SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 2)
File by the registrant (x)
Filed by party other than the registrant ( )
Check the appropriate box:
(x) Preliminary proxy statement
( ) Definitive proxy statement
( ) Definitive additional materials
( ) Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
______________________________Terex Corporation______________________________
(Name of Registrant as Specified in Its Charter)
______________________________Terex Corporation______________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
(x) $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11: *
(4) Proposed maximum aggregate value of transaction:
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
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Preliminary Copy -
For Information of the
Securities and Exchange
Commission Only
TEREX CORPORATION
500 Post Road East
Westport, Connecticut 06880
Telephone (203) 222-7008
February __, 1994
Dear Stockholder:
Terex Corporation (the "Company") is soliciting your consent to the issuance of
89,800 shares of its Series B Cumulative Redeemable Convertible Preferred
Stock, par value $.01 per share, and 89,800 of its Common Stock Purchase
Warrants to certain executives of KCS Industries, L.P., a Connecticut limited
partnership ("KCS"), in connection with the proposed termination of the
management agreement dated July 1, 1987, as amended, between the Company and
KCS (the "Management Contract"). The termination is part of the Company's plan
to integrate the management functions provided by KCS pursuant to the
Management Contract directly into the Company. Certain stockholders of the
Company, having the power to vote a majority of the shares of outstanding
common stock, have advised the Company that they intend to consent to this
matter. As a result, approval of the matter is assured. Nevertheless, your
consent is being sought to give all stockholders the opportunity to vote on
this matter pursuant to the requirements of the New York Stock Exchange.
To assure that your consent will be included, please complete, date and sign
the enclosed consent form and return it promptly in the enclosed prepaid
envelope. The period for solicitation of consents will terminate at 5:00 p.m.,
New York City time, on March __, 1994. You may revoke your consent in the
manner described in the accompanying Consent Solicitation Statement by delivery
of a notice of revocation at any time prior to March __, 1994.
Sincerely,
Ronald M. DeFeo
President
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Preliminary Copy -
For Information of the
Securities and Exchange
Commission Only
TEREX CORPORATION
500 Post Road East
Westport, Connecticut 06880
Telephone (203) 222-7008
CONSENT SOLICITATION STATEMENT
Terex Corporation (the "Company") is soliciting the consent of the holders of
common stock, $.01 par value per share (the "Common Stock"), of the Company
(the "Terex Stockholders") to the issuance (the "Issuance") of 89,800 shares of
its Series B Cumulative Redeemable Convertible Preferred Stock, par value $.01
per share (the "Preferred Stock"), and 89,800 of its Common Stock Purchase
Warrants (the "Warrants"; together with the Preferred Stock, the "Securities")
to certain executives of KCS Industries, L.P., a Connecticut limited
partnership ("KCS"), in connection with the proposed termination of the
management agreement dated July 1, 1987, as amended, between the Company and
KCS (the "Management Contract"). The termination is part of the Company's plan
to integrate the management functions provided by KCS pursuant to the
Management Contract directly into the Company, all as more fully described in
the section entitled "The Issuance -- Termination of the Management Contract."
The consent of Terex Stockholders holding a majority of the shares of Common
Stock outstanding as of the close of business on February __, 1994 is required
for the approval of the Issuance. Abstentions and broker non-votes (shares
held by brokers and not voted) will not be considered to have been voted for
the approval of the Issuance. Holders of a majority of the shares of Common
Stock have advised the Company that they intend to approve the Issuance. As a
result of the foregoing, approval of the Issuance is assured. See "Stock
Ownership Information" below. Nevertheless, this consent is being sought to
give all Terex Stockholders the opportunity to vote on this matter pursuant to
the requirements of the New York Stock Exchange.
The period for solicitation of consents will terminate at 5:00 p.m., New York
City time, on March __, 1994. An executed consent may be revoked at any time
by written revocation thereof executed and delivered to the Company, at the
office of the Secretary, Terex Corporation, 500 Post Road East, Westport,
Connecticut 06880, prior to 5:00 p.m., New York City time, on March __, 1994.
A revocation may be in any written form (including a substitute Consent Form
providing for consent to be withheld), provided that it clearly states that the
consent is no longer effective.
All Terex Stockholders of record at the close of business on February __, 1994
are entitled to receive this Consent Solicitation Statement and to give or
withhold their consent. As of February __, 1994, the Company had _________
shares of Common Stock outstanding, and each share is entitled to one vote on
the matter to be voted upon.
This Consent Solicitation Statement and the accompanying Consent Form are being
mailed to Terex Stockholders on or about February __, 1994. This solicitation
of consents is being made by the Company and the Company will bear the cost of
the solicitation. In addition to solicitation by mail, the Company may request
banks, brokers and other custodian nominees and fiduciaries to supply
solicitation material to the beneficial owners of the Common Stock of whom they
have knowledge, and, if so, will reimburse them for their reasonable expenses
in so doing.
