:
Title:
MINSERCO, INC.
By: _____________________________
Name:
Title:
VON'S WELDING, INC.
By: _____________________________
Name:
Title:
E-2
<PAGE> 1
EXHIBIT 10.2
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") is dated
on or after the consummation of the tender offer by and among Bucyrus
International, Inc., a Delaware corporation (the "Corporation"),
Boonville Mining Services, Inc., a Delaware corporation, Minserco,
Inc., a Delaware corporation and Von's Welding, Inc., a Wyoming
corporation (collectively the "Subsidiaries"); and American
Industrial Partners, a Delaware general partnership ("AIP").
Background
Subject to terms and conditions of this Agreement, the
Corporation desires to retain AIP to provide certain management
services to the Corporation.
Terms and Conditions
In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties agree as follows:
1. Management Services: During the term of this Agreement, AIP
shall provide general management, financial and other corporate
advisory services to the Corporation. Such management services shall
be performed by the qualified officers, employees or agents or AIP,
and AIP shall at all times direct, monitor and supervise the
performance of such services by such officers, employees or agents.
2. Fees and Expenses:
(a) The Corporation shall pay to AIP an annual management fee
(the "Management Fee") of One Million Four Hundred Fifty Thousand
Dollars ($1,450,000). The Management Fee shall be payable
semi-annually forty-five (45) days after the scheduled interest
payment date for the Company's 9 3/4% Senior Notes Due 2007,
beginning on or after the consummation of the Tender Offer or at such
other times as the Corporation and AIP shall otherwise agree;
provided that if any date on which payment of the Management Fee is
required hereunder is not a business day, the Corporation shall pay
such Management Fee on the first business day following the date on which
payment was otherwise due.
(b) In addition to the Management Fees payable pursuant to this
Section 2, the Corporation agrees to promptly reimburse AIP for all
out-of-pocket expenses
<PAGE> 2
incurred by AIP in providing the services contemplated by this Agreement,
including fees and expenses paid to consultants, subcontractors and other
third parties in connection with such services.
(c) The Corporation and the Subsidiaries (collectively, the
"Guarantors"), jointly and severally, hereby guarantee the
Corporation's payment of all amounts owing to AIP (i) subject to
paragraph 2(d) below, under paragraph 2(a) of this Agreement and (ii)
under paragraph 2(b) of this Agreement.
(d) Notwithstanding anything to the contrary contained herein:
(i) the Corporation shall not be required to pay the Management Fee
if and for so long as (A) any such payment would violate, breach or
otherwise constitute a default (or any event which might with the
lapse of time or giving of notice or both, constitute a default)
under any of the Corporation's financing agreements, and (ii) none of
the Guarantors shall be required to make any payments pursuant to
Section 2(c)(i) of this Agreement if any such payment would violate,
breach or otherwise constitute a default (or any event which might
constitute a default) under any of the Guarantors' financing
agreements, including, without limitation, the Credit Agreement,
dated as of September 24, 1997, among the Corporation, Bank One,
Wisconsin, and the Lenders from time to time party thereto.
(e) Interest will accrue on all due and unpaid Management Fees
at the lower of (i) the rate per annum equal to ten percent (10%) or
(ii) the maximum rate permitted by law until such time as such
Management Fees are paid, and such interest shall compound annually.
(f) Notwithstanding the provisions of Section 2(a) hereof, the
lability of the Corporation for any semi-annual Management Fee
payment hereunder shall not accrue, and AIP shall have no right for
payment in respect thereto, unless AIP continues to perform the
management services described in Section 1 through the end of the
applicable semi-annual period, and no payment obligation shall arise
on the part of the Corporation for the performance of services by AIP
for any partial semi-annual period (except for any partial
semi-annual period ending on the termination of this Agreement,
whereupon the Management Fee shall be pro rated, and shall be
payable, for such period).
3. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
successors and permitted
2
<PAGE> 3
assigns. This Agreement may not be transferred or assigned by any
party without the written consent of each other party.
4. Entire Agreement; Amendment. This Agreement constitutes the
entire agreement and understanding between the parties with respect
to the subject matter hereof. This Agreement may be amended or
modified, or any provision hereof may be waived, provided that such
amendment or waiver is set forth in a writing executed by the
parties. No courses of dealing between or among any persons having
any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or
obligations or any person under or by reason of this Agreement.
5. Term. Except as provided for herein, this Agreement shall
commence on the date hereof and shall terminate on the earlier of (i)
the tenth anniversary of the date hereof and (ii) such other date as
to which AIP and the Corporation mutually agree. The provisions of
Section 6 shall survive the termination of this Agreement.
