As filed with the Securities and Exchange Commission on December 6, 1995.
Registration No. 33-52711
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TEREX CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 3537 34-1531521
(State or other (Primary standard (I.R.S. employer
jurisdiction of industrial classification identification no.)
incorporation or code number)
organization)
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone number,
including area code, of Registrants' principal executive offices)
Marvin B. Rosenberg, Esq.
TEREX CORPORATION
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies To:
Robinson Silverman Pearce Aronsohn & Berman
1290 Avenue of the Americas
New York, New York 10104
Attention: Stuart A. Gordon, Esq., Eric I Cohen, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue
Los Angeles, California 90071
Attention: Michael A. Woronoff, Esq.
Approximate date of commencement of proposed sale to public:
From time to time after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1993, check the following box: [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant 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.
TEREX CORPORATION
Cross Reference Sheet
Pursuant to Item 501(b) of Regulation S-K Showing
Location in Prospectus of Information Required by Items in Form S-1
1. Forepart of Registration Statement Outside Front Cover Page of the
and Outside Front Cover Page Prospectus
of Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages of the Prospectus,
Additional Information
3. Summary Information/Risk Factors/ Prospectus Summary/Investment
Ratio of Earnings to Fixed Charges Considerations/Selected
Consolidated Financial Data
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Plan of Distribution
6. Dilution Not Applicable
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Outside Front Cover Page of the
Prospectus; Plan of Distribution
9. Description of Securities Description of Securities
to Be Registered
10. Interests of Named Experts Legal Matters; Experts
and Counsel
11. Information with Respect Outside Front Cover Page of the
to the Registrant Prospectus; Prospectus Summary;
The Company; Investment
Considerations; Market for Common
Stock and Dividend Policy;
Capitalization; Selected
Consolidated Financial
Information;
Management's Discussion and
Analysis of Financial Condition
and Results of Operations;
Business; Principal Stockholders;
Management; Certain Transactions;
Description of Securities
12. Disclosure of Commission Position Not Applicable
on Indemnification for Securities
Act Liabilities
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 6, 1995
1,200,000 Shares of Preferred Stock
2,700,000 Shares of Common Stock
TEREX CORPORATION
Preferred Stock and Common Stock
This Prospectus relates to the registration of (i) 1,200,000 shares of Series A
Cumulative Redeemable Convertible Preferred Stock, par value $.01 per share
(the "Preferred Stock"), of Terex Corporation, a Delaware corporation (the
"Company") and (ii) the shares of common stock, par value $.01 per share (the
"Common Stock"), issuable upon the conversion of the Preferred Stock (the
"Conversion Shares"). The Preferred Stock was issued by the Company, together
with 1,300,000 of the Company's common stock purchase warrants (the
"Warrants"), in a private placement effected on December 20, 1993 (the "Issue
Date"). All of the Preferred Stock and Conversion Shares are being registered
for resale by the holders thereof (the "Selling Security Holders") and the
Conversion Shares are also being registered for their issuance to the Selling
Security Holders upon their conversion of the Preferred Stock. See "Selling
Security Holders." The Company will not receive any of the proceeds from the
resale by the Selling Security Holders of the Preferred Stock or the Conversion
Shares nor from the issuance of Conversion Shares upon conversion of the
Preferred Stock.
Each share of Preferred Stock may be converted, at any time or from time to
time, at the option of the holder of such share, into that number of fully paid
and nonassessable Conversion Shares determined by dividing (i) $25.00 by (ii) a
price (the "Conversion Price") initially equal to $11.11 and subject to
adjustment upon the occurrence of certain dilutive events. The Company has
reserved 2,700,000 shares of Common Stock for issuance upon conversion of the
Preferred Stock, being the number of shares of Common Stock that will be
issuable based upon the initial Conversion Price. See "Description of
Securities -- Preferred Stock."
The Preferred Stock is entitled to receive, when and as declared by the Board
of Directors of the Company, cumulative cash dividends on March 31, June 30,
September 30 and December 31 of each year (each a "Dividend Payment Date") at a
rate (the "Dividend Rate") of (a) 13% per annum from the Dividend Payment Date
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 were in effect on the Issue
Date (the "Accretion Termination Date") through December 20, 1998, and (b) 18%
thereafter. As of the date of this Prospectus, the Company would not be
permitted to declare and pay dividends on the Preferred Stock under the
indentures and loan agreements which were in effect on the Issue Date and,
accordingly, the Accretion Termination Date has not occurred. Until such time
as the Registration Statement of which this Prospectus is a part becomes
effective, were the Accretion Termination Date to occur, the Dividend Rate to
which the Preferred Stock would be entitled would be 13.5% per annum. See
"Description of Securities -- Preferred Stock -- Dividends."
Upon a liquidation of the Company, the holders of the Preferred Stock shall be
entitled to be paid out of the assets of the Company, subject to the prior
preferences and rights of any stock ranking senior to the Preferred Stock, a
liquidation preference (the "Liquidation Preference"), initially equal to
$25.00 per share, plus all accrued and unpaid dividends to such date. During
the period commencing on the Issue Date and ending on the Accretion Termination
Date, the Liquidation Preference accretes at the applicable Dividend Rate,
compounded quarterly.
The Preferred Stock may be redeemed by the Company at any time in whole or 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
(the "Redemption Price") on such date. The Company is required to redeem all
of the then outstanding shares of Preferred Stock on or prior to December 31,
2000.
The Common Stock is listed on the New York Stock Exchange (the "NYSE") under
the trading symbol "TEX." On December 5, 1995, the closing price of the Common
Stock on the NYSE was $4.75 per share. See "Market for Common Stock and
Dividend Policy." The Conversion Shares have been approved for listing on the
NYSE, subject to issuance.
(continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
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 _______, 1995.
- -------------------------------------------------------------------------------
Prior to this offering, there has been no public market for the Preferred
Stock. The Company does not intend to list the Preferred Stock on any
securities exchange or to seek approval for quotation of the Preferred Stock
through any automated quotation system. There can be no assurance that an
active market for the Preferred Stock will develop.
The Selling Security Holders directly, through agents designated from time to
time, or through dealers or underwriters also to be designated, may sell the
Preferred Stock and Conversion Shares from time to time on terms to be
determined at the time of sale through customary brokerage channels or private
sales at market prices then prevailing or at negotiated prices then obtainable.
To the extent required, the specific Preferred Stock or Conversion Shares to be
sold, names of the selling security holders, purchase price, public offering
price, the names of any such agent, dealer or underwriter, amount of expenses
of the offering and any applicable commission or discount with respect to a
particular offer will be set forth in an accompanying Prospectus Supplement.
Each of the Selling Security Holders reserves the sole right to accept and,
together with its agents from time to time, to reject in whole or in part any
proposed purchase of Preferred Stock or Conversion Shares to be made directly
or through agents.
See "Plan of Distribution" for indemnification arrangements among the Company
and the Selling Security Holders.
For a discussion of certain matters which should be considered by prospective
investors, see "Investment Considerations."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith is required to file reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at its offices at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the regional offices of the Commission located at Seven World Trade Center,
13th Floor, New York, New York 10048 and at Northwestern Atrium Center, 500
West Madison Street, 14th Floor, Chicago, Illinois 60661-2511. Copies of such
materials can be obtained by mail from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
The Common Stock is listed on the NYSE and reports, proxy statements and other
information concerning the Company may also be inspected at the NYSE.
The Company has filed with the Commission a Registration Statement on Form S-1
under the Securities Act with respect to the Preferred Stock and Conversion
Shares offered hereby. The Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto, as permitted
by the rules and regulations of the Commission. For further information with
respect to the Company and the Preferred Stock and Conversion Shares offered
hereby, reference is made to the Registration Statement, including the exhibits
thereto and the financial statements, notes and schedules filed as a part
thereof, which may be inspected and copied at the public reference facilities
of the Commission referred to above. Statements contained in this Prospectus
as to the contents of any contract or other document are not necessarily
complete, and in each instance reference is made to the full text of such
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference.
The Company furnishes stockholders with annual reports containing audited
financial statements. The Company also furnishes its stockholders with proxy
material for its annual meetings complying with the proxy requirements of the
Exchange Act.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
notes thereto appearing elsewhere in this Prospectus. Investors should
carefully consider the information set forth under the caption "Investment
Considerations."
The Company
Terex Corporation ("Terex" or the "Company") is a global provider of capital
goods and equipment used in the mining, commercial building, infrastructure,
manufacturing and construction industries. The Company's Material Handling
Segment designs, manufactures and markets a complete line of internal
combustion ("IC") and electric lift trucks, electric walkies, automated pallet
trucks, industrial tow tractors and related components and replacement parts.
The Heavy Equipment Segment designs, manufactures and markets heavy-duty,
off-highway, earthmoving and construction equipment and related components and
replacement parts. The Mobile Cranes segment designs, manufactures and markets
mobile cranes, aerial platforms, container stackers and scrap handlers and
related components and replacement parts. See "The Company" and "Business."
The Mobile Cranes Segment was established as a separate business segment as a
result of a significant acquisition in 1995. On May 9, 1995, the Company,
through Terex Cranes, Inc., a recently formed Delaware corporation which is a
wholly owned subsidiary of the Company ("Terex Cranes"), completed the
acquisition (the "PPM Acquisition") of substantially all of the shares of
P.P.M. S.A., a societe anonyme ("PPM Europe"), from Potain S.A., a societe
anonyme, and all of the capital stock of Legris Industries, Inc., a Delaware
corporation which owns 92.4% of the capital stock of PPM Cranes, Inc., a
Delaware corporation ("PPM North America;" and PPM North America together with
PPM Europe collectively referred to as "PPM") from Legris Industries S.A., a
societe anonyme ("Legris France"). PPM designs, manufactures and markets
mobile cranes and container stackers primarily in North America and Western
Europe under the brand names of PPM, P&H (trademark of Harnischfeger
Corporation) and BENDINI. Concurrently with the completion of the PPM
Acquisition, the Company contributed the assets (subject to liabilities) of its
Koehring Cranes and Excavators and Marklift division to Terex Cranes. The
former division now operates as Koehring Cranes, Inc., a wholly owned
subsidiary of Terex Cranes ("Koehring"). Koehring manufactures mobile cranes
under the LORAIN brand name and aerial lift equipment under the MARKLIFT brand
name. PPM and Koehring comprise the Company's new Mobile Cranes Segment.
The Offering
On December 20, 1993 (the "Issue Date"), the Company completed the private
placement of (i) 1,200,000 shares of the Company's Series A Cumulative
Redeemable Convertible Preferred Stock, par value $.01 per share (the
"Preferred Stock"), and (ii) 1,300,000 common stock purchase warrants (the
"Warrants") exercisable for shares of common stock, par value $.01 per share
(the "Common Stock"), of the Company, to institutional investors for aggregate
gross proceeds to the Company of $30.2 million. Jefferies & Company, Inc.
("Jefferies") was the placement agent for the sale of the Preferred Stock and
Warrants.
In connection with the sale of the Preferred Stock, the Company and the
purchasers of the Preferred Stock entered into a Registration Rights Agreement
dated as of December 20, 1993 (the "Preferred Stock Registration Rights
Agreement") relating to the Preferred Stock and the shares of Common Stock
issuable upon conversion of the Preferred Stock (the "Conversion Shares").
Pursuant to the terms of the Preferred Stock Registration Rights Agreement, the
Company agreed to file the Registration Statement of which this Prospectus
forms a part and is required to maintain the effectiveness of this Registration
Statement for 36 months from the date this Registration Statement is declared
effective or, if shorter, until all Preferred Stock and Conversion Shares have
been sold pursuant to an effective registration statement.
Summary of Terms of the Preferred Stock
Issuer Terex Corporation.
Issue Series A Cumulative Redeemable Convertible
Preferred Stock, convertible into shares of
Common Stock.
Aggregate Number of Shares 1,200,000.
Conversion Each share of Preferred Stock may be converted,
at any time or from time to time, at the option
of the holder of such share, into that number
of fully paid and nonassessable Conversion
Shares determined by dividing (i) $25.00 by
(ii) a price (the "Conversion Price")
initially equal to $11.11 and subject to
adjustment upon the occurrence of
certain dilutive events. See "Description of
Securities -- Preferred Stock -- Conversion
Right."
Dividends The Preferred Stock is entitled to receive, when
and as declared by the Board of Directors of the
Company, cumulative cash dividends on March 31,
June 30, September 30 and December 31 of each
year (each a "Dividend Payment Date") at a rate
(the "Dividend Rate") of (a) 13% per annum from
the Dividend Payment Date 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 were in effect on the Issue Date (the
"Accretion Termination Date") through December
20, 1998, and (b) 18% thereafter.
As of the date of this Prospectus, the Company
would not be permitted to declare and pay
dividends on the Preferred Stock under the
indentures and loan agreements which were in
effect on the Issue Date and, accordingly, the
Accretion Termination Date has not occurred.
Until such time as the Registration Statement of
which this Prospectus is a part becomes
effective, were the Accretion Termination Date
to occur, the Dividend Rate to which the
Preferred Stock would be entitled would be
13.5% per annum. See "Description of
Securities -- Preferred Stock -- Dividends."
Liquidation Preference Upon a liquidation of the Company, the holders of
the Preferred Stock shall be entitled to be paid
out of the assets of the Company, subject to the
prior preferences and rights of any stock ranking
senior to the Preferred Stock, a liquidation
preference (the "Liquidation Preference"),
initially equal to $25.00 per share, plus all
accrued and unpaid dividends to such date.
During the period commencing on the Issue Date
and ending on the Accretion Termination Date,
the Liquidation Preference accretes at the
applicable Dividend Rate, compounded quarterly.
See "Description of Securities -- Preferred
Stock -- Liquidation Preference."
Optional Redemption The Preferred Stock is redeemable, in whole or 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 (the "Redemption Price"). See
"Description of Securities -- Preferred Stock --
Redemption."
Mandatory Redemption The Company is required to redeem all of the then
outstanding shares of Preferred Stock on or prior
to December 31, 2000 at the Redemption Price on
such redemption date. See "Description of
Securities -- Preferred Stock -- Redemption."
Voting So long as any Preferred Stock is outstanding,
the Company must obtain the approval of the
holders of not less than a majority of the
then outstanding shares of Preferred Stock to
take certain actions, including (i)
authorizing or issuing any shares of
any class of stock ranking senior, or, in some
cases, on a parity with, the Preferred Stock,
(ii) authorizing or entering into any
transaction that would constitute a deemed
dividend to holders of the Preferred Stock
under United States Federal tax laws, or
(iii) consolidating with or merging into
another corporation other than in a
transaction in which the Company is the surviving
corporation. See "Description of Securities --
Preferred Stock -- Voting."
In addition, from and after the Accretion
Termination Date, (i) if the Company fails to pay
the entire amount of dividends payable on the
Preferred Stock on any two Dividend Payment
Dates, the holders of the Preferred Stock,
voting separately as a class, will be entitled
to elect one director of the Company, and
(ii) if the Company fails to pay the entire
amount of dividends payable on the Preferred
Stock on any four Dividend Payment Dates, the
holders of the Preferred Stock, voting
separately as a class, will be entitled to
elect two directors of the Company. See
"Description of Securities -- Preferred Stock
-- Voting."
Investment Considerations
See "Investment Considerations" for a discussion of certain factors that should
be considered in connection with an investment in the Preferred Stock and the
Conversion Shares.
SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands except per share amounts)
The following summary consolidated financial data is derived from the Selected
Consolidated Financial Data appearing elsewhere in this Prospectus.
As of and
for the
Nine Months Ended As of and for the
September 30, 1995 Year Ended December 31,
Actual Pro forma 1994 1993 1992 1991 1990
Summary of Operations (1)
Net
Sales $766,789 $831,629 $786,781 $670,309 $523,355 $784,194$1,023,283
Income
(loss)
from
opera-
tions 11,381 (5,122) 3,361 (29,178) (4,125) (70,706) 12,193
Income
(loss)
before
extraor-
dinary
items (26,087) (51,297) 1,170 (65,080) 2,915 (42,731) (39,243)
Per share:
Income
(loss)
before
extraor-
dinary
items (3.02) (5.55) (0.46) (6.55) 0.29 (4.31) (3.97)
Ratio of
earnings to
combined
fixed
charges and
preferred
stock
accretion(2) (3) (3) 1.0x (3) 1.2x (3) (3)
Total
Assets $645,934 $645,934 $401,616 $390,702 $477,356 $506,713 $584,352
Capitalization
Long-term
debt and
notes
payable,
including
current
matur-
ities $355,912 $355,912 $190,871 $218,039 $217,605 $223,051 $269,186
Stock-
holders'
invest-
ment (94,157) (94,157) (55,738) (62,261) (9,075) (4,141) 44,885
Dividends
per share $--- $--- $--- $--- $--- $0.06 $0.05
(1) The Summary Consolidated Financial Data include the results of operations
of the Company's Clark Material Handling Subsidiary ("CMH") and the Company's
aerial lift division, Mark Industries ("Mark"), from the dates of their
acquisitions, July 31, 1992 and December 31, 1991, respectively, and reflect
the deconsolidation of a former subsidiary, Fruehauf Trailer Corporation
("Fruehauf"), as of January 1, 1992. See a further discussion of these matters
in Note B -- "Acquisitions" and Note C -- "Investment in Fruehauf Trailer
Corporation" in the Notes to the Consolidated Financial Statements. The pro
forma data give effect to the PPM Acquisition and the issuance of debt to fund
the PPM Acquisition and refinance certain of the Company's debt. See "Pro
Forma Financial Information." Income (loss) before extraordinary items in 1992
includes a $36.5 million gain on deconsolidation of Fruehauf and in 1991
includes a $56.0 million gain as a result of an initial public offering of
Fruehauf common stock.
(2) For purposes of determining the ratio of earnings to combined fixed
charges and preferred stock accretion, earnings are defined as income from
continuing operations before income taxes, minority interest, extraordinary
items and fixed charges. Fixed charges consist of interest on indebtedness,
preferred stock accretion, amortization of debt issuance costs and rental
expense representative of the interest factor.
(3) The ratio of earnings to combined fixed charges and preferred stock
accretion is less than 1.0 for these periods. The deficiency amounts are
$25,954 for the nine months ended September 30, 1995, $51,164 for the pro forma
nine months ended September 30, 1995, $64,245 for 1993, $46,021 for 1991 and
$47,578 for 1990.
INVESTMENT CONSIDERATIONS
In addition to other matters described in this Prospectus, the following should
be carefully considered in connection with an investment in the Preferred Stock
and the Conversion Shares:
Significant Leverage
The Company is highly leveraged. At September 30, 1995 the Company had
approximately $355.9 million of indebtedness and negative stockholders' equity
of $94.2 million.
On May 9, 1995, the Company completed the refinancing of substantially all of
its outstanding debt (the "Refinancing"). The Refinancing included the private
placement to institutional investors of $250 million of 13.25% Senior Secured
Notes due May 15, 2002 (the "Senior Secured Notes"), repayment of the Company's
existing senior secured notes and senior subordinated notes, totaling
approximately $152.6 million principal amount, and entry into a new credit
facility to replace the Company's existing lending facility in the U.S.
This substantial leverage has several important consequences, including the
following: (i) a substantial portion of the Company's cash flow from
operations will be dedicated to the payment of principal of, and interest on,
its indebtedness, (ii) the covenants contained in the Company's indebtedness
impose certain restrictions on the Company which, among other things, will
limit its ability to borrow additional funds or to dispose of assets, (iii) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, general corporate purposes or
other purposes may be impaired, and (iv) the Company's ability to withstand
competitive pressures, adverse economic conditions and adverse changes in
governmental regulations, to make acquisitions, and to take advantage of
significant business opportunities that may arise, may be negatively impacted.
The Company's ability to meet its debt service obligations and to reduce its
total indebtedness will be dependent upon future performance, which will be
subject to general economic conditions, its ability to achieve cost savings and
other financial, business and other factors affecting the operations of the
Company, many of which are beyond its control. The Company has historically
sustained significant losses and, prior to the Refinancing, net cash from
operating activities was insufficient to meet the Company's debt service
requirements, which the Company funded primarily from asset sales. If the
Company is unable to generate sufficient cash flow from operations in the
future to service its debt, it may be required to refinance all or a portion of
such debt, including the new Senior Secured Notes, or to obtain additional
financing. However, there can be no assurance that any refinancing would be
possible or that any additional financing could be obtained.
Integration of PPM
The acquisition of PPM by the Company will require the integration of the
administrative, finance, sales and marketing organizations of PPM, as well as
the integration of and coordination of PPM's manufacturing and sales
activities. This will require substantial attention from the Company's
management team. The diversion of management attention and any other
difficulties encountered in the integration process could have an adverse
impact on the revenue and operating results of the Company. There also can be
no assurance that unforeseen costs and expenses or other factors may not
adversely affect the integration of PPM and thereby adversely affect the
business of the Company.
Absence of Public Market
As of November 1, 1995 there were 24 holders of the Preferred Stock. There has
previously been no public market for the Preferred Stock. The Company does not
intend to list the Preferred Stock 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 Preferred Stock will develop. In
addition, resales of a substantial percentage of the outstanding Preferred
Stock could constrain the ability of any market maker to develop or maintain a
market for the Preferred Stock. To the extent that a market for the Preferred
Stock does develop, the market value of the Preferred Stock will depend on the
price of the Common Stock, general economic conditions, the Company's financial
condition and other conditions and may be subject to substantial price
volatility.
Future Sales of Common Stock
The Company is unable to predict the effect, if any, that any future sales of
Common Stock, including the shares of Common Stock covered hereby, will have on
the market price of the Common Stock and, therefore, indirectly, the value of
the Preferred Stock, prevailing from time to time.
As of November 1, 1995, Randolph W. Lenz, formerly Chairman of the Board and a
Director of the Company, is the beneficial owner, directly and indirectly, of
approximately 44% of the outstanding Common Stock of the Company. Mr. Lenz
currently pledges, and intends to pledge in the future, shares of Common Stock
owned by him as collateral for loans. See "Principal Stockholders." 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 or other disposition of a substantial amount of such
shares of Common Stock in the public market could adversely affect the
prevailing market price for the Common Stock and, therefore, indirectly, the
value of the Preferred Stock. Mr. Lenz retired as Chairman of the Board and a
Director of the Company on August 28, 1995, but will continue as a consultant
to the Company. See "Management -- Retirement of Randolph W. Lenz."
Pursuant to the terms of a Registration Rights Agreement dated December 20,
1993 relating to the Warrants (the "Warrant Registration Rights Agreement"),
the Company filed with the Commission a shelf registration statement which has
not yet become effective covering the outstanding Warrants and the 3,900,000
shares of Common Stock which may be issuable upon exercise of the Warrants.
The sale or other disposition of a substantial number of such shares of Common
Stock in the public market could adversely affect the prevailing market price
for the Common Stock and, therefore, indirectly, the value of the Preferred
Stock.
Dividend Policy
Contractual restrictions exist which limit the Company's ability to pay
dividends on its capital stock. The terms of the Preferred Stock provide that
no dividends will accrue on the Preferred Stock until the Accretion Termination
Date, the determination of which is based upon and is subject to all of such
restrictions and other provisions of the indentures and loan agreements of the
Company which were in effect on December 20, 1993. Pursuant to the terms of
the provisions of the indentures and loan agreements of the Company which were
in effect on December 23, 1993, the Company is restricted from paying dividends
on the Preferred Stock unless at the time of the declaration of any dividend on
the Preferred Stock (i) the Company has a Tangible Net Worth (as defined in
such indentures and loan agreements) of in excess of $50.0 million, (ii) the
Company has Pre-Tax Cash Flow (as defined in such indentures and loan
agreements) equal to or greater than 2.0 to 1 and (iii) the amount of all
Restricted Payments (as defined in such indentures and loan agreements) made by
the Company since the date such indentures and loan agreements were entered
into do not exceed the sum of (a) 50% of Consolidated Net Income (as defined in
such indentures and loan agreements) from and after the date on which items (i)
and (ii) are satisfied, plus (b) 75% of Consolidated Net Income from and after
the date on which the Company's Tangible Net Worth exceeds $100 million, plus
(c) 100% of the net cash proceeds from the sale of capital stock of the
Company. The Company does not believe that it will be able to pay dividends on
the Preferred Stock in the foreseeable future. In addition, under Delaware law
the Company's ability to pay dividends on the Preferred Stock and the Common
Stock is subject to the statutory limitation that such payment be either (i)
out of its surplus (the excess of its net assets over its total liabilities
plus stated capital) or (ii) in the event that there is no surplus, out of its
net profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year. See "Market for Common Stock and Dividend Policy." The
terms of the Preferred Stock also limit the Company's ability to pay cash
dividends on any class of capital stock of the Company junior to or on a parity
with the Preferred Stock, including the Common Stock. See "Description of
Securities -- Preferred Stock."
Environmental and Related Matters
The Company generates hazardous and nonhazardous wastes in the normal course of
its operations. As a result, the Company is subject to a wide range of
federal, state, local and foreign environmental laws and regulations, including
the Comprehensive Environmental Response, Compensation and Liability Act, that
(i) govern activities or operations that may have adverse environmental
effects, such as discharges to air and water, as well as handling and disposal
practices for hazardous and nonhazardous wastes, and (ii) impose liability for
the costs of cleaning up, and certain damages resulting from, sites of past
spills, disposals or other releases of hazardous substances. Compliance with
such laws and regulations has, and will, require expenditures by the Company on
a continuing basis. The Company may also have contingent responsibility for
liabilities of certain of its subsidiaries with respect to environmental
matters if such subsidiaries were to fail to discharge their obligations to the
extent that such liabilities arose during the period in which the Company was a
controlling shareholder.
Net Operating Loss Carryovers and Other Tax Issues
The Internal Revenue Service is currently examining the Company's federal tax
returns for the years 1987 through 1989. In December 1994, the Company
received an examination report from the IRS proposing a substantial tax
deficiency based on this examination. The examination report raises a variety
of issues, including the Company's substantiation for certain deductions taken
during this period, the Company's utilization of certain net operating loss
carryovers ("NOL's") and the availability of such NOL's to offset future
taxable income. If the IRS were to prevail on all the issues raised, the
amount of the tax assessment would be approximately $56 million plus interest
and penalties. If the Company were required to pay a significant portion of
the assessment, it could have a material adverse impact on the Company and
could exceed the Company's resources. The Company has filed its administrative
appeal to the examination report. Although management believes that the
Company will be able to provide adequate documentation for a substantial
portion of the deductions questioned by the IRS and that there is substantial
support for the Company's past and future utilization of the NOL's, the
ultimate outcome of this matter is subject to the resolution of significant
legal and factual issues. If the Company's positions prevail on the most
significant issues, management believes that the amounts due would not exceed
amounts previously paid or provided; however, even under such circumstances, it
is possible that the Company's NOL's could be reduced to some extent. No
additional accruals have been made for any amounts which might be due as a
result of this matter because the possible loss ranges from zero to $56 million
plus interest and penalties and the ultimate outcome cannot presently be
determined or estimated.
In addition, Randolph W. Lenz has retired as Chairman of the Company. Although
his retirement agreement places certain restrictions on his ability to sell his
shares of Common Stock in the Company, in the event that Mr. Lenz is able to
sell a substantial portion of his shares in the Company, such sale, in
combination with the issuance of the Warrants in December 20, 1993 and subject
to the effects of other changes in share ownership of the Company, could result
in a change in control for tax purposes. Such a change in control for tax
purposes could possibly result in a significant reduction in the amount of
NOL's available to the Company to offset future taxable income.
SEC Investigation
The Securities and Exchange Commission (the "Commission") in March of 1994
initiated a private investigation, which included the Company and certain of
its then affiliates, to determine whether violations of certain aspects of the
Federal securities laws have taken place. The Company is cooperating with the
Commission in its investigation and it is not possible at this time to
determine the outcome of the Commission's investigation.
Industry Cyclicality and Substantial Competition
Sales of products to be manufactured and sold by the Company have historically
been subject to substantial cyclical variation extending over a number of years
based on general economic conditions. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
The markets in which the Company competes are highly competitive. The Company
must remain competitive in the areas of quality, price, product line, ease of
use, safety, comfort and customer service. Many of the Company's competitors
have greater financial resources than the Company. See "Business" for further
discussion.
Foreign Operations
The Company's products are sold in over 50 countries around the world and,
accordingly, a substantial portion of the revenues of the Company are generated
in foreign currencies, while the costs associated with these revenues are only
partially incurred in the same currencies. Consequently, the Company has a net
exposure to fluctuations between the U.S. dollar and such foreign currencies,
which impacts the financial performance of the Company. Although revenues and
costs of the Company may be partially hedged, currency movements will impact
the Company's financial performance in the future. In addition, international
operations are subject to a number of potential risks, including, among others,
currency exchange controls, transfer restrictions and rate fluctuations, trade
barriers, the effects of income and withholding tax, and governmental
expropriation.
THE COMPANY
Terex is a global provider of capital goods and equipment used in the mining,
commercial building, infrastructure, manufacturing and construction industries.
The Company's operations began in 1983 with the purchase of Northwest
Engineering Company, the Company's original business and name. Since 1983,
management has expanded the Company's business through a series of
acquisitions. In 1988, Northwest Engineering Company merged into a subsidiary
acquired in 1986 named Terex Corporation, with Terex Corporation as the
surviving corporation. The Company's Material Handling Segment designs,
manufactures and markets a complete line of internal combustion and electric
lift trucks, electric walkies, automated pallet trucks, industrial tow tractors
and related components and replacement parts. The Heavy Equipment Segment
designs, manufactures and markets heavy-duty, off-highway, earthmoving and
contruction equipment and related components and replacement parts. The Mobile
Cranes segment designs, manufactures and markets mobile cranes, aerial
platforms, container stackers and scrap holders and related components and
replacement parts.
The Mobile Cranes Segment was established as a separate business segment as a
result of a significant acquisition in 1995. On May 9, 1995, the Company,
through Terex Cranes, a recently formed wholly owned subsidiary of the Company,
completed the PPM Acquisition. PPM designs, manufactures and markets mobile
cranes and container stackers primarily in North America and Western Europe
under the brand names of PPM, P&H (trademark of Harnischfeger Corporation) and
BENDINI. Concurrently with the completion of the PPM Acquisition, the Company
contributed the assets (subject to liabilities) of its Koehring and Marklift
division to Terex Cranes. The former division now operates as Koehring, a
wholly owned subsidiary of Terex Cranes. Koehring manufactures mobile cranes
under the LORAIN brand name and aerial lift equipment under the MARKLIFT brand
name. PPM and Koehring comprise the Company's new Mobile Cranes Segment.
The Company has grown through acquisitions and has had considerable experience
in restructuring and operating capital goods manufacturers, particularly in the
off-road truck and construction and industrial equipment industries. Following
an acquisition, in order to improve profitability, the Company traditionally
(i) consolidates manufacturing operations, (ii) adjusts new equipment
production capacity to meet the actual level of demand in the marketplace,
(iii) reduces corporate overhead and (iv) emphasizes that portion of the
business that yields the highest margins, particularly the replacement parts
business. More specifically, this strategy involves elimination of marginally
profitable or unprofitable product lines, closing underutilized and inefficient
plants, liquidating excess inventories and substantially reducing personnel.
The principal executive offices of the Company are located at 500 Post Road
East, Westport, Connecticut 06880 and its telephone number is (203) 222-7170.
USE OF PROCEEDS
All Preferred Stock and Conversion Shares covered hereby being registered for
resale are being so registered for the account of the Selling Security Holders
and, accordingly, the Company will not receive any of the proceeds from the
resale of the Preferred Stock or Conversion Shares by the Selling Security
Holders. The Company will not receive any proceeds from the issuance of
Conversion Shares upon conversion of the Preferred Stock.
MARKET FOR COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is listed on the NYSE under the symbol "TEX."
Quarterly Market Prices
1995 1994 1993
Third Second First FourthThird SecondFirst Fourth Third SecondFirst
High $5.38 $6.63 $7.13 $8.75 $7.38 $8.00 $9.88 $9.25 $8.13 $10.75$11.88
Low 4.88 4.63 5.88 6.00 4.25 5.13 6.13 6.38 6.25 6.63 9.13
No dividends were declared or paid in 1993, 1994 or in 1995 through the date of
this Prospectus. As discussed in Note F -- "Long-Term Obligations" in the
Notes to the Consolidated Financial Statements, certain of the Company's debt
agreements contain restrictions as to the payment of cash dividends. Under the
most restrictive of these agreements, no retained earnings were available for
dividends at September 30, 1995. The terms of the Company's outstanding Series
A Cumulative Redeemable Convertible Preferred Stock, par value $.01 per share
(the "Series A Preferred Stock") and Series B Cumulative Redeemable Convertible
Preferred Stock, par value $.01 per share (the "Series B Preferred Stock") also
restrict the Company's ability to pay cash dividends on the Common Stock. The
Company intends generally to retain earnings, if any, to fund the development
and growth of its business. The Company does not plan on paying dividends on
the Common Stock in the foreseeable future. Any future payments of cash
dividends will depend upon the financial condition, capital requirements and
earnings of the Company, as well as other factors that the Board of Directors
may deem relevant.
As of November 1, 1995, there were 800 stockholders of record of the Company's
Common Stock.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the Company
as of September 30, 1995. The table should be read in conjunction with the
consolidated financial statements of the Company and the related notes thereto
included elsewhere in this Prospectus. See "The Company" and "Selected
Consolidated Financial Information."
(in thousands)
Notes payable and long-term debt
(including current portion):
Senior Secured Notes due May 15, 2002 (1) $ 246,919
Credit Facility maturing May 9, 1998 (2) 72,335
Other debt, including notes payable (3) 36,658
Total notes payable and long term debt 355,912
Minority interest, including redeemable
preferred stock of a subsidiary 10,028
Redeemable Convertible Preferred Stock
(including the Preferred Stock
registered hereby) 22,462
Stockholders' investment
Common Stock Purchase Warrants 17,240
Common Stock 104
Additional paid-in capital 40,451
Accumulated deficit (147,872)
Pension liability adjustment (1,778)
Unrealized holding gain on equity securities 938
Foreign currency translation adjustment (3,240)
Total stockholders' investment (94,157)
Total capitalization $ 294,245
(1) Represents $250.0 million principal amount of Senior Secured Notes. See
"The Senior Secured Notes," below.
(2) The Credit Facility currently provides for revolving credit loans and
guarantees of letters of credit of up to $100 million and matures on May 9,
1998. The Credit Facility bears interest at a fluctuating rate based on 1.75%
per annum in excess of the prime rate or 3.75% per annum in excess of the
adjusted eurodollar rate at the Company's option. Borrowings under the credit
facility are secured by a lien on substantially all of the Company's domestic
accounts receivable and inventory. See "The Credit Facility," below.
(3) Includes $16.1 million of notes payable to banks, capital leases and term
debt assumed in the PPM Acquisition. See Note F -- "Long Term Obligations" of
the Notes to Consolidated Financial Statements, included elsewhere in this
Prospectus, for a description of the Company's other debt.
The Senior Secured Notes
On May 9, 1995, the Company issued $250 million of Senior Secured Notes due May
15, 2002. Except in the event of certain asset sales, there are no principal
repayment or sinking fund requirements prior to maturity. Interest on the
Notes is payable semi-annually on May 15 and November 15 of each year,
commencing on November 15, 1995, to holders of record on the immediately
preceding May 1 and November 1, respectively. The Notes bear interest at 13
3/4% per annum. Upon the earlier of (i) the consummation of an Exchange Offer
and (ii) the effectiveness of a Shelf Registration Statement, the interest rate
on the Notes will decrease to 13 1/4% per annum. Interest is computed on the
basis of a 360-day year comprised of twelve 30-day months.
The Senior Secured Notes are senior obligations of the Company, pari passu in
right of payment with all existing and future senior indebtedness and senior to
all subordinated indebtedness. Repayment of the Senior Secured Notes are
guaranteed by certain domestic wholly-owned subsidiaries of the Company (the
"Guarantors"). The Senior Secured Notes are secured by a first priority
security interest on substantially all of the assets of the Company and the
Guarantors, other than cash and cash equivalents, except that as to accounts
receivable and inventory and proceeds thereof, and certain related rights, such
security shall be subordinated to liens securing obligations outstanding under
any working capital or revolving credit facility secured by such accounts
receivable and inventory, including the Credit Facility. The Senior Secured
Notes are also secured by a lien on certain assets of the Company's foreign
subsidiaries. The Indenture for the Senior Secured Notes places certain limits
on the Company's ability to incur additional indebtedness; permit the existence
of liens; issue, pay dividends on or redeem equity securities; sell assets;
consolidate, merge or transfer assets to another entity; and enter into
transactions with affiliates.
In connection with the issuance of the Senior Secured Notes, the Company issued
one million stock appreciation rights ("SARs") entitling the holders to receive
cash or Terex Corporation common stock, at the option of the Company, in an
amount equal to the average closing sale price of the common stock for 60
trading days prior to the date of exercise less $7.288 for each SAR.
The foregoing description is a summary of the terms of the Senior Secured Notes
and Indenture and is qualified in its entirety by reference to such documents,
copies of which are filed as Exhibits to the Registration Statement of which
this Prospectus is a part.
The Credit Facility
The Company currently has a secured revolving credit facility (the "Credit
Facility") with certain institutional lenders (the "Lenders"). Under the terms
of such facility, the Company and Clark Material Handling Company ("CMHC"),
Koehring and PPM North America, each a subsidiary of the Company,
(collectively, the "Borrowers") will have availability, subject to the
borrowing base limitations set forth below, in an aggregate amount of up to
$100 million. Subject to the terms and conditions set forth in the Credit
Facility, the Borrowers may borrow (in the form of revolving loans and up to
$15 million in outstanding letters of credit) an amount at any time outstanding
initially equalling the sum of the following: (i) 75% of the net amount of
eligible receivables (as defined in the Credit Facility) of the Company,
Koehring and PPM North America, plus (ii) 70% of the net amount of eligible
receivables of CMHC, plus (iii) the lesser of (a) 45% of the value of eligible
inventory (as defined in the Credit Facility) of the Borrowers or (b) 80% of
the appraised orderly liquidation value of eligible inventory.
Each Borrower guarantees, on a joint and several basis, all of the obligations
of the other Borrowers under the Credit Facility, which obligations will
generally be secured by a first priority security interest in favor of the
Lenders in all of the receivables and inventory and certain related rights of
the Borrowers.
The outstanding principal amount of prime rate loans initially bears interest
at the rate of 1.75% per annum in excess of the prime rate and the outstanding
principal amount of eurodollar rate loans initially bears interest at the rate
of 3.75% per annum in excess of the adjusted eurodollar rate. The Credit
Facility contains covenants limiting the Borrowers' activities, including,
without limitation, limitations on the incurrence of indebtedness, liens, asset
sales, dividends and other payments, investments, mergers and related party
transactions.
The Credit Facility matures on May 9, 1998. The Lenders, at their option, may
extend the facility for one additional year. In the event that for any reason
the facility is terminated prior to the maturity date, the Borrowers must pay
to the Lenders a termination fee.
The foregoing description is a summary of the terms of the Credit Facility and
does not purport to be complete and is qualified in its entirety by reference
to the Loan and Security Agreement dated as of May 9, 1995 between the Lenders
and the Borrowers, a copy of which is filed as an Exhibit to the Registration
Statement of which this Prospectus is a part.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands except per share amounts and employees)
Selected Financial Data
The Selected Financial Data include the results of operations of CMH and of
Mark from the dates of their acquisitions, July 31, 1992 and December 31, 1991,
respectively, and reflect the deconsolidation of Fruehauf as of January 1,
1992. For a further discussion of these matters, see Note B -- "Acquisitions"
and Note C -- "Investment in Fruehauf Trailer Corporation" in the Notes to the
Consolidated Financial Statements. The pro forma data gives effect to the PPM
Acquisition, the issuance of the Senior Secured Notes and the refinancings of
certain of the Company's existing debt. Income (loss) before extraordinary
items and net income (loss) in 1992 include a $36.5 million gain on
deconsolidation of Fruehauf, and in 1991 include a $56.0 million gain as a
result of an initial public offering of Fruehauf common stock.
The following data should be read in conjunction with the historical financial
statements of the Company and the related notes thereto, the "Pro Forma
Financial Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein. Operating
results for interim periods are not necessarily indicative of results for the
entire fiscal year.
Nine Months Ended As of and for the
September 30, 1995 Year Ended December 31,
Actual Pro forma 1994 1993 1992 1991 1990
Summary of Operations
Net
Sales $766,789 $831,629 $786,781 $670,309 $523,355 $784,194$1,023,283
Income
(loss)
from
opera-
tions 11,381 (5,122) 3,361 (29,178) (4,125) (70,706) 12,193
Income
(loss)
before
extraor-
dinary
items (26,087) (51,297) 1,170 (65,080) 2,915 (42,731) (39,243)
Net
income
(loss) (33,539) N/A 461 (66,544) 2,915 (42,731) (42,837)
Net
income
(loss)
applicable
to common
stock (38,739) N/A (5,468) (66,696) 2,915 (42,731) (42,837)
Per Common
and Common
Equivalent
Share:
Income
(loss)
before
extraor-
dinary
items (3.02) (5.55) (0.46) (6.55) 0.29 (4.31) (3.97)
Net
income
(loss) (3.75) N/A (0.53) (6.70) 0.29 (4.31) (4.33)
Ratio of
earnings
to fixed
charges(1) (2) (2) 1.0x (2) 1.0x (2) (2)
Total
Assets $645,934 N/A $401,616 $390,702 $477,356 $506,713 $584,352
Capitalization
Long-term
debt and
notes
payable,
including
current
matur-
ities $355,912 N/A $190,871 $218,039 $217,605 $223,051 $269,186
Minority
interest,
including
redeemable
preferred
stock of
a subsi-
diary $10,028 N/A --- --- --- --- ---
Redeemable
convertible
preferred
stock 22,462 N/A 17,262 10,480 --- --- ---
Stock-
holders'
invest-
ment (94,157) N/A (55,738) (62,261) (9,075) (4,141) 44,885
Dividends
per share
of Common
Stock --- --- --- --- --- $0.06 $0.05
Shares of
Common
Stock
outstanding
at period
end 10,359 N/A 10,303 10,303 9,949 9,923 9,893
Employees 3,670 N/A 2,851 2,930 3,056 6,980 8,000
Notes to Selected Consolidated Financial Data
(1) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as income from continuing operations before income taxes,
minority interest, extraordinary items and fixed charges. Fixed charges
consist of interest on indebtedness, preferred stock accretion, amortization of
debt issuance costs and rental expense representative of the interest factor.
(2) The ratio of earnings to fixed charges is less than 1.0 for these periods.
The deficiency amounts are $25,954 for the nine months ended September 30,
1995, $51,164 for the pro forma nine months ended September 30, 1995, $64,245
for 1993, $46,021 for 1991 and $47,578 for 1990.
Unaudited Quarterly Financial Data
Summarized quarterly financial data for the nine months ended September 30,
1995 and for the years 1994 and 1993 are as follows (in thousands, except per
share amounts):
1995
Third Second First
Net sales $283,304 $269,409 $214,076
Gross profit 30,814 24,234 21,212
Income (loss) before
extraordinary items (7,768) (16,416) (1,885)
Net income (loss) (7,786) (23,868) (1,885)
Net income (loss) applicable
to common stock (9,639) (25,657) (3,614)
Per share:
Primary
Income (loss) before
extraordinary items $(0.93) $(1.76) $(0.35)
Net income (loss) (0.93) (2.48) (0.35)
Fully diluted
Income (loss)
before extraor-
dinary items $(0.93) $(1.76) $(0.35)
Net income (loss) (0.93) (2.48) (0.35)
1994
Fourth Third Second First
Net sales $213,431 $207,062 $198,250 $168,038
Gross profit 25,698 22,782 19,502 15,177
Income (loss) before
extraordinary items 531 1,209 10,254 (10,824)
Net income (loss) 219 1,045 10,021 (10,824)
Net income (loss)
applicable to common stock (1,369) (472) 8,577 (12,204)
Per share:
Primary
Income (loss) before
extraordinary items $(0.10) $(0.03) $0.64 $(1.18)
Net income (loss) (0.13) (0.05) 0.62 (1.18)
Fully diluted
Income (loss) before
extraordinary items $(0.10) $(0.03) $0.60 $(1.18)
Net income (loss) (0.13) (0.05) 0.59 (1.18)
1993
Fourth Third Second First
Net sales $150,799 $164,052 $172,261 $183,197
Gross profit 7,499 11,545 13,257 16,192
Income (loss) before
extraordinary items (21,988) (15,046) (15,647) (12,399)
Net income (loss) (21,449) (15,046) (17,650) (12,399)
Net income (loss)
applicable to common stock (21,601) (15,046) (17,650) (12,399)
Per share:
Primary
Income (loss) before
extraordinary items $(2.22) $(1.51) $(1.57) $(1.25)
Net income (loss) (2.17) (1.51) (1.77) (1.25)
Fully diluted
Income (loss) before
extraordinary items $(2.22) $(1.51) $(1.57) $(1.25)
Net income (loss) (2.17) (1.51) (1.77) (1.25)
The accompanying unaudited quarterly financial data of the Company have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with Item 302 of Regulation S-K. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been made and were of a normal recurring nature except for
those discussed below.
In 1995, the Company recognized a gain of $1.0 million in the first quarter as
a result of the sale of 486,622 shares of Fruehauf common stock and recorded
severance and exit costs of $3.5 million in the second quarter.
In 1994, the Company recognized gains of $4.6 million in the first quarter,
$15.5 million in the second quarter, $4.3 million in the third quarter and $1.6
million in the fourth quarter as a result of the sale of a total of 5,900,000
shares of Fruehauf common stock. The Company recognized a gain of $4.7 million
from the sale of its Drexel Industries subsidiary in the second quarter of
1994. The Company recorded severance charges of $4.5 million in the second
quarter of 1994 and $2.8 million in the fourth quarter of 1994, and a related
pension curtailment gain of $0.9 million in the fourth quarter of 1994.
As a result of changing Mark's product offerings and distribution, the Company
recognized a charge to income of $4.7 million in the fourth quarter of 1993 to
write-off the remaining unamortized goodwill from the acquisition of Mark. The
Company recognized a gain of $3.0 million in the fourth quarter of 1993 as a
result of the sale of 1,000,000 shares of Fruehauf common stock.
Net income (loss) has been reduced by Preferred Stock accretion for purposes of
calculating earnings per share amounts. See Note I -- "Preferred Stock" in the
Notes to the Company's Consolidated Financial Statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Prior to the PPM Acquisition on May 9, 1995, the Company operated in two
industry segments during the periods presented herein: material handling and
heavy equipment. The addition of the PPM business to the Company's existing
crane and aerial lift business has created combined mobile crane operations
sufficient in size to constitute a third industry segment referred to herein as
"Mobile Cranes." The comparisons presented below have been reclassified to a
three segment basis for consistency. The Mobile Cranes segment results for
periods prior to May 1995 consist solely of Koehring's operations which were
formerly included in the results of the Heavy Equipment Segment.
Nine Months Ended September 30, 1995
The table below is a comparison of net sales, gross profit, selling, general
and administrative expenses, severance and exit costs, and income (loss) from
operations, by segment, for the nine months ended September 30, 1995 and 1994.
Nine Months Ended
September 30, Increase
1995 1994 (Decrease)
(in millions of dollars)
NET SALES
Material Handling $ 404.4 $ 335.7 $ 68.7
Heavy Equipment 190.5 173.1 17.4
Mobile Cranes 172.7 66.9 105.8
Eliminations (0.8) (2.3) 1.5
Total $ 766.8 $ 573.4 $ 193.4
GROSS PROFIT
Material Handling $ 26.7 $ 22.4 $ 4.3
Heavy Equipment 26.4 24.6 1.8
Mobile Cranes 23.2 10.4 12.8
Total $ 76.3 $ 57.4 $ 18.9
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Material Handling $ 24.6 $ 33.2 $ (8.6)
Heavy Equipment 17.1 15.7 1.4
Mobile Cranes 18.7 4.9 13.8
General/Corporate 1.0 2.0 (1.0)
Total $ 61.4 $ 55.8 $ 5.6
SEVERANCE AND EXIT COSTS
Material Handling $ 3.5 $ 4.3 $ (0.8)
Heavy Equipment --- 0.2 (0.2)
Total $ 3.5 $ 4.5 $ (1.0)
INCOME (LOSS) FROM OPERATIONS
Material Handling $ (1.4) $ (15.1) $ 13.7
Heavy Equipment 9.3 8.7 0.6
Mobile Cranes 4.5 5.5 (1.0)
General/Corporate (1.0) (2.0) 1.0
Total $ 11.4 $ (2.9) $ 14.3
Net Sales
Sales increased $193.4 million to $766.8, or approximately 34%, for the nine
months ended September 30, 1995 over the comparable 1994 period.
Material Handling Segment sales were $404.4 million for the nine months ended
September 30, 1995, an increase of $68.7 million from $335.7 million in the
year earlier period. The sales mix was approximately18% parts in the nine
months ended September 30, 1995 compared to 20% in the comparable 1994 period.
Machine sales increased 22%, primarily because of increased output resulting
from actions taken by management during 1994 and shipments of the new Genesis
line of IC trucks, introduced in December 1994. Parts sales increased 7%
because of improved parts inventory availability partially offset by the
adverse effects of a labor strike at the Company's parts distribution center
during the second quarter of 1995. The strike has not had a material
continuing effect on parts sales.
Material Handling Segment bookings for the nine months ended September 30, 1995
were $368.7 million, an increase of $59.8 million, or 19%, from the year
earlier period, on strong customer demand early in the year for the new Genesis
line. Bookings for parts sales for the nine months ended September 30, 1995,
from which the Company generally realized higher margins than machine sales,
increased 6% from the year earlier period. Machine order bookings for the nine
months ended September 30, 1995 increased 17% from the year earlier period,
reflecting the favorable acceptance of the Company's new Genesis line.
Material Handling Segment backlog was $100.1 million at September 30, 1995
compared to $135.9 million at December 31, 1994 and $119.8 million at September
30, 1994.
Heavy Equipment Segment sales increased $17.4 million for the nine months ended
September 30, 1995 from the nine months ended September 30, 1994. Machines
sales increased 9%, and parts sales increased 10%. The sales mix was
approximately 35% parts for the nine months ended September 30, 1995 compared
to 35% parts for the comparable 1994 period. Heavy Equipment Segment parts
sales were also adversely affected by the strike at the parts distribution
center during the second quarter of 1995, but to a lesser degree than the
Material Handling Segment.
Heavy Equipment Segment bookings for the nine months ended September 30, 1995
were $171.3 million, an increase of $12.3 million, or 8%, from the year earlier
period. Bookings for parts sales, from which the Company generally realizes
higher margins than machine sales, increased 12% from the nine months ended
September 30, 1994. Machine bookings for the nine months ended September 30,
1995 increased 5% from the comparable 1994 period. Heavy Equipment Segment
backlog was $55.2 million at September 30, 1995 compared to $67.8 million at
December 31, 1994 and $48.2 million at September 30, 1994.
Mobile Crane segment sales were $172.7 million for the nine months ended
September 30, 1995, an increase of $105.8 million from $66.9 million in the
year earlier period due to the PPM Acquisition in May 1995. Mobile Crane
Segment backlog was $81.6 million at September 30, 1995, reflecting the
additional PPM backlog acquired, compared to $11.7 million at December 31, 1994
and $11.9 million at September 30, 1994.
Gross Profit
Gross profit of $76.3 million for the nine months ended September 30, 1995 was
$18.9 million, or 33%, higher than gross profit of $57.5 million for the nine
months ended September 30, 1994.
The Material Handling Segment's gross profit increased $4.3 million to $26.7
million for the nine months ended September 30, 1995 compared to $22.4 million
for the prior year's period. The gross profit percentage in the Material
Handling Segment was 7% for the nine months ended September 30, 1995 and for
the comparable 1994 period. Favorable efficiencies due to higher production
and sales volumes and the effects of 1994 severance actions were offset by
additional costs associated with the start-up of production of the new Genesis
product line and manufacturing inefficiencies related to vendors' continuing
inability to meet demand.
The Heavy Equipment Segment's gross profit increased $1.8 million to $26.4
million for the nine months ended September 30, 1995 compared to $24.6 million
for the comparable 1994 period. The gross profit percentage in the Heavy
Equipment Segment was 14% for the nine months ended September 30, 1995 and for
the nine months ended September 30, 1994.