THE ISSUANCE
Termination of the Management Contract
Terex Stockholders are being asked to approve the issuance of 89,800 shares of
Preferred Stock and 89,800 Warrants to Randolph W. Lenz, David J. Langevin and
Marvin B. Rosenberg, executives of KCS, in connection with the proposed
termination of the Management Contract. Pursuant to the terms of the
Management Contract, KCS and its employees have provided administrative,
financial, marketing, technical, real estate and legal services to the Company
and its subsidiaries, and also provided assistance in the evaluation,
negotiation and consummation of potential acquisitions of other companies,
products and processes, as well as the development of new areas of business for
the Company. For the services of KCS pursuant to the Management Contract, the
Company paid KCS an annual fee, plus the reimbursement of all out-of-pocket
expenses incurred by KCS in fulfilling the Management Contract. During 1993,
the Company made payments to KCS for fees and out-of-pocket expenses of $2.9
million and $0.1 million, respectively. During 1992, the Company made payments
to KCS for fees and out-of-pocket expenses of $2.8 million and $0.2 million,
respectively. Currently, under the existing Management Contract, payments of
$3.4 million would be due to KCS for the period commencing January 1, 1994
through the earliest termination date, June 30, 1995.
During 1993, the Board of Directors of the Company (the "Board") concluded that
it would be in the Company's best interest to terminate the Management Contract
and integrate the management functions provided by KCS directly into the
Company. The Board adopted resolutions to this effect and appointed a Special
Committee of the Board (the "Special Committee"), consisting of the two outside
directors making up the Compensation Committee of the Board together with
another outside director who was also a member of the Board's Audit Committee,
to develop a plan to implement this change. The Special Committee developed
such a plan and then negotiated an agreement to such effect with KCS (the
"Termination Agreement"). The Special Committee engaged a compensation
consulting firm to advise it as to appropriate settlement compensation
negotiated with KCS with respect to the balance of the Management Contract and
as to appropriate compensation for any KCS executives who might join the
Company as employees.
Pursuant to the Termination Agreement, the Company suspended the management
services provided by KCS to the Company pursuant to the Management Contract
effective as of the close of business on December 31, 1993, with the Management
Contract to finally terminate upon approval of the Issuance by the Terex
Stockholders. Accordingly, KCS now provides no services to the Company
thereunder; provided, however, that if the Terex Stockholders do not approve
the Issuance, the Management Contract will be reinstated in full force and
effect and KCS will again provide such services to the Company, and receive
compensation therefor, as provided in the Management Contract, although in such
case the Company will continue to endeavor to achieve an alternate agreement to
terminate the Management Contract. Effective January 1, 1994, Messrs. Langevin
and Rosenberg, executives of KCS, accepted employment with the Company to
continue to perform the management functions they formerly provided to the
Company pursuant to the Management Contract, with Mr. Langevin becoming
Executive Vice President of the Company and Mr. Rosenberg, a director of the
Company, becoming Senior Vice President of the Company and continuing to serve
as Secretary and General Counsel of the Company. In addition, Mr. Lenz, a
director, Chairman of the Board and Chief Executive Officer of the Company and
the principal shareholder of KCS, agreed to continue to provide his services to
the Company. Mr. Lenz is also the owner of approximately 49.1% of the
outstanding Common Stock of the Company (prior to giving effect to the
Issuance). See "Ownership of Management and Principal Stockholders."
In consideration of the agreement of KCS to the suspension and eventual early
termination of the Management Contract, and as appropriate and reasonable
compensation in satisfaction of the value of the Management Contract over its
remaining unexpired term through June 30, 1995, the Company, subject to the
approval of the Terex Stockholders, has agreed to the Issuance of the
Securities to the three executives designated by KCS. Messrs. Langevin and
Rosenberg would each receive 25,500 shares of Preferred Stock and 25,500
Warrants and Mr. Lenz would receive 38,800 shares of Preferred Stock and 38,800
Warrants.
The Termination Agreement, coupled with the Issuance, permits the Company to
obtain substantially all of the benefits of the Management Contract without the
expenditure of all of the cash required to be paid out under the terms and
provisions of the Management Contract. The Termination Agreement and Issuance
would require the Issuance of the Securities, with each share of Preferred
Stock being valued at $23.00 per share and each Warrant being valued at $2.00
per Warrant, which is equal to the respective cash consideration per share and
per Warrant paid by investors in the Company's private placement of Series A
Cumulative Redeemable Convertible Preferred Stock, par value $.01 per share
(the "Series A Stock"), and common stock purchase warrants (the "Private
Placement Warrants") consummated on December 20, 1993. The Securities so
valued ($2.2 million) represent a discount from the $3.4 million payable to KCS
under the remaining term of the Management Contract. The amount due for the
remaining term of the Management Contract would be equivalent to 135,360 shares
of Series A Preferred Stock and Warrants as contrasted to the 89,800 shares of
Preferred Stock and Warrants proposed to be issued. The terms of the Preferred
Stock are substantially similar to those of the Series A Stock, although the
Preferred Stock would be junior in payment of dividends and liquidation
preference to the Series A Stock. The terms of the Warrants are substantially
similar to the terms of the Private Placement Warrants. See "-- The
Securities."
Mr. Langevin previously served as acting Chief Financial Officer of the Company
beginning March 9, 1993. Mr. Rosenberg has been a director of the Company
since 1992 and has served as the Secretary and General Counsel of the Company
since 1987. However, prior to January 1, 1994, Messrs. Langevin and Rosenberg
have never been employed by the Company and have never received any
compensation from the Company, but rather have been providing their services to
the Company based only upon their relationships with KCS. Mr. Langevin has
been a Vice President of KCS since 1988 and Mr. Rosenberg has been General
Counsel of KCS since 1987.
The Securities
The Preferred Stock
The Board is authorized to issue up to 10,000,000 shares of preferred stock,
par value $.01 per share, in one or more series, with such designations,
powers, preferences and rights of such series and the qualifications,
limitations or restrictions thereon, including, but not limited to, the fixing
of dividend rights, dividend rates, conversion rights, voting rights, rights
and terms of redemption (including sinking fund provisions), the redemption
price or prices, and the liquidation preferences, in each case, if any, as the
Board may by resolution determine, without any further vote or action by the
Terex Stockholders.