6. Indemnification. The Corporation and the Guarantors hereby
jointly and severally agree to indemnify and hold harmless AIP and
its partners, employees, agents, representatives and affiliates (each
being an "Indemnified Party") from and against any and all losses,
claims, damages and liabilities to which such Indemnified Party may
become subject under any applicable federal or state law, any claim
made by any third party or otherwise, relating to or arising out of
the engagement of AIP pursuant to, and the performance by AIP of the
services contemplated by, this Agreement, and the Corporation and the
Guarantors jointly and severally will reimburse any indemnified Party
for all costs and expenses (including attorneys' fees and expenses)
as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatening claim, or
any action or proceeding arising therefrom, whether or not such
Indemnified Party is a party hereto. None of the Corporation and the
Guarantors will be liable under this Section 6, and an Indemnified
Party shall reimburse the Corporation or the Guarantors for any
related payments made by it under this Section 6, to the extent that
any loss, claim, damage, liability, cost or expense is determined by
a court, in a final judgment from which not further appeal may be
taken, to have resulted primarily from the gross negligence or
willful misconduct of such Indemnified Party. No Indemnified Party shall
be liable to the Corporation or any of the
3
<PAGE> 4
Guarantors for honest mistakes of judgment, or for action or
inaction, taken in good faith in the performance of management
services under this Agreement to the extent such action would satisfy
the standards for indemnification set forth in Section 6.
7. Permissible Activities. Subject to all applicable provisions
of Delaware law that impose fiduciary duties upon AIP or its partners
or affiliates, nothing herein shall in any way preclude AIP, it
partners or affiliates from engaging in any business activities or
from performing services for its or their own account or for the
account of others.
8. Governing Law. The validity, performance, construction and
effect of this Agreement shall be governed by and construed in
accordance with the internal law of the State of New York.
BUCYRUS INTERNATIONAL, INC.
By: /s/ Daniel J. Smoke
Its: Vice President and Chief Financial Officer
BOONVILLE MINING SERVICES, INC.
By: /s/ Craig R. Mackus
Its: Vice President
MINSERCO, INC.
By: /s/ Craig R. Mackus
Its: Vice President
VON'S WELDING, INC.
By: /s/ Craig R. Mackus
Its: Vice President
AMERICAN INDUSTRIAL PARTNERS, A
DELAWARE GENERAL PARTNERSHIP
By: /s/ Kenneth A. Pereira
Its: Chief Financial Officer
4
<PAGE> 1
EXHIBIT 10.3
BUCYRUS INTERNATIONAL, INC.
9-3/4% Senior Notes Due 2007
REGISTRATION AGREEMENT
New York, New York
September 24, 1997
Salomon Brothers Inc
Jefferies & Company, Inc.
Donaldson, Lufkin & Jenrette
Securities Corporation
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Bucyrus International, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to certain purchasers (the "Initial Purchasers"),
upon the terms set forth in a purchase agreement of even date herewith (the
"Purchase Agreement"), $150,000,000 aggregate principal amount of its 9-3/4%
Senior Notes Due 2007 (the "Notes"), to be guaranteed on an unsecured senior
basis (the "Guarantees" and, together with the Notes, the "Securities") by each
of the Company's domestic subsidiaries (the "Guarantors" and, together with the
Company, the "Issuers") (the "Initial Placement"). As an inducement to the
Initial Purchasers to enter into the Purchase Agreement and in satisfaction of
a condition to your obligations thereunder, the Issuers agree with you, (i) for
your benefit and (ii) for the benefit of the holders from time to time of the
Securities (including you and the other Initial Purchasers) (each of the
foregoing, a "Holder" and together, the "Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following capitalized defined terms shall have the
following meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control
of a person
<PAGE> 2
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means the power, direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" means the 180-day period following
the consummation of the Registered Exchange Offer, exclusive of any period
during which any stop order shall be in effect suspending the effectiveness of
the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration statement
of the Company on an appropriate form under the Act with respect to the
Registered Exchange Offer, all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Exchanging Dealer" means any Holder (which may include the Initial
Purchasers) which is a broker-dealer, electing to exchange Securities acquired
for its own account as a result of market-making activities or other trading
activities, for New Securities.
"Final Memorandum" means the Offering Memorandum dated September 17,
1997.
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture relating to the Securities dated as of
September 24, 1997, among the Company, the Guarantors and Harris Trust and
Savings Bank, as trustee, as the same may be amended from time to time in
accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
<PAGE> 3
-3-
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering.
"New Securities" means debt securities of the Company identical in all
material respects to the Securities (except that the transfer restrictions will
be eliminated) to be issued under the Indenture or the New Securities
Indenture.
"New Securities Indenture" means an indenture the Company, the
Guarantors and the New Securities Trustee, identical in all material respects
with the Indenture (except that the cash interest and interest rate step-up
provisions will be modified or eliminated, as appropriate).
"New Securities Trustee" means a bank or trust company reasonably
satisfactory to the Initial Purchasers, as trustee with respect to the New
Securities under the New Securities Indenture.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities, covered by
such Registration Statement, and all amendments and supplements to the
Prospectus, including post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the Holders to
issue and deliver to such Holders, in exchange for the securities, a like
principal amount of the New Securities.
"Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Securities" has the meaning set forth in the preamble hereto.
<PAGE> 4
-4-
"Shelf Registration" means a registration effected pursuant to Section
3 hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
of the Company pursuant to the provisions of Section 3 hereof which covers some
or all of the Securities or New Securities, as applicable, on an appropriate
form under Rule 415 under the Act, or any similar rule that may be adopted by
the Commission, amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Trustee" means the trustee with respect to the Securities under the
Indenture.