Mobile Crane Segment's gross profit increased $12.8 million to $23.2 million
for the nine months ended September 30, 1995, compared to $10.4 million for the
prior year's period reflecting the addition of the May through September 1995
results of the PPM businesses.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses increased to $61.4 million
for the nine months ended September 30, 1995 from $55.8 million for the nine
months ended September 30, 1994. Material Handling Segment engineering,
selling and administrative expenses decreased to $24.6 million for the nine
months ended September 30, 1995 from $33.2 million for the comparable 1994
period, primarily as a result of severance actions taken by management during
the second half of 1994. Heavy Equipment Segment engineering, selling and
administrative expenses increased to $17.1 million for the nine months ended
September 30, 1995 from $15.7 million for the comparable 1994 period as a
result of costs associated with the start-up of a new parts service business.
Mobile Crane Segment engineering, selling and administrative expenses increased
to $18.7 million for the nine months ended September 30, 1995 from $4.9 million
for the comparable 1994 period reflecting the PPM Acquisition in May 1995.
Corporate administrative expenses in 1994 included a charge of $2.2 million in
connection with the termination of a management contract with a related party.
Severance and Exit Costs
The Company announced personnel reductions totaling approximately 134 employees
in the Material Handling Segment's North American operations during the second
quarter of 1995 as a continuation of the Company's programs to increase
manufacturing efficiency, reduce costs and improve liquidity. The Company
recorded a combined charge of $3.5 million in the second quarter of 1995 for
severance costs associated with these actions and additional costs associated
with the closing of certain administrative and warehouse facilities.
During the second quarter of 1994, the Company recorded a charge of $4.5
million principally related to severance costs in the Material Handling
Segment's North American and European operations. In June 1994, the Company
announced personnel reductions in plant supervision, engineering, marketing and
administration totaling approximately 160 employees. The $4.5 million charge
represents severance costs associated with these actions.
Income (Loss) from Operations
The Material Handling Segment loss from operations of $1.4 million for the nine
months ended September 30, 1995 represents a $13.7 million improvement over the
$15.1 million loss in the comparable 1994 period. As discussed above,
increased sales and reduced costs contributed to the improvement in income from
operations for the nine months ended September 30, 1995.
Heavy Equipment Segment income from operations improved by $0.6 million to $9.3
million for the nine months ended June 30, 1995 from $8.7 million in the
comparable 1994 period, primarily as a result of reduced costs, offset by costs
associated with the start up of a new parts service business.
Mobile Crane Segment income from operations of $4.5 million for the nine months
ended September 30, 1995 decreased by $1.0 over the comparable 1994 period,
primarily due to losses of the PPM businesses acquired in May 1995.
On a consolidated basis, the Company realized operating income of $11.4 million
for the nine months ended September 30, 1995, compared to an operating loss of
$2.9 million for the comparable 1994 period.
Other Income (Expense)
Net interest expense increased to $27.3 million for the nine months ended
September 30, 1995 from $22.9 million in the comparable 1994 period as a result
of incremental borrowings associated with the PPM Acquisition in May 1995. The
Company realized gains of $24.4 million from sales of Fruehauf common stock.
The Company owns 250,000 shares of Fruehauf common stock which it received in
settlement of certain obligations of Fruehauf.
The Company recorded a charge of $3.0 million in the nine months ended
September 30, 1995 to recognize the impairment in value of certain properties
held for sale.
The Company recorded a charge of $1.8 million in the nine months ended
September 30, 1995 for payments related to the retirement of its former
chairman in August 1995, as described more fully in "Management -- Retirement
of Randolph W. Lenz." The balance of the provision for income taxes generally
represents taxes withheld on foreign royalties and dividends, and the
fluctuation in the provision for income tax is due to fluctuations in these
items.
1994 Compared with 1993
The table below is a comparison of net sales, gross profit, engineering,
selling, and administrative expenses, severance charges and income (loss) from
operations, by segment, for the years ended December 31, 1994 and 1993. As
described in Note A -- "Significant Accounting Policies -- Restatements and
Reclassifications" of the Notes to the Consolidated Financial Statements, the
1993 amounts have been restated.
Year Ended
December 31, Increase
1995 1994 (Decrease)
(in millions of dollars)
NET SALES
Material Handling $ 472.7 $ 395.6 $ 77.1
Heavy Equipment 226.8 203.8 23.0
Mobile Cranes 90.4 71.4 19.0
Eliminations (3.1) (0.5) (2.6)
Total $ 786.8 $ 670.3 $ 116.5
GROSS PROFIT
Material Handling $ 35.2 $ 16.0 $ 19.2
Heavy Equipment 33.8 30.5 3.3
Mobile Cranes 14.2 2.0 12.2
Total $ 83.2 $ 48.5 $ 34.7
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Material Handling $ 42.4 $ 44.6 $ (2.2)
Heavy Equipment 22.1 19.5 2.6
Mobile Cranes 6.3 10.1 (3.8)
General/Corporate 1.7 3.5 (1.8)
Total $ 72.5 $ 77.7 $ (5.2)
SEVERANCE CHARGES
Material Handling $ 6.7 $ --- $ 6.7
Heavy Equipment 0.6 --- 0.6
Total $ 7.3 $ --- $ 7.3
INCOME (LOSS) FROM OPERATIONS
Material Handling $ (13.9) $ (28.6) $ 14.7
Heavy Equipment 11.1 11.0 0.1
Mobile Cranes 7.9 (8.1) 16.0
General/Corporate (1.7) (3.5) 1.8
Total $ 3.4 $ (29.2) $ 32.6
Net Sales
Sales in 1994 increased $116.5 million, or approximately 17%, over 1993.
Material Handling Segment sales were $472.7 million for 1994, an increase of
$77.1 million, or 19%, from $395.6 million for the prior year. Machine sales
increased $81.0 million and parts sales decreased $3.9 million. As a result,
the sales mix was approximately 19% parts in 1994 compared to 24% parts in
1993. Machine sales improved due to increased industry demand and increased
output resulting from production improvements and the easing of capital
constraints. Cash constraints in the second half of 1993 resulted in
production problems caused by a lack of supplies and materials during the last
half of 1993 and the opening months of 1994. Production improved in 1994
because of reorganization of work flows and other actions taken by
manufacturing management and because a working capital infusion in December
1993 allowed management to improve relations and schedule payment terms with
its key suppliers. Parts sales were affected by the cash constraints
previously discussed and by difficulties in assimilating the Material Handling
Segment's parts business into the Terex Parts Distribution Center during the
first half of 1994, leading to decreased parts availability. Parts sales
improved during the last half of 1994 as these difficulties were mitigated.
Material Handling Segment bookings for 1994 were $470.6 million, an increase of
$5.6 million from 1993. Machine order bookings for the year ended December
31, 1994 of $381.2 million increased $17.3 million or 5% compared to $364.0
million in the year earlier period. Bookings for parts sales for 1994, from
which the Company generally realizes higher margins than machine sales,
decreased $11.6 million, or 12%, from the year earlier period, primarily
because of decreased parts availability as discussed above. Material Handling
Segment backlog was $135.9 million at December 31, 1994 compared to $152.7
million at December 31, 1993. This change reflects the improvement in second
through fourth quarter sales resulting from the upward trend in production and
improved parts availability levels. As the Company maintains full production
in the Material Handling Segment United States operations and as parts
availability returns to normal levels, management expects that the backlog of
both machines orders and parts orders will be reduced during 1995.
In December 1994 CMHC introduced the Genesis 2- to 4-ton IC truck. The light
IC market, in which this product competes, represents approximately 60% of the
rider lift truck industry. Management believes this product is superior to
competitors' products in performance, reliability and operator comfort, and is
designed to achieve reduced production costs.
Heavy Equipment Segment sales increased $23.0 million, or 11%, to $226.8
million in 1994 from $203.8 million in 1993. Machine sales increased $21.6
million and parts sales increased $1.4 million. The sales mix was
approximately 36% parts in 1994 compared to 39% parts in 1993. Machine sales
increased at all of the Heavy Equipment Segment divisions, reflecting increased
domestic construction industry demand and improved sales volume outside the
United States.
Heavy Equipment Segment bookings for 1994 were $232.2 million, an increase of
$38.1 million, or 20%, from 1993. Bookings for parts sales of $77.6 million,
from which the Company generally realizes higher margins than machine sales,
were comparable to bookings for 1993. Machine bookings for 1994 increased
$42.2 million, or 38%, from 1993, reflecting the factors discussed above.
Heavy Equipment Segment backlog was $67.8 million at December 31, 1994 compared
to $62.3 million at December 31, 1993, reflecting the improved shipments in
1994. Parts backlog was $6.1 million at December 31, 1994 compared to $8.6
million at December 31, 1993. This decrease resulted from increased parts
availability during 1994. As a result of the working capital infusion in
December 1993, the inventory availability for parts sales increased during 1994
and management expects that the backlog of parts orders will continue to be
reduced as working capital continues to be applied to improve parts inventory
availability.
Mobile Crane segment sales were $90.4 million for 1994, an increase of $19.0
million from $71.4 million in 1993. Machine sales increased 43% and parts
sales increased 3%. The sales mix was approximately 27% parts in 1994 compared
to 33% parts in 1993.
Mobile Crane Segment bookings were $83.6 million for 1994, an increase of 9%
from 1993. Machine bookings increased 16%, and parts bookings increased by
1%.
Gross Profit
Gross profit for 1994 increased $34.7 million compared to 1993.
The Material Handling Segment's gross profit increased $19.2 million to $35.2
million for 1994 compared to $16.0 million for 1993. The gross profit
percentage in the Material Handling Segment increased to 7.4% for 1994 from
4.0% for 1993, reflecting cost reduction initiatives and production
improvements in the second through fourth quarters of 1994, somewhat offset by
comparatively lower sales and decreased manufacturing efficiency due to
shortages in manufacturing supplies and materials during the first quarter of
the year and the decrease in sales of replacement parts.
The Heavy Equipment Segment's gross profit increased $3.3 million to $33.8
million for 1994 compared to $30.5 million for 1993. Improved gross profit
from machine sales accounted for substantially all of the increase. The gross
profit percentage in the Heavy Equipment Segment remained at 15.0% for 1994 and
1993, reflecting the continuing effects of cost reduction initiatives and
improved manufacturing efficiency offset by a decrease in the parts sale mix
during 1994.
Mobile Crane Segment's gross profit increased $12.2 million to $14.2 million
for 1994, compared to $2.0 million for 1993. The gross profit percentage in
the Mobile Crane segment increased to 15.7% for 1994 from 2.8% in the prior
years period reflecting the continuing effects of cost reductions and improved
manufacturing efficiency.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses decreased to $72.5 million for
1994 from $77.7 million for 1993 as a result of cost reduction initiatives
throughout the Company. Material Handling Segment engineering, selling and
administrative expenses totaled $42.4 million for 1994 compared to $44.6
million for the prior year. Heavy Equipment Segment engineering, selling and
administrative expenses increased to $22.1 million for 1994 from $19.5 million
for the prior year. Mobile Crane Segment engineering, selling and
administrative expenses decreased to $6.3 million for 1994 compared to $10.1
million for 1993. Corporate administrative expense in 1994 includes a charge
of $2.2 million in connection with the termination, as of January 1, 1994, of
the Company's management contract with KCS Industries, L.P. ("KCS"), a
Connecticut limited partnership principally owned by certain present and former
officers of the Company, offset by allocations to operating segments. Charges
under the KCS contract would have totaled approximately $2.7 million for the
year ended December 31, 1994 if it had not been terminated, and would have
continued at such rate until at least June 30, 1995. See "Certain
Transactions" and Note M -- "Related Party Transactions" in the Notes to the
Consolidated Financial Statements for further information.
Severance Charges
During the second quarter of 1994, the Company recorded a charge of $4.5
million related principally to severance costs in the Material Handling
Segment's North American and European operations. In June 1994, the Company
announced personnel reductions in plant supervision, engineering, marketing and
administration totaling approximately 160 employees. The Company also
reorganized certain marketing activities and closed several of its regional
sales offices in the United States. In December 1994, the Company announced
additional personnel reductions totaling approximately 90 employees in
conjunction with the closing of the Material Handling Segment's Korean plant
and certain branch sales offices in France. An additional $2.8 million charge
was recorded for costs, principally severance costs, associated with these
actions.
Income (Loss) from Operations
The Material Handling Segment incurred a loss from operations of $7.2 million
for 1994, excluding the severance charge discussed above ($13.9 million
including the severance charge), compared to a loss of $28.6 million for 1993.
As discussed above, the decreases in sales and gross profit in the opening
months of 1994 reflected the difficulties in restoring full production due to
supplier problems. Income from operations was $3.5 million in the fourth
quarter of 1994, excluding the severance charge ($1.1 million including the
severance charge), compared to a loss of $10.7 million in the fourth quarter of
1993. Because of the production improvements achieved during 1994 and the
reduced operating expenses resulting from the actions described above,
management expects continued improvement in the Material Handling Segment's
income from operations during 1995.
Heavy Equipment Segment income from operations improved by $0.1 million to
$11.1 million for 1994 compared to $11.0 million in the prior year. This
improvement resulted from the increase in gross profit offset by the increase
in engineering, selling and administrative expenses described above.
Mobile Crane Segment income from operations of $7.9 million for 1994 improved
by $16.0 million over the comparable 1994 period due to increased sales and
cost reductions outlined above. As a result of cost reductions, improvements
in inventory management and consolidation of model offerings, Koehring was
profitable in 1994 after several years of losses.
On a consolidated basis, the Company achieved operating income of $10.7
million, excluding the severance charge discussed above, for 1994 ($3.4 million
income including the severance charge) compared to an operating loss of $29.2
million for the prior year.
Other Income (Expense)
Interest expense on a consolidated basis was $30.5 million for 1994 compared to
$31.2 million for 1993. The decrease in interest expense is primarily the
result of repayments of senior and subordinated debt partially offset by
increased borrowings under the Company's lending facilities.
The Company recognized equity in the net loss of Fruehauf of $0.7 million in
1993. As described in Note C -- "Investment in Fruehauf Trailer Corporation"
in the Notes to the Consolidated Financial Statements, the Company's carrying
value for its investment in Fruehauf was reduced to zero during 1992 and the
Company did not recognize any additional gains or losses with respect to its
investment in Fruehauf except as realized on transactions in Fruehauf common
stock. In December 1993, the Company sold 1,000,000 shares of Fruehauf common
stock and realized a gain of $3.0 million. During 1994 the Company sold a
total of 5,900,000 shares of Fruehauf common stock and realized a gain of $26.0
million.
As a result of changing Mark's product offerings and distribution, the Company
recognized a charge to income of $4.7 million in the fourth quarter of 1993 to
write-off the remaining unamortized goodwill from the acquisition of Mark.
In 1994, the Company recorded a provision for state income taxes of $0.5
million in connection with the sale of its former subsidiary, Drexel
Industries, Inc. The balance of the provision for income taxes generally
represents taxes withheld on foreign royalties and dividends. As such, any
fluctuation in the provision for income tax is due to fluctuations in these
items.
Extraordinary Items
During 1994, the Company repurchased a total of $27.3 million of old senior
secured notes. The Company recognized extraordinary losses totaling $0.7
million from these transactions to write off unamortized discount and debt
issuance costs.
In connection with terminating its previous bank lending agreement, the Company
recognized a charge of approximately $2.0 million in the second quarter of 1993
to write off unamortized debt issuance costs.
In December 1993, the Company repurchased $5.0 million of old senior secured
notes for approximately $4.5 million, including accrued interest. The Company
recognized an extraordinary gain on this transaction of approximately $0.5
million, net of write-off of unamortized discount and debt issuance costs.
1993 Compared with 1992
The table below is a comparison of net sales, gross profit, engineering,
selling, and administrative expenses and income (loss) from operations, by
segment, for the years ended December 31, 1993 and 1992. As described in Note
A -- "Significant Accounting Policies -- Restatements and Reclassifications" of
the Notes to Consolidated Financial Statements, the 1993 amounts have been
restated. Amounts shown for the Material Handling Segment for 1992 represent
activity for the five months subsequent to the CMH Acquisition.
Year Ended
December 31, Increase
1993 1992 (Decrease)
(in millions of dollars)
NET SALES
Material Handling $ 395.6 $ 241.0 $ 154.6
Heavy Equipment 203.8 194.7 9.1
Mobile Cranes 71.4 87.7 (16.3)
Eliminations (0.5) --- (0.5)
Total $ 670.3 $ 523.4 $ 146.9
GROSS PROFIT
Material Handling $ 16.0 $ 22.5 $ (6.5)
Heavy Equipment 30.5 26.8 3.7
Mobile Cranes 2.0 2.8 (0.8)
Total $ 48.5 $ 52.1 $ (3.6)
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Material Handling $ 44.6 $ 20.3 $ 24.3
Heavy Equipment 19.5 23.6 (4.1)
Mobile Cranes 10.1 12.0 (1.9)
General/Corporate 3.5 0.3 3.2
Total $ 77.7 $ 56.2 $ 21.5
INCOME (LOSS) FROM OPERATIONS
Material Handling $ (28.6) $ 2.2 $ (30.8)
Heavy Equipment 11.0 3.2 7.8
Mobile Cranes (8.1) (9.2) 1.1
General/Corporate (3.5) (0.3) (3.2)
Total $ (29.2) $ (4.1) $ (25.1)
Net Sales
Sales in 1993 increased $146.9 million, or approximately 28%, over 1992.
Material Handling Segment sales were $395.6 million for 1993 compared to $241.0
million for the last five months of 1992, an increase of $154.6 million. On a
pro forma basis, giving effect to the CMH Acquisition as of January 1, 1992,
sales decreased $133.9 million for 1993 from $529.5 million for 1992. Material
Handling Segment sales in the first quarter of 1993 were significantly lower
than in the fourth quarter of 1992. Management believes that Material Handling
Segment dealers increased orders during the fourth quarter of 1992 to ensure
adequate inventory levels during the first quarter of 1993 while the Company
transferred certain light IC lift truck production from Korea to the U.S. and
Germany. In addition, the Material Handling Segment operations in the U. S.
experienced working capital constraints during 1993 which limited the Company's
ability to obtain materials and maintain production, adversely affecting sales
for 1993. Bookings remained strong because of improved demand in the North
American forklift industry. As a result of these factors, the Material
Handling Segment backlog was $152.7 million at December 31, 1993 compared to
$83.2 million at December 31, 1992 and $80.8 million at the July 31, 1992 CMH
Acquisition date.
Heavy Equipment Segment sales increased $9.1 million in 1993 from 1992.
Machines and contract sales represented $9.9 million of the increase and offset
by a parts sales decrease of $0.8 million. The sales mix changed from
approximately 41% parts in 1992 to 39% parts in 1993. Unit Rig, the Heavy
Equipment Segment division that principally serves the mining industry,
experienced a decrease in sales of $4.5 million to $69.6 million in 1993 from
$74.1 million in 1992. Unit Rig equipment sales decreased $7.0 million,
partially offset by a $2.5 million increase in parts sales. The decrease in
equipment sales reflects continuing low activity in the mining industry as well
as more aggressive pricing and financing by competitors. The decreased sales
at Unit Rig were offset by an $11.3 million increase in sales by the Terex
Business to $132.7 million for 1993. Terex Business machine sales increased
$16.0 million, partially offset by a $4.7 million decrease in parts sales.
Heavy Equipment Segment bookings in 1993 were $194.1 million, a decrease of
$31.5 million, or 14%, from 1992. Bookings for parts sales, from which the
Company realizes higher margins than machine sales, decreased $1.9 million or
2.4% in 1993. Machine bookings decreased $32.1 million or 22%, reflecting
continuing weakness in the Heavy Equipment Segment's principal markets during
the first half of 1993 as well as more aggressive pricing and financing by the
Company's competitors. The slow recovery in the construction industry has also
made the Terex Business distributor networks more cautious in their acquisition
of new equipment, especially for machines to be used in the rental market.
Heavy Equipment Segment backlog was $62.3 million at December 31, 1993 compared
to $72.0 million at December 31, 1992, reflecting the decrease in bookings.
Parts backlog was $8.6 million at December 31, 1993 compared to $6.3 million at
December 31, 1992. This increase resulted primarily from liquidity constraints
experienced during 1993 which resulted in decreased parts inventory
availability.
Mobile Crane segment sales were $71.4 million for 1993, a decrease of $16.3
million from $87.7 million in the year earlier period. Machine sales decreased
23% and parts sales decreased 12%. The sales mix was approximately 33% parts
for 1993 compared to 30% parts in 1992. Koehring sales in 1992 were higher due
to sales of slow moving inventory and product lines at low margins to reduce
inventory and more effectively utilize working capital.
Mobile Crane Segment bookings were $76.5 million for 1993, a decrease of 15%
from the year earlier period. Machine bookings decreased 11%, and parts
bookings decreased by 9%. Bookings declined during 1993 due to the slow
recovery in the construction market which made the Mobile Crane Segment's
distributors more cautious in their acquistion of new equipment, especially
those to be used in the rental market.
Gross Profit
Gross profit for 1993 decreased $3.6 million compared to 1992.
The Material Handling Segment's gross profit decreased $6.5 million to $16.0
million for 1993 compared to $22.5 million for the last five months of 1992 and
compared to $40.1 million on a pro forma basis for 1992. The gross profit
percentage in the Material Handling Segment decreased to 4.0% for 1993 compared
to 9.3% for the last five months of 1992. The decrease in gross profit
percentage reflects comparatively lower 1993 sales (compared to annualized 1992
sales) and decreased manufacturing efficiency due to working capital
constraints, somewhat offset by cost reduction initiatives.
The Heavy Equipment Segment's gross profit increased $3.7 million to $30.5
million for 1993 compared to $26.8 million for 1992. Improved gross profit
from machines and contract sales accounted for substantially all of the
increase, reflecting the positive effects of cost reduction initiatives
implemented in 1992 and throughout 1993. The gross profit percentage in the
Heavy Equipment Segment increased to 15.0% for 1993 compared to 13.8% for 1992,
reflecting improved manufacturing efficiency.
Mobile Crane Segment's gross profit decreased $0.8 million to $2.0 million for
1993, compared to $2.8 million for 1992. The gross profit percentage in the
Mobile Crane segment decreased to 2.8% for 1993 from 3.2% in 1992. Gross
profit for the 1993 period included a $2.2 million provision for write-down of
certain inventory at Koehring in connection with management's decision to
consolidate model offerings.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses increased to $77.7 million for
1993 from $56.2 million for 1992. Material Handling Segment engineering,
selling and administrative expenses totaled $44.6 million for 1993 compared to
$20.3 million for the last five months of 1992 and compared to $48.2 million on
a pro forma basis for 1992. Heavy Equipment Segment engineering, selling and
administrative expenses decreased to $19.5 million for 1993 from $23.6 million
for 1992 as a result of cost reduction initiatives, including headcount
reductions and the consolidation of certain administrative functions into the
Heavy Equipment Segment's administrative offices in Tulsa, Oklahoma. Mobile
Crane Segment engineering, selling and administrative expenses decreased to
$10.1 million for 1993 from $12.0 million for 1992. Corporate expenses
increased $3.2 million primarily as a result of increased legal and accounting
expenses which were not fully allocated to operating segments.
Income (Loss) from Operations
The Material Handling Segment incurred a loss from operations of $28.6 million
for 1993, compared to operating income of $2.2 million for the last five months
of 1992 and compared to an operating loss of $8.2 million on a pro forma basis
for 1992, primarily as a result of decreased sales. As discussed above, sales
and gross profit in 1993 reflect the effects of the Company's working capital
constraints.
Heavy Equipment Segment income from operations improved by $7.8 million to
$11.0 million in 1993 from $3.2 million in 1992. This improvement resulted
from the increase in gross profit and the decrease in engineering, selling and
administrative expenses.
Mobile Crane Segment loss from operations of $8.1 million for 1993 improved by
$1.1 million over 1992 principally due to continuing cost reductions,
improvements in inventory management and consolidation of model offerings.
On a consolidated basis, the Company experienced an operating loss of $29.2
million for 1993, compared to an operating loss of $4.1 million for 1992.
Other Income (Expense)
Interest expense on a consolidated basis was $31.2 million for 1993 compared to
$23.3 million for 1992. Terex sold $160 million principal amount of its 13%
senior secured notes due August 1, 1996 on July 31, 1992. The proceeds of the
senior secured notes were used for the cash portion of the the acquisition of
CMH ($85 million), the payment of all amounts outstanding under Terex's
previous credit and letter of credit agreement ($58 million), and for working
capital and transaction costs. The increase in Terex interest expense for 1993
over 1992 is primarily the result of incremental borrowings to finance the
acquisition of CMH (incremental interest expense of approximately $6.7 million)
and higher interest rates on new borrowings used to refinance the previous
credit and letter of credit agreement, as well as additional costs related to
establishing and utilizing a new credit and letter of credit agreement.
The Company recognized equity in the net loss of Fruehauf of $0.7 million in
1993 compared to a gain from deconsolidation of Fruehauf of $36.5 million in
1992. As described in Note C -- "Investment in Fruehauf Trailer Corporation"
in the Notes to the Consolidated Financial Statements, the Company's carrying
value for its investment in Fruehauf was reduced to zero in 1992 and the
Company did not recognize any additional gains or losses with respect to its
investment in Fruehauf except as realized on transactions in Fruehauf common
stock. In December 1993, the Company sold 1,000,000 shares of Fruehauf common
stock and realized a gain of $3.0 million.
As a result of changing Mark's product offerings and distribution, the Company
recognized a charge to income of $4.7 million in the fourth quarter of 1993 to
write-off the remaining unamortized goodwill from the acquisition of Mark.
The provision for income taxes generally represents taxes withheld on foreign
royalties and dividends. As such, any fluctuation in the provision for income
tax is due to fluctuations in these items. The Company adopted SFAS No. 109,
"Accounting for Income Taxes" on January 1, 1993. The new pronouncement
retains the basic concepts of SFAS No. 96, but generally simplifies its
application. The adoption of this new pronouncement did not have a material
impact on the Company's financial statements.
Extraordinary Items
In connection with terminating its previous bank lending agreement, the Company
recognized a charge of approximately $2.0 million in the second quarter of 1993
to write off unamortized debt issuance costs.
In December 1993, the Company repurchased $5.0 million of its old senior
secured notes for approximately $4.5 million, including accrued interest. The
Company recognized an extraordinary gain on this transaction of approximately
$0.5 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company's businesses are working capital intensive and require funding for
purchases of production and replacement parts inventories, capital expenditures
for repair, replacement and upgrading of existing facilities as well as
financing of receivables from customers and dealers. The Company has
significant debt service requirements including semi-annual interest payments
on senior debt and monthly interest payments on its credit facility.
Net cash of $27.9 million was used in operating activities during the nine
months ended September 30, 1995. Net cash used by investing activities was
$95.8 million during the nine months ended September 30, 1995 principally due
to the PPM Acquisition as described below. Net cash provided by financing
activities during the nine months ended September 30, 1995 was $127.5 million,
primarily from the Refinancing discussed below. Cash and cash equivalents
totaled $12.5 million at September 30, 1995.
Factors affecting future liquidity
The Company announced personnel reductions totaling approximately 134 employees
in the Material Handling Segment's North American operations during the second
quarter of 1995 as a continuation of the Company's programs to increase
manufacturing efficiency, reduce costs and improve liquidity. The Company
recorded a combined charge of $3.5 million in the second quarter of 1995 for
severance costs associated with these actions and additional costs associated
with the closing of certain administrative and warehouse facilities.
As discussed below, the Company has refinanced its senior and subordinated
debt, established new credit facilities and borrowed additional funds to
complete the PPM Acquisition which will impact future operating results,
sources of liquidity and debt service requirements.
On May 9, 1995, the Company completed the refinancing and the PPM Acquisition.
The Refinancing included the private placement to institutional investors of
$250 million of the Senior Secured Notes, repayment of the Company's old senior
secured notes and senior subordinated notes, totaling approximately $152.6
million principal amount, and entry into the Credit Facility to replace the
Company's existing lending facility in the U.S. Until such time as the Company
completes an exchange of the Senior Secured Notes for an equivalent issue of
registered notes, or a shelf registration statement for the Senior Secured
Notes is effective, the interest rate on the Senior Secured Notes will be
13.75%. The Indenture for the Senior Secured Notes places certain limits on
the Company's ability to incur additional indebtedness; permit the existence of
liens; issue, pay dividends on or redeem equity securities; utilize the
proceeds of assets sales; consolidate, merge or transfer assets to another
entity; and enter into transactions with affiliates. In connection with the
issuance of the Senior Secured Notes, the Company issued 1,000,000 stock
appreciation rights ("SARs") entitling the holders to receive cash or Common
Stock, at the option of the Company, in an amount equal to the average closing
sale price of the common stock for 60 trading days prior to the date of
exercise less $7.288 for each SAR.
Approximately $92.6 million of the proceeds of the Senior Secured Notes was
used for the PPM Acquisition, including the repayment of certain indebtedness
of PPM required to be repaid in connection with the acquisition. In addition,
the Company estimates that the acquisition costs incurred will total
approximately $3.0 million. The remainder of the purchase price consisted of
the issuance of redeemable preferred stock of Terex Cranes having an aggregate
liquidation preference of 127 million French francs (approximately $26.1
million), subject to adjustment. The purchase price is subject to adjustment
calculated by reference to the consolidated net asset value of PPM as
determined by an audit as of the date of closing. The preferred stock does not
bear a dividend and, accordingly, the Company has valued this stock at
approximately $8.8 million (discounted at 15%). The Company has not yet
reached agreement with the sellers about the amount of purchase price
adjustment but, based on work performed, the Company believes that the amount
of the preferred stock could ultimately be reduced.
The Company's Credit Facility provides the Company with the ability to borrow
(in the form of revolving loans and up to $15 million in outstanding letters of
credit) up to $100 million. The Credit Facility is secured by substantially
all of the Company's domestic receivables and inventory (including PPM). The
amount of borrowings is limited to the sum of the following: (i) 75% of the
net amount of eligible receivables, as defined, of the Company's U.S.
businesses other than CMHC, plus (ii) 70% of the net amount of CMHC eligible
receivables, plus (iii) the lesser of 45% of the value of eligible inventory,
as defined, or 80% of the appraised orderly liquidation value of eligible
inventory less (iv) any availability reserves established by the lenders. The
Credit Facility expires May 9, 1998 unless extended by the lenders for one
additional year. At the option of the Company, revolving loans may be in the
form of prime rate loans initially bearing interest at the rate of 1.75% per
annum in excess of the prime rate and eurodollar rate loans initially bearing
interest at the rate of 3.75% per annum in excess of the adjusted eurodollar
rate.
The Company made an interest payment of $17.7 million on November 15, 1995 on
the Senior Secured Notes. The Company's debt service obligations for the
remainder of 1995 include approximately $0.6 million monthly on the Credit
Facility. Management believes that, together with cash generated from
operations, the Refinancing provides the Company with adequate liquidity to
meet the Company's operating and debt service requirements. The balance
outstanding under the Credit Facility as of October 31, 1995 was $60.6 million,
and the additional amount the Company could have borrowed was $23.0 million as
of that date. Management intends to seek additional working capital financing
facilities for the Company's international operations to provide additional
liquidity worldwide, but there can be no assurances whether, or under what
terms, such additional facilities can be obtained.
CONTINGENCIES AND UNCERTAINTIES
The Internal Revenue Service is currently examining the Company's federal tax
returns for the years 1987 through 1989. In December 1994, the Company
received an examination report from the IRS proposing a substantial tax
deficiency based on this examination. The examination report raises a variety
of issues, including the Company's substantiation for certain deductions taken
during this period, the Company's utilization of certain net operating loss
carryovers ("NOL's") and the availability of such NOL's to offset future
taxable income. If the IRS were to prevail on all the issues raised, the
amount of the tax assessment would be approximately $56 million plus interest
and penalties. If the Company were required to pay a significant portion of
the assessment, it could have a material adverse impact on the Company and
could exceed the Company's resources. The Company has filed its administrative
appeal to the examination report. Although management believes that the
Company will be able to provide adequate documentation for a substantial
portion of the deductions questioned by the IRS and that there is substantial
support for the Company's past and future utilization of the NOL's, the
ultimate outcome of this matter is subject to the resolution of significant
legal and factual issues. If the Company's positions prevail on the most
significant issues, management believes that the amounts due would not exceed
amounts previously paid or provided; however, even under such circumstances, it
is possible that the Company's NOL's could be reduced to some extent. No
additional accruals have been made for any amounts which might be due as a
result of this matter because the possible loss ranges from zero to $56 million
plus interest and penalties and the ultimate outcome cannot presently be
determined or estimated.
In addition, Randolph W. Lenz has retired as Chairman of the Company. Although
his retirement agreement places certain restrictions on his ability to sell his
shares of Common Stock in the Company, in the event that Mr. Lenz is able to
sell a substantial portion of his shares in the Company, such sale, in
combination with the issuance of the Warrants in December 20, 1993 and subject
to the effects of other changes in share ownership of the Company, could result
in a change in control for tax purposes. Such a change in control for tax
purposes could possibly result in a significant reduction in the amount of
NOL's available to the Company to offset future taxable income.
The Commission in March of 1994 initiated a private investigation, which
included the Company and certain of its affiliates, to determine whether
violations of certain aspects of the Federal securities laws have taken place.
The Company is cooperating with the Commission in its investigation and it is
not possible at this time to determine the outcome of the Commission's
investigation.
The Company has received a letter from the Department of Labor (the "DOL")
alleging that the Company's former Chairman of the Board, at the time a
fiduciary for the Company's retirement plans, violated certain provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") in
making certain investments which may have been imprudent and by possibly
engaging in prohibited transactions under ERISA. The Company and its former
Chairman of the Board are currently in discussions with the DOL concerning the
allegations and it is not possible at this time to determine the outcome of
this matter; however, the Company does not believe that the resolution of the
allegations will have a material adverse effect on the Company.
The Company is subject to a number of contingencies and uncertainties including
product liability claims, self-insurance obligations, tax examinations and
guarantees. Many of the exposures are unasserted or proceedings are at a
preliminary stage, and it is not presently possible to estimate the amount or
timing of any cost to the Company. However, management does not believe that
these contingencies and uncertainties will, in the aggregate, have a material
effect on the Company. When it is probable that a loss has been incurred and
possible to make reasonable estimates of the Company's liability with respect
to such matters, a provision is recorded for the amount of such estimate or for
the minimum amount of a range of estimates when it is not possible to estimate
the amount within the range that is most likely to occur.
The Company generates hazardous and nonhazardous wastes in the normal course of
its operations. As a result, the Company is subject to a wide range of
federal, state, local and foreign environmental laws and regulations, including
the Comprehensive Environmental Response, Compensation and Liability Act, that
(i) govern activities or operations that may have adverse environmental
effects, such as discharges to air and water, as well as handling and disposal
practices for hazardous and nonhazardous wastes, and (ii) impose liability for
the costs of cleaning up, and certain damages resulting from, sites of past
spills, disposals or other releases of hazardous substances. Compliance with
such laws and regulations has, and will, require expenditures by the Company on
a continuing basis.
BUSINESS
General
Terex is a global provider of capital goods and equipment used in the
manufacturing, distribution, mining, construction and infrastructure
industries.
The Company's operations began in 1983 with the purchase of Northwest
Engineering Company, the Company's original business and name. Since 1983,
management has expanded the Company's business through a series of
acquisitions. In 1988, Northwest Engineering Company merged into a subsidiary
acquired in 1986 named Terex Corporation, with Terex Corporation as the
surviving corporation. For the year ended December 31, 1994, consolidated
revenues of the Company amounted to approximately $787 million. Prior to May
1995, the Company's operations were divided into two principal segments:
Material Handling and Heavy Equipment. On May 9, 1995, the Company completed
the PPM Acquisition. Together with Koehring, these businesses form the
Company's new Mobile Cranes Segment.
The Material Handling Segment designs, manufactures and markets a complete line
of internal combustion ("IC") and electric lift trucks, electric walkies,
automated pallet trucks, industrial tow tractors and related components and
replacement parts. These products are used in material handling applications
in a broad array of manufacturing, distribution and transportation industries.
The Material Handling Segment consists of CMH, which was acquired by the
Company on July 31, 1992 from Clark Equipment Company.
The Heavy Equipment Segment designs, manufactures and markets heavy-duty,
off-highway earthmoving and construction equipment and related components and
replacement parts. These products are used primarily by construction, mining,
logging, industrial and government customers in building roads, dams and
commercial and residential buildings; supplying coal, minerals, sand and
gravel. The Heavy Equipment Segment consists of two operating businesses: (i)
the Terex Business, which manufactures off-highway rigid and articulated
haulers, scrapers and wheel loaders and (ii) Unit Rig, which manufactures
electric rear and bottom dump haulers, as well as mechanical drive haulers and
wheel loaders principally sold to the mining industry.
The Mobile Cranes Segment designs, manufactures and markets mobile cranes,
aerial platforms, container stackers and scrap handlers and related components
and replacement parts. These products are used primarily for construction,
repair and maintenance of infrastructure, buildings and manufacturing
facilities, for material handling applications in the distribution and
transportation industries as well as in the scrap, refuse and lumber
industries. The Mobile Cranes Segment consists of three operating businesses:
(i) Koehring, which manufactures mobile cranes, aerial lift platforms and scrap
handlers, (ii) PPM North America, which manufactures mobile cranes and
container stackers under the brand name P&H (a trademark of Harnischfeger)
primarily in North America and (iii) PPM Europe, which manufactures mobile
cranes and container stackers primarily in Europe.
For financial information about the Company's industry and geographic segments,
see Note N -- "Business Segment Information" in the Notes to the Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The Company's long-term strategy has been, and continues to be, to seek out
acquisitions in the capital goods industry where aggressive management can
achieve substantial improvements in profitability and cash flow.
Material Handling Segment
CMH is a leading North American and European designer, manufacturer and
marketer of a complete line of IC and electric lift trucks, electric walkies,
automated pallet trucks, industrial tow tractors and related replacement parts.
CMH's products are distributed through an established global dealer network
which includes more than 440 locations. Management believes CMH has the
largest installed fleet in North America, with over 250,000 units, and that
over 320,000 CMH trucks are presently in operation worldwide. Historically,
approximately 80% of CMH's revenues have been derived from new product sales
and approximately 20% of revenues have been derived from the sale of
replacement parts. CMH and its independent dealers sell to a diversified base
of customers in a variety of industries. CMH's headquarters and U.S.
manufacturing facilities are located in Lexington, Kentucky. CMH's
international manufacturing facilities are located in Mulheim-Ruhr, Germany.
CMH also owns a training and research center in Lexington, Kentucky.
The Company acquired CMH on July 31, 1992. Following the acquisition, CMH
began implementing initiatives intended to reduce its manufacturing and
operating costs. These initiatives have included consolidation of engineering,
manufacturing and parts facilities. In December 1993, CMH transferred its
parts supply operations to the Company's parts distribution center in
Southaven, Mississippi. During 1994, CMH completed the transfer of its light
IC lift truck chassis production from Korea to Lexington, Kentucky, closed its
manufacturing facility in Danville, Kentucky and closed its axle manufacturing
facility in Korea. In April 1994, the Company sold 100% of the stock of
Drexel. Drexel, which is located in Horsham, Pennsylvania, manufactures very
narrow-aisle lift trucks.
CMH currently offers 116 basic truck designs within six major product lines:
light IC trucks (1.0 to 5.0 tons), heavy IC trucks (5.5 to 47.5 tons),
narrow-aisle trucks, electric counterbalanced trucks (1.3 to 6.0 tons),
electric walkies and tow tractors.
Light IC trucks are used for general warehousing needs and are generally
powered by liquid propane and well suited for manufacturing and distribution
applications which require a high degree of maneuverability. Heavy IC trucks
are specialty products designed for use in more demanding situations such as
heavy manufacturing or container handling applications. Narrow-aisle trucks
provide solutions for high density storage needs and operate in six-to-eight
foot aisles and reach heights of more than 30 feet. Electric counterbalanced
trucks are designed for indoor use in warehousing, manufacturing, distribution
and other applications and are powered by a rechargeable electric battery. For
environmental reasons, electric trucks are becoming more popular. Electric
walkies are generally used in transporting and order-selecting. Tow tractors
are units designed to pull one or more trailers, with the largest market for
tow tractors being airport baggage handling.
CMH is a leading manufacturer of lift trucks in North America, although the
brand names of Hyster and Yale combined, both owned by Nacco Industries, Inc.,
account for production of more lift trucks annually. Other major North
American competitors include Toyota, Mitsubishi, Caterpillar and Komatsu in
both IC and electric riders, and Crown and Raymond in electric riders alone.
In Europe, CMH competes with the Linde Group, the European market leader, as
well as Hyster-Yale, Toyota and Jungheinreich. CMH also competes with a number
of specialty firms.
Heavy Equipment Segment
The Company is recognized as a significant competitor in the market for large
capacity haulers and scrapers. However, the Company is not a dominant
manufacturer in the heavy equipment industry, which is dominated in most
segments by large, diversified firms, such as Caterpillar, Dresser Industries
and Komatsu, that have broader product lines and greater financial resources.
The Company also competes in this industry with a number of specialty firms,
whose products generally compete directly with one or more of the Company's
product lines.
Terex Business
The Company acquired the Terex Division in December 1986 and acquired Terex
Equipment Limited ("TEL"), a subsidiary of the Company located in Scotland, in
June 1987. The Terex Division and TEL are jointly hereinafter referred to as
the "Terex Business," which is headquartered in Motherwell, Scotland. Terex
Division's marketing efforts in the United States serve the needs of North,
Central and South America, while TEL serves the remainder of the international
market. TEL manufactures the products of the Terex Business at its facility in
Motherwell, Scotland.
The Terex Business has two principal product lines: off-highway rigid and
articulated haulers and scrapers. A "hauler" is an off-road dump truck with a
capacity in excess of 25 tons. Haulers produced by the Terex Business have
capacities ranging from 25 to 85 tons. A "scraper" is an off-road vehicle,
commonly referred to as an "earth mover," that loads, moves and unloads large
quantities of soil for site preparations, including roadbeds. The Terex
Business product line also includes wheel loaders although these are not
presently being manufactured. A "wheel loader" is a vehicle that loads
materials onto trucks, conveyors and similar equipment. The Terex Business
products perform a wide range of earthmoving functions in quarry and open pit
mining and in many types of heavy construction, including highway, dam and
waterway construction; commercial and industrial site preparation; general land
improvement and real estate development; and structural renovation and
replacement. The Terex Business's main competitors are Caterpillar, VME Group,
Komatsu and Dresser.
In 1987, TEL entered into a joint venture agreement with Second Inner Mongolia
Machinery Company for the production of haulers in China. The joint venture
company, North Hauler Limited Liability Company, manufactures heavy trucks,
principally used in mining, at a facility in Baotou, Inner Mongolia, People's
Republic of China.
Unit Rig
In July 1988, the Company purchased certain domestic and foreign assets and
operations of the business that now operates as the Unit Rig Division ("Unit
Rig"). Unit Rig is headquartered in Tulsa, Oklahoma.
Unit Rig's predecessor pioneered the development of the diesel electric drive,
rear dump hauling truck for use in open pit mining operations. The truck is
powered by a diesel engine driving an electric generator that provides power to
individual electric motors in each of the rear wheels. Unit Rig's current
LECTRA HAUL product line consists of a series of rear dump hauler trucks with
payload capacities ranging from 100 to 260 tons, and bottom dump haulers with
capacities ranging from 180 to 270 tons.
Unit Rig also produces the Dart line of wheel loaders and mechanical drive
haulers. This product line consists of the Dart 600C mechanical drive wheel
loader with a bucket capacity up to 23 cubic yards and rear dump trucks ranging
in capacity from 85 to 130 tons. The Dart line also includes a tractor-trailer
bottom dump hauler with capacities from 120 to 160 tons.
The present principal markets for Unit Rig products are copper, gold, coal and
iron mines. Unit Rig's major customers are mining companies in North and South
America, Asia, Africa and Australia. Approximately 70% of Unit Rig's sales are
export sales. Unit Rig's largest competitors are Caterpillar, Komatsu and
Dresser.
Mobile Cranes Segment
Koehring
In January 1987, the Company purchased certain assets and operations of the
business that operated prior to the PPM Acquisition as the Koehring Cranes &
Excavators Division, which assets and operations were contributed to Koehring
in connection with the PPM Acquisition. Koehring, headquartered in Waverly,
Iowa, designs, manufactures and markets a broad line of hydraulic excavators
and hydraulic telescoping cranes sold under the well recognized trade names of
KOEHRING and LORAIN. In 1994 the Company discontinued manufacturing hydraulic
excavators except for large scrap handlers where the Company maintains a
meaningful market share. Hydraulic telescoping cranes are primarily used for
construction and industrial applications. Koehring's largest competitors in
the hydraulic excavator market are Komatsu and Caterpillar. Koehring has four
principal competitors in the mobile crane market: Grove Manufacturing,
Liebherr Werk Ehingen, Link-Belt and PPM Cranes, Inc.
In December 1991, the Company acquired substantially all operating assets of
the business that operated prior to the PPM Acquisition as the Mark Industries
Division. Mark relocated to the Koehring facilities in Waverly, Iowa during
1992 in order to more effectively utilize existing capabilities and
manufacturing facilities at the Waverly location. Mark is engaged in the
manufacture and sale of aerial lift equipment, including scissor lifts, boom
lifts and a full line of replacement parts. Scissor lifts and boom lifts are
used for the repair, maintenance and construction of buildings, manufacturing
facilities and equipment. These lifts are used in a wide variety of industrial
applications, such as installing and repairing electrical and plumbing
fixtures; installing drywall and ceilings; cleaning, repairing and painting
production equipment; maintaining refineries, chemical plants and aircraft; and
performing common construction tasks such as siding, insulation and structural
member installation. In 1993, the Company began to market Mark's products
through the Terex and CMH dealer networks to expand distribution opportunities.
Mark's largest competitor in the aerial lift industry is JLG Industries.
The Company currently manages the Northwest Engineering and BCP Construction
Products ("BCP," acquired in 1985) businesses from Koehring's location in
Waverly, Iowa. The sale of replacement parts for Northwest Engineering and BCP
products, including the Dynahoe backhoe/loader, constitutes the most important
part of these businesses.
PPM Europe
On May 9, 1995, the Company acquired substantially all of the capital stock of
PPM Europe. PPM Europe was formed in 1966 by Potain, S.A., and is a leading
European designer, manufacturer and marketer of mobile cranes and container
stackers. PPM Europe consists of several subsidiaries throughout Europe,
including: Bendini SpA, an Italian rough terrain crane producer, Brimont
Agraire S.A., a specialized trailer manufacturer in France, PPM Krane GmbH, a
sales organization in Germany, and Baulift Baumaschinen Und Krane Handels GmbH,
a parts distributor in Germany. PPM Europe operates two manufacturing
facilities, its PPM manufacturing facility at Montceau les Mines in central
France and its Bendini manufacturing facility in northern Italy. PPM Europe
markets its products primarily in Europe, Africa and the Middle East under the
PPM and BENDINI brand names. PPM Europe's major competitors in mobile cranes
are Krupp Mobilkran, Grove Cranes Ltd. and Liebherr Werk Ehingen. PPM Europe's
major competitors in the container stacker market are Kalmar, Valmet Belloti
and Taylor.
PPM North America
On May 9, 1995, the Company acquired substantially all of the capital stock of
PPM North America. PPM North America, headquartered in Conway, South Carolina,
designs, manufactures and markets rough terrain cranes, truck cranes and
container stackers under the P&H brand name which is licensed from
Harnischfeger Corporation. PPM also markets mobile cranes and container
stackers in the Far East through its Singapore subsidiary and in Australia
through its Australian subsidiary. PPM North America has four main competitors
in the mobile crane market: Grove Manufacturing, Liebherr Werk Ehingen,
Link-Belt and Koehring Cranes.
Environmental Considerations
The Company generates hazardous and nonhazardous wastes in the normal course of
its operations. As a result, the Company is subject to a wide range of
federal, state, local and foreign environmental laws and regulations, including
the Comprehensive Environmental Response, Compensation and Liability Act, that
(i) govern activities or operations that may have adverse environmental
effects, such as discharges to air and water, as well as handling and disposal
practices for hazardous and nonhazardous wastes, and (ii) impose liability for
the costs of cleaning up, and certain damages resulting from, sites of past
spills, disposals or other releases of hazardous substances. Compliance with
such laws and regulations has, and will, require expenditures by the Company on
a continuing basis. The Company may also have contingent responsibility for
liabilities of certain of its subsidiaries with respect to environmental
matters if such subsidiaries were to fail to discharge their obligations to the
extent that such liabilities arose during the period in which the Company was a
controlling shareholder.
Research and Development
The Company maintains engineering staffs at several of its locations which
design new products and improvements in existing product lines. Such costs
incurred in the development of new products or significant improvements to
existing products amounted to $10.5 million, $11.8 million and $6.7 million in
1994, 1993 and 1992, respectively.
Materials
Principal materials used by the Company in its various manufacturing processes
include steel, castings, engines, tires, electric controls and motors, and a
variety of other fabricated or manufactured items. In the absence of labor
strikes or other unusual circumstances, substantially all materials are
normally available from multiple suppliers. Current and potential suppliers
are evaluated on a regular basis on their ability to meet the Company's
requirements and standards. During the first half of 1994, certain of CMH's
suppliers experienced difficulties in meeting CMH's production schedules. Such
difficulties, while not eliminated, were substantially alleviated in the second
half of 1994. Electric wheel motors and controls used in the Unit Rig product
line are currently supplied exclusively by General Electric Company.
Seasonal Factors
The Company markets a large portion of its products in North America and
Europe, and its sales of heavy equipment and cranes during the fourth quarter
of each year (i.e., October through December) to the construction industry are
usually lower than sales of such equipment during each of the first three
quarters of the year because of the normal winter slowdown of construction
activity. However, sales of heavy equipment to the mining industry, as well as
sales of lift trucks, are generally less affected by such seasonal factors.
Distribution
CMH markets original equipment and repair parts through a worldwide dealer
network. CMH currently has 94 independent North American dealers who operate
approximately 233 outlets, with all such dealer outlets providing both sales
and service. CMH's European distribution network consists of approximately 85
independent dealers and three company-owned dealers operating in 29 countries.
CMH dealers generally market the full CMH product line and maintain
comprehensive service capabilities. CMH operates a dealer service organization
designed to coordinate sales and promotional activities, provide ongoing dealer
training and facilitate dealer communications.
CMH products are sold through a system which enables customers to specify a
truck which meets their particular materials handling needs. Customers can add
attachments such as container handlers, side shifters, roll clamps, block
handlers, carton clamps, push-pulls (slip-sheet) and fork positioners. CMH and
its dealers sell to a diversified customer base with no single customer
accounting for more than 4% of CMH's revenues.
The Terex Business markets original equipment and repair parts through
worldwide dealership networks. Unit Rig distributes its products and services
directly to customers primarily through its own distribution system. The
Company's heavy equipment dealers are independent businesses which generally
serve the construction, mining, timber and/or scrap industries. Although these
dealers carry products of a variety of manufacturers, and may or may not carry
more than one of the Company's products, each dealer generally carries only one
manufacturer's "brand" of each particular type of product. The Company employs
sales representatives who service these dealers from offices located throughout
the world.
The Mobile Cranes Segment distributes its products through a global network of
over 300 independent dealers organized by product line. With respect to mobile
cranes, in North America both Koehring and PPM North America maintain extensive
dealer networks. The geographic strength of Koehring Cranes, which markets its
mobile cranes under the LORAIN brand name, centers in the midwest and
mid-Atlantic regions of the U.S. and the geographic strength of PPM North
America, which markets its mobile cranes under the P&H brand, centers in the
southern and western regions. PPM Europe's distribution is carried out under
two brand names, PPM and BENDINI, through a single distriubtion network
comprised of both distributors and a direct sales force.
Backlog
The Company's backlog as of September 30, 1995, December 31, 1994 and 1993 was
as follows:
September 30, December 31,
1995 1994 1993
(in millions of dollars)
Material Handling $100.1 $135.9 $152.7
Heavy Equipment 55.2 67.8 80.9
Mobile Cranes 81.6 11.7 18.6
Total $236.9 $215.4 $233.6
Substantially all of the Company's backlog orders are expected to be filled
within one year, although there can be no assurance that all such backlog
orders will be filled within that time period. The Company's backlog orders
represent primarily new equipment orders. Parts orders are generally filled on
an as-ordered basis.
Patents, Licenses and Trademarks
Several of the trademarks and trade names of the Company, in particular the
TEREX, CLARK, KOEHRING, LORAIN, UNIT RIG, MARKLIFT, DYNAHOE, POWERWORKER, P&H
(licensed by PPM North America from Harnischfeger Corporation), PPM,
HYPERSTACKER, SUPERSTACKER, BENDINI and GENESIS trademarks, are important to
the business of the Company. The Company owns and maintains trademark and
patent registrations in countries where it conducts business, and monitors the
status of its trademark and patent registrations to maintain them in force and
renews them as required. The Company also takes steps, including legal action,
to protect its trademark, trade name and patent rights when circumstances
warrant such action.