By resolution adopted January 24, 1994, subject to the approval of the Issuance
by the Terex Stockholders, the Board authorized the issuance of a series of
preferred stock consisting of 89,800 shares, designated Series B Cumulative
Redeemable Convertible Preferred Stock, par value $.01 per share, and fixed the
terms of such Preferred Stock. The following is a summary of the terms and
provisions of the Preferred Stock.
Liquidation Preference. In the event of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, subject
to the prior preferences and other rights of any stock ranking senior to the
Preferred Stock in respect of the right to receive assets upon liquidation,
including the Series A Stock, but before any distribution or payment shall be
made to the holders of Common Stock or any other stock ranking junior to the
Preferred Stock upon liquidation, the holders of the Preferred Stock shall be
entitled to be paid, out of the assets of the Company available for
distribution to its stockholders, a liquidation preference, initially equal to
$25.00 per share, plus all accrued and unpaid dividends thereon to such date,
in cash. During the period commencing on the date of issuance of the Preferred
Stock and the Warrants (the "Issue Date") and ending on the Dividend Payment
Date (as defined below) immediately preceding the first Dividend Payment Date
on which the Company is permitted to declare and pay cash dividends on the
Preferred Stock under the indentures and loan agreements of the Company as in
effect on the Issue Date (the "Accretion Termination Date"), the liquidation
preference will accrete at the rate of 13% per annum, compounded quarterly,
until the fifth anniversary of the Issue Date, and at the rate of 18% per
annum, compounded quarterly, thereafter.
Dividends. Subject to the prior preferences and other rights of any stock
ranking senior to the Preferred Stock with respect to the payment of dividends,
including the Series A Stock, holders of shares of the Preferred Stock are
entitled to receive, when and as declared by the Board, out of funds legally
available for the payment of dividends, cumulative cash dividends that will
accrue from the Accretion Termination Date at the rate of (a) 13% per annum
from the Accretion Termination Date through the fifth anniversary of the Issue
Date and (b) 18% per annum thereafter. Such dividends are cumulative and shall
be payable in cash, quarterly, in arrears, when and as declared by the Board of
Directors, on March 31, June 30, September 30 and December 31 of each year
(each, a "Dividend Payment Date") commencing on the first Dividend Payment Date
following the Accretion Termination Date. Each such dividend shall be paid to
the holders of record of the Preferred Stock as their names appear on the share
register of the Company at the close of business on the applicable record date,
which shall be the 15th day of the calendar month in which the applicable
Dividend Payment Date falls or such other record date designated by the Board
with respect to the dividend payable on such respective Dividend Payment Date.
If full cash dividends are not paid or made available to the holders of all
outstanding shares of Preferred Stock and of any stock ranking on a parity with
the Preferred Stock in respect of the right to receive dividends, and funds
available are insufficient to permit payment in full in cash to all such
holders of the preferential amounts to which they are then entitled, the entire
amount available for payment of cash dividends shall be distributed among the
holders of the Preferred Stock and of any such parity stock, ratably in
proportion to the full amount to which they would otherwise be respectively
entitled, and any remainder not paid in cash to the holders of the Preferred
Stock shall cumulate, whether or not earned or declared, with additional
dividends thereon for each succeeding full Dividend Period during which such
dividends shall remain unpaid. Unpaid dividends for any period less than a
full Dividend Period shall cumulate on a day-to-day basis and shall be computed
on the basis of a 360-day year.
So long as any shares of Preferred Stock shall be outstanding, the Company
shall not declare or pay on any stock ranking junior to the Preferred Stock in
respect of the right to receive dividends any dividend whatsoever, whether in
cash, property or otherwise (other than dividends payable in shares of the
class or series upon which such dividends are declared or paid), nor shall the
Company make any distribution on any such junior stock, nor shall any such
junior stock be purchased or redeemed by the Company or any subsidiary of the
Company, nor shall any monies be paid or made available for a sinking fund for
the purchase or redemption of any such junior stock; provided that from and
after the Accretion Termination Date, the Company may declare and pay cash
dividends on such junior stock so long as (i) all dividends to which the
holders of Preferred Stock shall have been entitled for all previous dividend
periods shall have been declared and paid and (ii) on or prior to the later of
(x) the third anniversary of the Issue Date and (y) the first anniversary of
the Accretion Termination Date, the Company will not pay dividends on the
Common Stock during any 12 month period exceeding 4% of the Current Market
Price (as hereinafter defined) per share of the Common Stock on the trading day
immediately prior to the declaration of any cash dividend.
Redemption. Prior to December 31, 1994, the Preferred Stock may be redeemed in
whole, but not in part, at a per share redemption price equal to the
liquidation preference per share on the date of redemption plus all accrued but
unpaid dividends thereon to and including the date of redemption; provided,
that concurrently with such redemption the Corporation redeems all Warrants
then outstanding. See "-- The Warrants."
On and after December 31, 1994, the Preferred Stock may be redeemed by the
Company at any time in whole or (except as noted below) from time to time, in
part, at the option of the Company, at a per share redemption price equal to
the liquidation preference per share on the date of redemption plus all accrued
but unpaid dividends thereon to and including the date of redemption. If less
than all of the outstanding shares of Preferred Stock are to be redeemed, such
shares shall be redeemed pro rata or by lot as determined by the Board in its
sole discretion. The Company shall not redeem less than all of the outstanding
shares of Preferred Stock unless all cumulative dividends on the Preferred
Stock for all previous dividend periods have been paid or declared and funds
therefor set apart for payment.