"underwriter" means any underwriter of Securities in connection with an
offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of New Securities by
Exchanging Dealers; Private Exchange. (a) The Issuers shall prepare and, not
later than 60 days following the Closing Date, shall file with the Commission
the Exchange Offer Registration Statement with respect to the Registered
Exchange Offer. The Issuers shall use their best efforts to cause the Exchange
Offer Registration Statement to become effective under the Act within 150 days
of the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Issuers shall promptly commence the Registered Exchange Offer,
it being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for New Securities (assuming that such Holder
is not an affiliate of the Issuers within the meaning of the Act, acquires the
New Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the New
Securities) to trade such New Securities from and after their receipt without
any limitations or restrictions under the Act and without material restrictions
under the securities laws of a substantial proportion of the several states of
the United States, in either case, other than such restrictions as are
applicable to publicly traded securities generally.
<PAGE> 5
-5-
(c) In connection with the Registered Exchange Offer, the Issuers
shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30
days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law);
(iii) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of New
York; and
(iv) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Issuers shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all securities so
accepted for exchange; and
(iii) cause the Trustee or the New Securities Trustee, as the case
may be, promptly to authenticate and deliver to each Holder of Securities,
New Securities equal in principal amount to the Securities of such Holder
so accepted for exchange.
(e) The Initial Purchasers and the Issuers acknowledge that,
pursuant to interpretations by the Commission's staff of Section 5 of the Act,
and in the absence of an applicable exemption therefrom, each Exchanging Dealer
is required to deliver a Prospectus in connection with a sale of any New
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer in exchange for Securities acquired for its own account as a
result of market-making activities or other trading activities. Accordingly,
the Issuers shall:
(i) include the information set forth in Annex A hereto on the cover
of the Exchange Offer Registration Statement, in Annex B hereto in the
forepart of the Exchange Offer Registration Statement in a section setting
forth
<PAGE> 6
-6-
details of the Exchange Offer, and in Annex C hereto in the underwriting or
plan of distribution section of the Prospectus forming a part of the
Exchange Offer Registration Statement, and include the information set
forth in Annex D hereto in the Letter of Transmittal delivered pursuant to
the Registered Exchange Offer; and
(ii) use their best efforts to keep the Exchange Offer Registration
Statement continuously effective under the Act during the Exchange Offer
Registration Period for delivery by Exchanging Dealers in connection with
sales of New Securities received pursuant to the Registered Exchange Offer,
as contemplated by Section 4(h) below.
(f) In the event that any Initial Purchaser determines that it is
not eligible to participate in the Registered Exchange Offer with respect to
the exchange of Securities constituting any portion of an unsold allotment, at
the request of such Initial Purchaser, the Issuers shall issue and deliver to
such Initial Purchaser or the party purchasing New Securities registered under
a Shelf Registration Statement as contemplated by Section 3 hereof from such
Initial Purchaser, in exchange for such Securities, a like principal amount of
New Securities. The Issuers shall seek to cause the CUSIP Service Bureau to
issue the same CUSIP number for such New Securities as for New Securities
issued pursuant to the Registered Exchange Offer.
3. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff, the Issuers
determine upon advice of their outside counsel that they are not permitted to
effect the Registered Exchange Offer as contemplated by Section 2 hereof, or
(ii) for any reason the Exchange Offer Registration Statement is not declared
effective within 150 days of the Closing Date, or (iii) any Holder is not
eligible to participate in the Registered Exchange Offer (other than by reason
of such Holder's failure to comply with Section 4(o), or (iv) in the case of
any Initial Purchaser that participates in the Registered Exchange Offer or
acquires New Securities pursuant to Section 2(f) hereof, such Initial Purchaser
does not receive freely tradeable New Securities in exchange for Securities
constituting any portion of an unsold allotment (it being understood that, for
purposes of this Section 3, (x) the requirement that an Initial Purchaser
deliver a Prospectus containing the information required by Items 507 and/or
508 of Regulation S-K under the Act in connection with sales of New Securities
acquired in exchange for such Securities shall result in such New Securities
being not "freely tradeable" but (y) the requirement that an Exchanging Dealer
deliver a Prospectus in connection with sales of New Securities acquired in
<PAGE> 7
-7-
the Registered Exchange Offer in exchange for Securities acquired as a result
of market-making activities or other trading activities shall not result in
such New Securities being not "freely tradeable"), the following provisions
shall apply:
(a) The Issuers shall as promptly as practicable (but in no event
more than 45 days after so required or requested pursuant to this Section
3), file with the Commission and thereafter shall use their best efforts to
cause to be declared effective under the Act a Shelf Registration Statement
by the 180th day after the Issue Date (but not earlier than the 180th day
after a request by an Initial Purchaser) relating to the offer and sale of
the Securities or the New Securities, as applicable, by the Holders from
time to time in accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement; provided,
however, that, with respect to New Securities received by an Initial
Purchaser in exchange for securities constituting any portion of an unsold
allotment, the Issuers may, if permitted by current interpretations by the
Commission's staff, file a post-effective amendment to the Exchange Offer
Registration Statement containing the information required by Regulation
S-K Items 507 and/or 508, as applicable, in satisfaction of their
obligations under this paragraph (a) with respect thereto, and any such
Exchange Offer Registration Statement, as so amended, shall be referred to
herein as, and governed by the provisions herein applicable to, a Shelf
Registration Statement.