Employees
As of September 30, 1995, the Company had approximately 3,670 employees.
The Company considers its relations with its personnel to be good.
Approximately 33% of the Company's employees are represented by labor unions
which have entered into various separate collective bargaining agreements with
the Company. Although the Company experienced a labor strike, which has been
settled, at its parts distribution center in Southaven, Mississippi during the
second quarter of 1995, and a strike at its Koehring facility in Waverly,
Iowa in December 1995, the Company does not expect these strikes to have a
material continuing adverse impact on the business.
Financial Information about Industry and Geographic Segments,
Export Sales and Major Customers
Information regarding foreign and domestic operations, export sales, segment
information and major customers is included in Note N -- "Business Segment
Information" in the Notes to the Consolidated Financial Statements.
PROPERTIES
The following table outlines the principal manufacturing, warehouse and office
facilities owned or leased by the Company and its subsidiaries:
Entity Facility Location Type and Size of Facility
Terex
(Corporate Offices) Westport, Connecticut (1) Office 14,898 sq. ft.
Terex
(Distribution
Center) Southaven, Mississippi (1) Warehouse and light
manufacturing
505,000 sq. ft. (2)
Material Handling Segment
CMHC Lexington, Kentucky (1) Manufacturing, warehouse and
office 372,600 sq. ft.
CMHC Lexington, Kentucky Training and research and
development 43,000 sq. ft.
CMHC Lexington, Kentucky (1) Office 64,600 sq. ft.
CMHC Lexington, Kentucky (1) Manufacturing, warehouse and
test facility 59,500 sq. ft.
CMHC Chicago, Illinois (1) Office 9,100 sq. ft.
CMH Germany Mulheim-Ruhr, Germany Manufacturing, engineering,
power generation,
maintenance and office
241,350 sq. ft.
CMH Germany Mulheim-Ruhr, Germany (1) Office 61,360 sq. ft.
CMH Germany Saarn, Germany (1) Warehouse 150,700 sq. ft.
Heavy Equipment Segment
Unit Rig Tulsa, Oklahoma Manufacturing and office
325,000 sq. ft.
TEL Motherwell, Scotland Manufacturing, warehouse and
office 714,000 sq. ft. (3)
Mobile Cranes Segment
Koehring & Mark Waverly, Iowa (4) Office, manufacturing and
warehouse 383,000 sq. ft.
PPM North America Conway, South Carolina (1) Office, manufacturing and
warehouse 257,040 sq. ft.
PPM Europe Montceau les Mines, France Office, manufacturing and
warehouse 419,764 sq. ft.
PPM Europe Crespellano, Italy Office, manufacturing and
warehouse 92,750 sq. ft.
PPM Europe Dortmund, Germany (1) Office and warehouse
129,180 sq. ft.
PPM Europe Rethel, France Office, manufacturing and
warehouse 215,300 sq. ft.
(1) These facilities are either leased or subleased by the indicated
entity.
(2) Includes 239,400 sq. ft. of warehouse space currently leased to
others.
(3) Includes 148,500 sq. ft. of manufacturing space currently leased to
others.
(4) Koehring also owns a 66,000 sq. ft. facility in Waterloo, Iowa which
is currently leased to others.
CMH also operates seven sales and service branch locations, all of which are
leased. The branch facilities consist of office and service space and
generally range in size from 1,500 to 3,100 square feet per facility. CMH also
owns manufacturing and office facilities in Seoul and Banwael, Korea which were
closed in the fourth quarter of 1994 and are presently held for sale.
Unit Rig also has 10 owned or leased locations for parts distribution and
rebuilding of components, of which two are in the United States, two are in
Canada and six are abroad.
The properties listed above are suitable and adequate for the Company's use.
The Company has determined that certain of its properties exceed its
requirements. Such properties may be sold, leased or utilized in another
manner and have been excluded from the above list.
LEGAL PROCEEDINGS
As described in Note L -- "Litigation and Contingencies" in the Notes to the
Consolidated Financial Statements, the Company is involved in various legal
proceedings, including product liability and workers' compensation liability
matters, which have arisen in the normal course of its operations and to which
the Company is self-insured for up to $5.0 million. Management believes that
the final outcome of such matters will not have a material adverse effect on
the Company's consolidated financial position.
For information concerning other contingencies and uncertainties, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Contingencies and Uncertainties."
MANAGEMENT
Executive Officers and Directors
The following individuals are currently directors of the Company:
Name Age Positions and First Year Elected
Offices with Company Director
Ronald M. DeFeo 43 President, Chief Executive 1993
Officer, Chief Operating
Officer and Director
Marvin B. Rosenberg 55 Senior Vice President, General 1992
Counsel, Secretary and
Director
G. Chris Andersen 57 Director 1992
William H. Fike 58 Director 1995
Bruce I. Raben 42 Director 1992
David A. Sachs 36 Director 1992
Adam E. Wolf 81 Director 1983
Mr. DeFeo became a director of the Company in 1993 and was appointed President
and Chief Operating Officer of the Company on October 4, 1993 and Chief
Executive Officer of the Company on March 24, 1995. Prior to joining Terex on
May 1, 1992, Mr. DeFeo was a Senior Vice President of J.I. Case Company, the
farm and construction equipment division of Tenneco Inc., and also served as a
Managing Director of Case Construction Equipment throughout Europe. While at
J.I. Case, Mr. DeFeo was also a Vice President of North American Construction
Equipment Sales and General Manager of Retail Operations.
Mr. Rosenberg was appointed a director of the Company in 1992 and was appointed
a Senior Vice President of the Company effective January 1, 1994. He has
served as Secretary and General Counsel of the Company since 1987. Mr.
Rosenberg is a director of Fruehauf and served as Secretary of Fruehauf since
it was organized in March 1989 until August 1993. From 1987 until December 31,
1993, he was employed as General Counsel of KCS, an entity that, until December
31, 1993, provided administrative, financial, marketing, technical, real estate
and legal services to the Company and its subsidiaries.
Mr. Andersen was appointed a director of the Company in 1992. Mr. Andersen has
been Vice Chairman of PaineWebber Incorporated ("PaineWebber") since March
1990. Prior to joining PaineWebber, Mr. Andersen was Managing Director for
nine years at Drexel Burnham Lambert Incorporated ("Drexel Burnham"), an
investment banking firm which filed for protection under Chapter 11 of the
United States Bankruptcy Code in 1990. Mr. Andersen is also a director of
Sunshine Mining Company.
William H. Fike was appointed a director of the Company in April 1995. Mr.
Fike is the Vice Chairman and Executive Vice President of Magna International,
Inc., an automotive parts manufacturer based in Ontario, Canada ("Magna").
Prior to joining Magna in September 1994, Mr. Fike was employed by Ford Motor
Company from 1966 to 1994, where he served in various capacities, most recently
as President of Ford Europe.
Mr. Raben was appointed a director of the Company in 1992. Mr. Raben is an
Executive Vice President of Jefferies & Company, Inc. Mr. Raben was employed
by Drexel Burnham from 1978 to 1990 where he served in various capacities
including Managing Director. Mr. Raben is also a director of Optical
Securities Group and Equity Marketing.
Mr. Sachs was appointed a director of the Company in 1992 and served as a
director of Fruehauf from November 1992 to March 1993. Mr. Sachs is President
of Alpha Onyx Asset Management, LLC, an investment advisory firm, and is a
principal at Onyx Partners, Inc., a merchant banking firm. From 1990 to 1994,
Mr. Sachs was employed at TMT-FW, Inc., an affiliate of Taylor & Co., a private
investment firm based in Fort Worth, Texas. TMT-FW, Inc. is one of two general
partners of EBD, L.P., which is the sole general partner of The Airlie Group
L.P. ("Airlie"). At TMT-FW, Inc., Mr. Sachs was engaged in the investment
activities of both Airlie and Taylor & Co. [Prior to joining TMT-FW, Inc. in
1990, Mr. Sachs was employed by Columbia Savings and Loan Association from 1984
to 1990 where he served in various capacities, including Executive Vice
President.]
Mr. Wolf became a director of the Company in 1983. Mr. Wolf has been
principally self-employed as an attorney throughout his career. He has
previously served on several boards of directors, including those of a
telephone company, a bank and a hospital.
The following table sets forth, as of November 1, 1995, the respective names
and ages of the Company's executive officers indicating all positions and
offices held by each such person. Each officer is elected by the Board to hold
office for one year or until his successor is duly elected and qualified.
Name Age Positions and Offices Held
Ronald M. DeFeo 43 President, Chief Executive
Officer and Chief Operating
Officer
David J. Langevin 44 Executive Vice President
Marvin B. Rosenberg 55 Senior Vice President,
General Counsel and
Secretary
Ralph T. Brandifino 50 Senior Vice President and
For information regarding Messrs. DeFeo and Rosenberg, refer to the table
listing directors above.
Mr. Langevin became Executive Vice President of the Company effective January
1, 1994 and was Acting Chief Financial Officer of the Company from March to
December, 1993. He was employed as a Vice President of KCS from 1988 until
December 31, 1993.
Mr. Brandifino was appointed to the position of Senior Vice President and Chief
Financial Officer on December 6, 1993. Mr. Brandifino was previously the Chief
Financial Officer at the Long Island Lighting Company from 1987 through 1993.
Executive Compensation
Summary Compensation Table
The Summary Compensation Table below shows the compensation for the past
three fiscal years of the Company's Chief Executive Officer and its four
highest paid executive officers with 1994 earned qualifying compensation in
excess of $100,000 (the "Named Executive Officers").
Long-Term
Annual Compensation Compensation
Other
Annual Restricted Securities All Other
Name and Compen- Stock Underlying Compen-
Principal Salary Bonus sation Awards(1) Options/ sation
Position Year ($) ($) ($) ($) SARS (#) ($)
Randolph W. 1994 486,000 243,000 - 118,250 43,000(4) -
Lenz 1993 483,508 - - - - -
1992 504,692 - - - - -
Chairman of
the Board
(2)(3)
Ronald M. 1994 350,000 325,000 - 84,700 30,800(4) 3,080(6)
DeFeo 1993 237,500 60,000 222,693(7) - 10,000 3,148(6)
1992 127,145 66,666 - - 20,000 -
President,
Chief Execu-
tive Officer
and Chief
Operating
Officer (5)
David J. 1994 303,600 150,000 - 75,350 27,400(4) -
Langevin 1993 - - - - - -
1992 - - - - - -
Executive
Vice
President
(3)(8)
Marvin B. 1994 250,000 75,000 - 62,150 22,600(4) -
Rosenberg 1993 - - - - - -
1992 - - - - - -
Senior Vice
President,
Secretary
and General
Counsel
(3)(9)
Ralph T. 1994 235,000 100,000 - 58,300 21,200(4) -
Brandifino 1993 16,913 - - - - -
1992 - - - - - -
Senior Vice
President,
Chief
Financial
Officer and
Treasurer (10)
(1) Consists of shares of restricted Common Stock ("Restricted Stock") granted
under the 1994 Terex Long-Term Incentive Plan (the "1994 Incentive Plan").
Restricted Stock is valued at the closing stock price of $5.50 per share on
June 23, 1994, the date of grant. Dividends are paid on Restricted Stock
awards at the same rate as paid to all stockholders. The number and market
value, based on the closing stock price of $7.00 per share, of Restricted Stock
holdings as of December 31, 1994 for each of the Named Executive Officers were
as follows: Mr. Lenz, 21,500 shares, $150,500; Mr. DeFeo, 15,400 shares,
$107,800; Mr. Langevin, 13,700 shares, $95,900; Mr. Rosenberg 11,300 shares,
$79,100; and Mr. Brandifino, 10,600 shares, $74,200. The shares of Restricted
Stock covered by the Restricted Stock awards of each of the Named Executive
Officers become vested to the extent of one-fourth of the shares covered
thereby on each of the first four anniversaries of June 23, 1994; however, upon
the earliest to occur of a change of control of the Company and the death or
disability of such Named Executive Officer, any unvested portion of such
Restricted Stock will immediately vest.
(2) Mr. Lenz was Chief Executive Officer of the Company during 1992, 1993 and
1994 and retired as Chairman of the Board and a Director of Company as of
August 28, 1995 (See "Retirement of Randolph W. Lenz," below).
(3) In conjunction with the termination of the Company's management agreement
with KCS, Mr. Lenz, together with Messrs. Langevin and Rosenberg (who became
employees of the Company on January 1, 1994), received cash and certain
securities of the Company. Such payments are not included as part of annual
compensation. See "Certain Transactions."
(4) Includes shares of Common Stock underlying stock options granted under the
1994 Incentive Plan.
(5) Mr. DeFeo joined the Company on May 1, 1992 and became Chief Executive
Officer on March 24, 1995.
(6) Company's matching contribution to defined contribution plan account.
(7) Includes relocation payments of $214,604.
(8) Mr. Langevin was acting Chief Financial Officer of the Company from March
9, 1993 through December 5, 1993, but did not receive compensation from the
Company until he became Executive Vice President of the Company effective
January 1, 1994. Prior to 1994, Mr. Langevin was employed as an executive
officer of KCS and received compensation from KCS.
(9) Although Mr. Rosenberg has acted as Secretary and General Counsel of the
Company since 1987, he did not receive compensation from the Company until he
was appointed Senior Vice President of the Company effective January 1, 1994.
Prior to 1994, Mr. Rosenberg was employed as an executive officer of KCS and
received compensation from KCS.
(10) Mr. Brandifino joined the Company on December 6, 1993.
Option Grants in 1994
In May 1986, the stockholders approved an incentive stock option plan covering
key management employees (the "1986 Incentive Plan"). As further amended by
action of the stockholders and the Board, 108,228 shares of Common Stock are
currently available for purchase pursuant to incentive stock options granted or
to be granted under the 1986 Incentive Plan, subject to adjustment in the event
of changes in the outstanding Common Stock by reason of certain corporate
events such as stock splits and mergers. The exercise price of the options
equals or exceeds the fair market value of the Common Stock at the time of the
grant. Options granted under the 1986 Incentive Plan vest ratably over three
years from the date of grant. No options were granted during 1994 to any Named
Executive Officers under the 1986 Incentive Plan.
The Board of Directors adopted the 1994 Incentive Plan on June 23, 1994,
subject to stockholder approval which was obtained on June 23, 1995. The 1994
Incentive Plan provides for the grant of stock options (both incentive stock
options and nonqualified stock options), shares of stock (including restricted
stock) and performance awards. Subject to adjustment in the event of certain
changes in the outstanding Common Stock, 750,000 shares of Common Stock have
been reserved for issuance under the 1994 Incentive Plan. The exercise price
of stock options generally will be no less than the fair market value of the
Common Stock at the time of grant unless otherwise determined by a committee of
two or more outside directors (the "Plan Committee"). The options will vest as
determined by the Plan Committee (but no less than one year from the date of
grant), provided that the options will vest immediately in the event of a
Change in Control (as defined in the 1994 Incentive Plan).
The table below summarizes options conditionally granted during 1994 to the
Named Executive Officers under the 1994 Incentive Plan, subject to stockholder
approval which was obtained on June 23, 1995.
Option/SAR Grants in Last Fiscal Year
Individual Grants
% of Total
Options/ Potential
Number of SARs Realizable
Securities Granted Value at Assumed
Underlying to Exercise Annual Rates of
Options/ Employees or Stock Price
SARs in Base Appreciation for
Granted Fiscal Price Expiration Option Term
Name (#)(1) Year ($/SH) Date 5%($) 10%($)
Randolph W. 43,000 15.6% 5.50 6/23/04 148,734 376,920
Lenz
Ronald M. 30,800 11.2 5.50 6/23/04 106,535 269,980
DeFeo
David J. 27,400 10.0 5.50 6/23/04 94,774 240,177
Langevin
Marvin B. 22,600 8.2 5.50 6/23/04 78,172 198,102
Rosenberg
Ralph T. 21,200 7.7 5.50 6/23/04 73,329 185,830
Brandifino
(1) All the options become vested to the extent of one-fourth of the shares of
Common Stock covered thereby on each of the first four anniversaries of June
23, 1994, the date of grant.
(2) The potential gains shown are net of the option exercise price and do not
include the effect of any taxes associated with exercise. The amounts are for
the assumed rates of appreciation only, do not constitute projections of future
stock price performance, and may not necessarily be realized. Actual gains, if
any, on stock option exercises depend on the future performance of the Common
Stock, continued employment of the optionee through the term of the option, and
other factors.
Aggregated Option Exercises in 1994 and Year-End Option Values
The table below summarizes options exercised during 1994 and year-end option
values of the Named Executive Officers.
Name Shares Value Number of Value of
Acquired Realized Securities Unexercised
on ($) Underlying In-the-Money
Exercise Unexercised Options/SARs at
(#) Options/SARs at Fiscal Year-end
Fiscal Year-end ($)(3)
(#)
Exercisable/ Exercisable/
Unexercisable Unexercisable
Randolph W. - - 0/43,000(1) 0/64,500
Lenz
Ronald M. - - 16,668/44,132(2) 0/46,200
DeFeo
David J. - - 0/27,400(1) 0/41,100
Langevin
Marvin B. - - 0/22,600(1) 0/33,900
Rosenberg
Ralph T. - - 0/21,200(1) 0/31,800
Brandifino
(1) Consist of shares of Common Stock underlying options granted under the
1994 Incentive Plan.
(2) Of such 44,132 shares of Common Stock, 30,800 consist of shares underlying
options granted under the 1994 Incentive Plan.
(3) Based upon the $7.00 per share market value of the Common Stock at closing
on December 31, 1994.
Pension Plans
The Company maintains four defined benefit pension plans covering certain
domestic employees, including, as described below, certain officers of the
Company. Retirement benefits for the plans covering the salaried employees are
based primarily on years of service and employees' qualifying compensation
during the final years of employment.
Messrs. Lenz and DeFeo participate in the Terex Corporation Salaried Employees'
Retirement Plan (the "Retirement Plan"). Messrs. Brandifino, Langevin and
Rosenberg do not participate because participation in the Retirement Plan was
frozen as of May 7, 1993, prior to their employment with the Company.
Participants of the Retirement Plan with five or more years of eligible service
are fully vested and entitled to annual pension benefits beginning at age 65.
Retirement benefits under the Retirement Plan are equal to the product of (i)
the participant's years of service (as defined in the Retirement Plan) and (ii)
1.02% of final average earnings (as defined in the Retirement Plan) plus 0.71%
of such compensation in excess of amounts shown on the applicable Social
Security Integration Table for participants born prior to 1938. For
participants born during 1938-1954, the formula is modified by replacing the
1.02% and 0.71% figures with 1.08% and 0.65%, respectively. For participants
born after 1954, the formula is modified by replacing the 1.02% and 0.71%
figures with 1.13% and 0.60%, respectively. Service in excess of 25 years is
not recognized. There is no offset for primary Social Security.
Participation in the Retirement Plan was frozen as of May 7, 1993, and no
participants, including Mr. Lenz and Mr. DeFeo, will be credited with service
following such date. However, participants not currently fully vested,
including Mr. DeFeo, will be credited with service for purposes of determining
vesting only. Mr. Lenz is already fully vested. The annual retirement
benefits payable at normal retirement age under the Retirement Plan will be
$31,530 for Mr. Lenz and $4,503 for Mr. DeFeo (assuming full vesting).
Compensation of Directors
Directors who are officers of the Company receive no additional compensation by
virtue of their being directors of the Company. Non-officer directors receive
an annual fee of $24,000. No additional compensation is paid for participation
in special or committee meetings of the Board. All directors of the Company
are reimbursed for travel, lodging and related expenses incurred in attending
Board and committee meetings.
In addition, under the 1994 Incentive Plan, outside directors are awarded (i)
an option to purchase 10,000 shares of Common Stock after having completed two
years of service as a member of the Board of Directors, and (ii) an option to
purchase an additional 10,000 shares after having completed five years of
service as a member of the Board of Directors. Years of service completed
include all years served on the Board of Directors, whether prior to, or
subsequent to, the adoption of the 1994 Incentive Plan. The options will have
a term of five years and the exercise price of the options will be equal to the
fair market value of the Common Stock on the date preceding the day the grant
is authorized. The options will not vest until at least one year following the
date of grant, provided, however, that the options will vest immediately in the
event of a change in control of the Company. On June 23, 1994, pursuant to
such provisions of the 1994 Incentive Plan, (i) each of G. Chris Andersen,
Bruce I. Raben and David A. Sachs was granted an option to purchase 10,000
shares of Common Stock and (ii) Adam E. Wolf was granted an option to purchase
20,000 shares of Common Stock, in each case at an option price of $5.50.
Retirement of Randolph W. Lenz
On August 28, 1995, the Company announced that its Chairman, Randolph W. Lenz,
had retired from his position with the Company and its Board of Directors. In
connection with his retirement, the Company (acting through a committee
comprised of its independent Directors and represented by independent counsel)
and Mr. Lenz have executed a retirement agreement providing certain benefits to
Mr. Lenz and the Company. The agreement provides, among other things, for a
five-year consulting engagement requiring Mr. Lenz to make himself available to
the Company to provide consulting services for certain portions of his time. Mr
Lenz, or his designee, will receive a fee for consulting services which will
include payments in an amount, and a rate, equal to his 1995 base salary until
December 31, 1996. The agreement also provides for the granting of a five-year
$1.8 million loan bearing interest at 6.56% per annum which is subject to being
forgiven in increments over the five-year term of the agreement upon certain
conditions and equity grants having a maximum potential of 200,000 shares of
Terex common stock conditioned upon the Company achieving certain financial
performance objectives in the future. In contemplation of the execution of this
retirement agreement, the Company advanced to Mr. Lenz the principal amount of
the forgivable loan. Mr. Lenz has also agreed not to compete with the Company,
to vote his Terex shares in the manner recommended by the Company's Board of
Directors, not to acquire any additional shares of the Company's common stock,
and, except under certain circumstances, not to sell his shares of common
stock.
The foregoing description is a summary of the terms of the retirement agreement
and does not purport to be complete and is qualified in its entirety by
reference to the Agreement dated as of November 2, 1995 between the Company and
Randolph W. Lenz, a copy of which is filed as an Exhibit to the Registration
Statement of which this Prospectus is a part.
Employment Contracts, Termination of Employment and
Change-in-Control Arrangements
The Company has agreed with Ronald M. DeFeo that in the event of a change in
ownership of the Company which prevents him from continuing in his position as
President and Chief Executive Officer, the Company will provide for a
continuance of his salary for a period of 24 months.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board during fiscal 1994 consisted of G.
Chris Andersen and Adam E. Wolf. There are no Compensation Committee
interlocks or insider participation with respect to such individuals.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock by each person known by the Company to own
beneficially more than 5% of Common Stock, by each director, by each executive
officer of the Company named in "Management -- Executive Compensation," and by
all directors and executive officers as a group, as of November 1, 1995. Each
person named in the following table has sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by such
person, except as otherwise set forth in the notes to the table. Shares of
Common Stock that any person has a right to acquire within 60 days after
November 1, 1995 pursuant to an exercise of options, warrants or other rights
or conversion of preferred stock or otherwise are deemed to be outstanding for
the purpose of computing the percentage ownership of such person, but are not
deemed to be outstanding for computing the percentage ownership of any other
person shown in the table.
Name and Address of Amount Percent
Beneficial Owner Beneficially of Class
Owned
Randolph W. Lenz (1) 4,761,362 (3) 44.47%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
The Airlie Group L.P. (2) 525,900 (4) 4.88%
201 Main Street
Fort Worth, TX 76102
Dort A. Cameron, III (2) 581,900 (4) 5.40%
c/o The Airlie Group, L.P.
201 Main Street
Fort Worth, TX 76102
Thomas A. Taylor (2) 763,200 (4) 7.09%
c/o The Airlie Group, L.P.
201 Main Street
Fort Worth, TX 76102
EBD L.P. (2) 525,900 (4) 4.88%
c/o The Airlie Group, L.P.
201 Main Street
Forth Worth, TX 76102
TMT-FW, Inc. (2) 525,900 (4) 4.88%
c/o The Airlie Group, L.P.
201 Main Street
Forth Worth, TX 76102
The Prudential Insurance Company 610,204 (4) 5.86%
of America (5)
Prudential Plaza
Newark, NJ 07102-3777
G. Chris Andersen 34,900 (6) *
1285 Avenue of the Americas
New York, NY 10019
Ronald M. DeFeo 62,140 (7) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
William H. Fike 0 *
26200 Lahser Road
Suite 300
Southfield, MI 48034
Bruce I. Raben 63,664 (8) *
11100 Santa Monica Boulevard
Suite 1000
Los Angeles, CA 90025
Marvin B. Rosenberg 111,475 (9) 1.06%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
David A. Sachs 37,300 (4)(10) *
2141 Hidden Creek Road
Fort Worth, TX 76107
Adam E. Wolf 28,100 (11) *
875 East Donges Lane
Milwaukee, WI 53217
David J. Langevin 128,775 (12) 1.23%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Ralph T. Brandifino 7,950 (13) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
All directors and executive 490,004 4.60%
* Amount owned does not exceed one percent (1%) of the class so owned.
(1) Mr. Lenz currently pledges, and intends to pledge in the future, shares of
the 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
the 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. See "Investment Considerations -- Future Sales of
Common Stock."
(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 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. Each of the indicated individuals, together with
certain other persons, reported ownership of an aggregate of 637,000 shares of
Common Stock, 40,000 shares of the Company's Series A Cumulative Redeemable
Convertible Preferred Stock (the "Series A Preferred Stock") and 40,000 of the
Company's Series A Common Stock Purchase Warrants (the "Series A Warrants"), or
approximately 7.61% of all outstanding Common Stock, assuming the conversion of
such shares of Series A Preferred Stock and the exercise of such Series A
Warrants (but not the conversion of any Series A Preferred Stock or the
exercise of any Series A Warrants by any other holder). 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.
(3) Includes (i) 4,106,037 shares of Common Stock, representing approximately
40.27% of the outstanding Common Stock, directly owned by Mr. Lenz, (ii)
536,200 shares of Common Stock indirectly owned by Mr. Lenz through a
corporation that he indirectly owns and controls, (iii) 5,375 shares of
restricted Common Stock granted under the 1994 Incentive Plan and which are
vested, (iv) 10,750 shares of restricted Common Stock issuable upon the
exercise of options exercisable within 60 days held by Mr. Lenz, and (v) 38,800
shares of the Company's Series B Cumulative Redeemable Convertible Preferred
Stock (the "Series B Preferred Stock") convertible into 87,300 shares of Common
Stock and the Company's Series B Common Stock Purchase Warrants (the "Series B
Warrants") exercisable into 15,700 shares of Common Stock received in
connection with the termination of the Company's management agreement with KCS
(see "Certain Transactions").
(4) For each of Airlie, Dort A. Cameron, III, Thomas M. Taylor, EBD L.P.,
TMT-TW, Inc., The Prudential Insurance Company of America ("Prudential") and
David A. Sachs, the amount shown assumes the conversion of the shares of Series
A Preferred Stock owned by such beneficial owner (but not by any other holder
of Series A Preferred Stock), and assumes the exercise of Series A Warrants
owned by such beneficial owner (but not by any other holder of Series A
Warrants).
(5) Prudential filed a Schedule 13G Statement, dated February 9, 1995,
pursuant to Section 13(g) of the Exchange Act, reflecting the ownership of an
aggregate of 557,200 shares of Common Stock and 23,045 Series A Warrants, or
approximately 5.86% of all outstanding Common Stock, assuming the exercise of
such Series A Warrants (but not the exercise of any Series A Warrants by any
other holder). Such securities are held for the benefit of Prudential's
clients by Prudential's registered investment companies and its subsidiary
Prudential Securities Incorporated, and Prudential disclaims the beneficial
ownership of such shares.
(6) Includes 10,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days held by Mr. Andersen (see "Management --
Compensation of Directors").
(7) Includes 3,850 shares of restricted Common Stock granted under the 1994
Incentive Plan and which are vested and 31,034 shares of Common Stock issuable
upon the exercise of options exercisable within 60 days held by Mr. DeFeo (see
"Management -- Executive Compensation").
(8) Does not include 10,000 shares owned by Mr. Raben's wife as to which Mr.
Raben does not have dispositive or voting power and disclaims beneficial
ownership. Includes 10,000 shares of Common Stock issuable upon the exercise
of options exercisable within 60 days held by Mr. Raben (see "Management --
Compensation of Directors") and 10,244 Series A Warrants exercisable for 23,664
shares of Common Stock.
(9) Includes (i) 2,825 shares of restricted Common Stock granted under the
1994 Incentive Plan and which are vested, and (ii) 5,650 shares of Common Stock
issuable upon the exercise of options exercisable within 60 days held by Mr.
Rosenberg.
(10) Includes 10,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days held by Mr. Sachs (see "Management --
Compensation of Directors"). Includes 3,300 shares of Common Stock owned by
Mr. Sachs' wife. Mr. Sachs disclaims the beneficial ownership of such shares.
(11) Includes 20,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days held by Mr. Wolf (see "Management --
Compensation of Directors").
(12) Includes (i) 3,425 shares of restricted Common Stock granted under the
1994 Incentive Plan and which are vested, and (ii) 6,850 shares of Common Stock
issuable upon the exercise of options exercisable within 60 days held by Mr.
Langevin.
(13) Includes 2,650 shares of restricted Common Stock granted under the 1994
Incentive Plan and which are vested and 5,300 shares of Common Stock issuable
upon the exercise of options exercisable within 60 days held by Mr. Brandifino
(see "Management -- Executive Compensation").
SELLING SECURITY HOLDERS
The following table sets forth certain information, as of November 1, 1995,
regarding the Preferred Stock held by the Selling Security Holders covered by
this Prospectus. The exact number of Conversion Shares issuable upon
conversion of a share of Preferred Stock cannot be determined until the date of
such conversion, as the Conversion Price is subject to adjustment upon the
occurrence of certain dilutive events. See "Description of Securities --
Preferred Stock -- Conversion Right." At the initial Conversion Price of
$11.11, each share of Preferred Stock can be converted into 2.25 Conversion
Shares. Because the Selling Security Holders may offer all or some part of the
Preferred Stock and Conversion Shares which they hold from time to time
pursuant to the offering contemplated by this Prospectus, and because this
offering is not being underwritten on a firm commitment basis, no estimate can
be given as to the amount of Preferred Stock or Conversion Shares that will be
held by the Selling Security Holders upon termination of this offering. See
"Plan of Distribution."
Number of
Name of Selling Shares of
Security Holder Preferred Stock Held
Atwell & Co. 40,000
Baninsa International 5,000
Bear Stearns Securities Corp. 142,300
Cumberland Partners 40,000
Donaldson Lufkin & Jenrette Securities Corp. 10,000
FAMCO Capital Partners 32,000
FAMCO Income Partners, LP 37,000
Gerlach & Co. 117,000
Hare & Co. 40,000
J. Romeo & Co. 61,200
JEFCO 38,000
Lewco Securities Corp. 108,800
Merrill Lynch Pierce Fenner & Smith Incorporated 173,500
Merrill Lynch Pierce Fenner & Smith Incorporated 25,000
Morgan Stanley & Co. 15,000
Neuberger & Berman 48,200
Polly & Co. 1,000
Prudential Securities Incorporated 11,000
SC Fundamental Value Fund LP 40,000
SP Investment International NVB 20,000
Scattered Corp. 20,000
Strome Offshore, Ltd. 90,000
Strome Susskind Hedgecap Fund, L.P. 80,000
Taft Securities 5,000
The Preferred Stock and Conversion Shares are being registered for resale
solely for the account of the Selling Security Holders. None of the Selling
Security Holders and none of their respective officers, directors or
stockholders has had any material relationship with the Company within the past
three years, except as set forth in "Certain Transactions."
CERTAIN TRANSACTIONS
On August 28, 1995, Randolph W. Lenz retired as Chairman of the Board and a
Director of the Company. Mr. Lenz remains the Company's principal stockholder.
As of November 1, 1995 he beneficially owned, directly and indirectly,
approximately 44% of the outstanding Common Stock of the Company. In
connection with his retirement, the Company entered into an agreement with Mr.
Lenz which provides certain benefits to Mr. Lenz and the Company. See
"Management -- Retirement of Randolph W. Lenz."
During 1993, the Company's Board of Directors concluded that it would be in the
Company's best interest to terminate the Company's management contract with
KCS, principally owned by Randolph W. Lenz, then Chairman of the Board of the
Company, and integrate the management services of KCS directly into the
Company. Pursuant to an agreement between the Company and KCS, the contract
between the Company and KCS was suspended as of the close of business on
December 31, 1993. David J. Langevin and Marvin B. Rosenberg, employees of
KCS, became salaried employees of the Company effective January 1, 1994, with
the titles of Executive Vice President and Senior Vice President, respectively.
In addition, in consideration of the termination of the contract, the Company
issued 89,800 shares of Series B Preferred Stock and 106,950 Series B Warrants,
the terms of which are substantially similar to the terms of the Company's
outstanding Series A Preferred Stock and Series A Warrants, respectively. Of
such amounts, Mr. Lenz received 38,800 shares of Series B Preferred Stock and
Series B Warrants exercisable for 15,700 shares of Common Stock, and Messrs.
Langevin and Rosenberg each received 25,500 shares of Series B Preferred Stock
and Series B Warrants exercisable for 45,625 shares of Common Stock. In
addition, Messrs. Lenz, Langevin and Rosenberg received cash payments of
$515,000, $82,000 and $82,000, respectively.
The Company, certain directors and executives of the Company, and KCS are named
parties in various legal proceedings. During 1994, the Company incurred
$319,000 of legal fees and expenses on behalf of the Company, directors and
executives of the Company, and KCS named in the lawsuits.
Bruce I. Raben, a director of the Company, is an officer of Jefferies & Company
Inc. ("Jefferies"), which acted as placement agent for the sale of the
Preferred Stock, Warrants and the Senior Secured Notes. In May 1995, the
Company paid $5.7 million in fees to Jefferies in connection with the placement
of the Senior Secured Notes. Jefferies has previously rendered financial
advisory and other services to the Company. JEFCO, one of the Selling Security
Holders, is an affiliate of Jefferies.
The Company intends that all transactions with affiliates be on terms no less
favorable to the Company than could be obtained in comparable transactions with
an unrelated person. The Board will be advised in advance of any such proposed
transaction or agreement and will utilize such procedures in evaluating their
terms and provisions as are appropriate in light of the Board's fiduciary
duties under Delaware law. In addition, the Company has an Audit Committee
consisting solely of outside directors. One of the responsibilities of the
Audit Committee is to review related party transactions.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 40,000,000 shares of capital
stock, $.01 par value, consisting of 30,000,000 shares of Common Stock and
10,000,000 shares of preferred stock. As of November 1, 1995, 10,588,480
shares of Common Stock and 1,200,000 shares of preferred stock were issued and
outstanding.
Common Stock
Each outstanding share of Common Stock entitles the holder to one vote, either
in person or by proxy, on all matters submitted to a vote of stockholders,
including the election of directors. There is no cumulative voting in the
election of directors, which means that the holders of a majority of the
outstanding shares of Common Stock can elect all of the directors then standing
for election. Subject to preferences which may be applicable to any
outstanding shares of preferred stock, holders of Common Stock have equal
ratable rights to such dividends as may be declared from time to time by the
Board of Directors out of funds legally available thereof. See "Market for
Common Stock and Dividend Policy."
Holders of Common Stock have no conversion, redemption or preemptive rights to
subscribe to any securities of the Company. All outstanding shares of Common
Stock are fully paid and nonassessable. In the event of any liquidation,
dissolution or winding-up of the affairs of the Company, holders of Common
Stock will be entitled to share ratably in the assets of the Company remaining
after provision for payment of liabilities to creditors and preferences
applicable to outstanding shares of preferred stock. The rights, preferences
and privileges of holders of Common Stock are subject to the rights of the
holders of any outstanding shares of preferred stock. See "-- Preferred
Stock."
The Certificate of Incorporation provides that directors of the Company shall
not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duties as a director except to the extent
otherwise required by Delaware law. The by-laws of the Company provide for
indemnification of the officers and directors of the Company to the fullest
extent permitted by Delaware law.
The transfer agent and registrar for the Common Stock is Mellon Securities
Trust Company, 111 Founders Plaza, Suite 1100, East Hartford, Connecticut
06108.
Preferred Stock
The Board of Directors of the Company 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 of Directors of the Company may by resolution determine,
without any further vote or action by the Company's stockholders.
Series A Cumulative Redeemable Convertible Preferred Stock. By resolution
adopted December 17, 1993, the Board of Directors of the Company authorized the
issuance of a series of preferred stock consisting of 1,200,000 shares,
designated Series A Cumulative Redeemable Convertible Preferred Stock, par
value $.01 per share, and fixed the terms of such Preferred Stock. The
following summary of the terms and provisions of the Preferred Stock does not
purport to be complete and is qualified in its entirety by reference to the
relevant sections of the Company's Restated Certificate of Incorporation, a
copy of which is filed as an exhibit to the Registration Statement.
The registrar and transfer agent for the Preferred Stock is Mellon Securities
Trust Company.
Liquidation Preference. In the event of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company (a
"Liquidation"), 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, 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 Issue Date and ending on the Accretion Termination
Date, the Liquidation Preference accretes and accrues daily at the rate of 13%
per annum from the Issue Date through December 20, 1998 (the "Fifth
Anniversary") and 18% per annum thereafter. Until the shelf Registration
Statement of which this Prospectus is a part (the "Registration Statement")
shall become effective or prior to the end of the period during which a
registration statement relating to the shares of Preferred Stock is required to
be maintained effective pursuant to the Preferred Stock Registration Rights
Agreement, the Commission issues a stop order suspending the effectiveness of
the Registration Statement, then for each day on which any of the foregoing
events occurred and are continuing, the rate increases by (a) 0.25% per annum
from February 18, 1994 through June 18, 1994 (the "Initial Event Period") and
(b) 0.50% per annum on each such day thereafter. Such accretion shall be
computed on the basis of a 360-day year and shall compound quarterly on each
Dividend Payment Date.
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,
holders of shares of the Preferred Stock are entitled to receive, when and as
declared by the Board of Directors, 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 13% per annum from the Issue Date
through the Fifth Anniversary and 18% per annum thereafter. Until the
Registration Statement shall become effective or in the event that, prior to
the end of the period during which a registration statement relating to the
shares of Preferred Stock is required to be maintained effective pursuant to
the Preferred Stock Registration Rights Agreement, the Commission issues a stop
order suspending the effectiveness of such registration statement, then for
each day on which any of the foregoing events occurred and are continuing, the
rate will increase by (a) 0.25% per annum during the Initial Event Period and
(b) 0.50% per annum on each such day thereafter. Such accretion shall be
computed on the basis of a 360-day year and shall compound quarterly on each
Dividend Payment Date. 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 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 of Directors of the Company 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 quarterly dividend period during
which such dividends shall remain unpaid. Unpaid dividends for any period less
than a full quarterly 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 first anniversary of the Accretion Termination Date and (y) the third
anniversary of the Issue Date, the Company will not pay dividends on the Common
Stock during any 12 month period exceeding 4% of the Current Market Price (as
defined below in "-- Warrants -- Warrant Ratio") per share of the Common Stock
on the trading day immediately prior to the declaration of any cash dividend.
Redemption. 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 of Directors 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 is required to redeem all of the 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 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; (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; or (v) consolidate
with or merge with or into another corporation, other than in a transaction in
which the Company is the surviving corporation.
From and after the Accretion Termination Date, (i) if and whenever the Company
fails to declare and pay in cash the entire amount of dividends payable on the
Preferred Stock on any two Dividend Payment Dates, then the holders of the
Preferred Stock, voting separately as a class, will be entitled at the next
annual meeting of the stockholders of the Company or at any special meeting to
elect one director, and (ii) if and whenever the Company shall have failed to
declare and pay in cash the entire amount of dividends payable on the Preferred
Stock on any four Dividend Payment Dates, then the holders of the Preferred
Stock, voting separately as a class, will be entitled at the next annual
meeting of the stockholders of the Company or at any special meeting to elect
two directors. Upon election, such directors will become additional directors
of the Company and the authorized number of directors of the Company will
thereupon be automatically increased by such number of directors. Such right
of the holders of Preferred Stock to elect directors may be exercised until all
dividends in default on the Preferred Stock have been paid in full, and
dividends for the current dividend period declared and funds therefor set apart
or paid, and when so paid and set apart or paid, the right of the holders of
Preferred Stock to elect such number of directors shall cease and the term of
such directors shall terminate, but subject always to the same provisions for
the vesting of such special voting rights in the case of any such future
dividend default or defaults.
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 of 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 Company 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 Company 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.
Series B Cumulative Redeemable Convertible Preferred Stock. By resolution
adopted January 24, 1994, the Board of Directors of the Company authorized the
issuance of a series of preferred stock consisting of 89,800 shares of Series B
Preferred Stock, and fixed the terms of such Series B Preferred Stock. The
following summary of the terms and provisions of the Series B Preferred Stock
does not purport to be complete and is qualified in its entirety by reference
to the relevant sections of the Certificate of Incorporation.
Liquidation Preference. In the event of the Liquidation of the Company,
subject to the prior preferences and other rights of any stock ranking senior
to the Series B Preferred Stock in respect of the right to receive assets upon
liquidation (including the Series A Preferred Stock), but before any
distribution or payment shall be made to the holders of Common Stock or any
other stock ranking junior to the Series B Preferred Stock upon liquidation,
the holders of the Series B Preferred Stock shall be entitled to be paid, out
of the assets of the Company available for distribution to its stockholders, a
liquidation preference (the "Series B 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 December 9, 1994 (the "Series B
Issue Date") and ending on the Series B Dividend Payment Date (as defined
herein) immediately preceding the first Series B Dividend Payment Date on which
the Company is permitted to declare and pay cash dividends on the Series B
Preferred Stock under the Company's indentures and loan agreements as were in
effect on the Series B Issue Date (the "Series B Accretion Termination Date"),
the Series B Liquidation Preference will accrete and accrue daily at the rate
of 13% per annum from the Series B Issue Date through December 9, 1999 and 18%
per annum thereafter. Such accretion shall be computed on the basis of a
360-day year and shall compound quarterly on each March 31, June 30, September
30 and December 31 of each year (each, a "Series B Dividend Payment Date").
Dividends. Subject to the prior preferences and other rights of any stock
ranking senior to the Series B Preferred Stock with respect to the payment of
dividends (including the Series A Preferred Stock), holders of shares of the
Series B Preferred Stock are entitled to receive, when and as declared by the
Board of Directors, out of funds legally available for the payment of
dividends, cumulative cash dividends that will accrue from the Series B
Accretion Termination Date at the rate of (a) 13% per annum from the Series B
Accretion Termination Date through December 9, 1999 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 each
Series B Dividend Payment Date commencing on the first Series B Dividend
Payment Date following the Series B Accretion Termination Date.
So long as any shares of Series B Preferred Stock shall be outstanding, the
Company shall not declare or pay on any stock ranking junior to the Series B
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 Series B 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 Series B 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 year anniversary of the
Series B Issue Date and (y) the one year anniversary of the Series B 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 defined) per
share of the Common Stock on the trading day immediately prior to the
declaration of any cash dividend.
Redemption. Except as described immediately below, prior to December 31, 1995,
the Series B Preferred Stock may not be redeemed in whole or in part by the
Company. The Series B Preferred Stock may be redeemed prior to December 31,
1995 in whole, but not in part, at a per share redemption price equal to the
Series B Liquidation Preference per share on the date of redemption plus all
accrued and unpaid dividends thereon to and including the date of redemption;
provided, that concurrently with such redemption the Company redeems all
warrants exercisable into shares of Common Stock that were issued on the Series
B Issue Date.
On and after December 31, 1995, the Series B Preferred Stock may be redeemed by
the Company in cash 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 Series B 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 Series B
Preferred Stock are to be redeemed, such shares shall be redeemed pro rata or
by lot as determined by the Board of Directors in its sole discretion. The
Company shall not redeem less than all of the outstanding shares of Series B
Preferred Stock unless all cumulative dividends on the Series B Preferred Stock
for all previous dividend periods have been paid or declared and funds therefor
set apart for payment.
The Company is required to redeem all of the then outstanding shares of Series
B Preferred Stock on or prior to December 31, 2001 at a per share redemption
price equal to the Series B 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 the Series B Preferred Stock may be redeemed
only if all of the outstanding Series A Preferred Stock has been redeemed prior
to such proposed redemption of the Series B Preferred Stock.
Voting. Except as set forth below or as otherwise required by law, the holders
of the issued and outstanding shares of Series B Preferred Stock shall have no
voting rights.
So long as any Series B 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 Series B Preferred
Stock, voting separately as a class, will not: (i) amend or repeal any
provision of, or add any provision to, the 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
Series B Preferred Stock, or increase or decrease the number of shares of
Series B Preferred Stock authorized; (ii) authorize or issue shares of any
class or series of stock ranking senior to the Series B 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 Series B Preferred Stock under United
States Federal tax laws.
Conversion Right. Each holder of shares of Series B 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 Series B Preferred Stock into the number of 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 (the
"Series B Conversion Price"), 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 "Series B Declaration Date" does not exceed 4% of
the Current Market Price per share of Common Stock on the trading day
immediately prior to the Series B 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 Series B 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 Series B 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 Company 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 Company 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.
Warrants
In addition to the Common Stock, the Series A Preferred Stock and the Series B
Preferred Stock, the Company has outstanding 1,275,000 of Series A Warrants and
106,950 of Series B Warrants. The Series A Warrants and the Series B Warrants
are collectively referred to as the "Warrants". The following is a summary of
the terms and provisions of the Warrants. This summary does not purport to be
complete and is qualified in its entirety by reference to the detailed
provisions of the Warrants.
Term. As of September 1, 1995, each Series A Warrant may be exercised by the
registered holder thereof for 2.31 shares of Common Stock. Each Series B
Warrant may be exercised by the registered holder thereof for one share of
Common Stock. The Warrants may be exercised at any time in whole and from time
to time in part, at the option of the holder, until 5:00 p.m. New York City
time on December 31, 2000. The shares of Common Stock issuable upon exercise
or redemption of the Warrants shall be the "Warrant Shares."
Exercise Price. The Warrants are exercisable for $.01 per Warrant Share 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 Series A Warrants may be redeemed by the Company in whole, but
not in part, in exchange for Series A Warrant Shares at any time on or after
December 31, 1994; provided, that concurrently with such redemption the Company
redeems all then outstanding shares of Series A Preferred Stock. Each Series A
Warrant will be redeemable for a number of Series A Warrant Shares equal to the
Series A Warrant Ratio on the date of redemption. The Series B Warrants are
not redeemable.
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 Series A Warrant (in lieu of
the Series A Warrant Shares 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 Series A Warrant Shares that would otherwise
have been deliverable upon the exercise of such Series A Warrant would have
been entitled upon such transaction if such Series A Warrant had been exercised
in full immediately prior to such transaction.
No Rights as Stockholders. Nothing contained in the Warrant Agreement relating
to the Warrants 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.
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 Warrant Shares to provide
for the exercise of all outstanding Warrants, and take all necessary action so
that all Warrant Shares that are issued upon exercise of the Warrants will,
upon issuance, be duly and validly issued, fully paid and nonassessable.
The Warrant Agent for the Warrants is Mellon Securities Trust Company, 111
Founders Plaza, Suite 1100, East Hartford, Connecticut 06108.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain Federal income tax consequences to
the initial holders of the Preferred Stock under existing Federal income tax
law, which is subject to change, possibly retroactively. This summary does not
discuss all aspects of Federal income taxation that may be relevant to a
particular investor in light of his personal investment circumstances or to
certain types of investors subject to special treatment under the Federal
income tax laws (for example, financial institutions, insurance companies,
tax-exempt organizations, broker-dealers, and foreign taxpayers), and it does
not discuss any aspects of state, local, or foreign tax laws. This summary
assumes that investors will hold their Preferred Stock as a "capital asset"
(generally property held for investment) under the Internal Revenue Code of
1986, as amended (the "Code"). Holders are urged to consult their tax advisors
as to the specific tax consequences of holding and disposing of the Preferred
Stock, including the application and effect of Federal, state, local and
foreign income and other tax laws.
Dividends
Accretions on the liquidation preference of, and distributions (including
constructive distributions) with respect to, the Preferred Stock will be
treated as dividends for Federal income tax purposes to the extent of the
current and accumulated earnings and profits of the Company, and such dividends
will be subject to tax as ordinary income. The amount included in income for
accreted amounts should equal the fair market value of such amounts at the time
such amounts accrete, which will require the holder to include in income the
accreted amounts prior to the date in which any cash is paid. To the extent
that the amount of a distribution, whether paid in cash or through accretion,
exceeds a holder's allocable share of current and accumulated earnings and
profits, such excess will be treated as a non-taxable return of capital to the
extent of a holder's basis in the Preferred Stock and thereafter as a gain from
the sale or exchange of a capital asset. For Federal income tax purposes,
earnings and profits will be allocated to distributions with respect to the
Preferred Stock before they are allocated to distributions with respect to the
Common Stock.
Distributions out of current and accumulated earnings and profits paid to a
corporate holder will generally qualify for the 70% intercorporate
dividends-received deduction provided that such holder satisfies certain
minimum holding period requirements and other applicable requirements. The
intercorporate dividends-received deduction will be reduced to the extent that
the holder of the Preferred Stock has incurred indebtedness to finance its
purchase. Generally, regular quarterly dividends on the Preferred Stock will
not be subject to the extraordinary dividend provisions of section 1059 of the
Code.
The amount of the Company's earnings and profits for Federal income tax
purposes will depend upon, among other things, the Company's future financial
performance. Accordingly, no assurances can be given that the Company will
have earnings and profits over the life of the Preferred Stock sufficient to
assure that distributions paid thereon will be treated as dividends for Federal
income tax purposes.
The Preferred Stock was issued with an "unreasonable redemption premium" and
holders will be required to include a portion of such premium in ordinary
income for each taxable year during which such stock is held to the extent of
the Company's current and accumulated earnings and profits. The portion of the
redemption premium included in income for each taxable year will be determined
on the basis of a constant yield to maturity method, which will result in a
greater portion of such premium being included in income in the later part of
the term of the Preferred Stock. If the Internal Revenue Service were to
assert successfully that the amount of the aggregate purchase price of the
Preferred Stock and Warrants that is allocable to the Warrants is greater than
the amount allocated in the Purchase Agreement, the Preferred Stock could be
deemed to be issued with a greater amount of an unreasonable redemption
premium.
Conversion of the Preferred Stock
If shares of the Preferred Stock are converted into shares of Common Stock, no
gain or loss will generally be recognized for Federal income tax purposes,
except as set forth below. The tax basis for the Common Stock received upon
conversion will be equal to the tax basis of the Preferred Stock converted
(reduced by the portion of such basis allocable to any fractional interest
exchanged for cash). The holding period of the Common Stock will include the
holding period of the Preferred Stock converted. Gain or loss may be
recognized at the time of conversion, however, upon the receipt of cash paid in
lieu of fractional shares of the Common Stock or in respect of constructive
dividends. See "Constructive Dividends" below.
Redemption or Sale of the Preferred Stock
A redemption or sale of shares of the Preferred Stock will be a taxable
transaction for the holders of the Preferred Stock. Assuming that, after the
redemption or sale, the holder has no other direct or indirect stock interest
in the Company, such a redemption or sale will result in the recognition of
gain or loss equal to the difference between the amount received and the
holder's tax basis in the Preferred Stock that is redeemed or sold. Such gain
or loss will be a capital gain or loss, unless it is determined that a portion
of the proceeds is attributable to a constructive dividend. Such a gain or
loss will be long-term if the Preferred Stock has been held for more than one
year.
Constructive Dividends
Under section 305 of the Code, adjustments in the Conversion Price of the
Preferred Stock to reflect distributions to holders of Common Stock, or the
omission to make such adjustments, may in certain circumstances result in
constructive distributions to holders of the Preferred Stock that could be
subject to tax as dividends to the extent of the Company's current and
accumulated earnings and profits.