The Company shall redeem all then outstanding shares of Preferred Stock on or
prior to December 31, 2000 at a per share redemption price equal to the
liquidation preference per share on the date of redemption plus all accrued but
unpaid dividends thereon to and including the date of redemption.
Notice of every proposed redemption of Preferred Stock shall be sent by or on
behalf of the Company, by first class mail, postage prepaid, to the holders of
record of the shares of Preferred Stock so to be redeemed at their respective
addresses as they shall appear on the records of the Company, not less than
thirty (30) days nor more than sixty (60) days prior to the date fixed for
redemption (the "Redemption Date") (i) notifying such holders of the election
or obligation of the Company to redeem such shares of Preferred Stock and of
the Redemption Date, (ii) stating the place or places at which the shares of
Preferred Stock called for redemption shall, upon presentation and surrender of
the certificates evidencing such shares of Preferred Stock, be redeemed, and
the redemption price therefor, and (iii) stating the name and address of any
redemption agent selected by the Company and the name and address of the
Corporation's transfer agent for the Preferred Stock.
Voting. Except as set forth below or as otherwise required by law, the holders
of the issued and outstanding shares of Preferred Stock shall have no voting
rights.
So long as any Preferred Stock is outstanding, the Company, without first
obtaining the affirmative vote or written consent of the holders of not less
than a majority of the then outstanding shares of Preferred Stock, voting
separately as a class, will not: (i) amend or repeal any provision of, or add
any provision to, the Company's Certificate of Incorporation or By-laws if such
action would alter adversely or change the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, any Preferred
Stock, or increase or decrease the number of shares of Preferred Stock
authorized; (ii) authorize or issue shares of any class or series of stock
ranking senior to the Preferred Stock (or, prior to the Warrant Ratio
Determination Date, as defined below, any stock ranking on a parity with the
Preferred Stock) in respect of the right to receive dividends or assets upon
liquidation; (iii) reclassify any class or series of any junior stock into such
parity stock or senior stock or reclassify any series of parity stock into
senior stock; or (iv) authorize, enter into, or consummate any transaction that
would constitute a deemed dividend to holders of the Preferred Stock under
United States Federal tax laws.
Conversion Right. Each holder of shares of Preferred Stock has the right, at
such holder's option, at any time or from time to time, to convert any of such
shares of Preferred Stock into the number fully paid and nonassessable shares
of Common Stock determined by dividing (i) $25.00 by (ii) the Conversion Price,
initially $11.11 and subject to adjustment as set forth below, in effect on the
date of conversion. The Conversion Price is subject to adjustment to prevent
dilution in the event of (i) dividends or other distributions of Common Stock,
(ii) subdivision and combinations of outstanding shares of Common Stock, (iii)
dividends or other distributions of rights or warrants entitling the holders
thereof to subscribe for or purchase, during a period not exceeding 45 days
from the date of such dividend or other distribution, Common Stock at a price
per share less than the Current Market Price of the Common Stock, (iv)
dividends or other distributions of other securities, evidences of its
indebtedness or other assets, excluding any cash dividend or cash distribution
payable out of earned surplus of the Company if the per share amount of such
dividend or distribution, together with the aggregate per share amount of all
other cash dividends and cash distributions declared or paid during the one
year period ending on the date such dividend is declared (the "Declaration
Date") does not exceed 4% of the Current Market Price per share of Common Stock
on the trading day immediately prior to the Declaration Date, or (v) issuances
by the Company of any Common Stock (or securities convertible into or
exercisable for Common Stock) for a consideration per share less than the
Current Market Price per share of Common Stock on the date of such issuance,
subject to certain exceptions.
Reorganizations. In case of (a) any consolidation with or merger of the
Company with or into another corporation, (b) the occurrence of any other
transaction or event pursuant to which all or substantially all of the Common
Stock is exchanged for, converted into, or acquired for, or constitutes solely
the right to receive, cash securities, property or other assets (whether by
exchange offer, liquidation, tender offer or otherwise) or (c) the sale, lease
or other transfer of all or substantially all of the assets of the Company,
each share of Preferred Stock shall after the date of such transaction be
convertible into the number of shares of stock or other securities or property
(including cash) to which the Common Stock issuable (at the time of such
transaction) upon conversion of such share of Preferred Stock would have been
entitled upon such transaction.
Reservation of Shares; Valid Issuance; Approvals. The Company shall (i)
reserve at all times so long as any shares of Preferred Stock remain
outstanding, free from preemptive rights, out of its treasury stock (if
applicable) or its authorized but unissued shares of Common Stock, or both,
solely for the purpose of effecting the conversion of the shares of Preferred
Stock, sufficient shares of Common Stock to provide for the conversion of all
outstanding shares of Preferred Stock, (ii) take all necessary action so that
all shares of Common Stock that are issued upon conversion of the shares of the
Preferred Stock will, upon issuance, be duly and validly issued, fully paid and
nonassessable, and (iii) take no action which will cause a contrary result
(including, without limitation, any action that would cause the Conversion
Price to be less than the par value, if any, of the Common Stock).