(b) The Issuers shall use their best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period of two
years from the date the Shelf Registration Statement is declared effective
by the Commission or such shorter period that will terminate when all the
Securities or New Securities, as applicable, covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement (in any such case, such period being called the "Shelf
Registration Period"). The Issuers shall be deemed not to have used their
best efforts to keep the Shelf Registration Statement effective during the
requisite period if any Issuer voluntarily takes any action that would
result in Holders of securities covered thereby not being able to offer and
sell such securities during that period, unless (i) such action is required
by applicable law, or (ii) such action is taken by such Issuer in good
faith and for valid business reasons (not including avoidance of such
Issuer's obligations
<PAGE> 8
-8-
hereunder), including the acquisition or divestiture of assets, so long as
such Issuer promptly thereafter complies with the requirements of Section
4(k) hereof, if applicable.
4. Registration Procedures. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Issuers shall furnish to you, prior to the filing thereof
with the Commission, a copy of any Shelf Registration Statement and any
Exchange Offer Registration Statement, and each amendment thereof and each
amendment or supplement, if any, to the Prospectus included therein and
shall use their best efforts to reflect in each such document, when so
filed with the Commission, such comments as you reasonably may propose.
(b) The Issuers shall ensure that (i) any Registration Statement
and any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies in all material respects with the
Act and the rules and regulations thereunder, (ii) any Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any
Registration Statement, and any amendment or supplement to such Prospectus,
does not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements, in the light of
the circumstances under which they were made, not misleading.
(c) (1) The Issuers shall advise you or your representative
and, in the case of a Shelf Registration Statement, the Holders of
securities covered thereby, and, if requested by you or your representative
or any such Holder, confirm such advice in writing:
(i) when a Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included
therein or for additional information.
<PAGE> 9
-9-
(2) The Issuers shall advise you or your representative and, in the
case of a Shelf Registration Statement, the Holders of securities covered
thereby, and, in the case of an Exchange Offer Registration Statement, any
Exchanging Dealer which has provided in writing to the Company a telephone
or facsimile number and address for notices, and, if requested by you or
your representative or any such Holder or Exchanging Dealer, confirm such
advice in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(ii) of the receipt by the Issuers of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(iii) of the happening of any event that requires the making
of any changes in the Registration Statement or the Prospectus so
that, as of such date, the statements therein are not misleading and
do not omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made)
not misleading (which advice shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have
been made).
(d) The Issuers shall use their best efforts to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement at the earliest possible time.
(e) The Issuers shall furnish to each Holder of Securities covered
by any Shelf Registration Statement, without charge, at least one copy of
such Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits (including those incorporated by
reference).
(f) The Issuers shall, during the Shelf Registration Period,
deliver to each Holder of Securities any Shelf Registration Statement,
without charge, as many copies of the Prospectus (including each
preliminary Prospectus)
<PAGE> 10
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included in such Shelf Registration Statement and any amendment or
supplement thereto as such Holder may reasonably request; and the Issuers
consent to the use of the Prospectus or any amendment or supplement thereto
by each of the selling Holders of securities in connection with the
offering and sale of the securities covered by the Prospectus or any
amendment or supplement thereto.
(g) The Issuers shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, any documents incorporated by reference
therein, and, if the Exchanging Dealer so requests in writing, all exhibits
(including those incorporated by reference).
(h) The Issuers shall, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer, without charge, as many
copies of the Prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as such Exchanging Dealer
may reasonably request for delivery by such Exchanging Dealer in connection
with a sale of New Securities received by it pursuant to the Registered
Exchange Offer; and the Issuers consent to the use of the Prospectus or any
amendment or supplement thereto by any such Exchanging Dealer, as
aforesaid.
(i) Prior to the Registered Exchange Offer or any other offering
of securities pursuant to any Registration Statement, the Issuers shall
register or qualify or cooperate with the Holders of securities included
therein and their respective counsel in connection with the registration or
qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holders reasonably request
in writing and do any and all other acts or things necessary or advisable
to enable the offer and sale in such jurisdictions of the securities
covered by such Registration Statement; provided, however, that the Issuers
will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
(j) The Issuers shall cooperate with the Holders of Securities to
facilitate the timely preparation and delivery
<PAGE> 11
-11-
of certificates representing Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request prior to
sales of securities pursuant to such Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Issuers shall promptly prepare a post-effective
amendment to any Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Securities included therein, the
Prospectus will not include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(l) Not later than the effective date of any such Registration
Statement hereunder, the Issuers shall provide a CUSIP number for the
Securities or New Securities, as the case may be, registered under such
Registration Statement, and provide the applicable trustee with printed
certificates for such Securities or New Securities, in a form eligible for
deposit with The Depository Trust Company.
(m) The Issuers shall use their best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the
effective date of the applicable Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Act.
(n) The Issuers shall cause the Indenture or the New Securities
Indenture, as the case may be, to be qualified under the Trust Indenture
Act in a timely manner.