PLAN OF DISTRIBUTION
The Company will issue Conversion Shares upon the conversion of Preferred Stock
by Selling Security Holders from time to time pursuant to the terms of the
Preferred Stock. See "Description of Securities -- Preferred Stock." The
Company will receive no proceeds from the issuance of Conversion Shares upon
conversion of Preferred Stock nor from the resale of the Preferred Stock and
the Conversion Shares by the Selling Security Holders pursuant to this
offering. The Preferred Stock and Conversion Shares offered for resale hereby
may be sold from time to time by the Selling Security Holders in one or more
transactions (which may involve block transactions) on the NYSE or in the
over-the-counter market (to the extent that such securities are listed or
traded on such markets), in negotiated transactions or in a combination of such
methods of sale, at fixed prices, at market prices prevailing at the time of
sale, at prices relating to prevailing market prices or at negotiated prices.
The Selling Security Holders may effect such transactions directly to
purchasers or to or through broker-dealers which may act as agents or
principals. Such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Security
Holders and/or the purchasers of Preferred Stock and Conversion Shares for
which broker-dealers may act as agent or to whom they may sell as principal or
both (which compensation as to a particular broker-dealer may be less than or
in excess of customary commissions). In addition, any Common Stock covered by
this Prospectus that subsequently qualifies for sale pursuant to Rule 144 of
the Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
The Preferred Stock was issued to the original purchasers on December 20, 1993
in a private placement. Pursuant to the Preferred Stock Registration Rights
Agreement, the Company agreed to file the Registration Statement of which this
Prospectus forms a part with the Commission, and to keep the Registration
Statement effective for 36 months from the date the Registration Statement is
declared effective, or, if shorter, until all of the Preferred Stock and
Conversion Shares are sold pursuant to an effective registration statement.
There is no established trading market for the Preferred Stock. The Company
does not intend to list the Preferred Stock on any securities exchange or to
seek approval for quotation through any automated quotation system. There is
no dealer which is obligated to make a market in the Preferred Stock and, if
any dealer or dealers should do so, they may discontinue any market making at
any time without notice. No assurance can be given as to the liquidity of any
trading market for the Preferred Stock.
At the time a particular offer of Preferred Stock or Conversion Shares is made,
a Prospectus Supplement, to the extent required, will be distributed which will
set forth the Preferred Stock or Conversion Shares being offered, the names of
the selling security holders, the purchase price, the amount of expenses of the
offering and the terms of the offering, including the name or names of any
underwriters, dealers or agents, any discounts, commissions and other items
constituting compensation from such selling security holders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.
To comply with certain states' securities laws, if applicable, the Preferred
Stock and Conversion Shares will be sold in such states only through brokers or
dealers. In addition, in certain states the Preferred Stock and Conversion
Shares may not be sold unless they have been registered or qualify for sale in
such states or an exemption from registration or qualification is available and
is complied with. The Company is obligated pursuant to the Preferred Stock
Registration Rights Agreement to use its best efforts to register or qualify
the Preferred Stock and Conversion Shares under the securities or blue sky laws
of such jurisdictions as any Selling Security Holder reasonably requests.
Any broker-dealers who participate in a sale of their Preferred Stock and
Conversion Shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by them, and
proceeds of any such sales as principal, may be deemed to be underwriting
discounts and commissions under the Securities Act.
Since the Selling Security Holders will be subject to the antimanipulation
rules promulgated under the Exchange Act, including Rule 10b-2, 10b-6 and
10b-7, in connection with transactions in the Preferred Stock and Conversion
Shares during the effectiveness of the Registration Statement of which this
Prospectus is a part, the Company advises the Selling Security Holders to
consult competent securities counsel prior to initiating any such transaction.
Pursuant to the Preferred Stock Registration Rights Agreement, the Company has
paid or will pay any and all expenses incident to the performance of such
agreement including filing fees, fees and expenses incurred in connection with
compliance with the securities or blue sky laws of the applicable states, and
fees and disbursements of counsel and independent public accounts for the
Company and the reasonable fees and disbursements of one counsel retained by
the Selling Security Holders in connection with the Registration Statement.
Such expenses are estimated to be approximately $____________. As and when the
Company is required to update this Prospectus, it may incur additional expenses
in excess of this estimated amount. Normal commission expenses and brokerage
fees, as well as any applicable underwriting discounts or transfer taxes, are
payable individually by the Selling Security Holders.
In the Preferred Stock Registration Rights Agreement, the Company agreed to
indemnify and hold harmless, to the extent permitted by law, the Selling
Security Holders, the officers, directors, shareholders, agents, affiliates and
partners of the Selling Security Holders, any person who participates as an
underwriter in the offering and sale of the Preferred Stock and Conversion
Shares and any person who controls any of such sellers or any of such
underwriters against losses, claims and expenses arising out of any false or
misleading statements contained in this Prospectus or the Registration
Statement of which it is a part. The Selling Security Holders have agreed to
indemnify the Company against certain liabilities and expenses arising out of
statements made by them for reliance by the Company in connection with the
Registration Statement or this Prospectus.
LEGAL MATTERS
Certain legal matters in connection with the sale of the Preferred Stock and
the Conversion Shares offered hereby will be passed upon for the Company by
Robinson Silverman Pearce Aronsohn & Berman, 1290 Avenue of the Americas, New
York, New York 10104.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1994
and 1993 and for each of the years in the three year period ended December 31,
1994 included in this Prospectus have been so included in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The combined financial statements of P.P.M. S.A. and Legris Industries, Inc. at
December 31, 1994 and 1993, and for each of the three years in the period ended
December 31, 1994, appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein and in the Registration Statement,
and are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Terex Corporation
In our opinion, the consolidated financial statements listed in the Index to
Consolidated Financial Statements and Financial Statement Schedule on page F-1
and referred to under Item 14(a)(1) and (2) present fairly, in all material
respects, the financial position of Terex Corporation and its subsidiaries at
December 31, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Note O to the consolidated financial statements, the Company is
required to make significant principal repayments during 1995 and is currently
seeking to refinance its long term debt obligations.
As discussed in Notes A and C to the consolidated financial statements, the
1993 and 1992 financial statements have been restated.
PRICE WATERHOUSE LLP
Stamford, Connecticut
March 28, 1995
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands except per share amounts)
Year Ended December 31,
1994 1993 1992
NET SALES $ 786,781 $ 670,309 $ 523,355
COST OF GOODS SOLD 703,622 621,816 471,242
Gross profit 83,159 48,493 52,113
ENGINEERING, SELLING AND ADMINISTRATIVE EXPENSES
Third parties 70,200 74,793 53,390
Related parties 2,245 2,878 2,848
72,445 77,671 56,238
SEVERANCE CHARGES 7,353 --- ---
Income (loss) from operations 3,361 (29,178) (4,125)
OTHER INCOME (EXPENSE)
Interest income 587 1,149 1,666
Interest expense (30,492) (31,246) (23,320)
Amortization of debt issuance costs (2,300) (3,369) (1,694)
Gain on sale of Fruehauf stock 26,043 3,009 ---
Equity in net loss of Fruehauf --- (677) (3,714)
Gain from deconsolidation of Fruehauf --- --- 36,518
Gain on sale of Drexel business 4,742 --- ---
Gain on sale of property,
plant and equipment 260 2,601 363
Write-off of Mark goodwill --- (4,718) ---
Other income (expense) - net (245) (2,493) (2,712)
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS 1,956 (64,922) 2,982
PROVISION FOR INCOME TAXES (786) (158) (67)
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS 1,170 (65,080) 2,915
EXTRAORDINARY LOSS ON
RETIREMENT OF DEBT (709) (1,464) ---
NET INCOME (LOSS) 461 (66,544) 2,915
LESS PREFERRED STOCK ACCRETION (5,929) (152) ---
INCOME (LOSS) APPLICABLE TO
COMMON STOCK $ (5,468) $(66,696) $ 2,915
PER COMMON AND COMMON EQUIVALENT SHARE:
Loss before extraordinary items $ (0.46) $ (6.55) $ .29
Extraordinary loss on
retirement of debt (0.07) (0.15) ---
Net income (loss) $ (0.53) $ (6.70) $ .29
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
IN PER SHARE CALCULATION 10,303 9,953 9,945
The accompanying notes are an integral part of these financial statements.
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands except per share amounts)
ASSETS
December 31,
1994 1993
CURRENT ASSETS
Cash and cash equivalents $ 9,727 $ 9,183
Cash securing letters of credit 6,688 6,263
Trade receivables (less allowance
of $6,114 in 1994 and $7,478 in 1993) 91,717 74,028
Net inventories 164,245 163,838
Other current assets 5,775 4,016
Total Current Assets 278,152 257,328
LONG-TERM ASSETS
Property, plant and equipment - net 86,160 97,537
Debt issuance costs and
intangible assets - net 8,604 12,645
Other assets 28,700 23,192
TOTAL ASSETS $ 401,616 $ 390,702
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Notes payable $ 2,078 $ 2,909
Current portion of long-term debt 25,806 19,799
Trade accounts payable 112,213 85,350
Accrued compensation and benefits 10,823 8,162
Accrued warranties and product liability 27,629 27,226
Accrued interest 8,969 10,698
Accrued income taxes 1,328 1,415
Other current liabilities 32,732 32,221
Total Current Liabilities 221,578 187,780
NON CURRENT LIABILITIES
Long-term debt, less current portion 162,987 195,331
Accrued warranties and product liability 31,846 33,959
Accrued pension 16,456 20,270
Other 7,225 5,143
REDEEMABLE CONVERTIBLE PREFERRED STOCK
Liquidation preference $36,578 in 1994
and $30,108 in 1993 17,262 10,480
COMMITMENTS AND CONTINGENCIES (Note L)
STOCKHOLDERS' INVESTMENT
Warrants to purchase common stock 17,564 16,851
Common Stock, $0.01 par value--
authorized 30,000 shares;
issued and outstanding 10,303
in 1994 and 1993 103 103
Additional paid-in capital 40,127 40,127
Accumulated deficit (108,395) (102,927)
Pension liability adjustment (1,778) (4,173)
Unrealized holding gain on
equity securities 1,825 ---
Cumulative translation adjustment (5,184) (12,242)
Total Stockholders' Investment (55,738) (62,261)
TOTAL LIABILITIES
AND STOCKHOLDERS' INVESTMENT $ 401,616 $ 390,702
The accompanying notes are an integral part of these financial statements.
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
(in thousands)
Cumu-
Addi- Pension Unre- lative
tional Accumu- Liabi- alized Trans-
Common Paid-in lated lity Holding lation
Warrants Stock Capital Deficit Adjustment Gain Adjustment Total
BALANCE AT
DECEMBER 31,
1991 $ --- $ 99 $37,496 $(39,146) $(8,233) $ --- $5,643 $(4,141)
Exercise
of stock
options --- --- 274 --- --- --- --- 274
Net income --- --- --- 2,915 --- --- --- 2,915
Pension
liability
adjustment --- --- --- --- 3,781 --- --- 3,781
Translation
adjustment --- --- --- --- --- --- (11,904) (11,904)
BALANCE AT
DECEMBER 31,
1992 --- 99 37,770 (36,231) (4,452) --- (6,261) (9,075)
Exercise
of stock
options --- --- 38 --- --- --- --- 38
Issuance of
Warrants
(Note I) 16,851 --- --- --- --- --- --- 16,851
Pension
Contribution
(Note J) --- 4 2,319 --- --- --- --- 2,323
Net loss --- --- --- (66,544) --- --- --- (66,544)
Accretion
of carrying
value of
redeemable
preferred
stock to
redemption
value
(Note I) --- --- --- (152) --- --- --- (152)
Pension
liability
adjustment --- --- --- --- 279 --- --- 279
Translation
adjustment --- --- --- --- --- --- (5,981) (5,981)
BALANCE AT
DECEMBER 31,
1993 16,851 103 40,127 (102,927) (4,173) --- (12,242) (62,261)
Issuance
of Warrants
(Note I) 713 --- --- --- --- --- --- 713
Net income --- --- --- 461 --- --- --- 461
Accretion
of carrying
value of
redeemable
preferred
stock to
redemption
value
(Note I) --- --- --- (5,929) --- --- --- (5,929)
Pension
liability
adjustment --- --- --- --- 2,395 --- --- 2,395
Unrealized
holding
gain on
equity
securities
(Note C) --- --- --- --- --- 1,825 --- 1,825
Translation
adjustment --- --- --- --- --- --- 7,058 7,058
BALANCE AT
DECEMBER 31,
1994 $17,564 $103 $40,127$(108,395) $(1,778) $1,825$(5,184)$(55,738)
The accompanying notes are an integral part of these financial statements.
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Year Ended December 31,
1994 1993 1992
OPERATING ACTIVITIES
Net income (loss) $ 461 $ (66,544) $ 2,915
Adjustments to reconcile net income
(loss) to net cash from (used in)
operating activities:
Depreciation 13,709 12,139 7,074
Amortization and write-off of
debt issuance costs, goodwill
and other intangibles 3,388 10,261 2,746
Extraordinary loss on
retirement of debt 709 1,464 ---
Gain on sale of Fruehauf stock (26,043) (3,009) ---
Equity in net loss of Fruehauf --- 677 3,714
Gain from deconsolidation
of Fruehauf --- --- (36,518)
Gain on sale of Drexel business (4,742) --- ---
Gain on sale of property,
plant and equipment (260) (2,601) (363)
Other noncash charges (804) 99 1,796
Increase (decrease) in cash
due to changes in operating
assets and liabilities net of
the effects of acquisitions
of businesses:
Cash securing letters of credit (425) 5,216 (11,479)
Trade receivables (17,564) 1,708 18,806
Net inventories 77 30,312 49,176
Other current assets 143 2,061 (512)
Trade accounts payable 24,379 (5,141) 7,187
Accrued compensation
and benefits 3,277 (3,567) (6,821)
Accrued warranties and
product liabilities 296 (3,356) 4,590
Accrued interest (1,729) (1,121) 7,763
Accrued income taxes (78) (604) 940
Other assets (306) (123) (7,928)
Other liabilities (3,728) (24,075) (21,318)
Net cash from (used in)
operating activities (9,240) (46,204) 21,768
INVESTING ACTIVITIES
Acquisitions of businesses,
net of cash acquired --- --- (86,544)
Capital expenditures (12,717) (11,549) (5,382)
Advances to Fruehauf --- (677) (3,714)
Proceeds from sale of excess assets 3,295 11,306 1,513
Proceeds from sale of Fruehauf stock 24,943 2,464 ---
Proceeds from sale of Drexel business 10,289 --- ---
Proceeds from sale-leaseback of
Saarn property 9,981 --- ---
Other - net 1,000 1,823 248
Net cash from (used in)
investing activities 36,791 3,367 (93,879)
FINANCING ACTIVITIES
Net borrowings (repayments) under
revolving line of credit agreements 12,947 11,931 (55,753)
Principal repayments of long-term debt (41,524) (12,450) (9,109)
Proceeds from issuance of
preferred stock and warrants --- 27,179 ---
Proceeds from issuance of
long-term debt --- --- 151,890
Other - net 249 44 2,258
Net cash from (used in)
financing activities (28,328) 26,704 89,286
Effect of exchange rate changes on
cash and cash equivalents 1,321 (355) (2,396)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 544 (16,488) 14,779
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 9,183 25,671 10,892
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 9,727 $ 9,183 $ 25,671
The accompanying notes are an integral part of these financial statements.
- -------------------------------------------------------------------------------
TEREX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994
(dollar amounts in thousands, unless otherwise noted, except per share amounts)
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The Consolidated Financial Statements include the
accounts of Terex Corporation and its majority owned subsidiaries ("Terex" or
the "Company"). All material intercompany balances, transactions and profits
have been eliminated. The equity method is used to account for investments in
affiliates in which the Company has an ownership interest between 20% and 50%.
Investments in affiliates in which the Company has an ownership interest of
less than 20% are accounted for on the cost method or at fair value in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity Securities."
Cash and Cash Equivalents. Cash equivalents consist of highly liquid
investments with original maturities of three months or less. The carrying
amount of cash and cash equivalents approximates their fair value.
Cash Securing Letters of Credit. The Company has certain cash and cash
equivalents that are not fully available for use in its operations. Certain
international operations collateralize letters of credit and performance bonds
with cash deposits. In addition, certain provisions of the Company's previous
lending agreement with a commercial bank required that amounts be deposited in
a cash collateral account to collateralize letters of credit issued by that
bank. Although Terex has entered into a new lending facility which replaced
the previous lending arrangement, Terex will continue to utilize letters of
credit issued under the previous lending arrangement until their expiration.
These cash balances will be made available to the Company as the underlying
bonds and letters of credit expire.
Inventories. Inventories are stated at the lower of cost or market value.
Cost is determined by the last-in, first-out ("LIFO") method for certain
domestic inventories and by the first-in, first-out ("FIFO") method for
inventories of international subsidiaries and certain domestic inventories.
Approximately 50% and 49% of consolidated inventories at December 31, 1994 and
1993, respectively, are accounted for under the LIFO method.
Debt Issuance Costs. Debt issuance costs associated with securing the
Company's financing arrangements are capitalized and amortized over the life of
the respective debt agreement. Capitalized debt issuance costs related to debt
that is retired early are charged to expense at the time of retirement.
Unamortized debt issuance costs totaled $3,271 and $6,283 at December 31, 1994
and 1993, respectively. During 1994, 1993 and 1992, the Company amortized
$2,300, $3,369 and $1,694, respectively, of capitalized debt issuance costs; in
addition, $601 and $2,162 of such costs were charged to extraordinary loss on
retirement of debt in 1994 and 1993, respectively.
Intangible Assets. Intangible assets include the excess of purchase price over
the fair value of identifiable net assets of acquired companies, which is being
amortized on a straight-line basis over 15 years, and costs allocated to
patents, trademarks and other specifically identifiable assets arising from
business combinations, which are amortized on a straight-line basis over the
respective estimated useful lives not exceeding seven years. Unamortized
intangible assets totaled $5,222 and $6,362 at December 31, 1994 and 1993,
respectively, net of accumulated amortization of $2,388 and $1,377 at December
31, 1994 and 1993, respectively. Amortization of intangible assets of $1,140,
$1,612 and $599 in 1994, 1993 and 1992, respectively, is included in
Engineering, Selling and Administrative Expenses. Intangible assets are
periodically assessed for impariment of value and any loss is recognized upon
impairment.
Property, Plant and Equipment. Property, plant and equipment are stated at
cost. Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred.
Plant and equipment are depreciated over the estimated useful lives of the
assets under the straight-line method of depreciation for financial reporting
purposes and both straight-line and other methods for tax purposes.
Revenue Recognition. Revenue and costs are generally recorded when products
are shipped and invoiced to either independently owned and operated dealers or
to customers. Certain new units may be invoiced prior to the time customers
take physical possession. Revenue is recognized in such cases only when the
customer has a fixed commitment to purchase the units, the units have been
completed, tested and made available to the customer for pickup or delivery,
and the customer has requested that the Company hold the units for pickup or
delivery at a time specified by the customer in the sales documents. In such
cases, the units are invoiced under the Company's customary billing terms,
title to the units and risks of ownership pass to the customer upon invoicing,
the units are segregated from the Company's inventory and identified as
belonging to the customer and the Company has no further obligations under the
order.
Accrued Warranties and Product Liability. The Company records accruals for
potential warranty and product liability claims based on the Company's claim
experience. Warranty costs are accrued at the time revenue is recognized. The
Company provides self-insurance accruals for estimated product liability
experience on known claims and for claims anticipated to have been incurred
which have not yet been reported. Certain of the Company's product liability
accruals, principally related to the forklift business acquired during 1992
(see Note B -- "Acquisitions"), are presented on a discounted basis. The
related discount of approximately $8,100 at each of December 31, 1994 and 1993,
computed using an 8.0% discount rate, is recorded as a direct reduction of
gross product liability claims and is amortized using the effective interest
rate method. Interest expense attributable to the amortization of the discount
aggregated approximately $3,200, $4,000 and $1,300 in 1994, 1993 and 1992,
respectively. The remainder of the Company's product liability accruals are
presented on a gross settlement basis. Product liability payments, including
expenses, are estimated to approximate $10,000 per year.
Non Pension Postretirement Benefits. The Company adopted SFAS No. 106
"Employers Accounting for Postretirement Benefits other than Pensions" on
January 1, 1993. The statement requires accrual of the obligation to provide
future benefits to employees during the years that the employees provide
service. The Company provides postretirement benefits to certain former
salaried and hourly employees and certain hourly employees covered by
bargaining unit contracts that provide such benefits. The Company elected the
delayed recognition method of adoption, and the effect of adoption of the new
standard was not material to the Company's financial statements. (See Note K
- -- "Retirement Plans.")
Foreign Currency Translation. Assets and liabilities of the Company's
international operations are translated at year-end exchange rates. Income and
expenses are translated at average exchange rates prevailing during the year.
For operations whose functional currency is the local currency, translation
adjustments are accumulated in the Cumulative Translation Adjustment component
of Stockholders' Investment. Gains or losses resulting from foreign currency
transactions are included in Other income (expense) -- net. Net foreign
exchange losses were $235, $825 and $2,413 in 1994, 1993 and 1992,
respectively.
Foreign Exchange Contracts. The Company uses foreign exchange contracts to
hedge recorded balance sheet amounts related to certain international
operations and firm commitments that create currency exposures. The Company
does not enter into speculative contracts. Gains and losses on hedges of
assets and liabilities are recognized in income as offsets to the gains and
losses from the underlying hedged amounts. Gains and losses on hedges of firm
commitments are recorded on the basis of the underlying transaction. At
December 31, 1994 and 1993, the Company had no outstanding foreign exchange
contracts.
Environmental Policies. Environmental expenditures that relate to current
operations are either expensed or capitalized depending on the nature of the
expenditure. Expenditures relating to conditions caused by past operations
that do not contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments and/or remedial actions
are probable, and the costs can be reasonably estimated. Such amounts are not
material at December 31, 1994 and 1993.
Research and Development Costs. Research and development costs are expensed as
incurred. Such costs incurred in the development of new products or
significant improvements to existing products are included in Engineering,
Selling and Administrative Expenses and amounted to $10,462 in 1994, $11,822 in
1993 and $6,741 in 1992.
Issuance of Stock by a Subsidiary. The Company accounts for increases and
decreases in its proportionate share of a subsidiary's equity arising from the
issuance of stock by the subsidiary and related transactions as gains and
losses in the Consolidated Statement of Operations.
Income Taxes. The Company adopted SFAS No. 109, "Accounting for Income Taxes"
on January 1, 1993. SFAS No. 109 retains the basic concepts of SFAS No. 96, the
Company's former method of accounting for income taxes, which requires the
Company to follow the liability method. The liability method provides that
deferred tax assets and liabilities be recorded based upon the difference
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. SFAS No. 109 further requires that the Company
record a valuation allowance for deferred tax assets if realization of such
assets is dependent on future taxable income. The effect of adoption of the
new standard was not material to the Company's financial statements. (See Note
H -- "Income Taxes.")
Net Income (Loss) Per Share. Net income (loss) per share is based on the
weighted average number of common and common equivalent shares outstanding
during the year. The dilutive effect of common stock equivalents (if
applicable) is calculated using the treasury stock method.
Restatements and Reclassifications. The consolidated financial statements for
the year ended December 31, 1992 have been restated as a result of Fruehauf
Trailer Corporation's ("Fruehauf") restatement of its financial statements as
described in Note C -- "Investment in Fruehauf Trailer Corporation." The
consolidated financial statements for the year ended December 31, 1993 have
been restated to reflect the correction of various vendor accounts, resulting
from the resolution of unreconciled items, at the Material Handling Segment.
The accompanying consolidated financial statements reflect the effects of the
restatements as follows:
As
Previously Restatement As
Reported Effect Restated
Stockholders' Investment,
December 31, 1991
(cumulative effect of
restatements for 1989
through 1991) $ 59,881 $(64,022) $ (4,141)
Net income (loss), year ended
December 31, 1992 (57,175) 60,090 2,915
Change in translation adjustment,
year ended December 31, 1992 (12,929) 1,025 (11,904)
Stockholders' Investment,
December 31, 1992 (6,168) (2,907) (9,075)
Net income (loss), year ended
December 31, 1993 (62,661) (3,883) (66,544)
Change in translation adjustment,
year ended December 31, 1993 (8,962) 2,981 (5,981)
Stockholders investment,
December 31, 1993 $(58,452) $ (3,809) $(62,261)
Net income (loss) per share:
Year ended December 31, 1992 $ (5.75) $ 6.04 $ 0.29
Year ended December 31, 1993 $ (6.31) $ (0.39) $ (6.70)
Certain amounts shown for 1992 and 1993 have been reclassified to conform to
the 1994 presentation.
NOTE B -- ACQUISITIONS
Clark Material Handling Company - On July 31, 1992, the Company acquired Clark
Material Handling Company ("CMHC") and certain affiliate companies (together
with CMHC, "CMH") from Clark Equipment Company (the "CMH Acquisition"). CMH is
engaged in the design, manufacture and marketing of internal combustion ("IC")
and electric forklift and lift trucks and related parts and equipment. The
purchase price of the CMH Acquisition was $91,090, which was funded by $85,000
of cash and a $6,090 note to the seller.
The acquisition was accounted for using the purchase method with the purchase
price of the acquisition allocated to assets acquired and liabilities assumed
based upon their respective estimated fair value at the date of the
acquisition. Purchase price allocations were based on evaluations,
estimations, appraisals, actuarial studies and other studies performed by the
Company. The excess of purchase price over the net assets acquired ($4,009) is
included in Debt Issuance Costs and Intangible Assets and is being amortized on
a straight-line basis over 15 years.
The operating results of CMH have been included in the Company's consolidated
results of operations since August 1, 1992. The following unaudited pro forma
summary presents the consolidated results of operations as though the Company
completed the CMH Acquisition on January 1, 1992, after giving effect to
certain adjustments, including amortization of goodwill and intangible assets,
increased depreciation resulting from the revaluation of property, plant and
equipment, interest expense and amortization of debt issuance costs on the
acquisition debt, and reduced operating costs related to recurring cost savings
which are directly attributable to the CMH Acquisition.
Unaudited Pro Forma
For the Year Ended
December 31,1992
Net sales $811,859
Loss from operations (14,452)
Net loss (16,423)
Net loss per common share $ (1.65)
The unaudited pro forma consolidated results do not represent actual operating
results. The Company is actively reorganizing the operations of CMH by
consolidating manufacturing and distribution operations. Consequently, the pro
forma results are not necessarily indicative of the Company's future
operations.
Mark Industries - In December 1991, the Company purchased substantially all
operating assets of Mark Industries ("Mark"), a manufacturer of aerial lift
equipment, for $5,865. The acquisition of Mark was accounted for using the
purchase method, with the purchase price of the acquisition allocated to assets
acquired and liabilities assumed based upon their respective estimated fair
value at the date of the acquisition. Purchase price allocations were based on
evaluations, estimations and other studies performed by the Company. The Mark
purchase price allocation was completed in 1992. The excess of the purchase
price over the fair value of the net assets acquired totaled $5,550 and was
originally being amortized on a straight-line basis over 12 years. In late
1993 the Company introduced several new aerial lift models under the CMH brand
name and began to market these products through the Terex and CMH dealer
networks. Management made a determination that the goodwill related to the
December 1991 acquisition, primarily associated with the Mark name and dealer
network, had been impaired as a result of the above factors and, accordingly,
the Company wrote off the remaining balance of $4,718 in 1993.
NOTE C-- INVESTMENT IN FRUEHAUF TRAILER CORPORATION
Accounting for Investment
Prior to an initial public offering of 4,000,000 shares of Fruehauf common
stock in July of 1991 (the "Fruehauf IPO"), Fruehauf was a wholly-owned
subsidiary of the Company. Following the IPO and as of December 31, 1992, the
Company owned approximately 42% of the outstanding common stock of Fruehauf.
Pending the consummation of certain exchange transactions, Terex's principal
shareholder and certain other individuals placed 956,000 shares of Fruehauf
common stock in a voting trust to enable the Company to retain voting control
of more than 50% of Fruehauf's outstanding common stock. Because the voting
trust allowed the Company to retain a controlling financial interest in
Fruehauf, the Company included Fruehauf in its consolidated financial
statements in 1991. The voting trust terminated during 1992 and, accordingly,
the Company accounted for its ownership interest in Fruehauf using the equity
method in 1992 and 1993.
In August 1993, Fruehauf entered into agreements with its existing lenders, a
new lender and a number of investors which resulted in a restructuring of
existing debt and provided for a new $25,000 credit facility and $20,500 of new
equity (the "Fruehauf Restructuring"). As a result of the Fruehauf
Restructuring the Company's ownership of Fruehauf decreased to approximately
26% in August 1993. As part of the Fruehauf Restructuring, Terex confirmed its
agreement with Fruehauf to accept 2,251,167 shares of Fruehauf common stock in
payment of $13,507 of intercompany indebtedness which Fruehauf owed to Terex.
These shares were received by Terex in December 1993.
Because Fruehauf had experienced significant losses since 1990 and continued to
have a stockholders' deficit after the new equity investment described above
under "Fruehauf Restructuring," Terex's carrying value for its investment in
Fruehauf was reduced to zero. Terex also recognized a contingent obligation of
approximately $3,000 with respect to guaranties by Terex of certain obligations
of Fruehauf. This amount was reduced to $2,000 in 1994 as a result of the
expiration of certain of the guarantees.
In December 1993, the Company sold 1,000,000 shares of Fruehauf common stock
and realized a gain and aggregate proceeds of $3,009, reducing its ownership to
approximately 22.6% (6,386,622 shares) at December 31, 1993. In February 1994
the Company sold an additional 1,000,000 shares of Fruehauf common stock for
$4,620, reducing its remaining ownership interest in Fruehauf to 19.1%.
Because the Company's ownership interest was below 20% and because the Company
intended to sell the remaining shares, management concluded that use of the
equity method was no longer appropriate for the Company's investment in
Fruehauf and classified the Company's remaining shares of Fruehauf common stock
as shares available for sale under SFAS No. 115. During the remainder of 1994
the Company sold an additional 4,900,000 shares of Fruehauf common stock for
$21,423 and the Company's remaining ownership interest in Fruehauf at December
31, 1994 was 486,622 shares of common stock or approximately 1.6% of Fruehauf's
outstanding common stock. As required by SFAS 115 for assets held for sale,
the investment was valued at $1,825 at December 31, 1994, with an equivalent
amount presented as a component of stockholders' investment. The Company sold
the remaining shares of Fruehauf common stock in January 1995 for $796.
Restatement of Fruehauf Financial Statements
In March 1994, Fruehauf announced that it would revise the allocation of the
purchase price paid by Terex in its 1989 acquisition of Fruehauf. In March
1995, Fruehauf restated its financial statements for 1989 through 1992 for
revisions in the accounting treatment for Fruehauf's maritime operations,
certain liabilities included in the opening purchase price allocation and the
valuation of certain assets in the opening purchase price allocation. Because
Fruehauf was included as a consolidated subsidiary in the Company's
consolidated financial statements for 1989 through 1991 and was accounted for
on the equity method for 1992 and 1993, the restatements by Fruehauf also
resulted in the restatement of Terex's consolidated financial statements for
1989 through 1992. There was no significant effect on Terex's 1993 financial
statements because Terex's investment in Fruehauf had been reduced to zero
during 1992 and use of the equity method had been suspended. See Note A --
"Significant Accounting Policies -- Restatements and Reclassifications."
NOTE D -- INVENTORIES
Inventories consist of the following:
December 31,
1994 1993
Finished equipment $ 26,812 $ 27,157
Replacement parts 69,932 62,150
Work-in-process 13,520 14,351
Raw materials and supplies 57,894 65,165
167,158 168,823
Less: Excess of FIFO inventory value
over LIFO cost (2,913) (4,985)
Net inventories $164,245 $ 163,838
In 1994 and 1993, certain inventory quantities were reduced, resulting in the
liquidation of LIFO inventory quantities carried at lower costs prevailing in
prior years. The effects of such liquidations were to decrease cost of goods
sold by $2,072 in 1994 and $167 in 1993.
NOTE E -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
December 31,
1994 1993
Property $ 8,335 $ 12,157
Plant 32,249 41,711
Equipment 83,419 73,918
124,003 127,786
Less: Accumulated depreciation (37,843) (30,249)
Net property, plant and equipment $ 86,160 $ 97,537
NOTE F -- LONG-TERM OBLIGATIONS
December 31,
1994 1993
Long-term debt is summarized as follows:
Senior Secured Notes bearing interest
at 13%, due August 1, 1996
("Senior Secured Notes") $ 127,219 $ 154,173
Secured Senior Subordinated Notes
bearing interest at 13.5%,
due July 1, 1997 ("Subordinated
Notes") 24,546 32,702
Lending Facility maturing
August 24, 1997 24,064 10,165
Secured promissory note bearing
interest at prime rate,
due July 31, 1994 --- 6,090
Secured term note bearing interest
at 9.0% payable in equal semiannual
installments from August 1994
to February 1998 587 740
Capital lease obligations (Note G) 12,377 11,130
Other --- 130
Total long-term debt 188,793 215,130
Current portion of long-term debt 25,806 19,799
Long-term debt, less current portion $ 162,987 $ 195,331
Senior Secured Notes and Subordinated Notes
The Senior Secured Notes, totaling $127,673 principal amount outstanding at
December 31, 1994, were issued during July 1992 for a total of $160,000 in
conjunction with the CMH Acquisition and a refinancing of the Company's bank
debt. Proceeds from the issuance of the Senior Secured Notes were used for the
cash portion of the CMH Acquisition purchase price ($85,000), for the
settlement of all amounts outstanding under its previous credit facility
($58,000), and for working capital and transaction costs. Interest on the
Senior Secured Notes is due semiannually on February 1 and August 1.
The indenture for the Senior Secured Notes requires that proceeds from the
sale of collateral must be used to make an offer to repurchase, at par, an
equivalent amount of Senior Secured Notes. During 1994, as a result of sales
of 5,400,000 shares of Fruehauf common stock during 1994 and 1,000,000 shares
in the last quarter of 1993, the Company repurchased $27,327 principal amount
of the Senior Secured Notes. The Company realized an extraordinary loss of
$709 on the repurchases in conjunction with the accelerated write off of
related discount and debt issuance costs.
In December 1993, the Company repurchased in the open market $5,000 principal
amount of Senior Secured Notes for approximately $4,544, including accrued
interest, and had such notes cancelled as of December 31, 1993. The Company
realized an extraordinary gain from the early extinguishment of debt of $539,
net of unamortized debt discount and debt issuance costs.
The provisions of the Senior Secured Notes registration rights agreement
required that the Company file a registration statement to register the Senior
Secured Notes, or to effect an exchange offer of registered notes for such
notes, with the Securities and Exchange Commission by November 30, 1992, which
registration was to become effective no later than March 1, 1993. The
registration has not become effective and, as a result, Terex is incurring
liquidated damages until such filing becomes effective. Terex incurred such
liquidated damages in the amount of $715 and $768 during 1994 and 1993,
respectively, which are included in interest expense.
The Subordinated Notes, totalling $24,915 principal amount outstanding at
December 31, 1994, were initially issued as unsecured subordinated notes for a
total amount of $50,000. The notes have annual sinking fund requirements of
$8,333 due July 1 which commenced in 1992, and mature in 1997. Interest on the
Subordinated Notes is due semiannually on January 2 and July 1. In 1992, in
conjunction with the issuance of the Senior Secured Notes, the holders of
Subordinated Notes were granted a secondary security interest in certain of the
Company's assets.
The Senior Secured Notes are secured by substantially all of the Company's
inventory and property, plant and equipment, and were secured by the Company's
investment in Fruehauf common stock. The Subordinated Notes are secured by a
secondary secured position in substantially the same assets. Certain
non-financial covenants of the indentures governing the Senior Secured Notes
and Subordinated Notes limit, among other things, Terex's ability to incur
additional indebtedness, consummate mergers and acquisitions, pay dividends,
sell business segments and enter into transactions with affiliates, and also
place limitations on change of control. The Company's principal shareholder
has pledged shares of the Common Stock owned by him as collateral for loans.
If such loans are not paid when due, the pledgee may have the right to sell the
shares of the Common Stock pledged to it in satisfaction of such 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 repurchase the Senior Secured Notes and the Subordinated Notes.
The financial covenants of the indentures require, among other things, that the
Company comply with the Net Worth Covenants and the Collateral Covenants. In
the event that the Company's net worth is not in excess of the amount required
under the Net Worth Covenants for any two consecutive quarters, the Company
must offer to repurchase, at par plus accrued interest, 20% of the outstanding
principal amount of the Notes. In the event the Company is not in compliance
with the Collateral Covenants at the end of any calendar quarter, the Company
must offer to repurchase, at par plus accrued interest, $16.0 million principal
amount of the Senior Secured Notes or such greater amount as would be necessary
to bring the Company into compliance with the Collateral Covenants. If the
Company were not to be in compliance with such covenants, there could result a
material adverse impact on the Company.
The Company was in compliance with the Net Worth Covenants and the
Collateral Covenants at December 31, 1994 and throughout 1994. As discussed in
Note O -- "Liquidity, Financing and Severance Actions," the Company is seeking
to refinance the Senior Secured Notes and the Subordinated Notes during 1995.
Even if the Company is not successful in such refinancing, the Company believes
that, based on management's current estimates, it will be in compliance with
its covenants with respect to the Senior Secured Notes and Subordinated Notes
over the next twelve months.
Lending Facility
In May 1993, Terex entered into an agreement with a new lender which initially
provided short-term financing and currently provides long term financing (the
"Lending Facility"). The Lending Facility is secured by substantially all the
Company's domestic receivables and proceeds thereof. Interest on Lending
Facility borrowings is payable monthly at variable rates generally equal to
2.75% above the prime rate. During 1994, the agreement was amended to extend
the maturity date from August 24, 1995 to August 24, 1997. The agreement
currently provides for up to $30,000 of cash advances and guarantees through
April 30, 1995, and $25,000 thereafter through the extended maturity date. The
balance outstanding under the Lending Facility at December 31, 1994 was
$24,064. Accordingly, all outstanding borrowings are classified as Long Term
Debt in the accompanying Balance Sheet.
In conjunction with entering into the Lending Facility, the Company terminated
a former bank lending agreement and recognized, as an extraordinary item, a
charge of $2,003 to write off the unamortized debt issuance costs.
TEL Facility
In 1993, the Company's subsidiary, Terex Equipment Limited ("TEL") located in
Motherwell, Scotland, entered into a bank facility (the "TEL Facility") which
provides up to pd 28,000 ($42,000) including up to pd 13,000 ($19,500) non-
recourse discounting of accounts receivable which meet certain credit criteria,
plus additional facilities for tender and performance bonds and foreign exchange
contracts. Interest rates vary between 1.0% - 1.5% above the financial
institution's Published Base Rate or LIBOR. The TEL Facility is collateralized
primarily by the related accounts receivable. The TEL Facility requires no
performance covenants. Proceeds from the TEL Facility are primarily used for
working capital purposes. Amounts discounted under facility were $11,900 and
zero at December 31, 1994 and 1993, respectively.
Secured Promissory Note
A portion of the CMH Acquisition was financed through a note to the seller in
the amount of $6,090 due July 31, 1994. Interest accrued at prime rate and was
payable quarterly. The seller note was secured by certain property, plant and
equipment. The note was paid in May 1994.
Schedule of Debt Maturities
Scheduled annual maturities of long-term debt outstanding at December 31, 1994
in the successive five-year period are summarized below. Amounts shown are
exclusive of minimum lease payments disclosed in Note G -- "Lease Commitments":
1995 $ 23,360
1996 121,237
1997 32,571
1998 71
1999 ---
Thereafter ---
Total $ 177,239
Based on quoted market values, the Company believes that the fair value of the
Senior Secured Notes and Subordinated Notes is approximately $121,289 and
$23,171, respectively, as of December 31, 1994. The Company believes that the
carrying value of its other borrowings approximates fair market value, based on
discounting future cash flows using rates currently available for debt of
similar terms and remaining maturities.
The Company paid $32,221, $31,805 and $15,602 of interest in 1994, 1993 and
1992, respectively.
The weighted average interest rate on short term borrowings outstanding was
10.2% at December 31, 1994 and 9.3% at December 31, 1993.
NOTE G -- LEASE COMMITMENTS
The Company leases certain facilities, machinery and equipment, and vehicles
with varying terms. Under most leasing arrangements, the Company pays the
property taxes, insurance, maintenance and expenses related to the leased
property. Certain of the equipment leases are classified as capital leases and
the related assets have been included in Property, Plant and Equipment. Net
assets under capital leases were $5,919 and $5,011 at December 31, 1994 and
1993, respectively, net of accumulated amortization of $2,856 and $3,352 at
December 31, 1994 and 1993, respectively.
The Company's Material Handling Segment also routinely enters into
sale-leaseback arrangements for certain equipment, which is later sold to
third-party customers under sales-type lease agreements. The Company maintains
a net investment in these leases, represented by the present value of payments
due under the leases of $8,014 of which $1,549 is current at December 31, 1994.
In connection with the original sale-leaseback arrangements underlying the
customer leasing program, the Company has an outstanding rental installment
obligation which is recorded based on the present value of minimum payments due
under the leases.
Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1994 are as
follows:
Capital Operating
Leases Leases
1995 3,621 6,775
1996 3,059 5,910
1997 2,998 4,963
1998 2,542 3,333
1999 1,778 2,482
Thereafter 139 1,128
Total minimum obligations 14,137 24,591
Less amount representing interest 1,760
Present value of net minimum obligations 12,377
Less current portion 2,445
Long-term obligations $ 9,932
Noncash investing and financing activities include net capital lease
obligations of $1,144, $4,156 and $2,150 incurred in 1994, 1993 and 1992,
respectively, when the Company entered into leases for new equipment.
Most of the Company's operating leases provide the Company with the option to
renew the leases for varying periods after the initial lease terms. These
renewal options enable the Company to renew the leases based upon the fair
rental values at the date of expiration of the initial lease. Total rental
expense under operating leases was $7,405, $6,294 and $6,601 in 1994, 1993, and
1992, respectively.
In November 1994, the Company entered into a sale-leaseback transaction for
CMH's parts distribution center in Germany. The Company received net proceeds
of 16,500 German marks ($11,000) and will lease the facility under the terms of
a five year lease for a total rental of 2,900 German marks ($1,900) per year.
The Company realized a gain of 6,244 German marks ($4,029) which was deferred
and will be amortized as a reduction of rental expense over the lease term
($774 per year).
NOTE H -- INCOME TAXES
The components of Income (Loss) Before Income Taxes and Extraordinary Items are
as follows:
Year ended December 31,
1994 1993 1992
United States $ 12,355 $(67,455) $ 169
Foreign (10,399) 2,533 2,813
Income (loss) before income taxes
and extraordinary items $ 1,956 $(64,922) $ 2,982
The major components of the Company's provision for income taxes are summarized
below:
Year ended December 31,
1994 1993 1992
Current:
Federal $ --- $ --- $ ---
State 498 --- ---
Foreign 2,132 1,336 167
Utilization of foreign net operating
loss ("NOL") carryforward (1,844) (1,178) ---
Current income tax provision 786 158 167
Deferred:
Deferred federal income tax benefit --- --- (100)
Total provision for income taxes $ 786 $ 158 $ 67
Deferred tax assets and liabilities result from differences in the basis of
assets and liabilities for tax and financial statement purposes. In accordance
with SFAS No. 109, "Accounting for Income Taxes," a valuation allowance has
been recognized. The tax effects of the basis differences and net operating
loss carryforward as of December 31, 1994 and 1993 are summarized below for
major balance sheet captions:
1994 1993
Net inventories $ (7,118) $ (4,343)
Fixed assets (9,564) (9,933)
Other (485) (202)
Total deferred tax liabilities (17,167) (14,478)
Receivables 1,376 2,136
Warranties and product liability 20,756 20,709
Investments 957 9,692
All other items 6,098 4,914
Benefit of net operating loss carryforward 126,573 114,109
Total deferred tax assets 155,760 151,560
Deferred tax assets valuation allowance (138,593) (137,082)
Net deferred tax liabilities $ --- ---
The valuation allowance for deferred tax assets as of January 1, 1993 was
$112,708. The net change in the total valuation allowance for the years ended
December 31, 1993 and 1994 were increases of $24,374 and $1,511, respectively.
The Company's Provision for Income Taxes is different from the amount which
would be provided by applying the statutory federal income tax rate to the
Company's Loss Before Income Taxes and Extraordinary Items. The reasons for
the difference are summarized below:
Year ended December 31,
1994 1993 1992
Statutory federal income tax rate $ 685 $(22,723) $ 1,014
Recognition of previously
unrecognized tax assets (4,333) --- ---
NOL with no current benefit --- 21,641 ---
Foreign tax differential on
income/losses of foreign subsidiaries 3,698 (627) (856)
Goodwill write-off --- 1,793 ---
State tax 498 --- ---
Other 238 74 (91)
Total provision for income taxes $ 786 $ 158 $ 67
The Company has not provided for U.S. federal and foreign withholding taxes on
$10,625 of foreign subsidiaries' undistributed earnings as of December 31,
1994, because such earnings are intended to be reinvested indefinitely. Any
income tax liability that would result had such earnings actually been
repatriated would likely be offset by utilization of NOL's. On repatriation,
certain foreign countries impose withholding taxes. The amount of withholding
tax that would be payable on remittance of the entire amount of undistributed
earnings would approximate $1,900.
At December 31, 1994, the Company had domestic federal net operating loss
carryforwards of $272,501. Approximately $93,765 of the remaining net
operating loss carryforwards are subject to special limitations under the
Internal Revenue Code, and the NOL's may be affected by the current IRS
examination discussed below.
The tax basis net operating loss carryforwards expire as follows:
Tax Basis Net
Operating Loss
Carryforwards
1995 24,041
1996 45,231
1997 8,004
1998 11,908
1999 ---
2000 4,581
2006 20,689
2007 35,661
2008 101,896
2009 20,490
Total $ 272,501
The Company also has various state net operating loss and tax credit
carryforwards expiring at various dates through 2009 available to reduce future
state taxable income and income taxes. In addition, the Company's foreign
subsidiaries have approximately $60,586 of loss carryforwards, $33,475 in
Germany, $17,748 in U.K. and $9,363 in other countries, which are available to
offset future foreign taxable income. The loss carryforwards in Germany and
U.K. are available without expiration. The loss carryforwards in other
countries of $7,271 are available without expiration, with the remaining $2,092
expiring in the years 1995 through 2000.
The Internal Revenue Service is currently examining the Company's federal tax
returns for the years 1987 through 1989. In December 1994, the Company
received an examination report from the IRS proposing a substantial tax
deficiency based on this examination. The examination report raises a variety
of issues, including the Company's substantiation for certain deductions taken
during this period, the Company's utilization of certain net operating loss
carryovers ("NOL's") and the availability of such NOL's to offset future
taxable income. If the IRS were to prevail on all the issues raised, the
amount of the tax assessment would be approximately $56 million plus interest
and penalties. If the Company were required to pay a significant amount to
resolve such assessment, it would have a material adverse impact on the Company
and could exceed the Company's resources. The Company is preparing its
administrative appeal to the examination report. Although management believes
that the Company will be able to provide adequate documentation for a
substantial portion of the deductions questioned by the IRS and that there is
substantial support for the Company's past and future utilization of the NOL's,
the ultimate outcome of this matter is subject to significant legal and factual
issues. If the Company's positions are upheld, management believes that the
amounts due would not exceed amounts previously paid or provided; however, the
Company's NOL's could be reduced. No additional accruals have been made for
any amounts which might be due as a result of this matter because the possible
loss ranges from zero to $56 million plus interest and penalties and the
ultimate outcome cannot presently be determined.
The Company made income tax payments of $790, $58 and $66 in 1994, 1993 and
1992, respectively.
NOTE I -- PREFERRED STOCK
The Company's certificate of incorporation was amended in October 1993 to
authorize 10,000,000 shares of preferred stock, $.01 par value per share. As
of December 31, 1994, a total of 1,289,800 shares of preferred stock are issued
and outstanding as described below.
Series A Cumulative Redeemable Convertible Preferred Stock
As of December 31, 1994, the Company has 1,200,000 issued and outstanding
shares of Series A Cumulative Redeemable Convertible Preferred Stock (the
"Series A Preferred Stock"). These shares were issued as part of a private
placement on December 20, 1993 which also included the issuance of 1,300,000
Common Stock Purchase Warrants (the "Series A Warrants," see Note J --
"Stockholders' Investment"). The Series A Preferred Stock has a par value of
$.01 per share and an initial liquidation preference of $25.00 per share (the
"Liquidation Preference"). During the period from the issue date and ending at
the Accretion Termination Date (as defined below), the Liquidation Preference
will accrete at the rate of 13% per year until December 20, 1998, and 18% per
year thereafter. The Liquidation Preference totaled $34,321 at December 31,
1994.
After the Accretion Termination Date, the holders of the Series A Preferred
Stock are entitled to cumulative dividends, payable quarterly, as described
below. Each share of Series A Preferred Stock is convertible into 2.25 shares
of the Company's common stock (subject to adjustment in certain circumstances),
and is redeemable at the option of the Company on or after December 31, 1994 at
a price equal to the Liquidation Preference plus unpaid dividends provided that
a concurrent redemption of all outstanding Series A Warrants is made. The
Series A Preferred Stock is subject to a mandatory redemption requirement on or
before December 31, 2000 at a per share redemption price equal to the
Liquidation Preference on the date of redemption plus accrued but unpaid
dividends. The Series A Preferred Stock has no voting rights except when and
if dividends are in arrears as described below.
Commencing three months prior to the date the Company's indentures and loan
agreements allow the Company to declare and pay cash dividends on the Series A
Preferred Stock ("the Accretion Termination Date"), dividends will begin to
accrue at the rate of 13% per year through December 20, 1998, and at the rate
of 18% per year thereafter. After the Accretion Termination Date the holders
of the Series A Preferred Stock will be entitled to elect one additional
director of the Company if the Company fails to declare and pay the full amount
of dividends payable on any two dividend payment dates. Such holders will have
a right to elect two additional directors of the Company if the Company misses
four dividend payment dates.
The aggregate net proceeds to the Company for the Series A Preferred Stock and
the Series A Warrants issued on December 20, 1993 were $27,179. The Company
has allocated $10,328 and $16,851 of this amount to the Series A Preferred
Stock and the Series A Warrants, respectively, based on management's estimate
of the relative fair values of these securities at the time of their issuance,
using information provided by the Company's investment bankers. The difference
between the initially recorded amount and the redemption amount will be
accreted to the carrying value of the Series A Preferred Stock using the
interest method over the period from issuance to the mandatory redemption date,
December 31, 2000. In addition, the carrying value of the Series A Preferred
Stock will be further adjusted for increases in the Liquidation Preference
prior to the Accretion Termination Date as described above. The total
accretion recorded in 1994 and 1993 was $5,912 and $152, respectively.
Series B Cumulative Redeemable Convertible Preferred Stock
As of December 31, 1994, the Company has 89,800 issued and outstanding shares
of Series B Cumulative Redeemable Convertible Preferred Stock (the "Series B
Preferred Stock"). These shares were issued to certain individuals on December
9, 1994 in consideration for the early termination of a contract between the
Company and KCS Industries, Inc., a Connecticut limited partnership ("KCS"), a
related party (see Note M -- "Related Party Transactions"). The transaction
also included the issuance of 106,950 Common Stock Purchase Warrants (the
"Series B Warrants," see Note J -- "Stockholders' Investment"). The Series B
Preferred Stock has a par value of $.01 per share and an initial liquidation
preference of $25.00 per share (the "Liquidation Preference"). During the
period from the issue date and ending at the Accretion Termination Date (as
defined below), the Liquidation Preference will accrete at the rate of 13% per
year until December 20, 1999, and 18% per year thereafter. The Liquidation
Preference totaled $2,257 at December 31, 1994.
After the Accretion Termination Date, the holders of the Series B Preferred
Stock are entitled to cumulative dividends, payable quarterly, as described
below. Each share of Series B Preferred Stock is convertible into 2.25 shares
of the Company's common stock (subject to adjustment in certain circumstances),
and is redeemable at the option of the Company on or after December 31, 1995 at
a price equal to the Liquidation Preference plus unpaid dividends provided that
a concurrent redemption of all outstanding Series B Warrants is made. The
Series B Preferred Stock is subject to a mandatory redemption requirement on or
before December 31, 2001 at a per share redemption price equal to the
Liquidation Preference on the date of redemption plus accrued but unpaid
dividends. The Series B Preferred Stock has no voting rights except when and
if dividends are in arrears as described below.
Commencing three months prior to the date the Company's indentures and loan
agreements allow the Company to declare and pay cash dividends on the Series B
Preferred Stock ("the Accretion Termination Date"), dividends will begin to
accrue at the rate of 13% per year through December 20, 1999, and at the rate
of 18% per year thereafter.