If any shares of Common Stock reserved for the purpose of conversion of shares
of Preferred Stock require registration with or approval of any governmental
authority under any Federal or state law before such shares may be validly
issued or delivered upon conversion, then the Corporation will in good faith
and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be. If, and so long as, any Common Stock into which
the shares of Preferred Stock are then convertible is listed on any national
securities exchange, the Corporation will, if permitted by the rules of such
exchange, list and keep listed on such exchange, upon official notice of
issuance, all shares of such Common Stock issuable upon conversion.
The Warrants
The following is a summary of the terms and provisions of the Warrants and the
proposed Warrant Agreement between the Company and Mellon Securities Trust
Company, as Warrant agent.
Term. Each Warrant may be exercised by the registered holder thereof at any
time in whole and from time to time in part, at the option of the holder,
commencing at the opening of business on the day following the Warrant Ratio
Determination Date until 5:00 p.m. New York time on December 31, 2000 (the
"Expiration Date"). "Warrant Ratio Determination Date" means the date
designated as such by the Board pursuant to a duly adopted resolution of the
Board, which date shall be a trading day during the 12 month period beginning
on the Issue Date or, if no such date is designated, the last day of such 12
month period; provided, that if the Board has not yet designated a Warrant
Ratio Determination Date and the Current Market Price of a share of Common
Stock equals or exceeds $18.00 per share on any date during such 12 month
period, the "Warrant Ratio Determination Date" will be such date.
A Warrant may be exercised upon (i) surrender of the Warrant certificate at the
principal office of the Warrant agent, with the form of election to purchase on
the reverse thereof duly completed and signed and (ii) payment of the Exercise
Price (as hereinafter defined) with respect to the shares of Common Stock being
purchased, payable by certified or bank check to the order of the Company.
Warrant Ratio. Upon the exercise or redemption (see "-Redemption" below) of a
Warrant, the holder thereof shall be entitled to receive the number of shares
of Common Stock and other consideration, if any (the "Warrant Ratio"), equal to
(a) 3.0 shares of Common Stock if the Current Market Price of a share of Common
Stock on the Warrant Ratio Determination Date is $5.00 or less; (b) a number of
shares of Common Stock which decreases from 3.0 shares to 1.0 share with the
increase in such Current Market Price per share from $5.00 to $18.00, if such
Current Market Price per share is greater than $5.00 but less than $18.00, as
set forth in the schedule below; and (c) 1.0 share of Common Stock if such
Current Market Price per share is $18.00 or more.
Current Market Price Warrant Ratio
$ 5.00 or less 3.00
$ 5.50 2.75
$ 6.00 2.53
$ 6.50 2.36
$ 7.00 2.20
$ 7.50 2.07
$ 8.00 1.95
$ 8.50 1.85
$ 9.00 1.76
$ 9.50 1.68
$10.00 1.60
$10.50 1.54
$11.00 1.48
$11.50 1.42
$12.00 1.37
$12.50 1.33
$13.00 1.28
$13.50 1.24
$14.00 1.21
$14.50 1.17
$15.00 1.14
$15.50 1.11
$16.00 1.08
$16.50 1.06
$17.00 1.03
$17.50 1.01
$18.00 or more 1.00
"Current Market Price" per share of Common Stock on any day means the average
of the daily closing prices with respect to the Common Stock for the 30
consecutive trading days ending on such date (or, if such date is not a trading
day, on the trading day immediately preceding such date); provided, that if the
Common Stock is not publicly traded, the Current Market Price per share shall
be determined by a nationally recognized investment banking firm selected by
the Board.
Exercise Price. The Warrants are exercisable for $.01 per share of Common
Stock (the "Exercise Price") in the case of Common Stock and in the case of all
other securities issuable upon exercise of the Warrants, for the lowest
exercise price permitted by law.
Redemption. The Warrants may be redeemed by the Company in whole, but not in
part, in exchange for shares of Common Stock at any time on or after the
Warrant Ratio Determination Date; provided, that concurrently with such
redemption the Company redeems all then outstanding shares of Preferred Stock.
Each Warrant will be redeemable for a number of shares of Common Stock equal to
the Warrant Ratio on the date of redemption.
Notice of redemption of the Warrants shall be sent by or on behalf of the
Company to the holders not less than 30 days nor more than 60 days prior to the
date fixed for redemption (i) notifying the holders of the election of the
Company to redeem the Warrants and of the date of redemption, (ii) stating the
place or places at which the Warrants shall, upon presentation and surrender of
certificates evidencing such Warrants, be redeemed, and the number of shares of
Common Stock deliverable upon the redemption thereof, and (iii) stating the
name and address of the Warrant agent and the redemption agent.
Adjustments. The Warrants contain certain provisions that, commencing with the
occurrence of the Warrant Ratio Determination Date, protect the holders thereof
against dilution by adjustment of the Warrant Ratio in the event of (i)
dividends or other distributions of Common Stock, (ii) subdivisions and
combinations of outstanding shares of Common Stock, (iii) dividends or other
distributions of rights or warrants entitling the holders thereof to subscribe
for or purchase, during a period not exceeding 45 days from the date of such
dividend or other distribution, shares of Common Stock at a price per share
less than the Current Market Price per share of Common Stock, or (iv) issuances
by the Company of any Common Stock (or securities convertible into or
exercisable for Common Stock) for a consideration per share less than the
Current Market Price of the Common Stock on the date of such issuance, subject
to certain exceptions.