(o) The Issuers may require each Holder of Securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Issuers such
information regarding the Holder and the distribution of such Securities as
the Issuers may from time to time reasonably require for inclusion in such
Registration Statement. No Holder may include any of its Securities in any
Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the issuers in writing, within 20 days after
receipt of a written request therefor, such information as the Issuers may
reasonably request, including, but not limited to, information specified by
Regulation S-K or otherwise
<PAGE> 12
-12-
required by the Commission for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included
therein. Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Issuers all information required
to be disclosed in order to make the information previously furnished to
the Issuers by such Holder not materially misleading.
(p) The Issuers shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters and Majority
Holders reasonably agree should be included therein and shall make all
required filings of such Prospectus supplement or post-effective amendment
as soon as notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(q) In the case of any Shelf Registration Statement, the Issuers
shall enter into such agreements (including underwriting agreements) and
take all other appropriate actions in order to expedite or facilitate the
registration or the disposition of the Securities, and in connection
therewith, if an underwriting agreement is entered into, cause the same to
contain indemnification provisions and procedures no less favorable than
those set forth in Section 6 (or such other provisions and procedures
acceptable to the Majority Holders and the Managing Underwriters, if any)
with respect to all parties to be indemnified pursuant to Section 6 from
Holders of Securities to the Company.
(r) In the case of any Shelf Registration Statement, the Issuers
shall (i) make reasonably available for inspection by the Holders of
Securities to be registered thereunder, any underwriter participating in
any disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by the Holders or any such underwriter
all relevant financial and other records, pertinent corporate documents and
properties of the Issuers and their subsidiaries; (ii) cause the Issuers'
officers, directors and employees to supply all relevant information
reasonably requested by the Holders or any such underwriter, attorney,
accountant or agent in connection with any such Registration Statement as
is customary for similar due diligence examinations; provided, however,
that any information that is designated in writing by the Issuers, in good
faith, as confidential at the time of delivery of such
<PAGE> 13
-13-
information shall be kept confidential by the Holders or any such
underwriter, attorney, accountant or agent, unless such disclosure is made
in connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a third
party without an accompanying obligation of confidentiality; (iii) make
such representations and warranties to the Holders of Securities registered
thereunder and the underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in primary underwritten
offerings and covering matters including, but not limited to, those set
forth in the Purchase Agreement; (iv) obtain opinions of counsel to the
Issuers and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters,
if any) addressed to each selling Holder of Securities registered
thereunder and the underwriters, if any, in customary form and covering
such matters as are customarily covered in opinions requested in
underwritten offerings; (v) obtain "cold comfort" letters and updates
thereof from the independent certified public accountants of the Issuers
(and, if necessary, any other independent certified public accountants of
any subsidiary of the Issuers or of any business acquired by the Issuers
for which financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each selling
Holder of securities registered thereunder and the underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings;
and (vi) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 4(k) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Issuers. The foregoing actions set forth in
clauses (iii), (iv), (v) and (vi) of this Section 4(r) shall be performed
at (A) the effectiveness of such Registration Statement and each
post-effective amendment thereto and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.
(s) In the case of any Exchange Offer Registration Statement, the
Issuers shall, to the extent requested by any Purchaser, (i) make
reasonably available for inspection by such Purchaser, and any attorney,
accountant or other agent retained by such Purchaser, all relevant
financial and other records, pertinent corporate documents and properties
of the
<PAGE> 14
-14-
Issuers and their subsidiaries; (ii) cause the Issuers' officers,
directors and employees to supply all relevant information reasonably
requested by such Purchaser or any such attorney, accountant or agent in
connection with any such Registration Statement as is customary for similar
due diligence examinations; provided, however, that any information that is
designated in writing by the Issuers, in good faith, as confidential at the
time of delivery of such information shall be kept confidential by such
Purchaser or any such attorney, accountant or agent, unless such disclosure
is made in connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a third
party without an accompanying obligation of confidentiality; (iii) make
such representations and warranties to such Purchaser, in form, substance
and scope as are customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including, but not limited to,
those set forth in the Purchase Agreement; (iv) obtain opinions of counsel
to the Issuers and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to such Purchaser and
its counsel, addressed to such Purchaser, covering such matters as are
customarily covered in opinions requested in underwritten offerings; (v)
obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Issuers (and, if necessary, any other
independent certified public accountants of any subsidiary of the Issuers
or of any business acquired by the Issuers for which financial statements
and financial data are, or are required to be, included in the Registration
Statement), addressed to such Purchaser, in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings, or if requested by such
Purchaser or its counsel in lieu of a "cold comfort" letter, an agreed-upon
procedures letter under Statement on Auditing Standards No. 35, covering
matters requested by such Purchaser or its counsel; and (vi) deliver such
documents and certificates as may be reasonably requested by such Purchaser
or its counsel, including those to evidence compliance with Section 4(k)
and with conditions customarily contained in underwriting agreements. The
foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this
Section 4(s) shall be performed at the close of the Registered Exchange
Offer and the effective date of any post-effective amendment to the
Exchange Offer Registration Statement.
<PAGE> 15
-15-
5. Registration Expenses. The Issuers shall bear all expenses
incurred in connection with the performance of their obligations under Sections
2, 3 and 4 hereof and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchasers for the reasonable fees and
disbursements of one firm or counsel acting in connection therewith.
6. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Issuers, jointly and severally, agree to indemnify
and hold harmless each Holder of Securities covered thereby (including each
Initial Purchaser and, with respect to any Prospectus delivery as contemplated
in Section 4(h) hereof, each Exchanging Dealer), the directors, officers,
employees and agents of each such Holder and each person who controls any such
Holder within the meaning of either the Act or the Exchange Act against any and
all losses, claims, damages or liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same), joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise (collectively, "Losses"), insofar as such Losses (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement as originally filed or in any amendment thereof, or in any
preliminary Prospectus or Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon 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, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Loss or
action; provided, however, that the Issuers will not be liable to any Holder in
any case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Issuers by or on behalf of any such
Holder specifically for inclusion therein.
The Issuers, jointly and severally, also agree to indemnify or
contribute to Losses of, as provided in Section 6(d), any underwriters of
Securities registered under a Shelf Registration Statement, their officers and
directors and
<PAGE> 16
-16-
each person who controls such underwriters on substantially the same basis as
that of the indemnification of the Purchaser and the selling Holders provided
in this Section 6(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 4(q)
hereof.
(b) Each Holder of Securities covered by a Registration Statement
(including each Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer) severally agrees
to indemnify and hold harmless (i) the Issuers, (ii) each of their directors,
(iii) each of their respective officers who signs such Registration Statement
and (iv) each person who controls the Issuers within the meaning of either the
Act or the Exchange Act to the same extent as the foregoing indemnity from the
Issuers to each such Holder, but only with reference to written information
relating to such Holder furnished to the Issuers by or on behalf of such Holder
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees,
costs and expenses of such separate counsel (and local counsel) if
<PAGE> 17
-17-
(i) the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest, (ii)
the actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and counsel to the
indemnified party shall have reasonably concluded that there may be legal
defenses available to such indemnified party and/or other indemnified parties
which are different from or additional to those available to the indemnifying
party, (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively, "Losses") to
which such indemnified party may be subject in such proportion as is
appropriate to reflect the relative benefits received by such indemnifying
party, on the one hand, and such indemnified party, on the other hand, from the
Initial Placement and the Registration Statement which resulted in such Losses;
provided, however, that in no case shall any Initial Purchaser or any
subsequent Holder of any Security or New Security be responsible, in the
aggregate, for any amount in excess of the purchase discount or commission
applicable to such Security, or in the case of a New Security, applicable to
the Security which was exchangeable into such New Security, as set forth on the
cover page of the Final Memorandum, nor shall any underwriter be responsible
for any amount in excess of the underwriting discount or commission applicable
to the Securities purchased by such underwriter under the Registration
Statement which resulted in such Losses. If the allocation provided by the
<PAGE> 18
-18-
immediately preceding sentence is unavailable for any reason, the indemnifying
party and the indemnified party shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of such indemnifying party, on the one hand, and such indemnified party,
on the other hand, in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Issuers shall be deemed to be equal to the proceeds
from the Initial Placement net of purchase discounts and commissions (before
deducting expenses) as set forth on the cover page of the Final Memorandum.
Benefits received by the Initial Purchasers shall be deemed to be equal to the
total purchase discounts and commissions as set forth on the cover page of the
Final Memorandum, and benefits received by any other Holders shall be deemed to
be equal to the value of receiving Securities or New Securities, as applicable,
registered under the Act. Benefits received by any underwriter shall be deemed
to be equal to the total underwriting discounts and commissions, as set forth
on the cover page of the Prospectus forming a part of the Registration
Statement which resulted in such Losses. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the indemnifying party, on the one hand, or by the
indemnified party, on the other hand. The parties agree that it would not be
just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 6, each person who controls a Holder within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of such Holder shall have the same rights to contribution as such Holder,
and each person who controls the Issuers within the meaning of either the Act
or the Exchange Act, each officer of the Issuers who shall have signed the
Registration Statement and each director of the Issuers shall have the same
rights to contribution as the Company or the Subsidiary Guarantors
respectively, subject in each case to the applicable terms and conditions of
this paragraph (d).
(e) The provisions of this Section 6 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Issuers or any of the officers, directors or controlling persons referred
to in Section 6 hereof, and will survive the sale by a Holder of securities
covered by a Registration Statement.
<PAGE> 19
-19-
7. Miscellaneous.
(a) No Inconsistent Agreements. The Issuers have not, as of the
date hereof, entered into, nor shall any of them, on or after the date hereof,
enter into, any agreement with respect to their securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Issuers have obtained the
written consent of the Holders of at least a majority of the then outstanding
aggregate principal amount of Securities (or, after the consummation of any
Exchange Offer in accordance with Section 2 hereof, of New Securities);
provided that, with respect to any matter that directly or indirectly affects
the rights of any Initial Purchaser hereunder, the Issuers shall obtain the
written consent of each such Initial Purchaser against which such amendment,
qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by the Majority Holders,
determined on the basis of securities being sold rather than registered under
such Registration Statement.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand- delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
holder to the Issuers in accordance with the provisions of this Section
7(c), which address initially is, with respect to each Holder, the address
of such Holder maintained by the Registrar under the Indenture;
(2) if to you, initially at the respective addresses set forth in
the Purchase Agreement; and
(3) if to the Issuers, initially at the address of the Company set
forth in the Purchase Agreement with copies as indicated therein.