The Company has allocated $853 and $713 to the Series B Preferred Stock and the
Series B Warrants, respectively, based on management's estimate of the relative
fair values of these securities at the time of their issuance (equivalent to
the allocation used for the Series A Preferred Stock and Series A Warrants).
The difference between the initially recorded amount and the redemption amount
will be accreted to the carrying value of the Series B Preferred Stock using
the interest method over the period from issuance to the mandatory redemption
date, December 31, 2001. In addition, the carrying value of the Series B
Preferred Stock will be further adjusted for increases in the Liquidation
Preference prior to the Accretion Termination Date as described above. The
total accretion recorded in 1994 was $17.
NOTE J -- STOCKHOLDERS' INVESTMENT
Common Stock. The Company's certificate of incorporation was amended in
October 1993 to increase the number of authorized shares of common stock, par
value $.01 (the "Common Stock"), to 30,000,000. As of December 31, 1994,
there were 10,303,067 shares issued and outstanding. Of the 19,696,933
unissued shares at that date, 6,016,228 shares were reserved for issuance as
follows:
Conversion of Series A Preferred Stock (Note I) 2,700,000
Conversion of Series B Preferred Stock (Note I) 202,050
Exercise of Series A and Series B Warrants 3,005,950
Exercise of Stock Options 108,228
Total reserved for issuance 6,016,228
In December 1993, the Company issued 350,000 shares of Common Stock as a
contribution to two of the Company's pension plans. The Company valued these
shares at $2,323, based on 96.5% of the market price of the Common Stock on the
date of issuance.
Series A Warrants. In connection with the private placement of the Series A
Preferred Stock (see Note I -- "Series A Preferred Stock"), the Company issued
1,300,000 Series A Warrants. Each Series A Warrant may be exercised, in whole
or in part, at the option of the holder at any time before the expiration date
on December 31, 2000 and is redeemable by the Company under certain
circumstances. Upon the exercise or redemption of a Warrant, the holder
thereof shall be entitled to receive 2.23 shares of Common Stock. The exercise
price for the Warrants is $.01 for each share of Common Stock. The number of
shares of Common Stock issuable upon exercise or redemption of the Warrants is
subject to adjustment in certain circumstances.
Series B Warrants. In connection with the private placement of the Series B
Preferred Stock (see Note I -- "Series B Preferred Stock"), the Company issued
106,950 Series B Warrants. Each Series B Warrant may be exercised, in whole or
in part, at the option of the holder at any time before the expiration date on
December 31, 2001 and is redeemable by the Company under certain circumstances.
Upon the exercise or redemption of a Warrant, the holder thereof shall be
entitled to receive one share of Common Stock. The exercise price for the
Warrants is $.01 for each share of Common Stock. The number of shares of
Common Stock issuable upon exercise or redemption of the Warrants is subject to
adjustment in certain circumstances.
Stock Options. The Company maintains a qualified incentive stock option ("ISO")
plan covering certain officers and key employees. The exercise price of the
ISO stock option is the fair market value of the shares at the date of grant.
The ISO allows the holder to purchase shares of common stock, commencing one
year after grant. ISO options expire after ten years. At December 31, 1994,
26,062 stock options were available for grant under the plan.
The following table is a summary of stock options:
Number Exercise Price
of Options per Option
Outstanding at December 31, 1991 78,583 $ 6.40 to 14.80
Granted 20,000 13.25
Exercised (25,917) 6.40 to 14.80
Canceled or expired (13,000) 10.20 to 14.80
Outstanding at December 31, 1992 59,666 $ 6.40 to 14.80
Granted 23,750 7.13 to 10.50
Exercised (3,750) 10.20
Canceled or expired (3,750) 14.80
Outstanding at December 31, 1993 75,916 $ 6.40 to 14.80
Granted 10,000 6.63
Exercised ---
Canceled or expired (3,750) 14.80
Outstanding at December 31, 1994 82,166 $ 6.40 to 14.80
Exercisable at December 31, 1994 54,251 $ 6.40 to 14.80
Long-Term Incentive Plan. In June 1994, the Company's board of directors
approved a Long-Term Incentive Plan (the "Plan") covering certain managerial,
administrative and professional employees and outside directors. The Plan
provides for awards to employees, from time to time and as determined by a
committee of outside directors, of cash bonuses, stock options, stock and/or
restricted stock. The total number of shares of the Company's common stock
available to be awarded under the Plan is 750,000, subject to certain
adjustments. In June 1994, options to purchase a total of 308,800 shares of
common stock at $5.50 per share and a total of 129,400 shares of restricted
common stock were granted to employees and outside directors. The Plan, and
the options and restricted stock granted thereunder, are subject to approval by
the Company's shareholders. Accordingly, these shares and options are not
considered to be outstanding and are not included in calculations of earnings
per share.
Stock Appreciation Rights. In connection with the sale of the Senior Secured
Notes and obtaining the consent of the holders of the Company's existing
Subordinated Notes to modify the Subordinated Notes, the Company issued 658,409
common stock appreciation rights ("SAR"). As of December 31, 1994, there were
624,794 SAR's outstanding. Of the outstanding SAR's, 552,000 may be exercised
at the option of the holder thereof at any time through July 31, 1996. The
remaining 72,794 SAR's may be exercised through July 1, 1997. The SAR's
entitle the holder to receive the market appreciation in the Company's Common
Stock between $11.00 per share, subject to adjustment, and the average price
per share for the 30 consecutive trading days prior to the date of exercise.
At December 31, 1994, there was no reserve requirement necessary because the
Company's Common Stock price was below $11.00 per share.
Dividends. No dividends were declared or paid in 1994, 1993 or 1992. As
discussed in Note F -- "Long-Term Obligations," certain of the Company's debt
agreements contain restrictions as to the payment of cash dividends. Under the
most restrictive of these agreements, no retained earnings were available for
dividends at December 31, 1994. The terms of the Company's outstanding Series
A Preferred Stock and Series B Convertible Preferred Stock also restrict the
Company's ability to pay cash dividends on the Common Stock.
NOTE K -- RETIREMENT PLANS
Pension Plans
US Plans
The Company maintains four defined benefit pension plans covering certain
domestic employees. The benefits for the plans covering the salaried employees
are based primarily on years of service and employees' qualifying compensation
during the final years of employment. Participation in the plan for salaried
employees was frozen as of May 7, 1993, and no participants will be credited
with service following such date except that participants not fully vested will
be credited with service for purposes of determining vesting only. The
benefits for the plans covering the hourly employees are based primarily on
years of service and a flat dollar amount per year of service. It is the
Company's policy generally to fund these plans based on the minimum
requirements of the Employee Retirement Income Security Act of 1974 (ERISA).
Plan assets consist primarily of common stocks, bonds, and short-term cash
equivalent funds.
Pension expense includes the following components for 1994, 1993 and 1992:
Year Ended December 31,
1994 1993 1992
Service cost for benefits
earned during period $ 183 $ 449 $ 499
Interest cost on projected
benefit obligation 2,176 2,368 2,378
Actual (return) loss on plan assets (355) (2,128) (3,052)
Net amortization and deferral (1,150) 872 1,870
Curtailment (gain) loss --- (284) 58
Net pension expense $ 854 $ 1,277 $ 1,753
The following table sets forth the US plans' funded status and the amounts
recognized in the Company's financial statements at December 31:
1994 1993 1992
OverfundedUnderfunded Overfunded UnderfundedUnderfunded
Plans Plans Plans Plans Plans
Actuarial present value of:
Vested benefits $ 7,952 $ 19,041 $ 9,252 $ 22,450 $ 27,249
Accumulated
benefits $ 8,145 $ 19,119 $ 9,509 $ 22,657 $ 27,637
Projected
benefits $ 8,145 $ 19,119 $ 9,509 $ 22,657 $ 29,602
Fair value of
plan assets 9,268 14,723 9,711 14,641 19,929
Projected benefit
obligation
(in excess of)
less than
plan assets 1,123 (4,396) 202 (8,016) (9,673)
Unrecognized net
loss from past
experience different
than assumed 2,488 1,778 3,691 4,173 6,328
Unrecognized prior
service cost 470 --- 503 --- 920
Unrecognized
transition (asset) --- --- --- --- (324)
Adjustment to
recognize minimum
liability --- (1,778) --- (4,173) (4,988)
Pension asset
(liability)
recognized in the
balance sheet $ 4,081 $ (4,396) $ 4,396 $ (8,016) $ (7,737)
The expected long-term rate of return on plan assets was 9% for the periods
presented. The discount rate assumption was 8.5% for 1994, 7.0% for 1993 and
8.25% for 1992. The assumption for the rate of compensation increase, if
applicable per plan provisions, was 5.5% for 1992 and until May 7, 1993.
In accordance with the provisions of the SFAS No. 87, "Employers' Accounting
for Pensions," the Company has recorded an adjustment of $1,778 and $4,173 to
recognize a minimum pension liability at December 31, 1994 and 1993,
respectively. This liability is offset by a direct reduction of stockholders'
investment of $1,778 and $4,173 at December 31, 1994 and 1993, respectively.
Assets of Terex's pension plans were combined with assets of Fruehauf's pension
plans into a master trust (the "Master Trust") effective January 1, 1992. In
1993, the Master Trust acquired Terex Common Stock to be held in designated
accounts for the benefit of Fruehauf retirees. The fair value of the Terex
Common Stock held for the benefit of the Fruehauf retirees totaled
approximately $3.3 million at December 31, 1993. The Master Trust disposed of
this investment in Terex Common Stock in March 1994 for approximately $3.9
million.
In December 1993, Terex contributed 350,000 shares of Terex Common Stock, par
value $.01, to the Master Trust for the benefit of two of the Terex plans,
which were valued by Terex at $2,323 based upon 96.5% of the market value of
Terex Common Stock as quoted on the New York Stock Exchange on the day of
contribution. The market value of this investment was $2,450 at December 31,
1994.
In addition, the Master Trust held 6,000 Terex Common Stock Appreciation Rights
("Terex SAR's"), valued at $1.00 per right (total value of $6) at December 31,
1994 and 12,000 Terex SAR's, valued at $1.25 per right ($15 total) at December
31, 1993.
As of December 31, 1993 the Master Trust maintained a participation in
Fruehauf's Credit Facility with a market value of $1,954 (cost of $2,299). The
rights of the Master Trust were equivalent to those of the other lenders and
investors.
Effective September 1, 1994, the Fruehauf Trailer Corporation Master Retirement
Trust was created, and those investments held by the Master Trust allocable to
the Fruehauf pension plans were transferred to the Fruehauf Trailer Corporation
Master Retirement Plan Trust, including the investment in Fruehauf's Bank
Credit Facility. The investments in Terex Common Stock and Terex SAR's
remained in the Master Trust for the benefit of participants in Terex's pension
plans.
International Plans
TEL maintains a government-required defined benefit plan (which includes
certain defined contribution elements) covering substantially all of its
management employees. This plan is fully funded. Pension expense relating to
this plan was approximately $260, $228 and $208 for the years ended December
31, 1994, 1993 and 1992, respectively.
Certain of CMH's German employees are covered by noncontributory defined
benefit pension plans. The Company retained responsibility for such plans
after the Acquisition. CMH also maintains separate pension benefit plans for
certain German executive employees and for other staff. The executive pension
plans are based on final pay and service, and, in some cases, are dependent on
social security pensions while the other staff plans are based on fixed amounts
applied to the number of years service rendered. The plans are unfunded.
The components of consolidated pension expense for each of the reporting
periods covered by these financial statements is as follows:
Five months
Year Ended Year Ended ended
December 31, December 31, December 31,
1994 1993 1992
Current service cost $ 174 $ 201 $ 103
Interest cost 877 862 339
Net amortization and deferrals (820) 84 37
Defined benefit pension expense $ 231 $ 1,147 $ 479
The following table reconciles the funded status of the Company's defined
benefit pension plans to the amounts recognized on the Company's Consolidated
Balance Sheet:
December 31,
1994 1993
Accumulated benefit obligation,
including nonvested benefits
of $207 and $819 at
December 31, 1994 and 1993 $ 11,095 $ 12,220
Projected benefit obligation $ 11,152 $ 13,143
Unrecognized net gain/(loss) 1,902 (893)
Unrecognized transition
asset (liability) (665) (814)
Adjustment required to recognize
minimum liability --- 785
Accrued pension cost $ 12,389 $ 12,221
Discount rates of 7.5% in 1994 and 7% in 1993 were used to determine the
projected benefit obligation. During 1994, the Company significantly reduced
its German work force in connection with restructuring of its operations. As a
result, the Company realized a curtailment gain with respect to these plans,
which was recognized as a reduction of the unrecognized transition liability in
accordance with the provisions of SFAS 88, "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Plans and for Termination of
Benefits." The Company changed certain assumptions used in the actuarial
valuation of the plans: the assumed rate of compensation increases is 0%
through 1999 and 2% thereafter (4% for all periods in the 1993 valuation); and
the assumed rate of cost of living adjustments of pensions in payment is 0%
through 1999 and 2% thereafter (3.5% for all periods in the 1993 valuation).
These changes in assumptions reflect the reductions in personnel and other
changes in the Company's operations, including changes in compensation
arrangements, implemented during 1994. These changes resulted in an actuarial
gain of $2,724. The gain in excess of 10% of the projected benefit obligation
is being amortized over 2 years; $908 was amortized as a reduction of pension
cost in 1994 and was recorded in the fourth quarter of 1994.
Saving Plans
The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. The Company
can, but is not obligated to, contribute to certain of these plans.
Other Postretirement Benefits
The Company provides postretirement health and life insurance benefits to
certain former salaried and hourly employees of Koehring. The Company adopted
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions," on January 1, 1993. This statement requires accrual of
postretirement benefits (such as health care benefits) during the years an
employee provides service.
Terex adopted the provisions of SFAS No. 106 using the delayed recognition
method, whereby the amount of the unrecognized transition obligation at January
1, 1993 is recognized prospectively as a component of future years' net
periodic postretirement benefit expense. The unrecognized transition
obligation at January 1, 1993 was $4,476. Terex is amortizing this transition
obligation over 12 years, the average remaining life expectancy of the
participants. The liability of the Company, as of December 31, was as follows:
1994 1993
Actuarial present value of accumulated
postretirement benefit obligation:
Retirees $ 4,604 $ 4,522
Active participants --- ---
Total accumulated postretirement
benefit obligation 4,604 4,522
Unamortized transition obligation (3,730) (4,103)
Liability recognized in the
balance sheet $ 874 $ 419
Health care trend rates used in the actuarial assumptions range from 12.3% to
13.5%. These rates decrease to 6.75% over a period of 9 to 11 years. The
effect of a one percentage-point change in the health care cost trend rates
would change the accumulated postretirement benefit obligation approximately
5%. The discount rate used in determining the accumulated postretirement
benefit obligation is 8.25%.
Net periodic postretirement benefit expense includes the following components
for 1994 and 1993:
Year Ended December 31,
1994 1993
Service Cost $ --- $ ---
Interest cost 369 369
Net amortization 373 373
Total 742 742
The Company's postretirement benefit obligations are not funded. Net periodic
postretirement benefit expense for the year ended December 31, 1994 and 1993
was approximately $455 and $419 greater on the accrual basis than it would have
been on the cash basis.
Retiree health payments totaled $235 for the year ended December 31, 1992.
NOTE L -- LITIGATION AND CONTINGENCIES
In December 1992, a Class Action complaint was filed, purportedly on behalf of
all persons who purchased Fruehauf common stock during the period from June 28,
1991 through December 4, 1992, against Fruehauf, the Company, certain of
Fruehauf's then officers and directors, including Randolph W. Lenz, Marvin B.
Rosenberg and G. Chris Andersen, and certain of the underwriters of the initial
public offering of Fruehauf, namely, PaineWebber Incorporated, Alex. Brown &
Sons, Incorporated and Wertheim Schroder & Co., Incorporated, in the United
States District Court for the Eastern District of Michigan, Southern Division,
seeking unspecified compensatory and punitive damages. The complaint alleges,
among other things, that, in connection with and following the initial public
offering of Fruehauf, the defendants misrepresented Fruehauf's liquidity and
the status of compliance with Fruehauf's credit facilities at the time of the
Fruehauf IPO, and in certain other documents publicly disseminated by Fruehauf
subsequent to the initial public offering. The plaintiffs then amended their
complaint to include claims based on the April 1993 restatement of Fruehauf's
1989 and 1990 financial statements. The defendants filed answers to the
complaint denying material allegations of the complaint, as amended, and
asserting various affirmative defenses. A motion for partial summary judgment
against the defendants on the restatement claims is currently pending. The
Company has not recorded any loss provision for this litigation. The Company
has been participating in settlement discussions and, based on an agreement in
principal reached with the plaintiffs, believes that an agreement to settle
this litigation will be resolved without any material adverse impact to the
Company.
In the Company's lines of business, but primarily in the Material Handling
Segment, numerous suits have been filed alleging damages for injuries or deaths
from accidents involving the Company's products that have arisen in the normal
course of operations. As part of the acquisition of CMH, the Company and CMH
assumed both the outstanding and future product liability exposures related to
such operations. As of December 31, 1994, CMH had approximately 120 lawsuits
outstanding alleging damages for injuries or deaths arising from accidents
involving CMH products. Most of the foregoing suits are in various stages of
pretrial completion, and certain plaintiffs are seeking punitive as well as
compensatory damages. The Company is self-insured, up to certain limits, for
these product liability exposures, as well as for certain exposures related to
general, workers' compensation and automobile liability. Insurance coverage is
obtained for catastrophic losses as well as those risks required to be insured
by law or contract. The Company has recorded and maintains an estimated
liability, based in part upon actuarial determinations, in the amount of
management's estimate of the Company's aggregate exposure for such self-insured
risks.
The Company is involved in various other legal proceedings which have arisen
in the normal course of its operations. The Company has recorded provisions
for estimated losses in circumstances where a loss is probable and the amount
or range of possible amounts of the loss is estimable.
The Company is contingently liable as a guarantor for certain customers' floor
plan obligations with financial institutions. As a guarantor, the Company is
obligated to purchase equipment which has been repossessed by the financial
institution based upon the unamortized principal balance outstanding. The
Company records the repossessed inventory as used equipment at its estimated
net realizable value. Any resultant losses are charged against related
reserves. The guarantee under such floor plans aggregated $7,031 at December
31, 1994. The Company has recorded reserves based on management's estimates of
potential losses arising from these guarantees. Historically, the Company has
incurred only immaterial losses relating to these arrangements.
CMH has also given guarantees to financial institutions relating to capital
loans, residual guarantees and other dealer and customer obligations arising
out of the ordinary conduct of its business. Such guarantees approximated
$6,400 at December 31, 1994. Potential losses on such guarantees are accrued
as a component of the Allowance for Doubtful Accounts.
To enhance its marketing effort and ensure continuity of its dealer network,
CMH has also agreed as part of its dealer sales agreements to repurchase
certain new and unused products and parts inventory and certain products used
as dealer rental assets in the event of a dealer termination. Repurchase
agreements included in operating agreements with an independent financial
institution have been patterned after those included in the dealer sales
agreements, and provide for repurchase of inventory in certain circumstances of
dealer default on financing provided by the financial institution to the
dealer. Dealer inventory and rental asset financing of approximately $206,000
at December 31, 1994 were covered by those operating agreements. Under these
agreements, when dealer terminations do occur, a newly selected dealer
generally assumes the assets of the prior dealer and any related financial
obligations. Historically, CMH has incurred only immaterial losses relating to
these arrangements.
Terex's outstanding letters of credit totaled $6,687 which are cash
collateralized. The letters of credit generally serve as collateral for
certain liabilities included in the Consolidated Balance Sheet. Certain of
the letters of credit serve as collateral guaranteeing the Company's
performance under contracts.
As described in Note H -- "Income Taxes," the Internal Revenue Service is
currently examining the Company's federal tax returns for the years 1987
through 1989.
Terex has agreed to indemnify certain outside parties for losses related to
Fruehauf's worker compensation obligations. Some of the claims for which Terex
is contingently obligated are also covered by bonds issued by an insurance
company. As of December 31, 1994 Terex has recognized liabilities for these
contingent obligations in the aggregate amount of $2,000, representing
management's estimate of the maximum potential losses which the Company might
incur.
NOTE M -- RELATED PARTY TRANSACTIONS
Under a contract dated July 1, 1987, as amended, KCS Industries, L.P., a
Connecticut limited partnership ("KCS"), principally owned by Randolph W. Lenz,
Chairman of the Board and a principal stockholder of the Company, provided
administrative, financial, marketing, technical, real estate and legal services
to the Company and its subsidiaries until December 31, 1993. KCS 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, the Company paid KCS an annual fee plus the
reimbursement for all out-of-pocket expenses incurred by KCS in fulfilling the
contract, including travel and similar expenses and fees for professional and
other services provided by third parties. Each year the contract was in
effect, the annual fee increased by the greater of 10% or the increase in the
Consumer Price Index, subject to limitations imposed by the Company's debt
agreements. During 1993 and 1992, the Company made payments to KCS for fees of
$2,878 and $2,848, respectively.
During 1993, the Board of Directors of the Company concluded that it would be
in the Company's best interest to terminate the Company's contract with KCS and
integrate the management services of KCS directly into the Company. Pursuant
to an agreement between the Company and KCS, the contract between the Company
and KCS was terminated as of the close of business on December 31, 1993. David
J. Langevin and Marvin B. Rosenberg, employees of KCS, became salaried
employees of the Company effective January 1, 1994, with the titles of
Executive Vice President and Senior Vice President, respectively. In
consideration of the termination of the contract, the Company issued 89,800
shares of the Company's Series B Cumulative Redeemable Convertible Preferred
Stock (valued at $853) and 106,950 Series B Warrants (valued at $713), the
terms of which are substantially similar to the terms of the Company's
outstanding Series A Preferred Stock and Series A Warrants, respectively. Of
such amounts, Mr. Lenz received 38,800 shares of preferred stock and warrants
exercisable for 15,700 shares of Terex Common Stock and Messrs. Langevin and
Rosenberg received 25,500 shares of preferred stock and warrants exercisable
for 45,625 shares of Terex Common Stock. In addition, Messrs. Lenz, Langevin
and Rosenberg received cash payments of $515, $82 and $82, respectively.
The Company, certain directors and executives of the Company, and KCS are named
parties in various legal proceedings. During 1994, 1993 and 1992, the Company
incurred $319, $351 and $59 of legal fees and expenses on behalf of the
Company, directors and executives of the Company, and KCS named in the
lawsuits.
On January 25, 1993, Terex entered into an agreement whereby KCS borrowed
$1,683 from Terex (the "KCS/Terex Note"). The KCS/Terex Note bore interest at
prime. The loan represented by the KCS/Terex Note may have constituted a
default under the Senior Secured Notes, the Subordinated Notes and the Bank
Lending Agreement. The entire balance was repaid to Terex on February 1, 1993,
six days after the initial borrowing, thereby curing any default which may have
occurred.
In conjunction with the CMH Acquisition, the Company financed the acquisition
and refinanced a major component of its previously outstanding bank debt
through a private placement of Secured Notes and SAR's, and the establishment
of the Bank Lending Agreement. Mr. Raben, a director of the Company, is an
employee and officer of Jefferies & Company, Inc. ("Jefferies"), the investment
banking firm which acted as an exclusive placement agent for the Company in the
offering of the Senior Secured Notes and SAR's. Jefferies was paid fees of
$6,500 in 1992 for services performed as placement agent. Jefferies was also
the Company's placement agent for the December 1993 sale of the Series A
Preferred Stock and Series A Warrants for which Jefferies received fees
totalling $2,500 in 1993. Jefferies was also the agent for the Company for
certain sales by the Company of its common stock of Fruehauf in 1993.
Jefferies purchased 250,000 Series A Warrants and 180,000 shares of Series A
Preferred Stock from the Company in connection with the Company's private
placement on December 20, 1993.
David A. Sachs, a director of the Company, was affiliated with the Airlie Group
L.P. ("Airlie"), a limited partnership which owns approximately 9% of the
Company's Common Stock (including Common Stock issuable upon conversion of
Series A Preferred Stock) and 40,000 Warrants. Until May 1994, Mr. Sachs was
an employee of the investment firm of TMT-FW, Inc. which is one of two general
partners of the general partner of Airlie. During the time Mr. Sachs was
affiliated with Airlie, Airlie received all director fees to which Mr. Sachs
was entitled by reason of his service as a director of the Company ($6 in 1994
and $24 in 1993). On December 20, 1993, Airlie purchased 40,000 Warrants and
40,000 shares of Series A Preferred Stock from the Company as part of the
Company's private placement.
In 1992, the Board approved a program to consolidate Fruehauf's parts
warehousing and administration functions with the Company. During the fourth
quarter of 1992, Fruehauf announced its intention to close its parts warehouse
in Westerville, Ohio and transfer its replacement parts inventory to the Terex
distribution center in Southaven Mississippi. In November 1992, in
contemplation of the parts consolidation, Terex had transferred $2.0 million to
Fruehauf. As a result of a debt restructuring of Fruehauf, the proposed
arrangement was not effectuated and, in May 1993, Terex entered into an
agreement with an operating unit of Fruehauf, whereby such operating unit was
to provide products and manufacturing services to Terex. This agreement
required Terex to make a $2.0 million payment to such operating unit, which
Terex effected on May 11, 1993 by instructing Fruehauf to transfer the $2.0
million Fruehauf owed to Terex directly to such operating unit. The operating
unit of the Fruehauf unit in question subsequently ceased operations. The
Company is in discussions with Fruehauf concerning the satisfaction of
Fruehauf's obligations under the May 1993 agreement.
The Company requires that all transactions with affiliates be on terms no less
favorable to the Company than could be obtained in comparable transactions with
an unrelated person. The Board is advised in advance of any such proposed
transaction or agreement and utilizes such procedures in evaluating their terms
and provisions as are appropriate in light of the Board's fiduciary duties
under Delaware law. In addition, the Company has an Audit Committee consisting
solely of outside directors. One of the responsibilities of the Audit
Committee is to review related party transactions.
NOTE N-- BUSINESS SEGMENT INFORMATION
The Company operates in two industry segments: Material Handling and Heavy
Equipment.
The Material Handling Segment, which was acquired during 1992 (see Note B --
"Acquisitions"), designs, manufactures and markets a complete line of internal
combustion and electric lift trucks, electric walkies, automated pallet trucks,
industrial tow tractors and related replacement parts. Material Handling
Segment products are used in material handling applications in a broad array of
manufacturing, distribution and transportation industries.
The Heavy Equipment Segment designs, manufactures and markets heavy-duty,
off-highway earthmoving, construction, lifting, material handling and aerial
lift equipment, and related components and replacement parts. Products include
haulers, scrapers, wheel loaders, crawlers, mobile cranes, excavators and
aerial lifts. Such products are used primarily by construction, mining,
logging, industrial and government customers in building roads, dams and
commercial and residential buildings; supplying coal, minerals, sand and
gravel; and handling materials in the scrap, refuse and lumber industries.
Industry segment information is presented below:
1994 1993 1992
Sales
Material Handling $ 472,652 $ 395,625 $ 240,940
Heavy Equipment 317,168 275,164 282,415
Eliminations (3,039) (480) ---
Total $ 786,781 $ 670,309 $ 523,355
Income (Loss) From Operations
Material Handling $ (13,983) $ (28,573) $ 2,177
Heavy Equipment 18,952 2,922 (5,929)
General/Corporate (1,608) (3,527) (373)
Total $ 3,361 $ (29,178) $ (4,125)
Depreciation and Amortization
Material Handling $ 11,024 $ 9,733 $ 4,068
Heavy Equipment 3,169 8,707 3,564
General/Corporate 2,904 3,960 2,188
Total $ 17,097 $ 22,400 $ 9,820
Capital Expenditures
Material Handling $ 7,860 $ 8,882 $ 3,129
Heavy Equipment 4,565 2,620 2,238
General/Corporate 292 47 15
Total $ 12,717 $ 11,549 $ 5,382
Identifiable Assets
Material Handling $ 194,985 $ 205,581 $ 247,813
Heavy Equipment 187,710 168,236 229,042
General/Corporate 18,921 16,885 501
Total $ 401,616 $ 390,702 $ 477,356
Geographic segment information is presented below:
1994 1993 1992
Sales
North America $ 557,114 $ 466,927 $ 369,394
Europe 240,670 211,726 149,970
All other 33,994 19,338 30,780
Eliminations (44,997) (27,682) (26,789)
Total $ 786,781 $ 670,309 $ 523,355
Income (Loss) From Operations
North America $ 6,255 $ (32,004) $ (11,968)
Europe (4,449) (722) 5,453
All other 374 2,320 1,351
Eliminations 1,181 1,228 1,039
Total $ 3,361 $ (29,178) $ (4,125)
Identifiable Assets
North America $ 250,559 $ 241,564 $ 363,252
Europe 167,538 150,006 122,877
All other 8,766 10,785 8,664
Eliminations (25,247) (11,653) (17,437)
Total $ 401,616 $ 390,702 $ 477,356
Sales between segments and geographic areas are generally priced to recover
costs plus a reasonable markup for profit. Operating income equals net sales
less direct and allocated operating expenses, excluding interest and other
nonoperating items. Corporate assets are principally cash, marketable
securities and administration facilities.
The Material Handling Segment operations market their product primarily through
independent dealers and distributors. The Heavy Equipment Segment operations
market their products through independent dealers and distributors and directly
to the end user.
The Company is not dependent upon any single customer. No single customer
accounted for more than 10% of 1994, 1993 or 1992 consolidated net sales.
Export sales from U.S. operations were as follows:
Year ended December 31,
1994 1993 1992
North and South America $ 34,873 $ 28,838 $ 31,845
Europe, Africa and Middle East 15,122 20,689 38,191
Asia and Australia 39,574 32,837 22,311
$ 89,569 $ 82,364 $ 92,347
NOTE O -- LIQUIDITY, FINANCING AND SEVERANCE ACTIONS
The Company experienced significant operating losses in the first quarter of
1994. Results improved in the second through fourth quarters of 1994 and the
Company generated income from operations of $3,361 for the year and $6,268 for
the quarter ended December 31, 1994. During 1994 the Company has taken
significant actions to reduce its overall cost structure and improved liquidity
by selling non-strategic assets to repay debt and lower interest costs.
During 1994, the Company repaid $35,744 of high interest rate debt, which will
result in interest expense savings of approximately $4,700 on an annual basis.
In June 1994, the Company announced personnel reductions in plant supervision,
engineering, marketing and administration totaling approximately 160 employees
in the Material Handling Segment's North American and European operations. The
Company also reorganized certain marketing activities and closed several of its
regional sales offices in the United States. The Company recorded a $4,549
charge in the second quarter of 1994 for severance costs associated with these
actions. In December 1994, the Company announced additional personnel
reductions totaling approximately 90 employees in conjunction with the closing
of the Material Handling Segment's Korean plant and certain branch sales
offices in France. An additional $2,804 charge was recorded for costs,
principally severance costs, associated with these actions.
The indentures governing the Senior Secured Notes and Subordinated Notes
require, among other things, that the Company maintain certain levels of
tangible net worth (the "Net Worth Covenants") and collateral (the "Collateral
Covenants"). In the event that the Company's net worth is not in excess of
the amount required under the Net Worth Covenants for any two consecutive
quarters, the Company must offer to repurchase, at par plus accrued interest,
20% of the outstanding principal amount of the Notes. In the event the
Company is not in compliance with the Collateral Covenants at the end of any
calendar quarter, the Company must offer to repurchase, at par plus accrued
interest, $16,000 principal amount of the Senior Secured Notes or such greater
amount as would be necessary to bring the Company into compliance with the
Collateral Covenants. If any offer to repurchase Notes were required to be
made as a result of noncompliance with the Covenants it is likely that the
Company would require additional funding to complete the offer, and if such
funding were unavailable to it, the Company would be unable to comply with the
terms of the Notes and the maturity of the Notes may be accelerated. Such
circumstances could result in a material adverse impact on the Company.
The Company was in compliance with the Net Worth Covenants and the
Collateral Covenants at December 31, 1994 and throughout 1994. During 1994,
the Company has taken actions to maintain compliance with the Net Worth
Covenants and Collateral Covenants, including the sale of its Drexel
subsidiary, shares of Fruehauf common stock and other assets, and plans to take
additional actions, if needed, to continue in compliance. As discussed below,
the Company is seeking to refinance the Senior Secured Notes and the
Subordinated Notes during 1995. In the event that the Company is not
successful in such refinancing, the Company believes that, based on
management's current estimates, it will be in compliance with its covenants
with respect to the Senior Secured Notes and Subordinated Notes over the next
twelve months.
The Company's interest payment requirements for 1995 total approximately
$23,200 on the Senior Secured Notes, the Subordinated Notes and the Lending
Facility, of which amount approximately $10,900 has been paid as of March 1,
1995. The Company's principal repayment requirements for 1995 include
approximately $8,247 in June 1995 for a required sinking fund payment on the
Subordinated Notes. In addition, as a result of the sale of certain real
estate collateral in November and December 1994, 500,000 shares of Fruehauf
common stock in December 1994 and the remaining 486,622 shares of Fruehauf
common stock in January 1995, pursuant to the indenture for the Senior Secured
Notes, the Company also intends to offer to repurchase approximately $15,923 of
the Senior Secured Notes in the second quarter of 1995.
The Senior Secured Notes mature on August 1, 1996 and the Subordinated Notes
mature on July 1, 1997. As discussed below, the Company is currently seeking
to refinance the Senior Secured Notes and Subordinated Notes during 1995;
however, there is no assurance that it will be successful in this regard. If
the refinancing is not completed, management intends to pursue alternative
refinancing opportunities, including replacement or additional working capital
based lending facilities; however, management has not identified any specific
sources of such alternative financing.
If the Company does not refinance the Senior Secured Notes and Subordinated
Notes and does not arrange additional financing before the principal repayments
of Senior Secured Notes and Subordinated Notes discussed above are due, the
Company intends to fund such repayments from operations. The need to use funds
from operations for $24,300 of debt repayments in the second quarter of 1995
could adversely affect the Company's operations by affecting its ability to
meet its operating payment obligations, including payments to vendors, on a
timely basis in the second quarter, although management believes that continued
improvement in cash flow from operations would allow the Company to return to
normal payment terms during the second half of 1995.
The Company has announced its plans to acquire, through a newly formed wholly
owned subsidiary of the Company ("Terex Cranes"), (i) substantially all of the
capital stock of P.P.M., S.A. ("PPM Europe") which is engaged in the mobile
crane and container stacker business in Europe primarily under the PPM brand
name, and (ii) all of the capital stock of Legris Industries, Inc. ("PPM North
America"), which is currently engaged in the mobile crane and container stacker
business in the United States, Singapore and Australia primarily under the P&H
brand name ("PPM North America" and, together with PPM Europe, "PPM"), from
Legris Industries, S.A. Simultaneously with the closing of the acquisition,
the Company will contribute to Terex Cranes, substantially all of the assets,
subject to all of the liabilities of its Koehring and Mark divisions.
The aggregate purchase price for PPM (including debt to be repaid immediately
after the acquisition and debt expected to remain outstanding) is approximately
577,000 French Francs (approximately $115,400). A portion of the purchase
price is payable by issuance of a redeemable non-interest bearing promissory
note of Terex Cranes in the amount of 8,000 French Francs (approximately
$1,600) and 119,000 French Francs (approximately $23,800) in aggregate
liquidation preference of preferred stock of Terex Cranes, bearing no
dividends. The note matures in seven years and may be paid in cash or, at the
option of Terex Cranes, in common stock of Terex Cranes. The purchase price is
subject to adjustment calculated by reference to the consolidated net asset
value of PPM as determined by an audit to be conducted following the
consummation of the acquisition.
The Company intends to finance the cash portion of the purchase price through
the sale to institutional investors of a new series of secured notes. Proceeds
from the sale of such notes will also provide funds to permit the Company to
redeem all of its existing Senior Secured Notes and Senior Subordinated Notes.
The Company is also endeavoring to obtain expanded working capital lending
facilities. There is no assurance that the Company will be able to conclude
any of such financings.
- -----------------------------------------------------------------------------
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
For the Nine Months
Ended September 30,
1995 1994
Net sales $ 766,789 $ 573,350
Cost of goods sold 690,529 515,889
Gross profit 76,260 57,461
Engineering, selling and
administrative expenses:
Third parties 61,401 53,574
Related parties --- 2,245
Total engineering, selling
and administrative
expenses 61,401 55,819
Severance and exit costs 3,478 4,549
Income (loss)
from operations 11,381 (2,907)
Other income (expense):
Interest income 1,073 400
Interest expense (28,416) (23,298)
Gain on sale of
Fruehauf stock 1,032 24,361
Gain on sale of
Drexel business --- 4,742
Property impairment charge (3,000) ---
Amortization of debt
issuance costs (1,672) (1,835)
Other income (expense)
- other (6,352) (8)
Income (loss) before
income taxes and
extraordinary items (25,954) 1,455
Income tax provision (133) (816)
Income (loss) before
extraordinary items (26,087) 639
Extraordinary losses on
retirement of debt (7,452) (397)
NET INCOME (LOSS) (33,539) 242
Less preferred stock
accretion (5,200) (4,341)
Income (loss) applicable
to common stock $(38,739) $ (4,099)
PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary:
Income (loss) before
extraordinary items $ (3.02) $ (0.36)
Extraordinary items (0.73) (0.04)
Net income (loss) $ (3.75) $ (0.40)
Fully diluted:
Income (loss) before
extraordinary items $ (3.02) $ (0.36)
Extraordinary items (0.73) (0.04)
Net income (loss) $ (3.75) $ (0.40)
Weighted average common
shares outstanding including
dilutive securities
(See Exhibit 11.1)
Primary (in millions) 10.3 10.3
Fully diluted (in millions) 10.3 10.3
The accompanying notes are an integral part of these financial statements.
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1995 1994
ASSETS
Current assets
Cash and cash equivalents $ 12,482 $ 9,727
Cash securing letters of credit 3,695 6,688
Trade receivables (less allowance
of $9,486 at September 30 and
$6,114 at December 31) 147,210 91,717
Net inventories 248,666 164,245
Other current assets 18,279 5,775
Total current assets 430,332 278,152
Property, plant and equipment - net 111,817 86,160
Goodwill - net 70,343 5,222
Debt issuance costs - net 15,110 3,382
Other assets 18,332 28,700
Total assets $ 645,934 $ 401,616
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities
Notes payable $ 6,575 $ 2,078
Current portion of long-term debt 12,298 25,806
Trade accounts payable 146,464 112,213
Accrued compensation and benefits 16,226 10,823
Accrued warranties and
product liability 38,488 27,629
Accrued interest 16,426 8,969
Accrued income taxes 3,827 1,328
Other current liabilities 62,951 32,732
Total current liabilities 303,255 221,578
Long-term debt less current portion 337,039 162,987
Accrued warranties and
product liability - long-term 35,110 31,846
Accrued pension 18,562 16,456
Other long-term liabilities 13,635 7,225
Total liabilities 707,601 440,092
Minority interest, including
redeemable preferred stock of a
subsidiary (liquidation preference
$26,051, subject to adjustment)
(Note B) 10,028 ---
Redeemable convertible preferred stock
(liquidation preference $39,083 at
September 30 and $36,578 at
December 31) 22,462 17,262
Commitments and contingencies (Note E)
Stockholders' investment
Warrants to purchase common stock 17,240 17,564
Common stock, $.01 par value
- authorized 30,000,000 shares;
issued and outstanding 10,359 at
September 30 and 10,303 at
December 31 104 103
Additional paid-in capital 40,451 40,127
Accumulated deficit (147,872) (108,395)
Pension liability adjustment (1,778) (1,778)
Unrealized holding gain on
equity securities 938 1,825
Cumulative translation adjustment (3,240) (5,184)
Total stockholders' investment (94,157) (55,738)
Total liabilities and
stockholders' investment $ 645,934 $ 401,616
The accompanying notes are an integral part of these financial statements.
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
For the Nine Months
Ended September 30,
1995 1994
OPERATING ACTIVITIES
Net loss $(33,539) $ 242
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation 13,265 10,053
Amortization 7,873 3,207
(Gain) loss on sale of property,
plant and equipment (173) (115)
Gain on sale of Fruehauf stock (1,032) (24,361)
Gain on sale of Drexel business --- (4,742)
Property impairment charge 3,000 ---
Other 337 (647)
Changes in operating assets
and liabilities:
Restricted cash 2,993 (781)
Trade receivables (15,504) (18,201)
Net inventories (4,598) (1,043)
Trade accounts payable (20,553) 15,488
Accrued compensation and benefits 4,866 1,616
Accrued warranties and
product liability 2,275 3,251
Accrued interest 7,571 (5,842)
Accrued income taxes 537 242
Other 4,737 3,883
Net cash used in operating activities (27,945) (17,750)
INVESTING ACTIVITIES
Acquisition of businesses,
net of cash acquired (92,429) ---
Capital expenditures (7,128) (9,853)
Proceeds from sale of property,
plant and equipment 872 483
Proceeds from refinancing
note receivable --- 1,000
Proceeds from sale of Fruehauf stock 2,714 24,916
Proceeds from sale of Drexel business --- 10,289
Other 185 535
Net cash from (used in) investing
activities (95,786) 27,370
FINANCING ACTIVITIES
Net borrowings under revolving
line of credit agreements 42,107 11,916
Principal repayments of long-term debt (153,947) (28,275)
Issuance of long-term debt, net of
issuance costs 239,800 ---
Other (446) (124)
Net cash from (used in)
financing activities 127,514 (16,483)
EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS (1,028) 435
NET DECREASE IN CASH AND CASH EQUIVALENTS 2,755 (6,428)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 9,727 (9,183)
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 12,482 $ 2,755
The accompanying notes are an integral part of these financial statements.
TEREX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, unless otherwise denoted)
September 30, 1995
NOTE A -- BASIS OF PRESENTATION
Basis of Presentation. The accompanying condensed consolidated financial
statements of Terex Corporation and subsidiaries as of September 30, 1995 and
for the nine months ended September 30, 1995 and 1994 have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles.
The accompanying condensed consolidated balance sheet as of December 31, 1994,
has been derived from the audited consolidated balance sheet as of that date.
The condensed consolidated financial statements include the accounts of Terex
Corporation and its majority owned subsidiaries ("Terex" or the "Company").
All material intercompany balances, transactions and profits have been
eliminated. The equity method is used to account for investments in affiliates
in which the Company has an ownership interest between 20% and 50%.
Investments in affiliates in which the Company has an ownership interest of
less than 20% are accounted for on the cost method or at fair value in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
In the opinion of management, all adjustments considered necessary for a fair
presentation have been made. Such adjustments consist only of those of a
normal recurring nature. Operating results for the nine months ended
September 30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995. For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994.
NOTE B -- REFINANCING AND ACQUISITION
On May 9, 1995, the Company completed the refinancing of substantially all of
its outstanding debt (the "Refinancing") and, through Terex Cranes, Inc.
("Terex Cranes"), a newly formed subsidiary, completed the acquisition of
substantially all of the outstanding stock of P.P.M., S.A. and Legris
Industries, Inc. (together, "PPM") (the "PPM Acquisition"). PPM designs,
manufactures and markets mobile cranes and container stackers primarily in
North America and Western Europe.
The Refinancing included the private placement to institutional investors of
$250,000 of 13.25% Senior Secured Notes due May 15, 2002 (the "New Senior
Secured Notes"), repayment of the Company's old senior secured notes and senior
subordinated notes, totaling approximately $152,600 principal amount, and entry
into a new Credit Facility to replace the Company's existing lending facility
in the U. S. Until such time as the Company completes an exchange of the New
Senior Secured Notes for an equivalent issue of registered notes, or a shelf
registration statement for the New Senior Secured Notes is effective, the
interest rate on the New Senior Secured Notes will be 13.75%. The Indenture
for the New Senior Secured Notes places certain limits on the Company's ability
to incur additional indebtedness; permit the existence of liens; issue, pay
dividends on or redeem equity securities; utilize the proceeds of asset sales;
consolidate, merge or transfer assets to another entity; and enter into
transactions with affiliates. In connection with the issuance of the New
Senior Secured Notes, the Company issued 1,000,000 stock appreciation rights
("SAR") entitling the holders to receive cash or Terex Corporation common
stock, at the option of the Company, in an amount equal to the average closing
sale price of the common stock for 60 trading days prior to the date of
exercise less $7.288 for each SAR.
The Company's new Credit Facility provides that the Company will be able to
borrow (in the form of revolving loans and up to $15,000 in outstanding letters
of credit) up to $100,000, subject to borrowing base limitations. The Credit
Facility is secured by substantially all of the Company's domestic receivables
and inventory. The amount of borrowings is limited to the sum of the
following: (i) 75% of the net amount of eligible receivables, as defined, of
the Company's U.S. businesses other than Clark Material Handling Company
("CMHC"), plus (ii) 70% of the net amount of CMHC eligible receivables, plus
(iii) the lesser of 45% of the value of eligible inventory, as defined, or 80%
of the appraised orderly liquidation value of eligible inventory, less (iv) any
availability reserves established by the lenders. The new Credit Facility
expires May 9, 1998 unless extended by the lenders for one additional year. At
the option of the Company, revolving loans may be in the form of prime rate
loans bearing interest at the rate of 1.75% per annum in excess of the prime
rate and eurodollar rate loans bearing interest at the rate of 3.75% per annum
in excess of the adjusted eurodollar rate.
Approximately $92,612 of the proceeds of the New Senior Secured Notes was used
for the PPM Acquisition, including the repayment of certain indebtedness of PPM
required to be repaid in connection with the acquisition. In addition, the
Company estimates that the acquisition costs incurred will total approximately
$3,000. The remainder of the purchase price consisted of the issuance of
redeemable preferred stock of Terex Cranes having an aggregate liquidation
preference of 127 million French francs (approximately $26,051), subject to
adjustment. The purchase price is subject to adjustment calculated by
reference to the consolidated net asset value of PPM as determined by an audit
as of the date of closing. The preferred stock does not bear a dividend and,
accordingly, the Company has valued this stock at approximately $8,840
(discounted at 15%). The Company has not yet reached agreement with the
sellers about the amount of purchase price adjustment but, based on work
performed, the Company believes that the amount of the preferred stock could
ultimately be reduced.
The PPM Acquisition is being accounted for using the purchase method, with the
purchase price allocated to the assets acquired and liabilities assumed based
upon their respective estimated fair values at the date of acquisition. The
excess of purchase price over the net assets acquired (approximately $65,864)
is being amortized on a straight-line basis over 15 years. The estimated fair
values of assets and liabilities acquired in the PPM Acquisition are summarized
as follows:
Cash $ 974
Accounts receivable 33,816
Inventories 69,107
Other current assets 11,866
Property, plant and equipment 20,516
Other assets 268
Goodwill 65,864
Accounts payable and other
current liabilities (84,458)
Other liabilities (13,501)
$ 104,452
The Company is in the process of obtaining certain evaluations, estimations,
appraisals and actuarial and other studies for purposes of determining certain
values. The Company has also estimated costs related to plans to integrate the
activities of PPM into the Company, including plans to terminate excess
employees, exit certain activities and consolidate and restructure certain
functions. The Company may revise the estimates as additional information is
obtained.
The operating results of PPM are included in the Company's consolidated results
of operations since May 9, 1995. The following pro forma summary presents the
consolidated results of operations as though the Company completed the PPM
Acquisition on January 1, 1994, after giving effect to certain adjustments,
including amortization of goodwill, interest expense and amortization of debt
issuance costs on the debt issued in the Refinancing:
Pro Forma for the
Nine Months ended Year ended
September 30, 1995 December 31, 1994
Net sales $831,629 $966,476
Loss from operations (5,122) (12,004)
Loss before extraordinary items (51,297) (27,217)
Loss before extraordinary items,
per share $(5.55) $(3.37)
The pro forma information is not necessarily indicative of what the actual
results of operations of the Company would have been for the periods indicated,
nor does it purport to represent the results of operations for future periods.
NOTE C -- INVENTORIES
Net inventories consist of the following:
September 30, December 31,
1995 1994
Finished Equipment $ 55,676 $ 26,812
Replacement parts 88,381 68,932
Work-in-process 25,351 13,520
Raw materials and supplies 82,171 57,894
251,579 167,158
Less: Excess of FIFO inventory value
over LIFO cost (2,913) (2,913)
Net inventories $ 248,666 $ 164,245
NOTE D -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
September 30, December 31,
1995 1994
Property $ 10,733 $ 8,335
Plant 44,575 32,249
Equipment 102,884 83,419
158,192 124,003
Less: Accumulated depreciation (46,375) (37,843)
Net property, plant and equipment $ 111,817 $ 86,160
NOTE E -- LITIGATION, CONTINGENCIES AND RELATED PARTY TRANSACTIONS
The Company is subject to a number of contingencies and uncertainties including
product liability claims, self-insurance obligations, tax examinations and
other contingencies. Many of the exposures are unasserted or proceedings are
at a preliminary stage, and it is not presently possible to estimate the amount
or timing of any cost to the Company. However, management does not believe
that these contingencies and uncertainties will, in the aggregate, have a
material effect on the Company. When it is probable that a loss has been
incurred and possible to make reasonable estimates of the Company's liability
with respect to such matters, a provision is recorded for the amount of such
estimate or for the minimum amount of a range of estimates when it is not
possible to estimate the amount within the range that is most likely to occur.
The Company generates hazardous and nonhazardous wastes in the normal course of
its operations. As a result, the Company is subject to a wide range of
federal, state, local and foreign environmental laws and regulations, including
the Comprehensive Environmental Response, Compensation and Liability Act, that
(i) govern activities or operations that may have adverse environmental
effects, such as discharges to air and water, as well as handling and disposal
practices for hazardous and nonhazardous wastes, and (ii) impose liability for
the costs of cleaning up, and certain damages resulting from, sites of past
spills, disposals or other releases of hazardous substances. Compliance with
such laws and regulations has, and will, require expenditures by the Company on
a continuing basis.
On August 28, 1995, the Company announced that its Chairman, Randolph W. Lenz,
had retired from his position with the Company and its Board of Directors. In
connection with his retirement, the Company (acting through a committee
comprised of its independent Directors and represented by independent counsel)
and Mr. Lenz have executed a retirement agreement providing certain benefits
to Mr. Lenz and the Company. The agreement provides, among other things, for a
five-year consulting engagement requiring Mr. Lenz to make himself available to
the Company to provide consulting services for certain portions of his time. Mr
Lenz, or his designee, will receive a fee for consulting services which will
include payments in an amount, and a rate, equal to his 1995 base salary until
December 31, 1996. The agreement also provides for the granting of a five-year
$1.8 million loan bearing interest at 6.56% per annum which is subject to being
forgiven in increments over the five-year term of the agreement upon certain
conditions and equity grants having a maximum potential of 200,000 shares of
Terex common stock conditioned upon the Company achieving certain financial
performance objectives in the future. In contemplation of the execution of this
retirement agreement, the Company advanced to Mr. Lenz the principal amount of
the forgivable loan. Mr. Lenz has also agreed not to compete with the Company,
to vote his Terex shares in the manner recommended by the Company's Board of
Directors, not to acquire any additional shares of the Company's common stock,
and, except under certain circumstances, not to sell his shares of common
stock. The Company recorded a charge of $1.8 million to Other Income/Expense
during the three and nine months ended September 30, 1995 in connection with
the retirement.
The Internal Revenue Service is currently examining the Company's federal tax
returns for the years 1987 through 1989. In December 1994, the Company
received an examination report from the IRS proposing a substantial tax
deficiency based on this examination. The examination report raises a variety
of issues, including the Company's substantiation for certain deductions taken
during this period, the Company's utilization of certain net operating loss
carryovers ("NOL's") and the availability of such NOL's to offset future
taxable income. If the IRS were to prevail on all the issues raised, the
amount of the tax assessment would be approximately $56,000 plus interest and
penalties. If the Company were required to pay a significant portion of the
assessment, it could have a material adverse impact on the Company and could
exceed the Company's resources. The Company has filed its administrative
appeal to the examination report. Although management believes that the
Company will be able to provide adequate documentation for a substantial
portion of the deductions questioned by the IRS and that there is substantial
support for the Company's past and future utilization of the NOL's, the
ultimate outcome of this matter is subject to the resolution of significant
legal and factual issues. If the Company's positions prevail on the most
significant issues, management believes that the amounts due would not exceed
amounts previously paid or provided; however, even under such circumstances, it
is possible that the Company's NOL's could be reduced to some extent. No
additional accruals have been made for any amounts which might be due as a
result of this matter because the possible loss ranges from zero to $56,000
plus interest and penalties and the ultimate outcome cannot presently be
determined or estimated. As discussed above, Mr. Lenz has retired as Chairman
of the Company. Although his retirement agreement places certain restrictions
on his ability to sell his shares of Common Stock in the Company, in the event
that Mr. Lenz is able to sell a substantial portion of his shares in the
Company before December 20, 1996, such sale, in combination with the issuance
of the Warrants in December 20, 1993 and subject to the effects of other
changes in share ownership of the Company, could result in a change in control
for tax purposes. Such a change in control for tax purposes could possibly
result in a significant reduction in the amount of NOL's available to the
Company to offset future taxable income.