In addition, if the Company shall declare a dividend or other distribution on
its Common Stock that would not cause such an adjustment consisting of (i)
securities other than Common Stock, (ii) evidences of its indebtedness, or
(iii) assets (including cash dividends or distributions) (collectively,
"Assets"), then in each such case adequate provision shall be made so that each
holder of Warrants shall receive, without charge, concurrently with the making
of such dividend or distribution, the amount and kind of such Assets that such
holder would have received if such holder had, immediately prior to the
relevant record date, exercised its Warrants.
On or prior to each day on which the Warrant Ratio is adjusted, the Company
shall promptly direct the Warrant agent, and the Warrant agent shall send to
each holder, notice of such adjustment and shall deliver to the Warrant Agent a
certificate of a firm of independent public accountants selected by the Board
(who may be the regular accountants employed by the Company) setting forth the
number of shares of Common Stock purchasable upon the exercise of each Warrant
and the Warrant Ratio after such adjustment, a brief statement of the facts
requiring such adjustment, and the computation by which such adjustment was
made.
Reorganizations. In case of (a) any consolidation or merger of the Company
with or into another corporation, (b) the occurrence of any other transaction
or event pursuant to which all or substantially all of the Common Stock is
exchanged for, converted into, or acquired for, or constitutes solely the right
to receive, cash securities, property or other assets (whether by exchange
offer, liquidation, tender offer or otherwise) or (c) the sale, lease or other
transfer of all or substantially all of the assets of the Company, there shall
thereafter be deliverable upon exercise of each Warrant (in lieu of the shares
of Common Stock theretofore deliverable), at the lowest exercise price
permitted by law, the number of shares of stock or other securities or property
to which a holder of the shares of Common Stock that would otherwise have been
deliverable upon the exercise of such Warrant would have been entitled upon
such transaction if such Warrant had been exercised in full immediately prior
to such transaction.
No Rights as Stockholders. Nothing contained in the Warrant Agreement or in
any of the Warrants confers upon the holders thereof or their transferees the
right to vote or to receive dividends or to consent or to receive notice as
stockholders in respect of any meeting of stockholders for the election of
directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company.
Transfer. The Warrants shall be transferable only on the Warrant register
maintained by the Warrant agent, upon delivery thereof, accompanied by a
written instrument or instruments of transfer in form reasonably acceptable to
the Warrant agent, duly executed by the registered holder or holders thereof or
by the duly appointed legal representative thereof or by a duly authorized
attorney. Upon any registration of transfer, the Warrant agent shall (a)
countersign and deliver a new Warrant certificate evidencing the Warrant or
Warrants to the persons entitled thereto and (b) cancel the surrendered Warrant
certificate.
Reservation of Shares; Governmental Approvals and Stock Exchange Listings. The
Company shall reserve at all times so long as any Warrants remain outstanding,
free from preemptive rights, out of its treasury stock (if applicable) or its
authorized but unissued shares of Common Stock, or both, solely for the purpose
of effecting the exercise of the Warrants, sufficient shares of Common Stock to
provide for the exercise of all outstanding Warrants, and take all necessary
action so that all shares of Common Stock that are issued upon exercise of the
Warrants will, upon issuance, be duly and validly issued, fully paid and
nonassessable.
The Company will use its best efforts to (a) obtain and keep effective any and
all permits, consents and approvals of governmental agencies and authorities
and to make securities acts filing under federal and state laws, that are
required in connection with the issuance, sale, transfer and delivery of the
Warrant certificates, the exercise or conversion of the Warrants, and the
issuance, sale, transfer and delivery of the shares of Common Stock issued upon
exercise or conversion of the Warrants, and (b) have the shares of Common Stock
issued upon exercise or conversion of the Warrants, immediately upon their
issuance, listed on such securities exchange on which the Common Stock is then
listed.
PRO FORMA FINANCIAL INFORMATION
Pro Forma Capitalization Table
The following table sets forth the capitalization of the Company at September
30, 1993 and pro forma giving effect to the Company's private placement of the
Series A Stock and the Private Placement Warrants (the "private placement" (i)
without giving effect to the Issuance and (ii) giving effect to the Issuance.
(In thousands)
Pro Forma Pro Forma
Without Giving Giving
Effect to the Effect to the
Actual Issuance (1) Issuance (2)
Notes payable and long-term debt
(including current portion):
Secured Notes $159,080 (3) $159,080 $159,080
Subordinated Notes 32,633 (4) 32,633 32,633
Lending Facilities 18,650 (5) 18,650 18,650
Other debt, including
notes payable 18,752 (6) 18,752 18,752
Total notes payable and
long term debt 229,115 229,115 229,115
Redeemable Convertible
Preferred Stock --- 10,328 11,181
Stockholders' investment
Common Stock Purchase Warrants --- 16,851 18,243
Common Stock 100 100 100
Additional paid-in capital 37,808 37,808 37,808
Retained deficit (81,326) (81,326) (83,571)
Pension liability
adjustment (4,452) (4,452) (4,452)
Foreign currency
translation adjustment (9,998) (9,998) (9,998)
Total stockholders'
investment (57,868) (41,017) (41,870)
Total capitalization $ 171,247 $198,426 $198,426
________________
(1) Presented as if 1,200,000 shares of the Series A Stock and 1,300,000
Private PlacementWarrants were issued, pursuant to the private placement, as
of September 30, 1993.
(2) Presented as if 89,800 shares of the Preferred Stock and 89,800 Warrants
were issued, pursuant to the Issuance, as of September 30, 1993.