<PAGE> 20
-20-
All such notices and communications shall be deemed to have been duly
given when received.
The Initial Purchasers or the Issuers by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent
by the Issuers thereto, subsequent Holders of Securities and/or New Securities.
The Issuers hereby agree to extend the benefits of this Agreement to any Holder
of Securities and/or New Securities and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in said State.
(h) Severability. In the event that any one of more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Issuers, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
or New Securities is required hereunder, Securities or New Securities, as
applicable, held by the Issuers or their Affiliates (other than subsequent
Holders of Securities or New Securities if such subsequent Holders are deemed
to be Affiliates solely by reason of their holdings of
<PAGE> 21
-21-
such Securities or New Securities) shall not be counted in determining whether
such consent or approval was given by the Holders of such required percentage.
<PAGE> 22
-22-
Please confirm that the foregoing correctly sets forth the agreement
between the Issuers and you.
Very truly yours,
BUCYRUS INTERNATIONAL, INC.
By: /s/ Daniel J. Smoke
----------------------------
Name: Daniel J. Smoke
Title: Vice President and
Chief Financial Officer
BOONVILLE MINING SERVICES, INC.
By: /s/ Craig R. Mackus
----------------------------
Name: Craig R. Mackus
Title: Vice President-Treasurer
and Assistant Secretary
MINSERCO, INC.
By: /s/ Craig R. Mackus
----------------------------
Name: Craig R. Mackus
Title: Vice President-Treasurer
and Assistant Secretary
THE MARION POWER SHOVEL COMPANY
By: /s/ Craig R. Mackus
----------------------------
Name: Craig R. Mackus
Title: Vice President-Treasurer
and Assistant Secretary
<PAGE> 23
-23-
Accepted September 24, 1997
SALOMON BROTHERS INC
JEFFERIES & COMPANY, INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: SALOMON BROTHERS INC
By: /s/ Steve Cunningham
--------------------
Name: Steve Cunningham
Title: Associate
<PAGE> 24
ANNEX A
Annex A
Each broker-dealer that receives New Securities for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Securities received in exchange for Securities where such New Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Issuers have agreed that they will make this
Prospectus available to any broker-dealer for use in connection with any such
resale, starting on the Expiration Date (as defined herein) and ending on the
close of business 180 days thereafter (or such later date as may be required by
Section 3(b) herein). See "Plan of Distribution."
<PAGE> 25
ANNEX B
Annex B
Each broker-dealer that receives New Securities for its own account in exchange
for Securities, where such Securities were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Securities. See "Plan of Distribution."
<PAGE> 26
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Issuers have agreed
that, starting on the Expiration Date and ending on the close of business on
the 180th day after the Expiration Date, they will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until __________, ____, all dealers
effecting transactions in the New Securities may be required to deliver a
prospectus.
The Issuers will not receive any proceeds from any sale of New
Securities by broker-dealers. New Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the- counter market, in negotiated
transactions, through the writing of options on the New Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Securities. Any broker-dealer that resells New Securities that were received
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such New Securities may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
of any such resale of New Securities and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Securities) other than commissions or concessions
<PAGE> 27
of any brokers or dealers and will indemnify the holders of the Securities
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
If applicable, add information required by Regulation S-K Items 507
and/or 508.
<PAGE> 28
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ____________________________________
Address: __________________________________
__________________________________
Rider B
If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of New
Securities. If the undersigned is a broker-dealer that will receive New
Securities for its own account in exchange for securities, it represents that
the Securities to be exchanged for New securities were acquired by it as a
result of market-making activities or other trading activities and acknowledges
that it will deliver a prospectus in connection with any resale of such New
Securities; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
<PAGE> 1
EXHIBIT 21.1
CURRENT SUBSIDIARIES OF BUCYRUS INTERNATIONAL, INC.
Bucyrus Europe Holdings, Ltd.
-Bucyrus Europe Limited
-White line Plant Ltd.
Wisconsin Holdings Pty. Ltd.
-Bucyrus (Australia) Proprietary Ltd.
Boonville Mining Services, Inc.
Bucyrus (Africa) (Proprietary) Limited
Bucyrus (Brasil) Ltda.
Bucyrus International (Chile) Limitada
Bucyrus Canada Limited
Bucyrus India Private Limited
Bucyrus (Mauritius) Limited
Minserco, Inc.
Von's Welding, Inc.
Western Gear Machinery Co.
-Equipment Assurance Limited
BWC Gear, Inc.
-BWP Gear, Inc.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Bucyrus International,
Inc. on Form S-4 of our report dated April 10, 1995, appearing in the
Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Independent Auditors"
in such Prospectus.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
October 30, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made part of this
registration statement.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
October 30, 1997
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as
Trustee
Check if an Application to Determine
Eligibility of a Trustee Pursuant to Section
305(b)(2)_________
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(I.R.S. Employer
(State of Incorporation) Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Daniel G. Donovan, Harris Trust and Savings Bank,
111 West Monroe Street, Chicago, Illinois, 60603
312-461-2908
(Name, address and telephone number for agent for service)
BUCYRUS INTERNATIONAL, INC.
(Name of Obligor)
Delaware 39-0188050
(I.R.S. Employer
(State of Incorporation) Identification No.)