- -----------------------------------------------------------------------------
Report of Independent Auditors
The Board of Directors and Shareholders
PPM S.A. and Legris Industries, Inc.
We have audited the accompanying combined balance sheets of PPM S.A. and Legris
Industries, Inc. as of December 31, 1994 and 1993, and the related combined
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1994. 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 a reasonable basis
for our opinion.
In our opinion, based on our audits, the financial statements referred to above
present fairly, in all material respects, the combined financial position of
PPM S.A. and Legris Industries, Inc. at December 31, 1994 and 1993, and the
combined results of their operations and their cash flows for each of the three
years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Greenville, South Carolina
August 22, 1995
PPM S.A. and Legris Industries, Inc.
Combined Balance Sheets
December 31
1994 1993
(In thousands except
share amounts)
Assets
Current assets:
Cash and cash equivalents $ 3,586 $ 2,152
Trade accounts receivable,
less allowances of $2,861 and
$2,181 in 1994 and 1993, respectively 35,173 25,868
Due from affiliates 1,705 1,869
Refundable taxes 5,946 5,257
Inventories 70,020 63,498
Prepaid expenses 5,525 4,758
Other current assets 32 81
Total current assets 121,987 103,483
Property, plant, and equipment, net 20,922 23,002
Intangible assets:
Cost in excess of net assets acquired,
less accumulated amortization of $8,567
and $6,871 in 1994 and 1993, respectively 34,951 36,540
Other identified intangible assets,
less accumulated amortization of $871 and
$597 in 1994 and 1993, respectively 462 715
35,413 37,255
Total assets $178,322 $163,740
PPM S.A. and Legris Industries, Inc.
Combined Balance Sheets
(continued)
December 31
1994 1993
(In thousands except
share amounts)
Liabilities and shareholders' equity
Current liabilities:
Trade accounts payable $ 43,963 $ 35,052
Due to affiliates 6,200 3,027
Product liability reserve 4,850 4,432
Product warranty reserve 1,526 753
Accrued expenses 15,215 16,352
Current portion of long-term debt
and other short-term borrowings 72,689 37,044
Current portion of obligations
under capital leases 925 731
Total current liabilities 145,368 97,391
Long-term debt, less current portion 5,851 28,331
Obligations under capital leases,
less current portion 2,896 3,308
Minority interest in subsidiaries 1,944 2,591
Shareholders' equity:
Common stock of Legris Industries, Inc.,
$100 par value -- authorized, issued
and outstanding 200 shares --- ---
Common stock of PPM S.A.,
100 French Francs ($19) par value --
authorized, issued and outstanding
1,265,544 shares --- ---
Paid-in capital 90,491 81,209
Accumulated deficit (65,079) (46,043)
Foreign currency translation
adjustments (3,149) (3,047)
Total shareholders' equity 22,263 32,119
Total liabilities and
shareholders' equity $178,322 $163,740
See accompanying notes.
PPM S.A. and Legris Industries, Inc.
Combined Statements of Operations
Year Ended December 31
1994 1993 1992
(In thousands)
Net Sales $ 179,695 $ 191,236$ 236,088
Cost of products sold (155,129) (175,072)(197,243)
Selling, general and administrative expenses (35,673) (38,861) (49,862)
Amortization of intangible assets (1,970) (1,807) (2,074)
Loss from operations (13,077) (24,504) (13,091)
Other income (expense):
Interest income 48 11 30
Interest expense (6,668) (8,293) (6,421)
Insurance proceeds --- 6,177 1,122
(6,620) (2,105) (5,269)
Loss before income taxes and
minority interest (19,697) (26,609) (18,360)
Income tax (benefit) provision (14) 30 917
Loss before minority interest (19,683) (26,639) (19,277)
Minority interest in loss of
consolidated subsidiaries 647 946 424
Net loss $ (19,036) $(25,693)$(18,853)
See accompanying notes.
PPM S.A. and Legris Industries, Inc.
Combined Statements of Shareholders' Equity
Foreign
Accu- Currency
Common Stock Paid-In mulated Translation
Shares Amount Capital Deficit Adjustments Total
(In thousands except share amounts)
Balance at
December 31,
1991 1,265,744 $ --- $ 71,242 $ (1,497) $ (62) $69,683
Capital
contribution --- --- 3,500 --- --- 3,500
Conversion of
debt to paid-in
capital --- --- 6,467 --- --- 6,467
Net loss --- --- --- (18,853) --- (18,853)
Translation
adjustment --- --- --- --- (2,443) (2,443)
Balance at
December 31,
1992 1,265,744 --- 81,209 (20,350) (2,505) 58,354
Net loss --- --- --- (25,693) --- (25,693)
Translation
adjustment --- --- --- --- (542) (542)
Balance at
December 31,
1993 1,265,744 --- 81,209 (46,043) (3,047) 32,119
Conversion of
debt to paid-in
capital --- --- 9,282 --- --- 9,282
Net loss --- --- --- (19,036) --- (19,036)
Translation
adjustment --- --- --- --- (102) (102)
Balance at
December 31,
1994 1,265,744 $ --- $ 90,491 $(65,079) $(3,149) $ 22,263
See accompanying notes.
PPM S.A. and Legris Industries, Inc.
Combined Statements of Cash Flows
Year Ended December 31
1994 1993 1992
(In thousands)
Operating activities
Net loss $(19,036) $(25,693) $(18,853)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 6,088 5,661 6,013
Changes in operating assets and liabilities:
Accounts receivable (9,305) 11,824 13,992
Inventories (6,522) 20,562 513
Prepaid expenses and other (1,407) 3,450 3,328
Accounts payable 8,911 (14,911) (20,660)
Net amounts due to affiliates 3,009 (3,275) (6,257)
Product liability reserve 418 493 (3,123)
Accrued expenses and product
warranty reserve (364) (2,654) (208)
Net cash used in operating activities (18,208) (4,543) (25,255)
Investing activities
Purchases of property, plant and equipment (718) (1,683) (5,398)
Increase in other intangible assets (128) 86 (247)
Net cash used in investing activities (846) (1,597) (5,645)
Financing activities
Proceeds from revolving credit with
banks and from notes payable to an
affiliated company 27,141 51,280 28,573
Principal payments on revolving credit
with banks and on notes payable to an
affiliated company (5,688) (43,239) (2,967)
Proceeds on other long-term debt 347 76 749
Principal payments on other long-term debt --- (3,351) ---
Payments on capital leases (218) (160) ---
Capital contribution --- --- 3,500
Net cash provided by financing activities 21,582 4,606 29,855
Effect of exchange rate changes on cash (1,094) 942 (461)
Net increase (decrease) in cash and
cash equivalents 1,434 (592) (1,506)
Cash and cash equivalents at
beginning of period 2,152 2,744 4,250
Cash and cash equivalents at end of period $ 3,586 $ 2,152 $ 2,744
Supplemental disclosure of
cash flow information
Cash paid for interest $ 6,763 $ 9,811 $ 7,667
Cash paid for income taxes $ 74 $ 948 $ 2,015
See accompanying notes.
PPM S.A. and Legris Industries, Inc.
Notes to Combined Financial Statements
December 31, 1994
(In thousands)
1. Basis of Presentation and Description of Business
Basis of Presentation
As more fully described in Note 13, Terex Corporation ("Terex"), through its
wholly owned subsidiary Terex Cranes, Inc. ("Terex Cranes"), completed the
acquisition of substantially all of the common stock of PPM S.A. ("PPM Europe")
and Legris Industries, Inc. ("PPM North America") on May 9, 1995. PPM North
America together with PPM Europe collectively are referred to as "PPM" or "the
Company". Prior to the acquisition, Legris Industries, Inc. was a wholly owned
subsidiary of Groupe Legris Industries S.A., a French corporation, and PPM S.A.
was owned 99.13% by Potain S.A., a majority owned subsidiary of Groupe Legris
Industries S.A. ("Groupe Legris").
The accompanying combined financial statements were prepared on the basis of
generally accepted accounting principles and include the combined financial
position, results of operations and cash flows of the businesses of PPM as
follows below (subsidiaries are 100% owned except as indicated). All
significant intercompany balances have been eliminated.
PPM S.A.
- Brimont Agraire S.A.
- Bendini SpA
- PPM Krane GmbH
- Baulift Baumaschiunen and Krane Handels GmbH
Legris Industries, Inc.
- Potain Tower Cranes, Inc. (inactive)
- PPM Cranes, Inc. (92.4%)
- PPM of Australia Pty. Ltd. (92.4%)
- PPM Far East Pte. Ltd. (92.4%)
Description of Business
PPM designs, manufactures and markets mobile cranes and container stackers
primarily in North America and Western Europe under the brand names of PPM, P&H
(trademark of Harnischfeger Corporation) and BENDINI.
2. Summary of Significant Accounting Policies
Cash and Cash Equivalents
For the purpose of reporting cash flows, cash and cash equivalents include cash
on hand and overnight investments. Included in cash and cash equivalents is
$512 at December 31, 1994 invested under repurchase agreements collateralized
by U. S. Treasury Notes. Securities pledged as collateral for repurchase
agreements are held by the Company's custodian bank until maturity of the
repurchase agreements. Provisions of the agreements ensure that the market
value of this collateral is sufficient in the event of default; however, in the
event of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral may be subject to legal proceedings.
Accounts Receivable
The Company provides credit in the normal course of business and performs
ongoing credit evaluation on certain of its customers' financial condition, but
generally does not require collateral to support such receivable. Accounts
receivable potentially exposes the Company to concentration of credit risk,
because the Company's customers operate primarily in the construction industry.
The Company also establishes an allowance for doubtful accounts based upon
factors surrounding the credit risk of specific customers, historical trends
and other information.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined by
the last-in, first-out (LIFO) method for inventories held in the United States,
by the first-in, first-out (FIFO) method for inventories of PPM of Australia
Pty. Ltd and PPM Far East Pte. Ltd., and by the weighted average method for
inventories of PPM S.A.
Property, Plant and Equipment
Additions and major replacements or improvements to property, plant and
equipment are recorded at cost. Maintenance, repairs and minor replacements are
charged to expense when incurred. Assets of PPM are depreciated using the
straight-line method over their estimated useful lives.
Intangible Assets
The excess of cost over fair value of net assets of businesses acquired
("goodwill") is amortized on the straight-line method over a period of twenty
years for Legris Industries, Inc. and fifteen years for PPM S.A. Other
identified intangibles are primarily patents and organizational costs which are
amortized over five years. The lives established for these assets are a
composite of many factors; accordingly, the Company evaluates the continued
appropriateness of these lives based upon the latest available economic factors
and circumstances.
The carrying value of goodwill is reviewed if the facts and circumstances
suggest that it may be impaired. If this review indicates that goodwill will
not be recoverable, as determined based on the undiscounted cash flows of the
entity acquired over the remaining amortization period, the Company's carrying
value of the goodwill is reduced by the estimated shortfall of cash flows.
Product Warranty
PPM warrants that each finished machine is merchantable and free of defects in
workmanship and material for a period of up to one year or a specified period
of use. Warranty reserves have been established for estimated normal warranty
costs and for specific problems known to exist on products in use.
Product Liability
Reserves for product liability have been established based upon historical loss
experience for the estimated liability on incidents which have occurred but
have not yet been reported and for the estimated liability for reported
incidents.
Income Taxes
Income taxes are provided using the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109O). Under FAS 109, the deferred tax liabilities and assets are
determined based on temporary differences between the bases of certain assets
and liabilities for income tax and financial reporting purposes. A valuation
allowance is recognized if it is more likely than not that some portion or all
of a deferred tax asset will not be ultimately realized.
Revenue Recognition
Sales are recorded upon shipment or designation of specific goods for later
shipment at customers' request with related risk of ownership passing to such
customers.
Research and Development Costs
Company sponsored research and development costs related to both present and
future products are expensed currently. Total expenditures for research and
development for 1994, 1993 and 1992 were $2,669, $3,751 and $3,440,
respectively.
Translation of Foreign Currencies
The local currencies of the Company's foreign operations have been determined
to be the functional currencies in accordance with Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation". Transactions in
foreign currencies are translated into United States dollars at average rates
of exchange prevailing during the period. Assets and liabilities denominated in
foreign currencies are translated at the year end exchange rates and resulting
translation adjustments are included as a separate component of shareholders'
equity. Gains and losses on foreign currency transactions are recognized in
earnings.
Shareholders' Equity
No amounts were paid as consideration for the issuance of common stock of PPM
S.A. and Legris Industries, Inc. Accordingly, no amounts have been assigned to
common stock in the financial statements.
3. Inventories
Inventories at December 31, 1994 and 1993 consist of the following:
1994 1993
Raw materials and parts $ 41,018 $ 37,767
Work in process 15,139 11,275
Finished goods and subassemblies 13,091 14,103
Consigned inventory 772 353
$ 70,020 $ 63,498
At December 31, 1994 and 1993, approximately $26,308 and $24,618 of inventories
were valued using the LIFO method. These amounts are approximately equivalent
to the corresponding FIFO values at December 31, 1994 and 1993.
4. Property, Plant and Equipment
Property, plant and equipment at December 31, 1994 and 1993 consists of the
following:
1994 1993
Land and improvements $ 2,080 $ 2,242
Buildings 21,273 20,181
Machinery and equipment 31,504 29,083
54,857 51,506
Less accumulated depreciation (33,935) (28,504)
$ 20,922 $ 23,002
Depreciation expense for 1994, 1993 and 1992 was $4,118, $3,854 and $3,939,
respectively.
5. Debt
Debt at December 31, 1994 and 1993 consists of the following:
1994 1993
Non-interest bearing promissory note payable to Harnischfeger
Corporation with annual payments of $1,000,000
through April 10, 1996, annual payments of
$750,000 beginning April 10, 1997 through April 10, 2001
and quarterly payments of $125,000 beginning April 10,
2001 through maturity on April 10, 2011 $ 6,331 $ 6,776
Letter of credit with Credit Lyonnais bearing interest
at U.S. Prime (8.5% at December 31, 1994) payable
on demand. 4,700 7,100
Indebtedness to Groupe Legris bearing interest at 9%
annually maturing May 31, 1996 with no scheduled
principal payments prior to that date. 686 686
Indebtedness to Groupe Legris bearing interest at the
Euro dollar rate plus .5% (6.875% at December 31,
1994) payable on demand 11,500 ---
Indebtedness to Groupe Legris bearing interest at the
Euro dollar rate plus .5% (6.875% at December 31,
1994) maturing December 31, 1996 with no scheduled
principal payments prior to that date. 6,000 6,000
Indebtedness to Groupe Legris bearing interest at the
Euro dollar rate plus .5% (6.875% at December 31,
1994) maturing April 10, 1996 with no scheduled
principal payments prior to that date. 3,000 3,000
Bank debt bearing interest at 10.75% --- 179
Notes payable to Credit National bearing interest at rates
ranging from 8% to 15.5% with maturities ranging from
10 to 15 years. 815 1,154
Note payable to Credit CECA over 5 years at 9.32% 2,170 1,968
Notes payable to Solirem bearing interest at 8.5% and
10.24%, payable over 6 years 557 843
Note payable to Ministero del'Industria over 10 years
at 8.37% 366 373
Note payable to Credito Romagnolo over 8 years at 10.93% 295 292
Lines of credit due on demand with various banks, bearing
interest at rates ranging from 5.8% to 7.4% 37,857 33,753
Other 4,263 3,251
78,540 65,375
Less current portion 72,689 37,044
$ 5,851 $28,331
Other than the note payable to Harnischfeger Corporation, all debt obligations
were satisfied in connection with the acquisition by Terex in May of 1995 (see
Note 13). Accordingly, all debt obligations other than the long-term portion
of the note payable to Harnischfeger Corporation have been classified as
current.
The maturities of the note payable to the Harnischfeger Corporation for the
five years following December 31, 1994 and thereafter are as follows:
Year Payments
1995 $ 480
1996 520
1997 312
1998 338
1999 366
Thereafter 4,315
$ 6,331
6. Employee Benefit Plan
Domestically, PPM Cranes, Inc. has a defined contribution plan covering its
U.S. employees. Under this plan, the Company matches a portion of an employee's
contribution to the plan. PPM Europe also maintains government required fully
funded retirement plans for its employees in France and Italy. For purposes of
these financial statements, all domestic and PPM Europe employees are
considered to have participated in a multi-employer pension plan as defined in
Statement of Financial Accounting Standards No. 87 "Employer's Accounting for
Pensions". For multi-employer plans, employers are required to recognize as
net pension expense total contributions for the period. With respect to these
plans, PPM recorded a net pension expense of $289 for 1994, $118 for 1993 and
$82 for 1992.
7. Income Taxes
Effective January 1, 1992, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". The adoption had no impact on the financial statements of the Company.
(Loss) income before income taxes and minority interest consisted of the
following:
1994 1993 1992
Domestic $ (7,346) $ (11,179) $ (4,269)
Foreign (12,351) (15,430) (14,091)
$ (19,697) $ (26,609) $ (18,360)
Significant components of the provision for income taxes are as follows:
1994 1993 1992
Current
Federal $ --- $ (5) $ 147
Foreign 5 72 836
5 67 983
Deferred:
Federal --- --- ---
Foreign (19) (37) (66)
$ (14) $ 30 $ 917
PPM has not provided U.S. and foreign income taxes on foreign undistributed
earnings which are being retained indefinitely for reinvestment. The
distribution of these earnings would result in additional foreign withholding
taxes and additional U.S. Federal income taxes to the extent they are not
offset by foreign tax credits, but it is not practicable to estimate the total
tax liability that would be incurred upon such a distribution.
The income tax (benefit) provision at the effective tax rate differed from the
benefit at the statutory rate as follows:
1994 1993 1992
Computed tax (benefit) at expected
statutory rate $ (6,697) $ (9,047) $ (4,074)
State taxes (315) (480) (183)
Valuation allowance 4,695 8,823 4,431
Nondeductible goodwill 837 837 837
Adjustment of prior years' accruals 1,548 --- ---
Foreign tax rate differential (82) (103) (94)
Income tax (benefit) provision $ (14) $ 30 $ 917
At December 31, 1994, PPM North America has net operating loss carryforwards
for Federal income tax purposes of approximately $50,550 available to offset
future taxable income, expiring from 1997 to 2008 if not used. PPM Europe has
loss carryforwards of approximately $21,665 at December 31, 1994, including
approximately $11,023 of carryforwards which have no fixed expiration date.
The remaining carryforwards will expire beginning in 1995.
The differences between the loss carryforwards for financial reporting and
income tax purposes result principally from differences between the income tax
basis and the financial reporting basis allocated to the net assets acquired
and differences in the methods of depreciating property, plant, and equipment.
For financial reporting purposes, a valuation allowance equal to the entire
benefit of the cumulative temporary differences and net operating loss
carryforwards has been recognized to offset the net deferred tax assets. For
substantially all of the valuation allowance for deferred tax assets,
subsequently recognized tax benefits will be allocated to reduce goodwill
resulting from the acquisition of PPM by Terex. Components of the Company's
deferred taxes are as follows:
1994 1993
Total deferred tax liabilities $ (3,030) $ (1,113)
Total deferred tax assets, principally
net operating loss carryforwards 43,454 36,179
Total valuation allowance (40,424) (35,066)
Net deferred taxes $ --- $ ---
8. Fair Value of Financial Instruments
The Company has estimated the fair value amounts of financial instruments as
required by Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments", using available market information
and appropriate valuation methodologies. The carrying amount of cash and cash
equivalents, accounts receivable, other current assets, accounts payable and
long-term debt are reasonable estimates of their fair value at December 31,
1994. However, considerable judgment is required in interpreting market data
to develop the carrying amounts of fair value. Accordingly, the carrying
amounts presented herein are not necessarily indicative of the amounts that
the Company would realize in a current market exchange.
9. Leases
PPM has various lease agreements, primarily related to office space, production
facilities, and office equipment, which are accounted for as operating leases.
Certain leases have renewal options and provisions requiring PPM to pay
maintenance, property taxes and insurance. Rent expense for 1994, 1993 and 1992
was $2,977, $2,433 and $3,401, respectively.
PPM Europe also leases buildings and machinery and equipment under capital
leases with terms of 1 to 10 years. Capitalized lease obligations are
calculated using interest rates appropriate at the inception of the lease.
Amortization of assets under capital leases is included with depreciation
expense. Property, plant and equipment includes the following amounts for
leases that have been capitalized:
1994 1993
Buildings $ 1,810 $ 1,642
Machinery and equipment 5,124 3,700
6,934 5,342
Less accumulated depreciation (3,030) (1,603)
Property, plant and equipment, net $ 3,904 $ 3,739
Future minimum rental payments, by year and in the aggregate, under capital
leases and noncancellable operating leases as of December 31, 1994 are as
follows:
Capital Operating
Year Leases Leases
1995 $ 1,365 $ 1,796
1996 1,297 1,242
1997 1,248 890
1998 664 788
1999 380 505
2000 and thereafter 2,847 272
Total minimum
lease payments $ 7,801 $ 5,493
Amount representing
interest (3,980)
Present value of minimum
lease payments $ 3,821
10. Commitments and Contingencies
PPM is involved in product liability and other lawsuits incident to the
operation of its business. Insurance coverages are maintained for claims and
lawsuits of this nature. At December 31, 1994 and 1993, the Company had a
reserve of $4,850 and $4,432 related to product liability matters, including
$200 at December 31, 1994 related to unasserted claims. Actual costs to be
incurred in the future may vary from the estimates, given the inherent
uncertainties in evaluating the outcome of claims and lawsuits of this nature.
Although it is difficult to estimate the liability of the Company related to
these matters, it is management's opinion that none of these lawsuits will have
a materially adverse effect on the Company's combined financial position.
PPM North America is a defendant in a lawsuit initiated by the bankruptcy
trustee for Century II GmbH, a former subsidiary of the Company, related to an
increase in capital. The amount of the claim is for $6,000. Groupe Legris has
indemnified the Company against all losses related to this claim.
PPM is contingently liable up to $1,027 with respect to financing arrangements
and performance guarantees entered into with banks and between certain banks
and certain dealers or customers of PPM.
11. Segment and Geographic Information
The Company operates in one business segment, designing, manufacturing and
marketing mobile cranes and container stackers primarily in North America and
Western Europe. Geographic data for the Company's operations are presented in
the following table. Intercompany sales and expenses are eliminated in
determining results for each operation.
1994 1993 1992
Net sales to unaffiliated customers:
North America $ 72,409 $ 71,984 $ 65,459
Europe 92,175 112,673 155,587
164,584 184,657 221,046
Sales to affiliates 15,111 6,579 15,042
$ 179,695 $191,236 $ 236,088
(Loss) from operations:
North America $ (5,466) $(9,729) $ (3,130)
Europe (7,611) (14,775) (9,961)
$(13,077) $(24,504) $(13,091)
Identifiable assets:
North America $ 80,179 $ 74,710 $ 87,900
Europe 98,143 89,030 122,683
$ 178,322 $ 163,740 $ 210,583
12. Related Party Transactions
PPM had transactions with Groupe Legris and certain of its subsidiaries as
follows:
1994 1993 1992
Product sales and service revenues $ 15,111 $ 6,579 $ 15,042
Purchases of inventory 23,613 17,860 13,515
Interest expense 3,230 2,529 3,038
Other charges 4,493 2,772 4,333
13. Subsequent Events -- Acquisition by Terex and Financing Arrangements
(unaudited)
On May 9, 1995, Terex, through its wholly-owned subsidiary Terex Cranes,
completed the acquisition of 99.18% of the shares of PPM S.A., a societe
anonyme ("PPM Europe"), from Potain S.A., a societe anonyme, and 100% of the
capital stock of Legris Industries, Inc., a Delaware corporation which owns
92.4% of the capital stock of PPM Cranes, Inc., a Delaware corporation ("PPM
North America") from Legris Industries S.A., a societe anonyme ("Legris
France"). PPM North America together with PPM Europe collectively are referred
to as "PPM". PPM designs, manufactures and markets mobile cranes and container
stackers primarily in North America and Western Europe under the brand names of
PPM, P&H (trademark of Harnischfeger Corporation) and BENDINI.
The purchase price, together with amounts needed to repay indebtedness of PPM
required to be repaid in connection with the Acquisition, consisted of (i)
approximately $92.6 million in cash and (ii) shares of Series A Redeemable
Exchangeable Preferred Stock of Terex Cranes having an aggregate liquidation
preference of approximately $25.9 million, subject to adjustment (the "Seller
Preferred Stock"). The Seller Preferred Stock bears no dividend and is
mandatorily redeemable in seven years and three months from the date of
issuance. The Seller Preferred Stock may be redeemed at any time for cash (to
the extent permitted pursuant to the provisions of the Indenture for Terex's 13
1/4% Senior Secured Notes due 2002) or, under certain circumstances for shares
of common stock, par value $.01 per share (the "Cranes Common Stock"), of Terex
Cranes. The purchase price is subject to adjustment calculated by reference to
the consolidated net asset value of PPM as determined by an audit to be
conducted following the consummation of the Acquisition. Terex Cranes has not
yet reached agreement with the sellers about the amount of purchase price
adjustment but, based on work performed, Terex Cranes believes that the amount
of the Seller Preferred Stock could ultimately be reduced. In addition, the
liquidation preference and the redemption price of the Seller Preferred Stock
may be adjusted based upon the unit shipments of the mobile crane industry in
Western Europe during the second and third years following the consummation of
the Acquisition.
The funds for the cash portion of the purchase price and the repayment of debt
of the acquired businesses were obtained from the private placement on May 9,
1995 to institutional investors of units consisting of Terex's 13 1/4% Senior
Secured Notes due 2002 and common stock appreciation rights. The Senior
Secured Notes are secured by substantially all of the assets of Terex and its
domestic subsidiaries, including PPM North America, subject to security
interests granted under the Credit Facility as described below, and by liens
on certain assets of Terex's foreign subsidiaries, including PPM Europe.
Simultaneously with the acquisition, Terex, PPM North America and certain other
domestic subsidiaries of Terex entered into a Credit Facility which provides
that the companies will be able to borrow (in the form of revolving loans and
up to $15 million in outstanding letters of credit) up to $100 million, subject
to borrowing base limitations. The Credit Facility is secured by substantially
all of the companies domestic receivables and inventory (including PPM North
America). The amount of borrowings is limited to the sum of the following: (i)
75% of the net amount of eligible receivables, as defined, of Terex's U.S.
businesses other than Clark Material Handling Company ("CMHC") plus (ii) 70% of
the net amount of CMHC eligible receivables, plus (iii) the lesser of 45% of
the value of eligible inventory, as defined, or 80% of the appraised orderly
liquidation value of eligible inventory, less (iv) any availability reserves
established by the lenders. The Credit Facility expires May 9, 1998 unless
extended by the lenders for one additional year. At the option of Terex,
revolving loans may be in the form of prime rate loans bearing interest at the
rate of l.75% per annum in excess of the prime rate and eurodollar rate loans
bearing interest at the rate of 3.75% per annum in excess of the adjusted
eurodollar rate.
- -----------------------------------------------------------------------------
TEREX CORPORATION
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information
of the Company gives effect to the PPM Acquisition and the Refinancing as
described elsewhere in this Prospectus. The pro forma information is based on
the historical statements of operations of the Company for the year ended
December 31, 1994 and for the nine months ended September 30, 1995, giving
effect to the PPM Acquisition and related financing transactions and
adjustments as reflected in the accompanying notes.
On May 9, 1995, the Company completed the PPM Acquisition. The purchase price,
together with amounts needed to repay indebtedness of PPM required to be repaid
in connection with the PPM Acquisition, consisted of (i) approximately $92.6
million in cash and (ii) shares of Series A Redeemable Exchangeable Preferred
Stock of Terex Cranes having an aggregate liquidation preference of
approximately $26.1 million, subject to adjustment calculated by reference to
the consolidated net asset value of PPM on the closing date of the PPM
Acquisition. A private placement of $250 million of the Company's 13.25%
Senior Secured Notes due 2002 provided the financing for the cash portion of
the purchase price. Proceeds of the Senior Secured Notes and of a new domestic
Credit Facility also provided funds for the refinancing of certain existing
Company debt (the "Refinancing"), for transaction and acquisition costs and for
working capital purposes.
The acquisition was accounted for using the purchase method, with the purchase
price of the PPM Acquisition allocated to the assets acquired and liabilities
assumed based upon their respective estimated fair values at the date of
acquisition. The pro forma consolidated financial information reflects the
Company's initial estimates of the purchase price allocation.
The unaudited pro forma consolidated financial information is not necessarily
indicative of what the actual results of operations of the Company would have
been for the periods indicated, nor does it purport to represent the results of
operations for future periods.
- ------------------------------------------------------------------------------
TEREX CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(in thousands except per share amounts)
Terex
Corporation Pro Forma Pro Forma
and BusinessAcquisition Refinancing
Subsidiaries AcquiredAdjustments Adjustments Pro Forma
NET SALES $ 786,781 $ 179,695 $ 0 $ 0 $966,476
COST OF GOODS SOLD 703,622 157,099 2,288 (2a) 0 863,009
Gross Profit 83,159 22,596 (2,288) 0 103,467
ENGINEERING, SELLING
AND ADMINISTRATIVE
EXPENSES 72,445 35,673 0 0 108,118
SEVERANCE CHARGES 7,353 0 0 0 7,353
Income (loss) from
operations 3,361 (13,077) (2,288) 0 (12,004)
OTHER INCOME (EXPENSE):
Interest income 587 48 0 0 635
Interest expense (30,492) (6,668) 5,329 (2b)(12,388)(2d)(44,219)
Amortization of debt
issuance costs (2,300) 0 0 (129)(2d) (2,429)
Gain on sale
of Fruehauf 26,043 0 0 0 26,043
Gain on sale of
Drexel business 4,742 0 0 0 4,742
Other income
(expense) - net 15 0 0 0 15
Income (loss) before
extraordinary items
and income taxes 1,956 (19,697) 3,041 (12,517) (27,217)
PROVISION FOR
INCOME TAXES (786) 14 0 0 (772)
Income (loss) before
extraordinary
items 1,170 (19,683) 3,041 (12,517) (27,989)
Minority interest in
loss of subsidiary 0 647 0 0 647
LESS PREFERRED STOCK
ACCRETION (5,929) 0 (1,421) (2c) 0 (7,350)
LOSS BEFORE
EXTRAORDINARY
ITEMS APPLICABLE TO
COMMON STOCK $ (4,759) $(19,036) $ 1,620 $(12,517) $(34,692)
PER SHARE $ (.46) $ (3.37)
AVERAGE NUMBER OF
COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING IN PER
SHARE CALCULATION 10,303 10,303
- ------------------------------------------------------------------------------
TEREX CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(in thousands except per share amounts)
Terex
Corporation Pro Forma Pro Forma
and Business Acquisition Refinancing
Subsidiaries Acquired Adjustments Adjustments Pro Forma
NET SALES $766,789 $ 64,840 $ 0 $ 0 $831,629
COST OF
GOODS SOLD 690,529 66,618 672 (2a) 0 757,819
Gross Profit 76,260 (1,778) (672) 0 73,810
ENGINEERING,
SELLING AND
ADMINISTRATIVE
EXPENSES 61,401 14,053 0 0 75,454
SEVERANCE CHARGES 3,478 0 0 0 3,478
Income (loss)
from operations 11,381 (15,831) (672) 0 (5,122)
OTHER INCOME
(EXPENSE):
Interest income 1,073 0 0 0 1,073
Interest expense (28,416) (2,305) 1,858 (2b) (5,744)(2d)(34,607)
Amortization of
debt issuance
costs (1,672) 0 0 (161)(2d) (1,833)
Gain on sale
of Fruehauf 1,032 0 0 0 1,032
Other income
(expense) - net (9,352) (2,355) 0 0 (11,707)
Loss before
extraordinary
items and
income taxes (25,954) (20,491) 1,186 (5,905) (51,164)
PROVISION FOR
INCOME TAXES (133) 0 0 0 (133)
Loss before
extraordinary
items (26,087) (20,491) 1,186 (5,905) (51,297)
LESS PREFERRED STOCK
ACCRETION (5,200) 0 (794) (2c) 0 (5,994)
LOSS BEFORE
EXTRAORDINARY
ITEMS APPLICABLE
TO COMMON STOCK $(31,287) $(20,491) $ 392 $ (5,905) $(57,291)
PER SHARE $ (3.02) $ (5.55)
AVERAGE NUMBER
OF COMMON AND
COMMON EQUIVALENT
SHARES OUTSTANDING
IN PER SHARE
CALCULATION 10,330 10,330
TEREX CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
1) The unaudited pro forma condensed consolidated financial information is
presented for the year ended December 31, 1994 and the nine months ended
September 30, 1995. The pro forma statements of operations reflect the
consolidated operations of the Company combined with those of the acquired
business assuming the PPM Acquisition and the Refinancing were consummated on
January 1, 1994.
2) The pro forma statement of operations adjustments are summarized as
follows:
a) Pro forma acquisition adjustments to "Cost of goods sold" represent
the elimination of goodwill amortization of the business acquired and the
amortization of goodwill resulting from the PPM Acquisition over 15 years.
b) Pro forma acquisition adjustments to "Interest expense" represent the
elimination of interest expense relating to debt repaid in connection with the
PPM Acquisition or forgiven by the seller.
c) Pro forma acquisition adjustments to "Preferred stock accretion"
represent accretion on Terex Cranes redeemable preferred stock issued in the
PPM Acquisition, assuming issuance as of January 1, 1994.
d) The Refinancing provided the funds to finance the PPM Acquisition, as
well as funds to refinance certain existing Company debt and pay refinancing
and acquisition costs. The new Senior Secured Notes bear interest at 13.25%
and are due May 15, 2002. The Credit Facility loans bear interest at 1.75% in
excess of the prime rate or at 3.75% in excess of the adjusted eurodollar rate,
at the Company's option (interest rate of 11%, including fees, assumed for pro
forma presentation); the Credit Facility expires May 9, 1998. The pro forma
adjustments to "Interest expense" and "Amortization of debt issuance costs"
represent the incremental effects of the Refinancing:
- The Company's old 13% senior secured notes and 13.5% senior
subordinated notes are assumed to be repaid as of January 1, 1994, and the
interest expense and related amortization of discount and issuance costs is
eliminated.
- The 13.25% new Senior Secured Notes are assumed to be issued and
registered as of January 1, 1994 and interest expense and related amortization
of discount and issuance costs is included.
- The incremental amount borrowed under the Credit Facility at the
time of the Refinancing is assumed to be outstanding from January 1, 1994 and
interest is included thereon.
3) A pro forma condensed balance sheet is not presented herein because the
PPM Acquisition is reflected in the Company's Condensed Consolidated Balance
Sheet as of September 30, 1995. The estimated fair values of assets and
liabilities acquired in the PPM Acquisition are summarized as follows (in
thousands):
Cash $ 974
Accounts receivable 33,816
Inventories 69,107
Other current assets 11,866
Property, plant and equipment 20,516
Other assets 268
Goodwill 65,864
Accounts payable and other
current liabilities (84,458)
Other liabilities (13,501)
$ 104,452
The Company is in the process of obtaining certain evaluations, estimations,
appraisals and actuarial and other studies for purposes of determining certain
values. The Company has also estimated costs related to plans to integrate the
activities of PPM into the Company, including plans to terminate excess
employees, exit certain activities and consolidate and restructure certain
functions. The Company may revise the estimates as additional information is
obtained.
- ------------------------------------------------------------------------------
******************************************************************************
No dealer, salesman or other person has been authorized to give any information
or to make any representations other than those contained in this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company. Neither the delivery of this
Prospectus nor any sale hereunder shall, under any circumstances, create any
implication that the information contained herein is correct as of any time
subsequent to its date. This Prospectus does not constitute an offer or
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 anyone to whom it is unlawful to make such offer
or solicitation.
Page
Available Information 2
Prospectus Summary 3
Investment Considerations 6
The Company 8
Use of Proceeds 10
Market for Common Stock and Dividend Policy 10
Capitalization 11
Selected Consolidated Financial Information 12
Management's Discussion and Analysis of
Financial Condition and Results of Operations 16
Business 28
Management 36
Principal Stockholders 40
Selling Security Holders 42
Certain Transactions 43
Description of Securities 45
Certain Federal Income Tax Considerations 51
Plan of Distribution 52
Legal Matters 53
Auditors 54
Index to Consolidated Financial Statements F-1
Until __________ __, 1996, all dealers effecting transactions in the Preferred
Stock and Conversion Shares, whether or not participating in this offering, may
be required to deliver a Prospectus.
******************************************************************************
1,200,000 Shares of Preferred Stock
2,700,000 Shares of Common Stock
of
TEREX CORPORATION
Preferred Stock
and
Common Stock
PROSPECTUS
, 1995
******************************************************************************
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table itemizes the expenses incurred by the Company in connection
with the offering of the shares of Preferred Stock and shares of Common Stock
being registered. All the amounts shown are estimates except the SEC
registration fee.
Item Amount
Registration Fee - SEC $ 9,517.24
Transfer Agent Fees and Expenses *
Printing and Engraving Expenses *
Legal Fees and Expenses *
Accounting Fees and Expenses *
Blue Sky Fees and Expenses *
Miscellaneous Expenses *
TOTAL $ *
* To be completed by amendment.
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("DGCL") and Article IX of
the Company's By-laws provide for the indemnification of the Company's
directors and officers in a variety of circumstances, which may include
liabilities under the Securities Act of 1933, as amended (the "Securities
Act").
Article IX of the Company's By-laws generally requires the Company to indemnify
its directors and officers against all liabilities (including judgments,
settlements, fines and penalties) and reasonable expenses incurred in
connection with the investigation, defense, settlement or appeal of any type of
action, whether instituted by a third party or a stockholder (either directly
or derivatively) and including specifically, but without limitation, actions
brought under the Securities Act and/or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); provided that no such indemnification will be
allowed if such director or officer was not successful in defending against any
such action and it is determined that the director or officer engaged in
misconduct which constitutes (i) a willful breach of his or her "duty of
loyalty" (as further defined therein) to the Company or its stockholders; (ii)
acts or omissions not in "good faith" (as further defined therein) or which
involve intentional misconduct or a knowing violation of law; (iii) the payment
of an illegal dividend or the authorization of an unlawful stock repurchase in
violation of Delaware law; or (iv) a transaction from which the executive
derived a material improper personal financial profit.
The Company's Certificate of Incorporation, as amended, contains a provision
which eliminates the personal liability of a director to the Company and its
stockholders for certain breaches of his or her fiduciary duty of care as a
director. This provision does not, however, eliminate or limit the personal
liability of a director (i) for any breach of such director's duty of loyalty
to the Company 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 the Delaware statutory provision making directors personally
liable, under a negligence standard, for unlawful dividends of unlawful stock
repurchases or redemptions, or (iv) for any transaction from which the director
derived an improper personal benefit. This provision offers persons who serve
on the Board of Directors of the Company protection against awards of monetary
damages resulting from negligent (except as indicated above) and "grossly"
negligent actions taken in the performance of their duty of care, including
grossly negligent business decisions made in connection with takeover proposals
for the Company. As a result of this provision, the ability of the Company or
a stockholder thereof to successfully prosecute an action against a director
for a breach of his duty of care has been limited. However, the provision does
not affect the availability of equitable remedies such as an injunction or
rescission based upon a director's breach of his duty of care. The Securities
and Exchange Commission (the "Commission") has taken the position that the
provision will have no effect on claims arising under the Federal securities
laws.
The Company maintains a directors' and officers' insurance policy which insures
the officers and directors of the Company from any claim arising out of an
alleged wrongful act by such persons in their respective capacities as officers
and directors of the Company.
Item 15. Recent Sales of Unregistered Securities
On December 20, 1993, the Company completed the private placement of (i)
1,300,000 common stock purchase warrants and (ii) the 1,200,000 shares of
Preferred Stock being registered hereby to 22 institutional investors for
aggregate proceeds to the Company of $30.2 million. This private placement was
effected pursuant to Section 4(2) of the Securities Act.
On December 29, 1993, the Company issued and contributed 350,000 shares of its
Common Stock to the Terex Corporation Master Retirement Plan Trust (the "Plan")
in satisfaction of certain outstanding obligations of the Company to the Plan.
This private placement was effected pursuant to Section 4(2) of the Securities
Act.
On December 9, 1994, the Company issued in a private placement (i) 89,800
shares of Series B Preferred Stock and 106,950 common stock purchase warrants,
to three individuals in consideration for the early termination of a contract
between the Company and KCS Industries, Inc., a related party. The private
placement was effected pursuant to Section 4(2) of the Securities Act.
On May 9, 1995, the Company completed the private placement of $250 million
aggregate principal amount of its 13-1/4% Senior Secured Notes due 2002 and one
million of its common stock appreciation rights to institutional investors.
This private placement was effected pursuant to Section 4(2) of the Securities
Act.
Item 16. Exhibits and Financial Statement Schedules
3.1 Restated Certificate of Incorporation of Terex Corporation (incorporated
by reference to Exhibit 3.1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52297).
3.2 Restated Bylaws of Terex Corporation (incorporated by reference to
Exhibit 3.2 to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52297).
3.3 Certificate of Designation of Preferences and Rights of Series B
Cumulative Redeemable Convertible Preferred Stock ("Series B Preferred Stock")
of Terex Corporation (incorporated by reference to Exhibit 3.3 to the Form 10-K
for the year ended December 31, 1994 of Terex Corporation, Commission File No.
1-10702).
4.1 Warrant Agreement dated as of December 20, 1993 between Terex
Corporation and Mellon Securities Trust Company, as Warrant Agent (incorporated
by reference to Exhibit 4.40 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52297).
4.2 Form of Series A Warrant (incorporated by reference to Exhibit 4.41 to
the Form S-1 Registration Statement of Terex Corporation, Registration No.
33-52297).
4.3 Form of Series A Preferred Stock certificate (incorporated by reference
to Exhibit 4.42 to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52711).
4.4 Form of Series B Warrant (incorporated by reference to Exhibit 4.43 to
the Form 10-K for the year ended December 31, 1994 of Terex Corporation,
Commission File No. 1-10702).
4.5 Form of Series B Preferred Stock Certificate (incorporated by reference
to Exhibit 4.44 to the Form 10-K for the year ended December 31, 1994 of Terex
Corporation, Commission File No. 1-10702).
4.6 Form of 13-1/4% Senior Secured Notes Due 2002 of Terex Corporation. *
4.7 Indenture dated as of May 9, 1995 among the Company, the Guarantors
referred to therein and United States Trust Company of New York, as Trustee. *
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman as to the
legality of the shares being registered.**
10.1 Terex Corporation Incentive Stock Option Plan, as amended (incorporated
by reference to Exhibit 4.1 to the Form S-8 Registration Statement of Terex
Corporation, Registration No. 33-21483).
10.2 1994 Terex Corporation Long Term Incentive Plan (incorporated by
reference to Exhibit 10.2 to the Form 10-K for the year ended December 31, 1994
of Terex Corporation, Commission File No. 1-10702).
10.3 Terex Corporation Employee Stock Purchase Plan (incorporated by
reference to Exhibit 10.3 to the Form 10-K for the year ended December 31, 1994
of Terex Corporation, Commission File No. 1-10702).
10.4 Common Stock Appreciation Rights Agreement dated as of July 31, 1992
between Terex Corporation and United States Trust Company of New York, as SAR
Agent (incorporated by reference to Exhibit 10.36 to the Form 10-K for the year
ended December 31, 1992 of Terex Corporation, Commission file No. 1-10702).
10.5 SAR Registration Rights Agreement dated as of July 31, 1992 between
Terex Corporation and the purchasers who are signatories thereto (incorporated
by reference to Exhibit 10.37 to the Form 10-K for the year ended December 31,
1992 of Terex Corporation, Commission file No. 1-10702).
10.6 Stock Purchase Agreement dated as of May 27, 1992 between Clark
Equipment Company and Terex Corporation (incorporated by reference to Exhibit
10.27 to the Form 10-K for the year ended December 31, 1992 of Terex
Corporation, Commission File No. 1-10702).
10.7 First Amendment to Stock Purchase Agreement dated as of July 31, 1992
between Terex Corporation and Clark Equipment Company (incorporated by
reference to Exhibit 10.28 to the Form 10-K for the year ended December 31,
1992 of Terex Corporation, Commission File No. 1-10702).
10.9 Tax Agreement dated as of July 31, 1992 between Terex Corporation in
favor of Clark Equipment Company (incorporated by reference to Exhibit 10.30 to
the Form 10-K for the year ended December 31, 1992 of Terex Corporation,
Commission File No. 1-10702).
10.10Trademark Assignment Agreement dated as of July 31, 1992 between Clark
Equipment Company and Clark Material Handling Company (incorporated by
reference to Exhibit 10.31 to the Form 10-K for the year ended December 31,
1992 of Terex Corporation, Commission File No. 1-10702).
10.11Trademark Assignment dated as of July 31, 1992 executed by Clark
Equipment Company in favor of Clark Material Handling Company (incorporated by
reference to Exhibit 10.32 to the Form 10-K for the year ended December 31,
1992 of Terex Corporation, Commission File No. 1-10702).
10.12License Agreement dated as of July 31, 1992 between Clark Equipment
Company and Clark Material Handling Company (incorporated by reference to
Exhibit 10.33 to the Form 10-K for the year ended December 31, 1992 of Terex
Corporation, Commission File No. 1-10702).
10.14Termination, General Release and Waiver Agreement, dated as of June 29,
1993, between Clark Material Handling Company and Gary D. Bello (incorporated
by reference to Exhibit 10.21 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52297).
10.15Form of Purchase Agreement dated as of December 20, 1993 between Terex
Corporation and the purchasers of Series A Warrants and shares of Series A
Preferred Stock of Terex Corporation (incorporated by reference to Exhibit
10.22 to the Form S-1 Registration Statement of Terex Corporation, Registration
No. 33-52297).
10.16Registration Rights Agreement dated as of December 20, 1993 between
Terex Corporation and the purchasers of Series A Warrants (incorporated by
reference to Exhibit 10.23 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52297).
10.17Registration Rights Agreement dated as of December 20, 1993 between
Terex Corporation and the purchasers of shares of Series A Preferred Stock of
Terex Corporation (incorporated by reference to Exhibit 10.24 to the Form S-1
Registration Statement of Terex Corporation, Registration No. 33-52297).
10.18 Series B Preferred Stock and
Warrants Registration Rights Agreement (incorporated by reference to Exhibit
10.27 to the Form 10-K for the year ended December 31, 1994 of Terex
Corporation, Commission File No. 1-10702).
10.19Agreement dated July 1, 1987, between KCS Industries, Inc. and Northwest
Engineering Company (incorporated by reference to Exhibit 10.2 to the Form S-4
Registration Statement of Terex Corporation, Registration No. 33-20737).
10.20Management Agreement Amendment, dated January 1, 1993, between KCS
Industries, Inc. and Terex Corporation (incorporated by reference to Exhibit
10.26 to the Form S-1 Registration Statement of Terex Corporation, Registration
No. 33-52297).
10.21Management Agreement Termination Agreement, dated January 1, 1994,
between KCS Industries, L.P. and Terex Corporation (incorporated by reference
to Exhibit 10.27 to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52297).
10.22Amendment to Management Agreement Termination Agreement, dated October
17, 1994, between KCS Industries , L.P. and Terex Corporation (incorporated by
reference to Exhibit 10.31 to the Form 10-K for the year ended December 31,
1994 of Terex Corporation, Commission File No. 1-10702).
10.23Credit Facility, dated December 23, 1993, among Terex Equipment Limited,
Terex Corporation and Standard Chartered Bank (incorporated by reference to
Exhibit 10.28 to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52297).
10.24Amended and Restated Stock Purchase Agreement by and between CMH
Acquisition Corp. and DAC Acquisition Corp. with respect to the sale of the
outstanding stock of Drexel Industries dated as of April 15, 1994 (incorporated
by reference to Exhibit 10.33 to the Form 10-K for the year ended December 31,
1994 of Terex Corporation, Commission File No. 1-10702).
10.25Share Purchase Agreement, as amended, between Terex Cranes, Inc. and
Legris Industries, S.A. and Potain, S.A. (incorporated by reference to Exhibit
10.1 to the From 8-K for May 9, 1995, Commission File No. 1-10702).
10.26Certificate of Designation of Terex Cranes, Inc. with respect to its
Series A Redeemable Exchangeable Preferred Stock (incorporated by reference to
Exhibit 10.2 to the From 8-K for May 9, 1995, Commission File No. 1-10702).
10.27Stockholders Agreement dated as of May 9, 1995 by and among Terex
Corporation, Legris Industries S.A., Potain S.A. and Terex Cranes, Inc.
(incorporated by reference to Exhibit 10.3 to the From 8-K for May 9, 1995,
Commission File No. 1-10702).
10.28Purchase Agreement, dated as of April 27, 1995, among Terex Corporation
(the "Company"), certain of its subsidiaries and Jefferies & Company, Inc.
("Jefferies") and Dillon, Read & Co. Inc. (together with Jefferies, the
"Purchasers"). *
10.29Common Stock Appreciation Rights Agreement dated as of May 9, 1995
between the Company and United States Trust Company of New York, as Rights
Agents. *
10.30Debt Registration Rights Agreement dated as of May 9, 1995 among the
Company and the Purchasers. *
10.31SAR Registration Rights Agreement dated as of May 9, 1995 among the
Company and the Purchasers. *
10.32Security and Pledge Agreement dated as of May 9, 1995 between the
Company and United States Trust Company of New York, as Collateral Agent. *
10.33Subsidiary Security and Pledge Agreement dated as of May 9, 1995 between
certain subsidiaries of the Company and United States Trust Company of New
York, as Collateral Agent. *
10.34Loan and Security Agreement dated as of May 9, 1995 among Terex
Corporation, Clark Material Handling Company, Koehring Cranes, Inc. and PPM
Cranes, Inc. and Congress Financial Corporation and Foothill Capital
Corporation, for itself and as agent. *
10.35Guarantee dated as of May 9, 1995 from Terex Corporation, Koehring
Cranes, Inc., PPM Cranes, Inc. and CMH Acquisition Corp. and Legris Industries,
Inc. *
10.36Guarantee dated as of May 9, 1995 from Terex Corporation, Clark Material
Handling Company, PPM Cranes, Inc. and CMH Acquisition Corp. and Legris
Industries, Inc. *
10.37Guarantee dated as of May 9, 1995 from Terex Corporation, Clark Material
Handling Company, Koehring Cranes, Inc. and CMH Acquisition Corp. and Legris
Industries, Inc. *
10.38Guarantee dated as of May 9, 1995 from Clark Material Handling Company,
Koehring Cranes, Inc., PPM Cranes, Inc. and CMH Acquisition Corp. and Legris
Industries, Inc. *
10.39Agreement dated as of November 2, 1995 between Terex Corporation, a
Delaware corporation, and Randolph W. Lenz (incorporated by reference to
Exhibit 10 to the Form 10-Q for the quarter ended September 30, 1995,
Commission File No. 1-10702).
11.1 Computation of per share earnings.*
12.1 Computation of ratio of earnings to fixed charges.*
21.1 Subsidiaries of Terex Corporation.*
23.1 Independent Accountants' Consent of Price Waterhouse LLP - Stamford,
Connecticut. *
23.2 Independent Auditors' Consent of Ernst & Young LLP -- Greenville, South
Carolina.*
23.3 Consent of Robinson Silverman Pearce Aronsohn & Berman (included as part
of the Exhibit 5.1). **
24.1 Power of Attorney (included on signature page of this Registration
Statement).
* Filed herewith.
** To be filed by amendment.
(b) Financial Statement Schedules Page
Terex Corporation
Report of Price Waterhouse (included as part
of Exhibit 23.1)
Report of Ernst & Young LLP (included as part
of Exhibit 23.2)
Schedule II -- Valuation and Qualifying Accounts
and Reserves S-1
All other schedules are omitted as the required information is inapplicable or
the information is presented in the consolidated financial statements or
related notes.
Item 17. Undertakings
The Company hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(b) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment 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 deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the 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 Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company 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 of 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Westport,
State of Connecticut, on December 6, 1995.