(3) Represents $160.0 million principal amount of Senior Secured Notes due
1996 (of which $5.0 million were repurchased subsequent to September 30, 1993)
which bear interest at 13.0% and are payable August 1, 1996. The notes are
secured by substantially all inventory and property, plant and equipment of the
Company's Material Handling and Heavy Equipment Segments as well as the
Company's investment in common stock of Fruehauf Trailer Corporation.
(4) Represents $33.3 million principal amount of Senior Subordinated Notes
due 1997 which bear interest at 13.5%, are payable in equal annual installments
of approximately $8.3 million and are finally due July 1997. These notes are
secured by a secondary position in substantially the same assets which
collateralize the Senior Secured Notes.
(5) Represents borrowings under a Loan and Security Agreement entered into
with Foothill Capital Corporation on May 20, 1993 (the "Lending Facility").
The Lending Facility bears interest at a fluctuating rate (8.75% at September
30, 1993) based on the prime rate. The Lending Facility provides for
revolving credit loans and guarantees of letters of credit of up to $20.0
million and matures on August 24, 1995. Borrowings under the Lending Facility
are secured by a lien on substantially all of the Company's domestic cash and
accounts receivable.
(6) Includes term note issued to the seller in connection with the acquisition
of Clark Material Handling Company and affiliated companies, other term debt
and capital leases.
Pro Forma Income Statement and Net Income (Loss) per Share Information
The financial information set forth below for the year ended December 31, 1992
is that of the Company on a consolidated basis and has been derived from the
audited consolidated financial statements of the Company for that period. The
financial information for the nine months ended September 30, 1993 is that of
the Company on a consolidated basis and has been derived from unaudited
condensed consolidated financial statements for that period and, in the opinion
of management, includes all adjustments necessary for a fair presentation of
the financial condition and results of operations of the Company for such
period. Results for the nine month period are not necessarily indicative of
the results for the full year.
All pro forma income statement adjustments for the year ended December 31, 1992
and the nine months ended September 30, 1993 assume that the private placement
and the Issuance had each occurred on January 1, 1992. The pro forma income
statement data is not necessarily indicative of the results of operations the
Company would have achieved had such events occurred at the dates assumed or of
future results of the Company. The pro forma financial data should be read in
conjunction with the Company's historical consolidated financial statements and
notes thereto and unaudited historical interim condensed consolidated financial
statements and notes thereto.
The pro forma income statement adjustments included in the pro forma income
statement giving effect to the Issuance are (i) a charge of $2,245,000 in 1992
to reflect the Issuance, (ii) the elimination of the fees paid to KCS under the
Management Contract of $2,848,000 in 1992 and $2,314,000 in 1993 and (iii) the
inclusion of incremental expenses to be incurred by Terex, including salaries
and related expenses for KCS employees who became employees of Terex and rent
and office expenses, of $1,853,000 in 1992 and $1,078,000 in 1993. The Series
A Stock, Preferred Stock, Private Placement Warrants and Warrants are common
stock equivalents. However, these securities are not included in the
calculation of net loss per share because the effects would be anti-dilutive.
(In thousands)
Pro Forma Pro Forma
Without Giving Giving
Effect to the Effect to the
Actual Issuance (1) Issuance (2)
YEAR ENDED DECEMBER 31, 1992:
Net sales $523,355 $523,355 $523,355
Cost of goods sold 469,345 469,345 469,345
Gross profit 54,010 54,010 54,010
Engineering, selling and
administrative expenses 58,135 58,135 59,385
Loss from operations (4,125) (4,125) (5,375)
Interest and other income
(expense) - net (52,983) (52,983) (52,983)
Loss before income taxes (57,108) (57,108) (58,358)
Provision for income taxes 67 67 67
Net loss $(57,175) $(57,175) $(58,425)
Net loss per share $(5.75) $(5.75) $(5.87)
Weighted average common
shares 9,945 9,945 9,945
NINE MONTHS ENDED SEPTEMBER 30, 1993:
Net sales $519,510 $519,510 $519,510
Cost of goods sold 475,251 475,251 475,251
Gross profit 44,259 44,259 44,259
Engineering, selling and
administrative expenses 62,627 62,627 61,391
Loss from operations (18,368) (18,368) (17,132)
Interest and other income
(expense) - net (26,534) (26,534) (26,534)
Loss before income taxes (44,902) (44,902) (43,666)
Provision for income taxes 193 193 193
Net loss $(45,095) $(45,095) $(43,859)
Net loss per share $(4.53) $(4.53) $(4.41)
Weighted average common
shares 9,953 9,953 9,953
OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock by each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, each
director and executive officer of the Company, and all directors and executive
officers as a group, as of January [1], 1994, (i) without giving effect to the
Issuance, and (ii) as adjusted to give effect to the Issuance.
Amount Beneficially Amount Beneficially
Owned Without Giving Owned Giving
Effect to the Issuance Effect to the Issuance
Name and
Address of
Beneficial Percent Percent
Owner Amount of Class Amount of Class
Randolph W. Lenz (1) 5,061,537 (3) 49.13% 5,265,237(3)(4)50.11%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
The Airlie Group L.P.(2) 965,000 (5) 9.29% 965,000 (5)
9.29%
201 Main Street
Fort Worth, TX 76102
Dort A. Cameron, III (2) 971,000 (5) 9.34% 971,000 (5)
9.34%
c/o The Airlie Group L.P.
201 Main Street
Fort Worth, TX 76102
Thomas M. Taylor (2) 1,270,500 (5) 12.22% 1,270,500 (5)
12.22%
c/o The Airlie Group L.P.