1100 Milwaukee Avenue
South Milwaukee, Wisconsin 53172-0500
(Address of principal executive offices)
9 3/4% Senior Notes Due 2007
(Title of indenture securities)
<PAGE> 2
1. GENERAL INFORMATION. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164
West Jackson Boulevard, Chicago, Illinois; Federal Deposit
Insurance Corporation, Washington, D.C.; The Board of Governors
of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee as now in effect
which includes the authority of the trustee to commence business
and to exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in effect
and includes the authority of the Trustee to commence business and to
exercise corporate trust powers was filed in connection with the
Registration Statement of Louisville Gas and Electric Company, File No.
2-44295, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of Commercial Federal Corporation,
File No. 333-20711, and is incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 23rd day of October 1997.
HARRIS TRUST AND SAVINGS BANK
By: /s/ D.G. Donovan
---------------------
D. G. Donovan
Assistant Vice President
EXHIBIT A
The consents of the Trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents
that reports of examinations of said trustee by Federal and State
authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /s/ D. G. Donovan
---------------------
D. G. Donovan
Assistant Vice President
2
<PAGE> 4
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of June 30, 1997, as published in accordance with a
call made by the State Banking Authority and by the Federal Reserve Bank of the
Seventh Reserve District.
[HARRIS BANK LOGO]
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicage, Illinois. And Foreign and Domestic Subsidiaries, at the close of
business on June 30, 1997, a state banking institution organized and operating
under the banking laws of this State and a member of the Federal Reserve
System. Published in accordance with a call made by the Commissioner of Banks
and Trust Companies of the State of Illinois and by the Federal Reserve Bank of
this District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency
and coin.................................... $ 1,707,824
Interest bearing balances.................... $ 628,916
Securities:..........................................
a. Held-to-maturity securities $ 0
b. Available-for-sale securities $ 3,766,727
Federal funds sold and securities purchased under
agreements to resell in domestic offices of
the bank and of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds sold........................... $ 275,425
Securities purchased under agreements
to resell................................. $ 0
Loans and lease financing receivables:
Loans and leases, net of unearned income..... $8,346,198
LESS: Allowance for loan and lease losses.... $ 110,230
----------
Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b).. $ 8,235,968
Assets held in trading accounts...................... $ 164,281
Premises and fixed assets (including capitalized
leases).......................................... $ 199,292
Other real estate owned.............................. $ 524
Investments in unconsolidated subsidiaries and
associated companies............................. $ 69
Customer's liability to this bank on
acceptances outstanding.......................... $ 46,107
Intangible assets.................................... $ 287,575
Other assets......................................... $ 670,230
------------------------
TOTAL ASSETS $15,982,938
========================
</TABLE>
3
<PAGE> 5
<TABLE>
<S> <C> <C>
LIABILITIES
Deposits:
In domestic offices................................. $ 9,243,162
Non-interest bearing............................. $3,411,145
Interest bearing................................. $5,832,017
In foreign offices, Edge and Agreement
subsidiaries, and IBF's.......................... $ 1,738,871
Non-interest bearing............................. $ 34,386
Interest bearing................................. $1,704,485
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices
of the bank and of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds purchased, & securities sold
under agreements to repurchase.................. $ 2,985,911
Trading Liabilities
Other borrowed money:................................. 62,083
a. With remaining maturity of one year or less....... $ 244,781
b. With remaining maturity of more than one year..... $ 0
Bank's liability on acceptances executed and
outstanding......................................... $ 46,107
Subordinated notes and debentures..................... $ 325,000
Other liabilities..................................... $ 119,695
------------------------
TOTAL LIABILITIES $14,765,610
========================
EQUITY CAPITAL
Common stock.......................................... $ 100,000
Surplus............................................... $ 600,715
a. Undivided profits and capital reserves............ $ 534,395
b. Net unrealized holding gains (losses) on
available-for-sale securities................... $ (17,782)
------------------------
TOTAL EQUITY CAPITAL $ 1,217,328
========================
Total liabilities, limited-life preferred stock,
and equity capital................................. $15,982,938
========================
</TABLE>
I, Steve Neudecker, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
STEVE NEUDECKER
7/30/97
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and, to the best of
our knowledge and belief, has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
the Commissioner of Banks and Trust Companies of the State of Illinois and is
true and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
RICHARD JAFFEE
Directors.
4
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 11,350
<SECURITIES> 0
<RECEIVABLES> 54,801
<ALLOWANCES> (530)
<INVENTORY> 74,587
<CURRENT-ASSETS> 145,299
<PP&E> 47,060
<DEPRECIATION> (9,421)
<TOTAL-ASSETS> 198,513
<CURRENT-LIABILITIES> 62,778
<BONDS> 68,339
0
0
<COMMON> 105
<OTHER-SE> 40,962
<TOTAL-LIABILITY-AND-EQUITY> 198,513
<SALES> 143,762
<TOTAL-REVENUES> 144,377
<CGS> 116,261
<TOTAL-COSTS> 116,261
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,956
<INCOME-PRETAX> 5,815
<INCOME-TAX> 2,392
<INCOME-CONTINUING> 3,423
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,423
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