TEREX CORPORATION
By: /s/ Ronald M. DeFeo
Ronald M. DeFeo,
President and Chief Executive Officer
and Chief Operating Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Ronald M. DeFeo or Marvin B. Rosenberg his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact
and agent or either of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment Number 1 to the Registration Statement has been signed by the
following persons in the capacities and on the date(s) indicated.
Name Title Date
/s/ Ronald M. DeFeo President, Chief Executive December 6, 1995
Ronald M. DeFeo Officer and Director
(Principal Executive Officer)
and Chief Operating Officer
/s/ Ralph T. Brandifino Senior Vice President and December 6, 1995
Ralph T. Brandifino Chief Financial Officer
(Principal Financial Officer
and acting Principal Accounting
Officer)
/s/ Marvin B. Rosenberg Senior Vice President, December 6, 1995
Marvin B. Rosenberg General Counsel, Secretary
and Director
/s/ G. Chris Andersen Director December 6, 1995
G. Chris Andersen
/s/ William H. Fike Director December 6, 1995
William H. Fike
/s/ Bruce I. Raben Director December 6, 1995
Bruce I. Raben
/s/ David A. Sachs Director December 6, 1995
David A. Sachs
/s/ Adam E. Wolf Director December 6, 1995
Adam E. Wolf
- -----------------------------------------------------------------------------
TEREX CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Amounts in thousands)
Balance Additions
Beginning Charges to Balance End
of Year Earnings Other Deductions(1) of Year
Year ended
December 31, 1994:
Deducted from
asset accounts:
Allowance for
doubtful
accounts $ 7,478 $ 1,018 $ --- $(2,382) $ 6,114
Reserve for
excess and
obsolete
inventory 20,670 7,561 --- (7,154) 21,077
Totals $ 28,148 $ 8,579 $ --- $(9,536) $ 27,191
Year ended
December 31, 1993:
Deducted from
asset accounts:
Allowance for
doubtful
accounts $ 6,348 $ 1,713 $ --- $ (583) $ 7,478
Reserve for
excess and
obsolete
inventory 22,364 7,478 --- (9,172) 20,670
Totals $ 28,712 $ 9,191 $ --- $(9,755) $ 28,148
Year ended
December 31, 1992:
Deducted from
asset accounts:
Allowance for
doubtful
accounts $ 1,932 $ 642 $ 4,462 (2) $ (688) $ 6,348
Reserve for
excess and
obsolete
inventory 20,135 2,545 691 (3) (1,007) 22,364
Totals $ 22,067 $ 3,187 $ 5,153 $ (1,695) $ 28,712
(1) Utilization of established reserves, net of recoveries.
(2) Added with the acquisition of businesses.
(3) Includes balances reclassified to other accounts.
(Face of Security)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT 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, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT 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 (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE.
THE ISSUE PRICE OF THE NOTES WILL BE $987.20 PER UNIT AND THE ISSUE PRICE OF
THE RIGHTS WILL BE $12.80 PER UNIT. THE ISSUE PRICE OF THE NOTES REPRESENTS A
YIELD TO MATURITY OF 14.041% PER ANNUM COMPUTED ON A SEMI-ANNUAL BOND
EQUIVALENT BASIS AND CALCULATED FROM MAY 9, 1995 ASSUMING THAT THE
INTEREST RATE IS 13r%. THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE NOTES WILL
BE $12.80 PER NOTE. THE CALCULATION OF ORIGINAL ISSUE DISCOUNT WILL BE
ADJUSTED ACCORDINGLY WHEN THE INTEREST RATE ON THE NOTES DECREASES TO 13 1/4% IN
ACCORDANCE WITH THE TERMS HEREOF.
TEREX CORPORATION
13 1/4% SERIES A SENIOR SECURED NOTE
DUE 2002
No. 1~ $
Terex Corporation, a Delaware corporation (the "Company"), as obligor, for
value received promises to pay to or registered assigns,
the principal sum of Dollars on May 15, 2002.
Interest Payment Dates: May 15 and November 15 and on the maturity date.
Record Dates: May 1 and November 1 (whether or not a Business Day).
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Dated:
TEREX CORPORATION
By:
Name:
Title:
By:
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the Notes referred to
in the within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:______________________________
Authorized Signature
(Back of Security)
13 1/4% SERIES A SENIOR SECURED NOTE
DUE MAY 15, 2002
1. Interest. Terex Corporation, a Delaware corporation (the
"Company"), as obligor, promises to pay interest on the principal amount of
this Note at the rate and in the manner specified below.
The Company shall pay, in cash, interest on the principal amount of
this Note, at the rate of 13r% per annum (subject to adjustment as provided
below). The Company shall pay interest semi-annually on May 15 and November 15
of each year, and on the maturity date, commencing on November 15, 1995, or if
any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date").
The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement (defined below). Upon (a) the consummation of
the Exchange Offer (as defined in the Registration Rights Agreement) or (b) the
effectiveness of a Shelf Registration Statement (as defined in the Registration
Rights Agreement) with respect to the Notes, as the case may be, the interest
rate borne by this Note will decrease to 13 1/4 per annum.
Interest shall be computed on the basis of a 360-day year consisting
of twelve 30-day months. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
the original issuance of the Notes. To the extent lawful, the Company shall
pay interest on overdue principal at the rate of 1% per annum in excess of the
then applicable interest rate on the Notes; the Company shall pay interest on
overdue installments of interest (without regard to any applicable grace
periods) at the same rate to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are cancelled after such record date and on or before
such Interest Payment Date. The Holder must surrender this Note to a Paying
Agent to collect principal payments. The Company shall 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. The Company, however, may pay
principal and interest by check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee shall act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-registrar without notice to any Holder. Subject to certain exceptions,
the Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated
as of May 9, 1995 (the "Indenture") among the Company, the Guarantors named
therein and the 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 (the "TIA") (15 U.S. Code ss. 77aaa-77bbbb) as in effect
on the date of the Indenture until such time as the Indenture is qualified
under the TIA and thereafter as in effect on the date the Indenture is so
qualified. The Notes are subject to all such terms, and Holders are referred
to the Indenture and such act for a statement of such terms. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the Notes.
Terms not otherwise defined herein shall have the meanings assigned in the
Indenture. The Notes are limited to $250,000,000 in aggregate principal
amount.
5. Optional Redemption. The Notes are not redeemable at the
Company's option prior to May 15, 2000. On and after May 15, 2000, the Notes
will be subject to redemption at the option of the Company, in whole or in
part, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon, if any, to the
applicable date of redemption, if redeemed during the 12-month period beginning
on May 15 of the years indicated below:
Year Percentage
2000 103.79 %
2001 101.89
2002 100.00
Notwithstanding the foregoing, prior to May 15, 2000, the Company
may, but shall not be obligated to, redeem up to one third of the original
principal amount of the Notes with the net proceeds of a bona fide public
offering of common stock of the Company or any Restricted Subsidiary, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the applicable date
of redemption, if redeemed during the 12-month period beginning on May 15 of
the years indicated below:
Year Percentage
1995 113.25 %
1996 111.36
1997 109.46
1998 107.57
1999 and thereafter 105.69
provided, however, that such redemption will occur within 60 days of the date
of the closing of such public offering.
6. Mandatory Redemption. There shall be no mandatory redemption of
the Notes.
7. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar and the Company need not exchange
or register the transfer (i) of any Note or portion of a Note selected for
redemption or (ii) of any Notes for a period of 15 days before a selection of
Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
9. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange
offer for Notes), and any existing Default or Event of Default (except a
payment default) may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes). Without the
consent of any Holders, the Indenture and the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
assumption of the Company's obligations to the Holders in the case of a merger
or consolidation, to provide for uncertificated Notes in addition to or in
place of certificated Notes, to make any change that would provide any
additional rights or benefits to the Holders of the Notes, or that does not
adversely affect the legal rights of any Holder, or to comply with requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the TIA.
10. 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 then outstanding Notes may declare all the Notes to be due and payable
immediately, except that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes become due
and payable immediately without further action or notice. Holders may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes 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 it determines that withholding notice is in the interests of the
Holders. The Company must furnish an annual compliance certificate to the
Trustee.
11. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not Trustee.
12. No Recourse Against Others. No director, officer, employee,
agent, manager, partner or interest holder or stockholder, as such, of the
Company or Guarantor, as such, shall have any liability for any obligations of
the Company under the Notes or the Indenture, or for any claim based on, in
respect of or by reason of such obligations. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Notwithstanding the foregoing,
nothing in this provision shall be construed as a waiver or release of any
claims under the Federal securities laws.
13. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
14. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
15. 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 Notes and have 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 Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
16. Holders' Compliance with Registration Rights Agreement. Each
Holder of a Note, by his acceptance thereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, dated as of May 9, 1995,
between the Company and the parties named on the signature page thereof (the
"Registration Rights Agreement"), including but not limited to the obligations
of the Holders with respect to a registration and the indemnification of the
Company and the Purchaser (as defined therein) to the extent provided therein.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to: Terex
Corporation, 500 Post Road East, Westport, Connecticut 06880, Attention:
Marvin B. Rosenberg.
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint______________________________
agent to transfer this Note 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 face of this Note)
Signature Guarantee*
________________
* NOTICE: The signature must be guaranteed by an institution which is a
member of one of the following recognized signature guarantee programs:
(1) The Securities Transfer Agent Medallian Program (STAMP);
(2) The New York Stock Exchange Medallian Program (MSP);
(3) The Stock Exchange Medallian Program (SEMP).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, as the case
may be, state the amount you elect to have purchased (if all, write "ALL"):
$______________
Date:__________________________
Your Signature:_________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
______________
* NOTICE: The signature must be guaranteed by an institution which is a
member of one of the following recognized signature guarantee programs:
(1) The Securities Transfer Agent Medallian Program (STAMP);
(2) The New York Stock Exchange Medallian Program (MSP);
(3) The Stock Exchange Medallian Program (SEMP).
GUARANTY
For good and valuable consideration received from the Company by the
undersigned (hereinafter referred to as the "Guarantors," which term includes
any successor or additional Guarantors), the receipt and sufficiency of which
is hereby acknowledged, subject to Section 10.9 of the Indenture, each
Guarantor, jointly and severally, hereby unconditionally guarantees,
irrespective of the validity or enforceability of the Indenture, the Notes, the
Security Documents or the Obligations, (a) the due and punctual payment of the
principal and premium, if any, of and interest on the Notes (including, without
limitation, interest after the filing of a petition initiating any proceedings
referred to in Sections 6.1(10) or (11) of the Indenture), whether at maturity
or on an interest payment date, by acceleration, call for redemption or
otherwise, (b) the due and punctual payment of interest on the overdue
principal and premium, if any, of and interest, if any, on the Notes, if
lawful, (c) the due and punctual payment and performance of all other
Obligations, all in accordance with the terms set forth in the Indenture, the
Notes and the Security Documents, and (d) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the due and
punctual payment or performance thereof in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the undersigned shall have any personal liability under
this Guaranty by reason of his or its status as such stockholder, officer,
director or incorporator.
CMH ACQUISITION CORP.
By:
Its:
CLARK MATERIAL HANDLING COMPANY
By:
Its:
CHM ACQUISITION INTERNATIONAL CORP.
By:
Its:
KOEHRING CRANES, INC.
By:
Its:
LEGRIS INDUSTRIES, INC.
By:
Its:
PPM CRANES, INC.
By:
Its:
TEREX CORPORATION
as obligor
and
the Guarantors referred to herein
$250,000,000
13 1/4% Senior Secured Notes due 2002
Series A and Series B
INDENTURE
Dated as of May 9, 1995
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
INDENTURE dated as of May 9, 1995 between Terex Corporation, a
Delaware corporation (the "Company"), and United States Trust Company of New
York, a New York corporation, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Company's
13 1/4% Series A Senior Secured Notes due 2002 and the Company's 13 1/4%
Series B Senior Secured Notes due 2002.
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"Accounts" shall mean, as to any Person, all of such Person's now
owned and hereafter acquired rights to payment (including intercompany
obligations) for the prior, concurrent or future sale, lease or other
disposition of Inventory or rendition of services, whether or not evidenced by
an instrument or chattel paper and whether or not earned by performance.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, other than
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person.
"Acquisition" means the acquisition of PPM by the Company pursuant to
the Acquisition Agreement.
"Acquisition Agreement" means the Share Purchase Agreement between
Terex Cranes (as assignee of New Terex Holdings UK Limited), as purchaser, and
Legris Industries and Pontain, as sellers, dated October 19, 1994, as amended
on December 20, 1994, March 3, 1995 and April 28, 1995.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. Notwithstanding the
foregoing to the contrary, neither Jefferies & Company, Inc. nor any of its
Affiliates will be deemed to be Affiliates of the Company.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means any sale, assignment, transfer, lease, conveyance,
or other disposition (including, without limitation, by way of merger or
consolidation) (collectively, a "transfer"), directly or indirectly, in one or
a series of related transactions other than in the ordinary course of business,
of any assets of the Company or its Restricted Subsidiaries (other than (i) to
the Company or a Restricted Subsidiary and (ii) sale and leaseback transactions
that are expressly permitted under this Indenture).
"Bankruptcy Law" means title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means the board of directors or any duly
constituted committee of any corporation or of a corporate general partner of a
partnership and any similar body empowered to direct the affairs of any other
entity.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be so required to be capitalized on the balance
sheet in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests and other indicia of ownership of a
business entity.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation
of any domestic commercial bank of recognized standing having capital and
surplus in excess of $500,000,000 and commercial paper issued by others rated
at least A-2 or the equivalent thereof by Standard & Poor's Corporation or at
least P-2 or the equivalent thereof by Moody's Investors Service, Inc. and in
each case maturing within one year after the date of acquisition and (iii)
investments in money market funds substantially all of whose assets comprise
securities of the types described in clauses (i) and (ii) above.
"Change of Control" means (i) the sale, assignment, lease, transfer
or conveyance (in one transaction or a series of transactions) of all or
substantially all of the Company's assets to any Person or group (as such term
is used in Section 13(d)(3) of the Exchange Act), (ii) the liquidation or
dissolution of the Company or the adoption of a plan by the stockholders of the
Company relating to the dissolution or liquidation of the Company, (iii) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except for any Person or group owning in excess of 40% of
the voting power of the Voting Stock of the Company on the date of this
Indenture, of a direct or indirect majority in interest (more than 50%) of the
voting power of the Voting Stock of the Company by way of purchase, merger or
consolidation or otherwise, or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (which includes any new directors whose election by
such Board of Directors or whose nomination for election by the stockholders of
the Company was approved by a vote of at least 66 2/3% of the directors 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 of the Company.
"Closing Date" means the date upon which the Series A Notes are first
issued.
"Collateral" means any assets of the Company or any of its
Subsidiaries defined as "Collateral" in any of the Security Documents and
assets from time to time in which a Lien exists as security for any of the
Obligations.
"Collateral Agent" shall have the meaning set forth in the
respective Security Documents.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body
performing such duties at such time.
"Company" means the party named as such above, until a successor
replaces such Person in accordance with the terms of this Indenture, and
thereafter means such successor.
"Company Order" means a written request or order signed in the name
of the Company by its Chairman of the Board, President or Vice President, and
by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee.
"Consolidated EBITDA" means, with respect to any Person (the referent
Person) for any period, income (loss) from operations of such Person for such
period, determined in accordance with GAAP, plus (to the extent such amounts
are deducted in calculating such income (loss) from operations of such Person
for such period, and without duplication) amortization, depreciation and other
non-cash charges (including, without limitation, amortization of goodwill,
deferred financing fees and other intangibles but excluding (a) non-cash
charges incurred after the date of this Indenture that require an accrual of or
a reserve for cash charges for any future period, and (b) normally recurring
accruals such as reserves against accounts receivable); provided, however that
(i) the income from operations of any Person that is not a Wholly Owned
Subsidiary or that is accounted for by the equity method of accounting will be
included only to the extent of the amount of dividends or distributions paid
during such period to the referent Person or a Wholly Owned Subsidiary of the
referent Person, (ii) the income from operations of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition will be excluded, and (iii) the income from operations of any
Subsidiary will not be included to the extent that declarations of dividends or
similar distributions by that Subsidiary are not at the time permitted,
directly or indirectly, by operation of the terms of its organization documents
or any agreement, instrument, judgment, decree, order, statute, rule of
governmental regulation applicable to that Subsidiary or its owners.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the consolidated interest expense of such Person for such period,
whether paid or accrued (including amortization of original issue discount,
noncash interest payment, and the interest component of Capital Lease
Obligations), to the extent such expense was deducted in computing Consolidated
Net Income of such Person for such period.
"Consolidated Net Income" means, with respect to any Person (the
referent Person) for any period, the aggregate of the Net Income of such Person
and its consolidated Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; provided, however that (i) the Net Income of any
Person that is not a Wholly Owned Subsidiary or that is accounted for by the
equity method of accounting will be included only to the extent of the amount
of dividends or distributions paid during such period to the referent Person or
a Wholly Owned Subsidiary of such Person, (ii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition will be excluded, and (iii) the Net Income of any
Subsidiary will not be included to the extent that declarations of dividends or
similar distributions by that Subsidiary of income are not at the time
permitted, directly or indirectly, by operation of the terms of its
organization documents or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
owners.
"Consolidated Net Worth" means, with respect to any Person, the total
stockholders' equity (exclusive of any Disqualified Stock) of such Person (less
Investments in Non-Restricted Subsidiaries) determined on a consolidated basis
in accordance with GAAP.
"Corporate Trust Office" shall be at the address of the Trustee
specified in Section 11.2 or such other address as the Trustee may give notice
to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or the passage of
time or both would be, an Event of Default.
"Definitive Notes" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1 and 2 thereof.
"Depository" means the Person specified in Section 2.3 hereof as the
Depository with respect to the Notes issuable in global form, until a successor
shall have been appointed and become such pursuant to the applicable provision
of this Indenture, and, thereafter, "Depository" shall mean or include such
successor.
"Disqualified Stock" means any Capital Stock that, (i) either by its
terms or the terms of any security into which it is convertible or for which it
is exchangeable or otherwise, is or upon the happening of an event or the
passage of time would be, required to be redeemed or repurchased (in whole or
in part) prior to the final stated maturity of the Notes or is redeemable (in
whole or in part) at the option of the holder thereof at any time prior to such
final stated maturity or (ii) is convertible into or exchangeable at the option
of the issuer thereof or any other Person for debt securities or Disqualified
Stock. Accretion in accordance with the terms of any Disqualified Stock
outstanding on the Closing Date shall not constitute the issuance of additional
Disqualified Stock.
"DTC" means The Depository Trust Company.
"Eligible Inventory" means all Inventory of the Company and the
Restricted Subsidiaries consisting of (i) finished goods held for resale in the
ordinary course of business of any such Person, (ii) work in process relating
to goods to be held for resale in the ordinary course of business of any such
Person, (iii) parts held for resale or to be incorporated into any such
finished goods, and (iv) raw materials for such finished goods.
"Eligible Receivables" means Accounts of the Borrower and the
Restricted Subsidiaries arising from the actual and bona fide sale and delivery
of goods or rendition of services by any such Person in the ordinary course of
its business that (i) are not unpaid more than ninety (90) days from the
original due date thereof or more than one hundred and eighty (180) days after
the date of the original invoice therefor; (ii) do not arise from sales on
consignment, guaranteed sale, sale and return, sale on approval, or other terms
under which payment by the account debtor may be conditional or contingent;
provided, however, that no Account where the debtor is a dealer of Inventory
shall be deemed ineligible solely because the Company or a Restricted
Subsidiary has a buy-back arrangement with such account debtor effective upon
the termination of such account debtor as a dealer, but upon such termination
such dealer's Accounts shall become ineligible; (iii) the account debtor with
respect to such Accounts (x) has not asserted a counterclaim, defense or
dispute and (y) does not have, and does not engage in transactions that may
give rise to, any right of setoff against such Accounts unless in the case of
this clause (y) such account debtor has entered into a written agreement,
pursuant to which such account debtor agrees not to assert any setoff against
Accounts owed to the Company or any of its Subsidiaries; and (iv) such account
debtor is not the Company or any Subsidiary or Affiliate of the Company.
"Equity Interests" means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series B Notes for
Series A Notes.
"Existing Credit Facility" means that certain Loan and Security
Agreement, dated as of May 9, 1995 by and among Congress Financial Corporation
and Foothill Capital Corporation, as lenders, Foothill Capital Corporation as
agent for the lenders and the Company, Koehring Cranes, Inc., Clark Material
Handling Company and PPM Cranes, Inc., as borrowers.
"Floor Plan Guaranty" means the Guarantee by the Company or a
Subsidiary of Indebtedness incurred by a franchise dealer, or other purchaser
or lessor, for the purchase or lease of inventory manufactured or sold by the
Company or a Restricted Subsidiary, the proceeds of which Indebtedness is used
solely to pay the purchase price of inventory sold by the Company or a
Restricted Subsidiary to such franchise dealer and any related fees and
expenses (including finance fees); provided, that (i) to the extent
commercially practicable, the Indebtedness so guaranteed is secured by a
perfected first priority lien on such inventory in favor of the holder of such
Indebtedness and (ii) if the Company or such Restricted Subsidiary is required
to make payment with respect to such Guarantee, the Company or such Restricted
Subsidiary will have the right to receive either (a) title to such inventory,
(b) a valid assignment of a first priority perfected lien in such inventory or
(c) the net proceeds of any resale of such inventory.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession and in the rules and regulations of the Commission, which
are in effect on the date of this Indenture.
"Global Note" means a Note that contains the paragraphs referred to
in footnote 1 and the additional schedule referred to in footnote 2 in the form
of the Note attached hereto as Exhibit A.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantors" means all present and future, direct or indirect,
Material Subsidiaries that are Restricted Subsidiaries organized under the laws
of the United States of America or any jurisdiction therein.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" of any Person means (without duplication) (i) all
indebtedness of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade payables on customary terms incurred in
the ordinary course of business), (iv) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (v) all obligations of such Person as
lessee under capitalized leases, (vi) all obligations, contingent or otherwise,
of such Person under bankers' acceptance and letter of credit facilities, (vii)
all obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any Disqualified Stock, (viii) all obligations of
such Person in respect of Hedging Obligations, (ix) all Indebtedness of others
Guaranteed by such Person, and (x) all Indebtedness of the type referred to in
clauses (i) through (ix) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, provided, however, that the amount
of such Indebtedness shall (to the extent such Person has not assumed or become
liable for the payment of such Indebtedness) be the lesser of (x) the fair
market value of such property at the time of determination and (y) the amount
of such Indebtedness. 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 at
such date, provided, however, that, in the case of each of clauses (i), (ii)
and (iii) above, the amount of such Indebtedness will be the amount that would
appear as a liability on the balance sheet of such Person prepared in
accordance with GAAP.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Intercreditor Agreement" means that certain Intercreditor Agreement
among Congress Financial Corporation ("Congress"), Foothill Capital
Corporation, in its individual capacity, and as agent for itself and Congress,
and the Collateral Agent, as amended or supplemented from time to time.
"Interest Coverage Ratio" means, for any period, the ratio of (i)
Consolidated EBITDA of the Company for such period, over (ii) Consolidated
Interest Expense of the Company for such period. In calculating Interest
Coverage Ratio for any period, pro forma effect shall be given to: (a) the
incurrence, assumption, guarantee, repayment, repurchase, redemption or
retirement by the Company or any of its Subsidiaries of any Indebtedness (other
than under the Revolving Credit Facility) subsequent to the commencement of the
period for which the Interest Coverage Ratio is being calculated, as if the
same had occurred at the beginning of the applicable period; and (b) the
occurrence of any Asset Sale during such period by reducing Consolidated EBITDA
for such period by an amount equal to the Consolidated EBITDA (if positive)
directly attributable to the assets sold and by reducing Consolidated Interest
Expense by an amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness secured by the assets sold and assumed by
third parties or repaid with the proceeds of such Asset Sale, in each case as
if the same had occurred at the beginning of the applicable period. For
purposes of making the computation referred to above, acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including all
mergers and consolidations, subsequent to the commencement of such period shall
be calculated on a pro forma basis, assuming that all such acquisitions,
mergers and consolidations had occurred on the first day of such period.
Without limiting the foregoing, the financial information of the Company with
respect to any portion of such four fiscal quarters that falls before the
Closing Date shall be adjusted (1) to give pro forma effect to the issuance of
the Units and the application of the proceeds therefrom (including, without
limitation, consummation of the Acquisition) as if they had occurred at the
beginning of such four fiscal quarters and (2) to exclude expenses incurred in
connection with the Acquisition or the issuance of the Units to the extent such
expenses are included in computing Consolidated Net Income for such period.
"Inventory" shall mean, as to any Person, all now owned and hereafter
acquired goods (including, without limitation, parts and goods in the
possession of such Person or of a bailee or other Person for sale, storage,
transit, processing, use or otherwise, and supplies, finished goods, parts and
components, that are: (a) held for sale or lease, (b) furnished or to be
furnished under contracts of services, or (c) raw materials, work-in-process or
materials used or consumed in its business.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans,
Guarantees, advances or capital contributions (excluding commission, travel and
similar advances to officers and employees of such Person made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and any other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, 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 and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Liquidated Damages" has the meaning set out in the Registration
Rights Agreement.
"Material Subsidiary" means any Person (a) that is a "Significant
Subsidiary" of the Company as defined in Rule 1-02 of Regulation S-X
promulgated by the Commission or (b) is otherwise material to the business of
the Company and its Subsidiaries, on a consolidated basis.
"Mortgages" means those several Mortgage, Assignment of Rents,
Security Documents and Fixture Filings pursuant to which the Company and
certain of its Subsidiaries have granted Liens on the Real Property therein
described in favor of the Trustee.
"Net Assets" means, with respect to any Person, (i) the fair market
value of the assets of such Person and its consolidated Subsidiaries as
determined on a consolidated basis in good faith by the Board of Directors of
such Person minus (ii) the aggregate principal amount of the Indebtedness of
such Person and its Subsidiaries that would appear on the consolidated balance
sheet of such Person as of the date of determination.
"Net Income" means, with respect to any Person for any period, the
net income (loss) of such Person for such period, determined in accordance with
GAAP, excluding any gain (but not loss), together with any related provision
for taxes on such gain (but not loss), realized in connection with any Asset
Sales and dispositions pursuant to sale and leaseback transactions, and
excluding any extraordinary gain (but not loss), together with any related
provision for taxes on such gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received in respect
of any Asset Sale, net of the direct out-of-pocket costs relating to such Asset
Sale (including, without limitation, legal, accounting and investment banking
fees and sales commission), other than any such costs payable to an Affiliate
of the Company, and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available
tax credits or deductions and any tax sharing arrangements), amounts required
to be applied to the repayment of Indebtedness secured by a Lien on the asset
or assets the subject of such Asset Sale, and any reserve for adjustment in
respect of the sale price of such asset or assets.
"Non-Restricted Subsidiary" means any Subsidiary of the Company
formed or acquired by the Company or by any Subsidiary of the Company after the
date of this Indenture that has been designated by the Company (by written
notice to the Trustee on or prior to the date of such formation or acquisition)
as a Non-Restricted Subsidiary and each Subsidiary of a Non-Restricted
Subsidiary; provided, however, that a Subsidiary may not be designated as a
"Non-Restricted Subsidiary" unless (i) such designation would not cause a
Default or Event of Default, (ii) neither such Subsidiary nor any of its
Subsidiaries is a Guarantor and (iii) the creditors of such Subsidiary have no
direct or indirect recourse (including, without limitation, recourse with
respect to the payment of principal or interest on Indebtedness of such
Subsidiary) to the assets of the Company or of a Restricted Subsidiary. For
purposes of the foregoing, the Company shall be deemed to make an Investment in
each Subsidiary designated as a "Non-Restricted Subsidiary" immediately
following such designation in an amount equal to the net Investment in such
Subsidiary and its Subsidiaries immediately prior to such designation.
"Notes" means, collectively, the Series A Notes and the Series B
Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other obligations and liabilities
of the Company or any of its Subsidiaries under the Indenture, the Notes,
Registration Rights Agreement or any of the Security Documents.
"Officers" means the Chairman of the Board, the President, the Chief
Financial Officer, Chief Operating Officer, the Treasurer, any Assistant
Treasurer, Controller, Secretary, any Assistant Secretary or any Vice-President
of the Company.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the President,
Chief Financial Officer, Treasurer, Controller, Executive Vice President or
Senior Vice President of the Company.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. Such counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.
"Permitted Investments" means (a) Investments in the Company, (b)
Investments in Cash Equivalents, (c) Investments by the Company or any
Restricted Subsidiary in a Guarantor or any Wholly Owned Subsidiary or in a
Person, if as a result of such Investment (i) such Person becomes a Guarantor
or a Wholly Owned Subsidiary and the Capital Stock of such Person is pledged to
secure the Obligations, or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company, a Guarantor or a Wholly Owned
Subsidiary, (d) Guarantees by the Company or any Restricted Subsidiary incurred
in the ordinary course of business of Indebtedness incurred for the purchase or
lease of inventory manufactured or sold by the Company or any Subsidiary,
including, without limitation, Floor Plan Guarantees, provided, however, that
(a) to the extent commercially practicable, the Indebtedness so guaranteed is
secured by a perfected first priority lien on such inventory in favor of the
holder of such Indebtedness and (b) if the Company or such Restricted
Subsidiary is required to make payment with respect to such guarantee, the
Company or such Restricted Subsidiary will have the right to receive either (i)
title to such inventory, (ii) a valid assignment of a perfected first priority
security interest in such inventory, or (iii) the net proceeds from the resale
of such inventory, (e) Investments in shares of Capital Stock of Fruehauf
Trailer Corporation in satisfaction of outstanding indebtedness of Fruehauf
Trailer Corporation to the Company in the amount of up to $2.0 million, and (f)
other Investments that do not exceed in the aggregate $5.0 million at any time
outstanding.
"Permitted Liens" means (i) Liens in favor of the Company and/or its
Restricted Subsidiaries other than with respect to intercompany Indebtedness,
(ii) Liens on property of a Person existing at the time such Person is acquired
by, merged into or consolidated with the Company or any Restricted Subsidiary,
provided, however, that such Liens were not created in contemplation of such
acquisition and do not extend to assets other than those subject to such Liens
immediately prior to such acquisition, (iii) Liens on property existing at the
time of acquisition thereof by the Company or any Restricted Subsidiary,
provided, however, that such Liens were not created in contemplation of such
acquisition and do not extend to assets other than those subject to such Liens
immediately prior to such acquisition, (iv) Liens incurred in the ordinary
course of business in respect of Hedging Obligations, (v) Liens to secure
Indebtedness for borrowed money of a Subsidiary in favor of the Company or a
Wholly Owned Subsidiary, (vi) Liens (other than pursuant to ERISA or
environmental laws) to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business, (vii) Liens existing on the
Closing Date, (viii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested or remedied in
good faith by appropriate proceedings promptly instituted and diligently
concluded, provided, however, that any reserve or other appropriate provision
as may be required in conformity with GAAP has been made therefor, (ix) Liens
arising by reason of any judgment, decree or order of any court with respect to
which the Company or any of its Restricted Subsidiaries is then in good faith
prosecuting an appeal or other proceedings for review, the existence of which
judgment, order or decree is not an Event of Default under this Indenture, (x)
encumbrances consisting of zoning restrictions, survey exceptions, utility
easements, licenses, rights of way, easements of ingress or egress over
property of the Company or any of its Restricted Subsidiaries, rights or
restrictions of record on the use of real property, minor defects in title,
landlord's and lessor's liens under leases on property located on the premises
rented, mechanics' liens, vendors' liens, and similar encumbrances, rights or
restrictions on personal or real property, in each case not interfering in any
material respect with the ordinary conduct of the business of the Company or
any of its Restricted Subsidiaries, (xi) Liens and priority claims incidental
to the conduct of business or the ownership of properties incurred in the
ordinary course of business and not in connection with the borrowing of money
or the obtaining of advances or credit, including, without limitation, liens
incurred or deposits made in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, bids, and government contracts and leases and
subleases, and (xii) any extension, renewal, or replacement (or successive
extensions, renewals or replacements), in whole or in part, of Liens described
in clauses (i) through (xi) above.
"Permitted Proceeds" means (i) cash and/or (ii) promissory notes in
an aggregate principal amount of up to $5.0 million in connection with any
single Asset Sale; provided, however, that the obligations under any such
promissory note are secured by a first priority security interest in the assets
sold.
"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.
"PPM" means P.P.M. S.A. and Legris Industries Inc. and their
respective Subsidiaries.
"PPM Funded Debt" means up to $7 million of Indebtedness of PPM not
required to be repaid by Terex Cranes pursuant to the terms of the Acquisition
Agreement.
"PPM Subordinated Note" means that certain Century II Promissory Note
dated April 22, 1988 in the original principal amount of $32,630,970 in favor
of Harnischfleger Corporation, which promissory note (i) was assigned by
Harnischfleger Corporation to Potain Tower Cranes, Inc. pursuant to a Note
Purchase Agreement dated as of April 10, 1991, and the obligations of Potain
Tower Cranes, Inc. under such Note Purchase Agreement to Harnischfleger
Corporation, which obligations were assumed by Legris Industries, Inc. and (ii)
is carried on the books of Legris Industries, Inc. at not more than $9.75
million.
"Purchase Money Liens" means (i) Liens to secure or securing Purchase
Money Obligations permitted to be incurred under this Indenture and (ii) Liens
to secure Refinancing Indebtedness incurred solely to refinance Purchase Money
Obligations provided that such Refinancing Indebtedness is incurred no later
than 180 days after the satisfaction of such Purchase Money Obligations.
"Purchase Money Obligations" means Indebtedness representing, or
incurred to finance, the cost (i) of acquiring any assets and (ii) of
construction or build-out of manufacturing, distribution or administrative
facilities (including Purchase Money Obligations of any other Person at the
time such other Person is merged with or into or is otherwise acquired by the
Company), provided, however, that (a) the principal amount of such Indebtedness
does not exceed 100% of such cost, including construction charges, (b) any Lien
securing such Indebtedness does not extend to or cover any other asset or
property other than the asset or property being so acquired and (c) such
Indebtedness is incurred, and any Liens with respect thereto are granted,
within 180 days of the acquisition of such property or asset.
"QIB" shall mean "qualified institutional buyer" as defined in Rule
144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Closing Date, by and among the Company, Jefferies &
Company, Inc. and Dillon, Read & Co. Inc. as such agreement may be amended,
modified or supplemented from time to time.
"Responsible Officer" when used with respect to the Trustee, means
any officer within the corporate trust department of the Trustee located at the
Corporate Trust Office (or any successor group of the Trustee) or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the designated officers, and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Securities" means Notes that bear or are required to bear
the legends set forth in Exhibit A hereto.
"Restricted Subsidiary" means all Subsidiaries of the Company other
than Non-Restricted Subsidiaries.
"Revolving Credit Facility" means any working capital facility or
facilities of the Company or any Subsidiary providing for revolving credit
borrowings or other working capital facilities in an aggregate amount not to
exceed the Indebtedness permitted under Section 4.9(b)(i), including, without
limitation, the Existing Credit Facility, and any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith.
"Rights" means the 1,000,000 Common Stock Appreciation Rights being
issued by the Company pursuant to the Rights Agreement.
"Rights Agent" means United States Trust Company of New York, as
agent under the Rights Agreement.
"Rights Agreement" means the Common Stock Appreciation Rights
Agreement, dated as of the Closing Date, between the Company and the Rights
Agent.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the Security and Pledge Agreement, dated
as of the date hereof, by and between the Company and the Collateral Agent, as
amended or supplemented from time to time.
"Security Documents" means, collectively, the Security Agreement, the
Subsidiary Security Agreement, the Mortgages, the Intercreditor Agreement and
any other document, instrument or agreement executed or delivered by the
Company or any of its Subsidiaries from time to time pursuant to which the
Company or any such Subsidiary shall grant a Lien on any of their respective
properties, assets or revenues to secure payment of the Obligations hereunder
and under the Notes or relating to intercreditor matters.
"Series A Notes" means the Company's 13 1/4% Series A Senior Secured
Notes due 2002 as authenticated and issued under this Indenture, together with
the related Guaranty endorsed thereon.
"Series B Notes" means the Company's 13 1/4% Series B Senior Secured
Notes due 2002, as authenticated and issued under this Indenture, together with
the related Guaranty endorsed thereon.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Voting Stock thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person or a combination thereof and (ii) any partnership in which such
Person or any of its Subsidiaries is a general partner.
"Subsidiary Security Agreement" means that certain Security and
Pledge Agreement among certain Subsidiaries of the Company and the Collateral
Agent, as amended or supplemented from time to time.
"Terex Cranes" means Terex Cranes, Inc., a Delaware corporation.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.
77aaa-77bbbb), as amended, as in effect on the date hereof until such time as
this Indenture is qualified under the TIA, and thereafter as in effect on the
date on which this Indenture is qualified under the TIA.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Units" means the units issued pursuant to that certain Purchase
Agreement, dated as of April 27, 1995, among the Company, Jefferies & Company,
Inc. and Dillon, Read & Co. Inc., each unit consisting of $1,000 principal
amount of Series A Notes and four Rights.
"U.S. Government Obligations" means direct obligations of the United
States of America, or any agency or instrumentality thereof for the payment of
which the full faith and credit of the United States of America is pledged.
"Voting Stock" means, with respect to any Person, (i) one or more
classes of the Capital Stock of such Person having general voting power to
elect at least a majority of the board of directors, managers or trustees of
such Person (irrespective of whether or not at the time Capital Stock of any
other class or classes have or might have voting power by reason of the
happening of any contingency) and (ii) any Capital Stock of such Person
convertible or exchangeable without restriction at the option of the holder
thereof into Capital Stock of such Person described in clause (i) above.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years (rounded to the nearest
one-twelfth) obtained by dividing (i) the then outstanding principal amount of
such Indebtedness into (ii) the total of the product obtained by multiplying
(x) the amount of each then remaining installment, sinking fund, serial
maturity or other required payments of principal, including payment at final
maturity, in respect thereof, by (y) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of such
payment.
"Wholly Owned Subsidiary" means (i) a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or one or more Wholly Owned Subsidiaries and (ii) Terex Cranes,
P.P.M. Cranes, Inc. and P.P.M. S.A., in each case so long as the Company or one
or more Wholly Owned Subsidiaries maintains a percentage ownership interest
equal to or greater than such ownership interest (on a fully diluted basis) on
the Closing Date.
Section 1.2. Other Definitions.
Defined in
Term Section
"Affiliate Transaction" 4.11
"Change of Control Offer" 4.14
"Change of Control Payment" 4.14
"Change of Control Payment Date" 4.14
"Definitive Notes" 2.1
"Event of Default" 6.1
"Excess Proceeds" 4.10
"Excess Proceeds Offer" 4.10
"Excess Proceeds Offer Period" 4.10
"Excess Proceeds Payment Date" 4.10
"Global Note" 2.1
"Guaranty" 10.7
"Paying Agent" 2.3
"Purchase Amount" 4.10
"Purchase Money Indebtedness" 4.9(b)
"Refinance" 4.9(b)
"Refinancing Indebtedness" 4.9(b)
"Registrar" 2.3
"Restricted Payments" 4.7
Section 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, the Guarantors and any successor
obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
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) words in the singular include the plural, and in the plural include
the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, the terms of which are incorporated in
and made a part of this Indenture. Each Note shall include the Guaranty
executed by each of the Guarantors in the form of Exhibit C, the terms of which
are incorporated and made a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Note shall be dated
the date of its authentication. The Notes shall be issued in denominations of
$1,000 and integral multiples thereof.
The Notes will be issued (i) in global form (the "Global Note"),
substantially in the form of Exhibit A attached hereto (including footnotes 1
and 2 thereto) and (ii) in definitive form (the "Definitive Notes"),
substantially in the form of Exhibit A (excluding footnotes 1 and 2 thereto).
The Global Note shall represent the aggregate amount of outstanding Notes from
time to time endorsed thereon; provided, that the aggregate amount of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of the Global Note to reflect the amount of any increase or
decrease in the amount of outstanding Notes represented thereby shall be made
by the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.6 hereof.
Section 2.2. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. If an Officer whose signature is on a Note no longer
holds that office at the time the Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature of the Trustee shall be conclusive evidence that
the Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially
as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for original
issue up to $250,000,000 aggregate principal amount of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed
$250,000,000 except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authenticating by the
Trustee includes authenticating by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the
Company.
Section 2.3. Registrar, Paying Agent and Depository.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii)
an office or agency where Notes may be presented for payment ("Paying Agent").
The Company initially appoints the Trustee as Registrar and Paying Agent. The
Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee of the name and address of any Agent not a party to
this Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent or Registrar, except that for
purposes of Articles Three and Eight and Sections 4.10 and 4.14 neither the
Company nor any of its Subsidiaries shall act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent.
The Company initially appoints DTC to act as Depository with respect
to the Global Notes. The Trustee shall act as custodian for the Depository
with respect to the Global Notes.
Section 2.4. Paying Agent to Hold Money in Trust.
The Company 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
the Holders or the Trustee all money held by the Paying Agent for the payment
of principal, premium, if any, or interest on the Notes and shall notify the
Trustee of any default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee. Upon payment over to the Trustee,
the Paying Agent (if other than the Company or a Subsidiary of the Company)
shall have no further liability for the money delivered to the Trustee. If the
Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
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
all Holders and shall otherwise comply with TIA s. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
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 the Holders,
including the aggregate principal amount thereof, and the Company shall
otherwise comply with TIA s. 312(a).
Section 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request (1) to register
the transfer of the Definitive Notes or (2) to exchange such Definitive Notes
for an equal principal amount of Definitive Notes of other authorized
denominations, the Registrar shall register the transfer or make the exchange
as requested if its requirements for such transactions are met; provided,
however, that the Definitive Notes so presented (A) have been duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney, duly authorized in
writing; and (B) in the case of a Restricted Security, such request shall be
accompanied by the following additional documents:
(i) if such Restricted Security is being delivered to the Registrar
by a Holder for registration in the name of such Holder, without transfer, a
certification to that effect (in substantially the form of Exhibit B hereto);
or
(ii) if such Restricted Security is being transferred to a QIB in
accordance with Rule 144A or pursuant to an effective registration statement
under the Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto); or
(iii) if such Restricted Security is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially the form of
Exhibit B hereto) and an opinion of counsel reasonably acceptable to the
Company and the Registrar to the effect that such transfer is in compliance
with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a
Global Note. A Definitive Note may be exchanged for a beneficial interest in a
Global Note only upon receipt by the Trustee of a Definitive Note, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) written instructions directing the Trustee to make an
endorsement on the Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note, and
(ii) if such Definitive Note is a Restricted Security, a
certification (in substantially the form of Exhibit B hereto) to the effect
that such Definitive Note is being transferred to a QIB in accordance with Rule
144A;
in which case the Trustee shall cancel such Definitive Note and cause the
aggregate principal amount of Notes represented by the Global Note to be
increased accordingly. If no Global Note is then outstanding, the Company
shall issue and the Trustee shall authenticate a new Global Note in the
appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture and the procedures of
the Depository therefor, which shall include restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note. Upon receipt by the Trustee of written transfer instructions
(or such other form of instructions as is customary for the Depository), from
the Depository (or its nominee) on behalf of any Person having a beneficial
interest in a Global Note, the Trustee shall, in accordance with the standing
instructions and procedures existing between the Depository and the Trustee,
cause the aggregate principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute and the Trustee shall
authenticate and deliver to the transferee a Definitive Note in the appropriate
principal amount; provided, that in the case of a Restricted Security, such
instructions shall be accompanied by the following additional documents:
(i) if such beneficial interest is being transferred to the Person
designated by the Depository as being the beneficial owner, a certification to
that effect (in substantially the form of Exhibit B hereto); or
(ii) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A or pursuant to an effective registration statement
under the Securities Act, a certification to that effect (in substantially the
form of Exhibit B hereto); or
(iii) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially the form of
Exhibit B hereto) and an opinion of counsel reasonably acceptable to the
Company and to the Registrar to the effect that such transfer is in compliance
with the Securities Act.
Definitive Notes issued in exchange for a beneficial interest in a
Global Note shall be registered in such names and in such authorized
denominations as the Depository shall instruct the Trustee.
(e) Transfer and Exchange of Global Notes. Notwithstanding any
other provision of this Indenture, the Global Note may not be transferred as a
whole except by the Depository to a nominee of the Depository or by a nominee
of the Depository to the Depository or another nominee of the Depository or by
the Depository or any such nominee to a successor Depository or a nominee of
such successor Depository; provided, that if:
(i) the Depository notifies the Company that the Depository is
unwilling or unable to continue as Depository and a successor Depository is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes under this
Indenture, then the Company shall execute and the Trustee shall authenticate
and deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Note in exchange for such Global Note.
(f) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in the Global Note have either been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, the Global Note shall be
returned to or retained and cancelled by the Trustee. At any time prior to
such cancellation, if any beneficial interest in the Global Note is exchanged
for Definitive Notes, redeemed, repurchased or cancelled, the principal amount
of Notes represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note by the Trustee to reflect such
reduction.
(g) General Provisions Relating to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Definitive Notes and Global Notes at the
Registrar's request. All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or Global Notes shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Definitive Notes or Global
Notes surrendered upon such registration of transfer or exchange.
No service charge shall be made to a Holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 3.7, 4.10, 4.14 and 9.5
hereto).
The Company shall not be required to (i) issue, register the transfer
of or exchange Notes during a period beginning at the opening of business 15
days before the day of any selection of Notes for redemption under Section 3.2
hereof and ending at the close of business on the day of selection; or (ii)
register the transfer of or exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part; or (iii) register the transfer of or exchange a Note between a record
date and the next succeeding interest payment date.
Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of, premium, if any, and interest on
such Notes, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(h) Exchange of Series A Notes for Series B Notes. The Series A
Notes may be exchanged for Series B Notes pursuant to the terms of the Exchange
Offer. The Trustee and Registrar shall make the exchange as follows:
The Company shall present the Trustee with an Officers' Certificate
certifying the following:
(A) upon issuance of the Series B Notes, the transactions
contemplated by the Exchange Offer have been consummated; and
(B) the principal amount of Series A Notes properly tendered in the
Exchange Offer that are represented by a Global Note and the principal amount
of Series A Notes properly tendered in the Exchange Offer that are represented
by Definitive Notes, the name of each Holder of such Definitive Notes, the
principal amount at maturity properly tendered in the Exchange Offer by each
such Holder and the name and address to which Definitive Notes for Series B
Notes shall be registered and sent for each such Holder.
The Trustee, upon receipt of (i) such Officers' Certificate, (ii) an
Opinion of Counsel (x) to the effect that the Series B Notes have been
registered under Section 5 of the Securities Act and the Indenture has been
qualified under the TIA and (y) with respect to the matters set forth in
Section 6(p) of the Registration Rights Agreement and (iii) a Company Order,
shall authenticate (A) a Global Note for Series B Notes in aggregate principal
amount equal to the aggregate principal amount of Series A Notes represented by
a Global Note indicated in such Officers' Certificate as having been properly
tendered and (B) Definitive Notes representing Series B Notes registered in the
names of, and in the principal amounts indicated in such Officers' Certificate.
If the principal amount at maturity of the Global Note for the Series
B Notes is less than the principal amount at maturity of the Global Note for
the Series A Notes, the Trustee shall make an endorsement on such Global Note
for Series A Notes indicating a reduction in the principal amount at maturity
represented thereby.
The Trustee shall deliver such Definitive Notes for Series B Notes to
the Holders thereof as indicated in such Officers' Certificate.
Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee shall
authenticate a replacement Note if the Trustee's requirements for replacements
of Notes are met. If required by the Trustee or the Company, an indemnity bond
must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent or any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company or the Trustee may charge for its expenses in replacing
a Note.
Every replacement Note is an obligation of the Company and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
Subject to Section 2.9 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only Notes
that a Trustee knows to be so owned shall be so considered.
Section 2.10. Temporary Notes.
Pending the preparation of definitive Notes, the Company and the
Guarantors may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Notes that are printed, lithographed, typewritten,
mimeographed or otherwise reproduced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Notes may determine, as conclusively
evidenced by their execution of such Notes.
If temporary Notes are issued, the Company and the Guarantors shall
cause definitive Notes to be prepared without unreasonable delay. The
definitive Notes shall be printed, lithographed or engraved, or provided by any
combination thereof, or in any other manner permitted by the rules and
regulations of any applicable Notes exchange, all as determined by the officers
executing such definitive Notes. After the preparation of definitive Notes,
the temporary Notes shall be exchangeable for definitive Notes upon surrender
of the temporary Notes at the office or agency maintained by the Company for
such purpose pursuant to Section 4.2 hereof, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Notes, the Company
and the Guarantors shall execute, and the Trustee shall authenticate and
deliver, in exchange therefor the same aggregate principal amount of definitive
Notes of authorized denominations. Until so exchanged, the temporary Notes
shall in all respects be entitled to the same benefits under this Indenture as
definitive Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall retain or
destroy cancelled Notes in accordance with its normal practices (subject to the
record retention requirement of the Exchange Act) unless the Company directs
them to be returned to it. The Company may not issue new Notes to replace
Notes that have been redeemed or paid or that have been delivered to the
Trustee for cancellation. All cancelled Notes held by the Trustee shall be
destroyed and certification of their destruction delivered to the Company
unless by a written order, signed by one Officer of the Company, the Company
shall direct that cancelled Notes be returned to it.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five Business Days prior
to the payment date, in each case at the rate provided in the Notes and in
Section 4.1 hereof. The Company shall, with the consent of the Trustee, fix or
cause to be fixed each such special record date and payment date. At least 15
days before the special record date, the Company (or the Trustee, in the name
of and at the expense of the Company) shall mail to the Holders a notice that
states the special record date, the related payment date and the amount of such
interest to be paid.
Section 2.13. Legends.
(a) Except as permitted by subsections (b) or (c) hereof, each Note
shall bear legends relating to restrictions on transfer pursuant to the
securities laws in substantially the form set forth on Exhibit A hereto.
(b) Upon any sale or transfer of a Restricted Security (including
any Restricted Security represented by a Global Note) pursuant to Rule 144
under the Securities Act or pursuant to an effective registration statement
under the Securities Act:
(i) in the case of any Restricted Security that is a Definitive
Note, the Registrar shall permit the Holder thereof to exchange such
Restricted Security for a Definitive Note that does not bear the legends
required by subsection (a) above; and
(ii) in the case of any Restricted Security represented by a Global
Note, such Restricted Security shall not be required to bear the legends
required by subsection (a) above, but shall continue to be subject to the
provisions of Section 2.6(c) hereof; provided, however, that with respect to
any request for an exchange of a Restricted Security that is represented by a
Global Note for a Definitive Note that does not bear the legends required by
subsection (a) above, which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Registrar that such request is
being made pursuant to Rule 144.
(c) The Company and the Guarantors shall issue and the Trustee shall
authenticate Series B Notes in exchange for Series A Notes accepted for
exchange in the Exchange Offer, which Series B Notes shall not bear the legends
required by subsection (a) above, in each case unless the Holder of such Series
A Notes is either (A) a broker-dealer who purchased such Series A Notes
directly from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (B) a Person participating in the
distribution of the Series A Notes or (C) a Person who is an affiliate (as
defined in Rule 144A) of the Company.
ARTICLE 3
REDEMPTION
Section 3.1. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee,
at least 35 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of Section 3.7 pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.2. Selection of Notes to Be Redeemed.
If less than all the Notes are to be redeemed, the Trustee shall
select the Notes to be redeemed pro rata, by lot or by such method as the
Trustee deems to be fair and reasonable (and in such manner as complies with
applicable legal and stock exchange requirements, if any).
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption by first class mail to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Note is being redeemed in part only, the portion of
the principal amount of such Note to be redeemed and that, after the redemption
date, upon cancellation of the original Note, a new Note or Notes in principal
amount equal to the unredeemed portion shall be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest on Notes or portions of Notes called for redemption ceases to
accrue on and after the redemption date;
(7) the paragraph of the Notes and/or the section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(8) the CUSIP number of the Notes to be redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the name of the Company and at its expense; provided that the
Company shall deliver to the Trustee, at least 45 days (unless a shorter period
is acceptable to the Trustee) prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption has been mailed to the Holders in
accordance with Section 3.3 herein, Notes called for redemption become due and
payable on the redemption date at the redemption price. At any time prior to
the mailing of a notice of redemption to the Holders pursuant to section 3.3,
the Company may withdraw, revoke or rescind any notice of redemption delivered
to the Trustee without any continuing obligation to redeem the Notes as
contemplated by such notice of redemption.
Section 3.5. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit with the
Trustee (to the extent not already held by the Trustee) or with the Paying
Agent money in immediately available funds sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall return to the Company any money deposited
with the Trustee or the Paying Agent by the Company in excess of the amounts
necessary to pay the redemption price of, and accrued interest on, all Notes to
be redeemed.