201 Main Street
Fort Worth, TX 76102
EBD L.P. (2) 965,000 (5) 9.29% 965,000 (5)
9.29%
c/o The Airlie Group L.P.
201 Main Street
Fort Worth, TX 76102
TMT-FW, Inc. (2) 965,000 (5) 9.29% 965,000 (5)
9.29%
c/o The Airlie Group L.P.
201 Main Street
Fort Worth, TX 76102
G. Chris Andersen 0 * 0
*
1285 Avenue of the Americas
New York, NY 10019
Ronald M. DeFeo 3,000 * 3,000
*
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Bruce I. Raben 11,000 * 11,000
*
11100 Santa Monica Boulevard
Suite 1000
Los Angeles, CA 90025
Marvin B. Rosenberg 0 * 133,875 (4)
1.28%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
David A. Sachs (3) 10,000 * 10,000
*
201 Main Street
Suite 3200
Fort Worth, TX 76102
Adam E. Wolf 7,400 * 7,400
*
875 East Donges Lane
Milwaukee, WI 53217
David J. Langevin 5,400 * 139,275 (4)
1.33%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Ralph T. Brandifino 0 * 0
*
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
All directors and
executive officers
as a group
(9 persons) 5,098,337 49.48% 5,569,787
51.69%
* Amount owned does not exceed 1% of the class so owned.
(1) Mr. Lenz currently pledges, and intends to pledge in the future, shares
of Common Stock owned by him as collateral for loans. If Mr. Lenz does not
pay such loans when due, the pledgee may have the right to sell the shares of
Common Stock pledged to it in satisfaction of Mr. Lenz's obligations. The
sale of a significant amount of such pledged shares could result in a change
of control of the Company and may require the Company to make an offer to
purchase certain of its outstanding debt instruments.
(2) Dort A. Cameron, III and TMT-FW, Inc., a Texas corporation, are general
partners of EBD L.P., a Delaware limited partnership which is the sole general
partner of The Airlie Group L.P. ("Airlie"). Thomas M. Taylor is the
President, sole director and sole stockholder of TMT-FW, Inc. By reason of
such relationships, Messrs. Cameron and Taylor may each be deemed the
beneficial owner of the shares deemed beneficially owned by Airlie. On
December 22, 1993, each of the indicated individuals, together with certain
other persons, filed Amendment No. 9 to a Schedule 13D Statement filed
pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended,
reflecting the ownership of an aggregate of 1,255,500 shares of Common Stock,
40,000 shares of Series A Stock and 40,000 Private Placement Warrants, or
approximately 13.7% to 14.4% of all Common Stock, assuming the conversion of
such shares of Series A Stock and the exercise of such Private Placement
Warrants, only. Except as otherwise reflected in this table or the footnotes
thereto, each of the indicated individuals disclaims the beneficial ownership
of any shares held by any other party to such Schedule 13D filing.
(3) Mr. Lenz is the direct owner of 4,984,337 shares of Common Stock,
representing approximately 48.38% of the outstanding Common Stock. In
addition, Mr. Lenz is the indirect beneficial owner of 77,200 shares of Common
Stock through a corporation that he indirectly owns and controls.
(4) For each of Messrs. Lenz, Rosenberg and Langevin, the amount shown
assumes the conversion of the shares of Preferred Stock and the exercise of
the Warrants (assuming each Warrant is exercisable for three shares of Common
Stock) proposed to be issued to such person in the Issuance, but does not
assume the conversion of shares of Preferred Stock or the exercise of Warrants
proposed to be issued to any other such person.
(5) For each of The Airlie Group L.P., Dort A. Cameron, III, Thomas M.
Taylor, EBD L.P. and TMT-FW, Inc., assumes the conversion of the Series A
Stock owned by such beneficial owner, only, but does not assume the exercise
of any Private Placement Warrants owned by such beneficial owner.
------------------------------------------------------
By Order of the Board of Directors,
Ronald M. DeFeo
President
February __, 1994
- ------------------------------------------------------------------------------
Preliminary Copy -
For Information of the
Securities and Exchange
Commission Only
TEREX CORPORATION
CONSENT FORM
Consent to Proposed Issuance of Preferred Stock and Warrants
Solicited by the Board of Directors of Terex Corporation
The undersigned hereby consents, withholds consent or abstains as specified
below to the issuance of shares of preferred stock and common stock purchase
warrants of Terex Corporation (the "Company") to certain executives of KCS
Industries, L.P., as described in the Consent Solicitation Statement dated
February __, 1994.
Please be certain to indicate below whether you wish to consent, withhold
consent or abstain. If this card is executed but no choice is indicated, you
will be deemed to have consented.
The Consent Solicitation Statement contains important information regarding the
proposed issuance. The Board of Directors of the Company therefore recommends
that you do not execute this consent unless you have received and read a copy
of the Consent Solicitation Statement.
(Signature required on reverse side)
- -------------------------------------------------------------------------------
Consent, Withhold Consent or Abstain to Terex Corporation issuing shares of
preferred stock and common stock purchase warrants to certain executives of KCS
Industries, L.P.
CONSENT WITHHOLD CONSENT ABSTAIN
( ) ( ) ( )
Dated: ___________________, 1994
(Signature)
(Signature)
Please sign your name exactly as it
appears hereon. If signing for
estates, trusts, corporations or
partnerships, title or capacity should
be stated.
If shares are held jointly, each
holder should sign.
Please sign, date and return this
consent using the enclosed envelope.