Interest on the Notes to be redeemed shall cease to accrue on the
applicable redemption date, whether or not such Notes are presented for
payment, if the Company makes or deposits the redemption payment in accordance
with this Section 3.5. If any Note called for redemption shall not be paid
upon surrender for redemption because of the failure of the Company to comply
with the preceding paragraph, interest shall be paid on the unpaid principal,
from the redemption date until such principal is paid, and to the extent lawful
on any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes.
Section 3.6. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and the Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to the unredeemed portion of the
Note surrendered.
Section 3.7. Optional Redemption.
(a) Except as set forth in Section 3.7(b), the Notes are not
redeemable at the Company's option prior to May 15, 2000. On and after, the
Notes will be subject to redemption at the option of the Company, in whole or
in part, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest thereon, if any, to
the applicable date of redemption, if redeemed during the 12-month period
beginning on May 15 of the years indicated below:
Year Percentage
2000 103.79%
2001 101.89
2002 100.00
(b) Prior to May 15, 2000, the Company may, but shall not be
obligated to, redeem up to one-third of the original principal amount of the
Notes with the net proceeds of a bona fide public offering of common stock of
the Company or any Restricted Subsidiary, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest thereon, if any, to the applicable date of redemption, if redeemed
during the 12-month period beginning on May 15 of the years indicated below:
Year Percentage
1995 113.25%
1996 111.36
1997 109.46
1998 107.57
1999 105.68
; provided, however, that such redemption occurs within 60 days of the date of
the closing of such public offering.
(c) The restrictions on optional redemptions set forth in this
Section 3.7 shall not limit the Company's right to make open market purchases
of the Notes from time to time; provided, that neither the Company nor any
Restricted Subsidiary may use the proceeds of a bona fide public offering made
prior to May 15, 2000 to make open market purchases of the Notes.
ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes.
The Company shall pay the principal and premium, if any, of, and
interest on, the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, and interest shall be considered paid on the date
due if the Paying Agent, other than the Company or a Subsidiary of the Company,
holds on or before that date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal,
premium, if any, and interest then due. Such Paying Agent shall return to the
Company, no later than three Business Days following the date of payment, any
money that exceeds such amount of principal, premium, if any, and interest then
due and payable on the Notes. The Company shall pay any and all amounts,
including without limitation Liquidated Damages, if any on the dates and in the
manner required under the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest) on
overdue principal at the rate equal to 1% per annum in excess of the then
applicable interest rate on the Notes to the extent lawful; it shall pay
interest (including post-petition interest) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain an office or agency (which may be an
office of the Trustee, Registrar or co-registrar) in the Borough of Manhattan,
the City of New York where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall 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 the Company 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 Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency for such purposes. The
Company shall 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.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.3.
Section 4.3. Reports.
(a) The Company shall file with the Trustee, within 15 days after
the time of filing with the Commission, copies of the reports, information and
other documents (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act. If the Company is not subject to the requirements of Section 13 or 15(d)
of the Exchange Act, the Company shall file with the Commission and the Trustee
all such reports, information and other documents as it would be required to
file if it were subject to the requirements of Section 13 or 15(d) of the
Exchange Act; provided, that the Company shall not be in default of the
provisions of this Section 4.3 for any failure to file reports with the
Commission solely by refusal by the Commission to accept the same for filing.
The Company shall send a copy of all reports, information and documents
required to be filed with the Trustee pursuant to this Section 4.3 to the
Holders at their addresses appearing in the registrar of Notes maintained by
the Registrar. The Company shall also comply with the provisions of TIA s.
314(a).
(b) If the Company is required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, the Company shall
cause any annual report to its stockholders and any quarterly or other
financial report furnished by it generally to its stockholders to be filed with
the Trustee and mailed to the Holders at their addresses appearing in the
registrar of Notes maintained by the Registrar. If the Company is not required
to furnish annual or quarterly reports to its stockholders pursuant to the
Exchange Act, the Company shall cause the financial statements of the Company
and its consolidated Subsidiaries (and a similar financial statement for all
unconsolidated Subsidiaries, if any), including any notes thereto (and, with
respect to annual reports, an auditors' report by an accounting firm of
established national reputation), and a "Management's Discussion and Analysis
of Financial Condition and Results of Operations," comparable to that which
would have been required to appear in annual or quarterly reports filed under
Section 13 or 15(d) of the Exchange Act to be so filed with the Trustee and
mailed to the Holders within 90 days after the end of each of the fiscal years
of the Company and within 45 days after the end of each of the first three
quarters of each such fiscal year.
(c) So long as is required for an offer or sale of the Notes to
qualify for an exemption under Rule 144A under the Securities Act, the Company
and the Guarantors shall, upon request, provide the information required by
clause (d)(4) thereunder to each Holder and to each beneficial owner and
prospective purchaser of Notes identified by any Holder of Restricted
Securities.
Section 4.4. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determine whether each has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge each of the Company
and its Subsidiaries has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the performance
or observance of any of the terms, provisions and conditions hereof or thereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge and what action
each is taking or proposes to take with respect thereto).
(b) The year-end financial statements delivered pursuant to Section
4.3 above shall be accompanied by a written statement of the independent public
accountants of the Company (which shall be a firm of established national
reputation reasonably satisfactory to the Trustee) that in making the
examination necessary for certification of such financial statements nothing
has come to their attention which would lead them to believe that either the
Company or any of its Subsidiaries has violated any provisions of this
Indenture or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall
not be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(c) So long as any of the Notes are outstanding, the Company shall
deliver to the Trustee forthwith upon any Officer becoming aware of (i) any
Default or Event of Default or (ii) any event of default under any other
mortgage, indenture or instrument referred to in Section 6.1(6) hereof, an
Officers' Certificate specifying such Default, Event of Default or other event
of default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.5. Taxes.
The Company shall, and shall cause its Subsidiaries to, file all tax
returns required to be filed and to pay prior to delinquency all material
taxes, assessments and governmental levies except as contested in good faith
and by appropriate proceedings and for which reserves have been established in
accordance with GAAP.
Section 4.6. Stay, Extension and Usury Laws.
Each of the Company and each Guarantor covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Indenture; and each
of the Company and each Guarantor (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee but shall suffer and
permit the execution of every such power as though no such law has been
enacted.
Section 4.7. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on
account of the Equity Interests of the Company and its Subsidiaries other than
(x) dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or such Restricted Subsidiary or (y)
dividends or distributions payable to the Company or any Wholly Owned
Subsidiary,
(ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interest of the Company or any Subsidiary or other Affiliate of the
Company (other than any such Equity Interest owned by the Company or any Wholly
Owned Subsidiary),
(iii) voluntarily make any principal payment on, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness that
is expressly subordinated in right of payment to the Notes prior to any
scheduled principal payment, sinking fund payment or other payment at the
stated maturity thereof, or
(iv) make any Restricted Investment,
(all such payments and other actions set forth in clauses (i) through (iv)
above being collectively referred to as "Restricted Payments") unless, at the
time of such Restricted Payment:
(1) no Default or Event of Default has occurred and is
continuing or would occur as a consequence thereof,
(2) immediately after such Restricted Payment (the value of any
such payment, if other than cash, being determined in good faith by the Board
of Directors and evidenced by a resolution set forth in an Officers'
Certificate delivered to the Trustee) and after giving effect thereto on a pro
forma basis, the Company could incur at least $1.00 of additional Indebtedness
under the Interest Coverage Ratio test set forth in Section 4.9(a) hereof, and
(3) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the Closing Date (including Restricted Payments permitted by clauses (i)
and (ii) of Section 4.7(b) and excluding Restricted Payments permitted by the
other clauses therein), is less than the sum of (x) 40% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from the
beginning of the first quarter commencing immediately after the Closing Date to
the end of the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment (or,
if such Consolidated Net Income for such period is a deficit, 100% of such
deficit), plus (y) 100% of the aggregate net cash proceeds received by the
Company from the issuance or sale, other than to a Subsidiary of the Company,
of Equity Interests of the Company (other than Disqualified Stock) after the
Closing Date and on or prior to the time of such Restricted Payment, plus (z)
100% of the aggregate net cash proceeds received by the Company from the
issuance or sale, other than to a Subsidiary of the Company, of any convertible
or exchangeable debt security of the Company that has been converted or
exchanged into Equity Interests of the Company (other than Disqualified Stock)
pursuant to the terms thereof after the Closing Date and on or prior to the
time of such Restricted Payment.
(b) The provisions of subsection (a) above shall not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at said date of declaration such payment would not
have been prohibited by the provisions of this Indenture,
(ii) the redemption, purchase, retirement or other acquisition
of any Equity Interests of the Company in exchange for, or out of the proceeds
of, the substantially concurrent sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than Disqualified
Stock),
(iii) the redemption, repurchase or payoff of any Indebtedness
with proceeds of any Refinancing Indebtedness permitted to be incurred pursuant
to the provisions of Section 4.9(b)(vii),
(iv) the redemption, purchase, retirement or other payoff of
shares of Series A Cumulative Redeemable Convertible Preferred Stock of the
Company outstanding on the Closing Date,
(v) Investments by the Company or any Restricted Subsidiary, in
an aggregate amount not to exceed $3.0 million, in a Non-Restricted Subsidiary
formed primarily for the purpose of financing purchases and leases of inventory
manufactured by the Company or any of its Subsidiaries, and
(vi) other Restricted Payments in an aggregate amount not to
exceed $8.0 million.
(c) Not later than 15 days following the end of each fiscal quarter
of the Company, the Company shall deliver to the Trustee an Officers'
Certificate stating that each Restricted Payment made during such quarter was
permitted, and setting forth the basis upon which the calculations required by
this Section 4.7 were computed, which calculations may be based upon the
Company's latest available financial statements.
Section 4.8. Limitation on Restrictions on Subsidiary Dividends.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary (a) to (i) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries (A) on such Restricted
Subsidiary's Capital Stock or (B) with respect to any other interest or
participation in, or measured by, such Restricted Subsidiary's profits or (ii)
pay any indebtedness owed to the Company or any of its Restricted Subsidiaries,
or (b) make loans or advances to the Company or any of its Subsidiaries, except
for such encumbrances or restrictions existing under or by reasons of (i) the
Revolving Credit Facility that are not materially more restrictive, taken as a
whole, than those contained in the Revolving Credit Facility existing on the
Closing Date, (ii) this Indenture, the Notes and the Security Documents, (iii)
applicable law, (iv) any Acquired Debt, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, and (v)
permitted Refinancing Indebtedness, provided, however, that such restrictions
contained in any agreement governing such Refinancing Indebtedness are no more
restrictive taken as a whole than those contained in any agreements governing
the Indebtedness being refinanced.
Section 4.9. Limitation on Incurrence of Indebtedness and Issuance of
Preferred Stock.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Restricted Subsidiaries to issue any preferred stock, provided, however, that
the Company may incur Indebtedness or issue shares of Disqualified Stock if the
Interest Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least equal to the ratio set
forth below opposite the period in which such incurrence or issuance occurs,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or
the Disqualified Stock had been issued, as the case may be, at the beginning of
such four-quarter period:
Period Ending Ratio
May 15, 1996 2.25:1
May 15, 1997 2.50:1
May 15, 1998 and thereafter 2.75:1
provided, however, that, in the case of Indebtedness, (i) the Weighted Average
Life to Maturity of such Indebtedness is greater than the remaining Weighted
Average Life to Maturity of the Notes by at least one year and (ii) such
Indebtedness has a final scheduled maturity that exceeds the final stated
maturity of the Notes by at least one year.
(b) The limitations of Section 4.9(a) shall not prohibit the
incurrence of:
(i) Indebtedness pursuant to the Revolving Credit Facility and
repayment obligations in respect of letters of credit, provided, however, that
the aggregate principal amount of Indebtedness so incurred on any date,
together with all other Indebtedness incurred pursuant to this clause (i) and
outstanding on such date, shall not exceed the sum of (A) 85% of Eligible
Receivables as of the last day of the calendar month immediately preceding such
date plus (B) 50% of the aggregate cost of Eligible Inventory as of the last
day of the calendar month immediately preceding such date,
(ii) performance bonds, surety bonds, insurance obligations or
bonds and other similar bonds or obligations incurred in the ordinary course of
business,
(iii) Hedging Obligations incurred to fix the interest rate on
any variable rate Indebtedness otherwise permitted by this Indenture,
(iv) Indebtedness arising out of sale and leaseback
transactions, Capital Lease Obligations or Purchase Money Obligations
(collectively, "Purchase Money Indebtedness") in an aggregate amount not to
exceed $6.0 million during any calendar year,
(v) Indebtedness owed by the Company to any Wholly Owned
Subsidiary or Guarantor or by any Wholly Owned Subsidiary or Guarantor to the
Company or any other Wholly Owned Subsidiary or Guarantor,
(vi) Guarantees incurred in the ordinary course of business of
Indebtedness incurred by any Person to purchase or lease inventory manufactured
or sold by the Company or any Restricted Subsidiary (including, without
limitation, Floor Plan Guarantees), provided, however, that (1) to the extent
commercially practicable, the Indebtedness so guaranteed is secured by a first
priority lien on such inventory in favor of the holder of such Indebtedness and
(2) if the Company or such Restricted Subsidiary is required to make payment
with respect to such guaranty, the Company or such Restricted Subsidiary will
have the right to receive either (A) title to such inventory, (B) a valid
assignment of a perfected first priority security interest in such inventory or
(C) the net proceeds of any resale of such inventory,
(vii) Indebtedness outstanding on the Closing Date, up to 80
million French Francs of PPM Funded Debt remaining outstanding immediately
following consummation of the Acquisition and the PPM Subordinated Note, and
(viii) Indebtedness issued in exchange for, or the proceeds of
which are contemporaneously used to extend, refinance, renew, replace, or
refund (collectively, "Refinance") Indebtedness referred to in clauses (iv) or
(vii) above and outstanding Indebtedness incurred pursuant to the debt
incurrence tests set forth in Section 4.9(a) hereof (the "Refinancing
Indebtedness"), provided, however, that (A) the principal amount of such
Refinancing Indebtedness does not exceed the principal amount of Indebtedness
so Refinanced (plus the amount of reasonable out-of-pocket fees and expenses
incurred in connection therewith), (B) the Refinancing Indebtedness has a
Weighted Average Life to Maturity that is either (x) equal to or greater than
the Weighted Average Life to Maturity of the Indebtedness being Refinanced or
(y) greater than the Weighted Average Life to Maturity of the Notes, and (C)
the Refinancing Indebtedness ranks, in right of payment, no less favorable to
the Notes as the Indebtedness being Refinanced.
Section 4.10. Limitation on Asset Sales.
The Company shall not, and shall not permit any Restricted Subsidiary
to, make any Asset Sale unless (i) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets subject to such Asset Sale as determined in
good faith by the Board of Directors, (ii) at least 80% of the consideration
for such Asset Sale (other than consideration consisting of assets that will be
used in the business of the Company or its Subsidiaries) is in the form of
Permitted Proceeds, and (iii) within 12 months of such Asset Sale, the Net
Proceeds thereof are (a) invested in assets related to the business of the
Company or its Restricted Subsidiaries as conducted on the Closing Date, (b)
applied to repay Indebtedness under Purchase Money Obligations incurred in
connection with the asset so sold or (c) to the extent not used as provided in
clauses (a) or (b), applied to make an offer to purchase Notes as described
below (an "Excess Proceeds Offer"), provided, however, that if the amount of
Net Proceeds from any Asset Sale not invested pursuant to clause (a) above is
less than $5.0 million, the Company shall not be required to repay indebtedness
pursuant to clause (b) or to make an offer pursuant to clause (c). Pending
application of such Net Proceeds in accordance with the provisions of this
Section 4.10, the Net Proceeds of an Asset Sale may be applied to reduce
amounts outstanding under the Revolving Credit Facility, subject to relending
in accordance with the terms thereof.
The amount of Net Proceeds not invested or applied as set forth in
the preceding clauses (a) and (b) constitutes "Excess Proceeds." If the
Company elects, or becomes obligated to make an Excess Proceeds Offer, the
Company shall offer to purchase Notes having an aggregate principal amount
equal to the Excess Proceeds (the "Purchase Amount"), at a purchase price equal
to 100% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the purchase date. The Company must commence such Excess
Proceeds Offer not later than 60 days after the expiration of the 12-month
period following the Asset Sale that produced Excess Proceeds. If the
aggregate purchase price for the Notes tendered pursuant to the Excess Proceeds
Offer is less than the Excess Proceeds, the Company and its Subsidiaries may
use the portion of the Excess Proceeds remaining after payment of such purchase
price for general corporate purposes.
The Excess Proceeds Offer shall remain open for a period of 20
Business Days and no longer, unless a longer period is required by law (the
"Excess Proceeds Offer Period"). Promptly after the termination of the Excess
Proceeds Offer Period (the "Excess Proceeds Payment Date"), the Company shall
purchase and mail or deliver payment for the Purchase Amount for the Notes or
portions thereof tendered, pro rata or by such other method as may be required
by law, or, if less than the Purchase Amount has been tendered, all Notes
tendered pursuant to the Excess Proceeds Offer. The principal amount of Notes
to be purchased pursuant to an Excess Proceeds Offer may be reduced by the
principal amount of Notes acquired by the Company through purchase or
redemption (other than pursuant to a Change of Control Offer) subsequent to the
date of the Asset Sale and surrendered to the Trustee for cancellation.
The Excess Proceeds Offer shall be conducted in compliance with all
applicable laws, including (without limitation), Regulation 14E of the Exchange
Act and the rules thereunder and all other applicable Federal and state
securities laws.
The Company shall not, and shall not permit any of its Subsidiaries
to, create or suffer to exist or become effective any restriction that would
impair the ability of the Company to make an Excess Proceeds Offer upon an
Asset Sale or, if such Excess Proceeds Offer is made, to pay for the Notes
tendered for purchase.
The Company shall, no later than 30 days following the expiration of
the 12-month period following the Asset Sale that produced Excess Proceeds,
commence the Excess Proceeds Offer by mailing to the Trustee and each Holder,
at such Holder's last registered address, a notice, which shall govern the
terms of the Excess Proceeds Offer, and shall state:
(1) that the Excess Proceeds Offer is being made pursuant to
this Section 4.10, the principal amount of Notes which shall be accepted for
payment and that all Notes validly tendered shall be accepted for payment on a
pro rata basis;
(2) the purchase price and the date of purchase;
(3) that any Notes not tendered or accepted for payment
pursuant to the Excess Proceeds Offer shall continue to accrue interest;
(4) that, unless the Company defaults in the payment of the
purchase price with respect to any Notes tendered, Notes accepted for payment
pursuant to the Excess Proceeds Offer shall cease to accrue interest after the
Excess Proceeds Payment Date;
(5) that Holders electing to have Notes purchased pursuant to
an Excess Proceeds Offer shall be required to surrender their Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Company prior to the close of business on the third Business
Day immediately preceding the Excess Proceeds Payment Date;
(6) that Holders shall be entitled to withdraw their election
if the Company receives, not later than the close of business on the second
Business Day preceding the Excess Proceeds Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in part shall
be issued Notes representing the unpurchased portion of the Notes surrendered;
provided that each Note purchased and each new Note issued shall be in
principal amount of $1,000 or whole multiples thereof; and
(8) the instructions that Holders must follow in order to
tender their Notes.
On or before the Excess Proceeds Payment Date, the Company shall (i)
accept for payment on a pro rata basis the Notes or portions thereof tendered
pursuant to the Excess Proceeds Offer, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
accepted and (iii) deliver to the Trustee the Notes so accepted, together with
an Officers' Certificate stating that the Notes or portions thereof tendered to
the Company are accepted for payment. The Paying Agent shall promptly mail to
each Holder of Notes so accepted payment in an amount equal to the purchase
price of such Notes, and the Trustee shall promptly authenticate and mail to
such Holders new Notes equal in principal amount to any unpurchased portion of
the Note surrendered.
The Company shall make a public announcement of the results of the
Excess Proceeds Offer as soon as practicable after the Excess Proceeds Payment
Date. For the purposes of this Section 4.10, the Trustee shall act as the
Paying Agent.
Section 4.11. Limitation on Transactions With Affiliates.
The Company shall not, and shall not permit any of the Restricted
Subsidiaries to, directly or indirectly, sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into any contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), except for (a) Affiliate Transactions
of aggregate value of up to $1.0 million, conducted in good faith, that are on
terms that are no less favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
by the Company or such Subsidiary with an unrelated Person, (b) Affiliate
Transactions of aggregate value of up to $10.0 million that a majority of the
disinterested members on the Board of Directors of the Company determines to be
fair to the Company or the relevant Restricted Subsidiary from a financial
point of view and (c) Affiliate Transactions for which the Company delivers to
the Trustee an opinion as to the fairness to the Company or such Restricted
Subsidiary from a financial point of view issued by an investment banking firm
of national standing.
Notwithstanding the foregoing, the following will not be deemed to be
Affiliate Transactions: (i) employment agreements entered into by the Company
or any Restricted Subsidiary in the ordinary course of business with the
approval of the Company's Board of Directors, (ii) transactions between or
among the Company and/or its Wholly Owned Subsidiaries or Guarantors, (iii)
transactions permitted by Section 4.7 of this Indenture, (iv) good faith bona
fide purchases and sales of inventory or services made in the ordinary course
of business consistent with past practice between the Company and any
Restricted Subsidiary or between Restricted Subsidiaries and (v) reasonable
directors' fees for members of the Board of Directors of the Company.
Section 4.12. Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
on any asset (real, personal, tangible or intangible) now owned or hereafter
acquired, or on any income or profits therefrom, or assign or convey any right
to receive income therefrom, except (i) Liens on Accounts and Inventory and the
proceeds thereof (and contract rights and general intangibles relating thereto
and any other Mutual Collateral (as defined in the Intercreditor Agreement))
securing Indebtedness permitted to be incurred pursuant to Section 4.9(b)(i)
hereof, (ii) Purchase Money Liens securing Purchase Money Indebtedness incurred
pursuant to Section 4.9(b)(iv), and (iii) Permitted Liens.
Section 4.13. Corporate Existence.
Subject to Section 4.18 and Article 5 of this Indenture, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence, and the corporate, partnership or
other existence of each of its respective Subsidiaries, in accordance with
their respective organizational documents (as the same may be amended from time
to time) and (ii) its (and its Subsidiaries) rights (charter and statutory),
licenses and franchises; provided that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any Subsidiary, if the Board of Directors on behalf of the
Company shall determine in good faith that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders.
Section 4.14. Change of Control.
Upon the occurrence of a Change of Control, the Company shall notify
the Trustee in writing thereof and shall make an offer to purchase all of the
Notes then outstanding as described below (the "Change of Control Offer") at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (the "Change of
Control Payment").
The Change of Control Offer shall be made in compliance with all
applicable laws, including without limitation, Regulation 14E of the Exchange
Act and the rules thereunder and all other applicable Federal and state
securities laws.
Within 40 days following any Change of Control, the Company shall
commence the Change of Control Offer by mailing to the Trustee and each Holder
a notice, which shall govern the terms of the Change of Control Offer, and
shall state that:
(i) the Change of Control Offer is being made pursuant to this
Section 4.14 and that all Notes tendered will be accepted for payment,
(ii) the purchase price and the purchase date, which shall be a
Business Day no earlier than 30 days nor later than 40 days from the date such
notice is mailed (the "Change of Control Payment Date"),
(iii) that any Note not tendered for payment pursuant to the
Change of Control Offer shall continue to accrue interest,
(iv) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date,
(v) that any Holder electing to have Notes purchased pursuant
to a Change of Control Offer shall be required to surrender such Notes, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the Change
of Control Payment Date,
(vi) that Holders shall be entitled to withdraw such election
if the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Notes such Holder delivered for purchase, and a
statement that such Holder is withdrawing its election to have such Notes
purchased,
(vii) that a Holder whose Notes are being purchased only in
part shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof,
(viii) the instructions that Holders must follow in order to
tender their Notes, and
(ix) the circumstances and relevant facts regarding such Change
of Control (including but not limited to information with respect to pro forma
historical and projected financial information after giving effect to such
Change of Control, information regarding the Persons acquiring control and such
Person's business plans going forward).
On or before the Change of Control Payment Date, the Company shall,
to the extent lawful, (i) accept for payment the Notes or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered, and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate
stating that the Notes or portions thereof tendered to the Company are accepted
for payment. The Paying Agent shall promptly mail to each Holder of Notes so
accepted payment in an amount equal to the purchase price for such Notes, and
the Trustee shall authenticate and mail to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any,
provided, however, that each such new Note will be in principal amount of
$1,000 or an integral multiple thereof.
The Company shall not, and shall not permit any of its Subsidiaries
to, create or suffer to exist or become effective any restriction that would
materially impair the ability of the Company to make a Change of Control Offer
upon a Change of Control or, if such Change of Control Offer is made, to pay
for the Notes tendered for purchase.
The Company shall make a public announcement of the results of the
Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date. For the purposes of this Section 4.14, the Trustee shall
act as the Paying Agent.
Section 4.15. Maintenance of Properties.
The Company shall, and shall cause each of its Subsidiaries to,
maintain their properties and assets in normal working order and condition as
on the date of this Indenture (reasonable wear and tear excepted) and make all
necessary repairs, renewals, replacements, additions, betterments and
improvements thereto, as shall be reasonably necessary for the proper conduct
of the business of the Company and its Subsidiaries taken as a whole; provided
that nothing herein shall prevent the Company or any of its Subsidiaries from
discontinuing any maintenance of any such properties if such discontinuance is
desirable in the conduct of the business of the Company and its Subsidiaries
taken as a whole.
Section 4.16. Maintenance of Insurance.
The Company shall, and shall cause each of its Subsidiaries to,
maintain liability, casualty and other insurance (including self-insurance
consistent with prior practice) with responsible insurance companies in such
amounts and against such risks as is in accordance with customary industry
practice in the general areas in which the Company and its Subsidiaries
operate.
Section 4.17. Liquidation.
A plan of liquidation or dissolution may not be adopted for the
Company that provides for, contemplates or the effectuation of which is
preceded by (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company otherwise than substantially as
an entirety (Article 5 of this Indenture being the provision of this Indenture
that governs any such sale, lease, conveyance or other disposition
substantially as an entirety) and (ii) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition and of
the remaining assets of the Company to the holders of Equity Interests in the
Company, unless the Company, prior to making any liquidating distribution
pursuant to such plan, makes provision for the satisfaction of the Obligations
hereunder and under the Notes as to the payment of principal and interest. The
Company shall be deemed to make provision for such payments only if (a) the
Company delivers in trust to the Trustee or Paying Agent (other than the
Company or its Subsidiaries) money or U.S. Government Obligations maturing as
to principal and interest in such amounts and at such times as are sufficient
without consideration of any reinvestment of such interest to pay, when due,
the principal of and interest on the Notes or (b) there is an express
assumption and observance of all covenants and conditions to be performed by
the Company hereunder by the execution and delivery of a supplemental indenture
in form satisfactory to the Trustee by a Person that acquires or shall acquire
(otherwise than pursuant to a lease) a portion of the assets of the Company and
such Person shall be permitted by virtue of its Fixed Charge Coverage Ratio to
incur, immediately after giving effect to such acquisition, at least $1.00 of
additional Indebtedness pursuant to Section 4.9(a) of this Indenture; provided
that the Company shall not make any liquidating distribution until after the
Company shall have certified to the Trustee with an Officers' Certificate at
least five days prior to the making of any liquidating distribution that it has
complied with the provisions of this Section 4.18 and that no Default or Event
of Default then exists or would occur as a result of any such liquidating
distribution.
ARTICLE 5
SUCCESSORS
Section 5.1. When the Company May Merge, etc.
Neither the Company nor any Guarantor shall consolidate or merge with
or into (whether or not the Company or such Guarantor, as the case may be, is
the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, any other Person unless:
(i) the Company or such Guarantor, as the case may be, is the
surviving Person or the Person formed by or surviving any such consolidation or
merger (if other than the Company or such Guarantor, as the case may be) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
has been made is a corporation organized and existing under the laws of the
United States, any state thereof or the District of Columbia,
(ii) the Person formed by or surviving any such consolidation
or merger (if other than the Company or such Guarantor, as the case may be) or
the Person to which such sale, assignment, transfer, lease, conveyance or other
disposition has been made assumes all the Obligations of the Company or such
Guarantor, as the case may be, pursuant to a supplemental indenture and
Security Documents, in a form reasonably satisfactory to the Trustee and the
Collateral Agent, under the Notes, this Indenture and the Security Documents,
(iii) immediately after giving effect to such transaction, no
Default or Event of Default exists, and
(iv) (A) the Company or such Guarantor, as the case may be, or
any Person formed by or surviving any such consolidation or merger, or to which
such sale, assignment, transfer, lease, conveyance or other disposition has
been made, has Consolidated Net Worth (immediately after the transaction but
prior to any purchase accounting adjustments resulting from the transaction)
equal to or greater than the Consolidated Net Worth of the Company or such
Guarantor, as the case may be, immediately preceding the transaction and (B)
the Company is permitted, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of
the applicable four-quarter period, to incur at least $1.00 of additional
Indebtedness pursuant to Section 4.9(a) hereof.
The Company shall deliver to the Trustee prior to the consummation of
any proposed transaction an Officers' Certificate to the foregoing effect, an
Opinion of Counsel, stating all conditions precedent to the proposed
transaction provided for in this Indenture have been complied with and a
written statement from a firm of independent public accountants of established
national reputation reasonably satisfactory to the Trustee stating that the
proposed transaction complies with clause (iv).
For purposes of this Section 5.1, the sale, lease, conveyance,
assignment, transfer or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company or any
Guarantor, which properties and assets, if held by the Company or such
Guarantor, as the case may be, instead of such Subsidiaries, would constitute
all or substantially all of the properties and assets of the Company or such
Guarantor, as the case may be, on a consolidated basis, shall be deemed to be
the transfer of all or substantially all of the properties and assets of the
Company or such Guarantor, as the case may be.
Section 5.2. Successor Substituted.
Upon any consolidation or merger, or any sale, lease, conveyance,
assignment, transfer or other disposition of all or substantially all of the
assets of the Company or any Guarantor in accordance with Section 5.1, the
successor formed by such consolidation or into or with which the Company or
such Guarantor, as the case may be, is merged or to which such sale, lease,
conveyance, assignment, transfer or other disposition is made, or formed by
such reorganization, as the case may be, shall succeed to, and be substituted
for, and may exercise every right and power of, the Company or such Guarantor,
as the case may be, under this Indenture, the Notes and the Security Documents
with the same effect as if such successor Person had been named as the Company
herein or therein.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any Note
when the same becomes due and payable and the Default continues for a period of
30 days;
(2) the Company defaults in the payment of the principal (or
premium, if any) on any Note when the same becomes due and payable at maturity,
upon redemption, in connection with an Excess Proceeds Offer, a Change of
Control Offer or otherwise;
(3) the Company defaults in the performance of or breaches any
of the provisions of Sections 4.7, 4.10, 4.12 or 4.14 hereof, of Article V
hereof, or of Sections 4.3, 4.4, 4.5, 4.6, 4.12, 4.16 or 4.17 of either the
Security Agreement or the Subsidiary Security Agreement.
(4) the Company defaults in the performance of or breaches any
of the provisions of Section 4.9, which Default continues for a period of 30
days;
(5) the Company, any Guarantor or any Restricted Subsidiary
fails to comply with any of its other agreements or covenants in, or provisions
of, the Notes, this Indenture or the Security Documents and the Default
continues for the period and after the notice specified below;
(6) a default occurs under (after giving effect to any
applicable grace periods or any extension of any maturity date) any mortgage,
indenture or instrument under which there may be issued or by which there may
be secured or which evidences any Indebtedness for money borrowed by the
Company, any Guarantor or any Restricted Subsidiary (or the payment of which is
guaranteed by the Company, any Guarantor or any Restricted Subsidiary), whether
such Indebtedness or guaranty now exists or is created hereafter, if (a) either
(i) such default results from the failure to pay principal of or interest on
such Indebtedness or (ii) as a result of such default the maturity of such
Indebtedness has been accelerated, and (b) the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
with respect to which a default (after the expiration of any applicable grace
period or any extension of the maturity date) has occurred, or the maturity of
which has been so accelerated, exceeds $4.0 million in the aggregate;
(7) a final judgment or final judgments for the payment of
money (other than judgments as to which a reputable insurance company has
accepted full liability) are entered by a court or courts of competent
jurisdiction against the Company, any Guarantor or any Restricted Subsidiary
and such judgment or judgments remain undischarged, unbonded or unstayed for a
period of 60 days after entry, provided that the aggregate of all such
judgments exceeds $1.0 million;
(8) breach by the Company, any Guarantor or any Restricted
Subsidiary of any material representation or warranty set forth in the Security
Documents, which Default continues for the period and after the notice
specified below;
(9) repudiation by the Company, any Guarantor or any Restricted
Subsidiary of its Obligations under this Indenture, the Notes, or the Security
Documents or the Company, any Guarantor or any Restricted Subsidiary takes any
action that causes, or asserts, or fails to take any action required hereunder,
under the Notes or under the Security Documents or that it knows, or has been
notified by the Trustee, is necessary to prevent, the unenforceability of this
Indenture, the Notes, or the Security Documents against the Company, any
Guarantor or any Restricted Subsidiary for any reason or is necessary to
maintain the priority and perfection of the Liens of the Security Documents;
(10) the Company or any of its Restricted Subsidiaries pursuant
to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(d) makes a general assignment for the benefit of its creditors,
(e) admits in writing its inability to pay debts as the same become
due; or
(11) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company or any of its Restricted
Subsidiaries in an involuntary case,
(b) appoints a Custodian of the Company or any of its Restricted
Subsidiaries or for all or substantially all of their property,
(c) orders the liquidation of the Company, or any of its Restricted
Subsidiaries, and the order or decree remains unstayed and in effect for 60
days.
A Default under clause (5) or (8) is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes notify the Company and the Trustee, of the
Default and the Company does not cure the Default within 30 days after receipt
of the notice. The notice must specify the Default, demand that it be remedied
and state that the notice is a "Notice of Default."
Section 6.2. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (10) and (11) of Section 6.1) occurs and is continuing, the Trustee by
written notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes by written notice to the Company and the
Trustee, may declare the unpaid principal of and any accrued interest on all
the Notes to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately. If an Event of Default
specified in clause (10) or (11) of Section 6.1 with respect to the Company
occurs, such an amount shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. At any time after a declaration of acceleration, but before a judgment
or decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in principal amount of the Notes outstanding, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if the Company has paid or deposited with the Trustee a
sum sufficient to pay (i) all sums paid or advanced by the Trustee and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest (including any interest
accrued subsequent to an Event of Default specified in clauses (10) and (11) of
Section 6.1) on all Notes, (iii) the principal of and premium, if any, on any
Notes that have become due otherwise than by such declaration or occurrence of
acceleration and interest thereon at the rate borne by the Notes, and (iv) to
the extent that payment of such interest is lawful, interest upon overdue
interest at the rate borne by the Notes; and all Events of Default, other than
the non-payment of principal of the Notes that has become due solely by such
declaration or occurrence of acceleration, have been cured or waived; and the
rescission would not conflict with any judgment, order or decree of any court
of competent jurisdiction.
Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy (under this Indenture or otherwise) to collect the
payment of principal or interest on the Notes to enforce the performance of any
provision of the Notes, this Indenture or the Security Documents.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes 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. All remedies
are cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
Holders of a majority of the aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of the Holders
of all of the Notes (a) waive an existing Default or Event of Default and its
consequences, except a continuing Default or Event of Default in the payment of
the principal of or interest on any Note and/or (b) rescind an acceleration and
its consequences if the rescission would not conflict with any judgment or
decree if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been
cured or waived. Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section 6.5. Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders, or that may involve the Trustee in
personal liability.
Section 6.6. Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or the
Notes only if:
(a) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
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 of a Note to receive payment of principal and interest on the Note,
on or after the respective due dates expressed in the Note, 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 the Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Notes and interest on overdue
principal (and premium, if any) and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee is authorized to 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 (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders allowed in any judicial proceedings relative to the Company (or
any other obligor under the Notes), their creditors or their property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any
such judicial proceeding is hereby authorized by each Holder to make such
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 to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment
of the same shall be secured by a Lien on, and shall be paid out of, any and
all distributions, dividends, money, securities and other properties that the
Holders of the Notes may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively;
Third: without duplication, to Holders for any other Obligations
owing to the Holders under the Notes or this Indenture; and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders.
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 a 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, 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 6.6, or a suit by Holders of more than 10% in principal
amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee.
(1) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of 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
his or her own affairs.
(2) Except during the continuance of an Event of Default:
(a) The duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Security Documents, and the
Trustee need perform only those duties that are specifically set forth in this
Indenture and the Security Documents, and no others, and no implied covenants
or obligations shall be read into this Indenture or the Security Documents
against the Trustee.
(b) 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 and the Security
Documents. However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this Indenture and
the Security Documents.
(3) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) This paragraph does not limit the effect of paragraph
(2) of this Section.
(b) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts.
(c) 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 Section 6.5.
(4) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (1), (2) and (3) of this Section.
(5) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee may refuse to
perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(6) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.2. Rights of Trustee.
(1) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by the Indenture and the Security Documents.
(5) Unless otherwise specifically provided in the Indenture or
the Security Documents, any demand, request, direction or notice from the
Company shall be sufficient if signed by an Officer of the Company, on behalf
of the Company.
(6) Except with respect to Section 4.1, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in Article
4 hereof. In addition, the Trustee shall not be deemed to have knowledge of
any Default or Event of Default except (i) any Event of Default occurring
pursuant to Sections 6.1(1), 6.1(2) and 4.1, or (ii) any Default or Event of
Default of which the Trustee shall have received written notification or
obtained actual knowledge.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to 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 Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision hereof,
it shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to the Holders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment on any Note pursuant to Section
6.1(1) or (2), the Trustee may withhold the notice if it determines that
withholding the notice is in the interests of the Holders.
Section 7.6. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall mail to the Holders a brief
report dated as of such reporting date that complies with TIA s. 313(a) (but if
no event described in TIA s. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA s. 313(b). The Trustee shall also transmit by mail all
reports as required by TIA s. 313(c).
Commencing at the time this Indenture is qualified under the TIA, a
copy of each report at the time of its mailing to the Holders shall be filed
with the Commission and each stock exchange on which the Notes are listed. The
Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel, except such disbursements, advances and expenses
as may be attributable to its negligence or bad faith.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it without negligence or bad faith on its
part arising out of or in connection with the acceptance or administration of
its duties under this Indenture, except as set forth below. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company
of its obligations hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. In the event that a conflict of
interest or conflicting defenses would arise in connection with the
representation of the Company and the Trustee by the same counsel, the Trustee
may have separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive
the satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or bad
faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal of (and
premium, if any) and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(10) or (11) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee after written request by any Holder who has been a
Holder for at least six months fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. 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 the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to
this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that shall (a) be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof or of the District of Columbia authorized under
such laws to exercise corporate trustee power, (b) be subject to supervision or
examination by Federal or state or the District of Columbia authority, and (c)
have a combined capital and surplus of at least $100,000,000 as set forth in
its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1) and 310(a)(5). The Trustee is subject to TIA
s. 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA s. 311(a), excluding any creditor
relationship listed in TIA s. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA s. 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except that
Section 7.7, 8.3 and 8.4 shall survive) when all outstanding Notes theretofore
authenticated and issued have been delivered (other than destroyed, lost or
stolen Notes that have been replaced or paid) to the Trustee for cancellation
and all sums payable by the Company hereunder have been paid. In addition, the
Company may (A) if applicable, be discharged from any and all Obligations in
respect of the Notes, other than the obligation to duly and punctually pay the
principal of, and premium, if any, and interest on the Notes, in accordance
herewith, or (B) if applicable, omit to comply with restrictive covenants, and
such omission will not be deemed to be an Event of Default if:
(1) with respect to clauses (A) and (B), the Company
irrevocably deposits in trust with the Trustee or at the option of the Trustee,
with a trustee reasonably satisfactory to the Trustee and the Company under the
terms of an irrevocable trust agreement in form and substance satisfactory to
the Trustee, money or U.S. Government Obligations sufficient (as certified by a
nationally recognized accounting firm designated by the Company) to pay
principal and interest and premium, if any, on the Notes to maturity or
redemption and each installment of interest, if any, on the due dates thereof
on the Notes, as the case may be, and to pay all other sums payable by it
hereunder, and with respect to clause (B) the obligations under this Indenture
other than with respect to such covenants and Events of Default which will
remain in full force and effect, provided that (i) the trustee of the
irrevocable trust shall have been irrevocably instructed to pay such money or
the proceeds of such U.S. Government Obligations to the Trustee and (ii) the
Trustee shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of said principal,
premium, if any, and interest with respect to the Notes;
(2) with respect to clause (A), the Company has received from, or
there has been published by, the U.S. Internal Revenue Service a ruling or
there has been a change in laws which in the opinion of independent counsel,
which the Company shall deliver to the Trustee, provides that holders of the
Notes will not recognize income, gain or loss for Federal income tax purposes
as a result of such deposit, defeasance and discharge and will be subject to
Federal income tax on the same amount, in the same manner and at the same times
as would have been the case if such deposit, defeasance and discharge had not
occurred and the Notes were otherwise paid or redeemed in accordance with the
provisions of this Indenture;
(3) with respect to clause (B), the Company has delivered to the
Trustee an opinion of independent counsel to the effect that the 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, in the same manner and at the same times as
would have been the case if such deposit and defeasance had not occurred and
the Notes were redeemed pursuant to Article 3 hereof without exercising the
option of the Company pursuant to this Section 8.1; and
(4) the Company delivers to the Trustee an Officers' Certificate
stating that all conditions precedent to satisfaction and discharge of this
Indenture have been complied with, and an Opinion of Counsel to the same
effect.
Then, this Indenture shall cease to be of further effect (except as provided in
this paragraph), and the Trustee, on demand of the Company, shall execute
proper instruments acknowledging confirmation of and discharge under this
Indenture and the release of the Liens created under the Security Documents.
However, the Company's Obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 4.1,
4.6, 7.7, 7.8, 8.3 and 8.4, the Guarantors' Obligations, and the Trustee's and
Paying Agent's obligations in Section 8.3 shall survive until the Notes are no
longer outstanding. Thereafter, only the Company's obligations in Section 7.7
and 8.4 and the Company's, Trustee's and Paying Agent's obligations in Section
8.3 shall survive.
After such irrevocable deposit has been made pursuant to this Section
8.1 and satisfaction of the other conditions set forth herein, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified above,
and the release of the Liens created under the Security Documents.
In order to have money available on a payment date to pay principal,
premium, if any, or interest on the Notes, the U.S. Government Obligations
shall be payable as to principal, premium, if any, or interest at least one
Business Day before such payment date in such amounts as shall provide the
necessary money. U.S. Government Obligations shall not be callable at the
issuer's option.
Section 8.2. Application of Trust Money.
The Trustee, or a trustee satisfactory to the Trustee and the
Company, shall hold in trust, money or U.S. Government Obligations deposited
with it pursuant to Section 8.1. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal, premium, if any,
and interest on the Notes.
Section 8.3. Repayment to the Company.
The Trustee and the Paying Agent shall promptly pay to the Company
upon written request any excess money or securities (as certified by an
independent public accountant reasonably acceptable to the Trustee) held by
them at any time.
The Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of principal, premium,
if any, or interest that remains unclaimed for two years after the date upon
which such payment shall have become due; provided that the Company shall have
either caused notice of such payment to be mailed to each Holder entitled
thereto no less than 30 days prior to such repayment or within such period
shall have published such notice in a financial newspaper of widespread
circulation published in the City of New York, including, without limitation,
The Wall Street Journal. After payment to the Company, Holders entitled to the
money must look to the Company for payment as general creditor unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
Section 8.4. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.2 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, the
Obligations of the Company and the Guarantors under this Indenture, the Notes
and the Security Documents shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.1 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 8.2; provided that if the Company has made any payment
of interest on or principal of any Notes because of the reinstatement of its
Obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
Section 9.1. Without Consent of Holders.
The Company and the Trustee may amend this Indenture and the Notes
without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(3) to comply with Article 5 hereof;
(4) to make any change that would provide any additional rights
or benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder or thereunder of any Holder; or
(5) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company, accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such
supplemental indenture or amendment, and upon receipt by the Trustee of the
documents described in Section 9.6 hereof required or requested by the Trustee,
the Trustee shall join with the Company in the execution of any supplemental
indenture or amendment authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
supplemental indenture or amendment that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2. With Consent of Holders.
Subject to Sections 6.4 and 6.7 hereof, the Company and the Trustee,
as applicable, may amend, or waive any provision of, this Indenture or the
Notes with the written consent of the Holders of at least a majority of the
principal amount of the then outstanding Notes.
Upon the request of the Company, accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such
supplemental indenture or amendment, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 9.6 hereof, the Trustee shall join with the Company in the execution of
such supplemental indenture or amendment unless such supplemental indenture or
amendment affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture
or amendment, but it shall be sufficient if such consent approves the substance
thereof.
After a supplemental indenture or amendment under this Section
becomes effective, the Company shall mail to the Holders of each Note affected
thereby a notice briefly describing the amendment or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture,
amendment or waiver.
Notwithstanding any other provision hereof, without the consent of
each Holder affected, an amendment or waiver under this Section may not (with
respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(3) reduce the principal of, or the premium on, or change the
fixed maturity of any Note or alter Article III hereof or numbered paragraphs 5
or 6 of Exhibit A to this Indenture or the price at which the Company shall
offer to purchase such Notes pursuant to Sections 4.10 or 4.14 hereof;
(4) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on, or redemption payment with
respect to, any Note (other than a Default in the payment of an amount due as a
result of an acceleration if the Holder rescinds such acceleration pursuant to
Section 6.2);
(5) make any Note payable in money other than that stated in
the Notes;
(6) make any change in Section 6.4 or 6.7 hereof or in this
Section 9.2;
(7) make any change in the provisions of Article X or Exhibit
C hereof that adversely affects the rights of any holder of the Notes; or
(8) make any change adversely affecting the contractual ranking
of the Obligations.
Section 9.3. Compliance with Trust Indenture Act.
If, at the time of an amendment to this Indenture or the Notes, this
Indenture shall be qualified under the TIA, every amendment to this Indenture
or the Notes shall be set forth in a supplemental indenture that complies with
the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until a supplemental indenture, an amendment or waiver becomes
effective, a consent to it by a Holder of a Note is a continuing consent by the
Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note, even if notation of
the consent is not made on any Note. A supplemental indenture, amendment or
waiver becomes effective in accordance with its terms and thereafter binds
every Holder.
The Company may fix a record date for determining which Holders must
consent to such supplemental indenture, amendment or waiver. If the Company
fixes a record date, the record date shall be fixed at (i) the later of 30 days
prior to the first solicitation of such consent or the date of the most recent
list of Holders furnished to the Trustee prior to such solicitation pursuant to
Section 2.5, or (ii) such other date as the Company shall designate.
Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about a supplemental
indenture, amendment or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall authenticate
new Notes that reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment or waiver.
Section 9.6. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it
does, the Trustee may, but need not, sign it. In signing or refusing to sign
such amendment or supplemental indenture, the Trustee shall be entitled to
receive, if requested, an 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 as conclusive evidence that
such amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it shall be valid and
binding upon the Company in accordance with its terms. The Company may not
sign an amendment or supplemental indenture until the Board of Directors of the
Company approves it.
Section 9.7 Payment for Consent
Neither the Company or any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fees or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this
Indenture, the Notes or any of the Security Documents, unless such
consideration is offered to be paid or agreed to be paid to all Holders that
consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver, or agreement.
ARTICLE 10
COLLATERAL AND SECURITY AND GUARANTY
Section 10.1. Collateral Documents.
The due and punctual payment of the principal and premium, if any,
of, and interest on, the Notes when and as the same shall be due and payable,
whether on an interest payment date, at maturity, by acceleration, repurchase,
redemption or otherwise, interest on the overdue principal of and interest (to
the extent permitted by law), if any, on the Notes and performance of all other
Obligations, shall be secured as provided in the Security Documents. Each
Holder, by its acceptance of a Note, consents and agrees to the terms of the
Security Documents (including, without limitation, the provisions providing for
foreclosure and release of Collateral) as the same may be in effect or may be
amended from time to time in accordance with the terms thereof and hereof and
authorizes and directs the Collateral Agent to enter into each of the Security
Documents and to perform its respective obligations and exercise its respective
rights thereunder in accordance therewith.
The Company shall, and shall cause each of its Subsidiaries to, do or
cause to be done all such acts and things as may be necessary or proper, or as
may be required by the provisions of the Security Documents, to assure and
confirm to the Collateral Agent the security interest in the Collateral
contemplated hereby and by the Security Documents, as from time to time
constituted, so as to render the same available for the security and benefit of
this Indenture and of the Notes secured hereby, according to the intent and
purposes herein expressed. The Company shall, and shall cause each of its
Subsidiaries to, take, upon request of the Trustee or the Collateral Agent, any
and all actions required to cause the Security Documents to create and
maintain, as security for the Obligations, valid and enforceable, perfected
(except as expressly provided herein or therein), Liens in and on all the
Collateral, in favor of the Collateral Agent, superior to and prior to the
rights of all third Persons, and subject to no other Liens, other than as
provided herein and therein.
Section 10.2. Recording and Opinions.
(a) The Company shall furnish to the Trustee as soon as practicable
after the execution and delivery of this Indenture an Opinion of Counsel either
(i) stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, the
Mortgages, financing statements or other instruments necessary to make
effective the Liens intended to be created by the Security Documents, and
reciting the details of such action, or (ii) stating that, in the opinion of
such counsel, no such action is necessary to make such Liens effective, which
Opinion of Counsel also shall state what actions are necessary to maintain the
effectiveness of such liens during the next two years.
(b) The Company shall furnish to the Trustee within three months
after each anniversary of the Closing Date, an Opinion of Counsel, dated as of
such date, stating either that (i) in the opinion of such counsel, all action
has been taken with respect to the recording, registering, filing,
re-recording, re-registering and refiling of all supplemental indentures,
financing statements, continuation statements or other instruments of further
assurance as is necessary to maintain the Liens of the Security Documents and
reciting the details of such action or (ii) in the opinion of such Counsel, no
such action is necessary to maintain such Liens, which Opinion of Counsel also
shall state what actions it then believes are necessary to maintain the
effectiveness of such liens during the next two years.
Section 10.3. Release of Collateral.
(a) Unless a Default or Event of Default shall have occurred and be
continuing, Collateral shall be released from the Liens created by the Security
Documents from time to time at the sole cost and expense of the Company:
(i) upon payment in full of the Notes and all other Obligations then
due and owing, or
(ii) upon the sale or other disposition of such Collateral pursuant
to an Asset Sale made in accordance with Section 4.10 hereof,
; provided, that the Trustee shall not release any Lien on any Collateral
unless and until it shall have received an Officers' Certificate certifying
that all conditions precedent hereunder have been met and such other documents
required by Section 10.4 hereof. Upon compliance with the above provisions,
the Trustee shall execute, deliver or acknowledge any necessary or proper
instruments of termination, satisfaction or release to evidence the release of
any Collateral permitted to be released pursuant to this Indenture or the
Security Documents.
(b) The disposition of Inventory or Accounts in the ordinary course
of business may be made without delivery to the Trustee of certificates
required by TIA s. 314(d).
(c) The release of any Collateral from the terms of the Security
Documents shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof and of the Security Documents if and to
the extent the Collateral is released pursuant to the terms of this Indenture
and the Security Documents.
Section 10.4. Certificates of the Company.
The Company shall furnish to the Trustee prior to each proposed
release of Collateral other than by reason of transactions referred to in
Section 10.3(b), all documents required by TIA s. 314(d). The Trustee may, to
the extent permitted by Sections 7.1 and 7.2 hereof, accept as conclusive
evidence of compliance with the foregoing provisions the appropriate statements
contained in such instruments. Any certificate or opinion required by TIA s.
314(d) may be made by an Officer of the Company except in cases where TIA s.
314(d) requires that such certificate or opinion be made by an independent
engineer, appraiser or other expert within the meaning of TIA s. 314(d).
Section 10.5. Authorization of Actions to be Taken by the Trustee Under the
Security Documents.
The Trustee may, in its sole discretion and without the consent of
the Holders, on behalf of the Holders, take all actions it deems necessary or
appropriate in order to (a) enforce any of the terms of the Security Documents
and (b) collect and receive any and all amounts payable in respect of the
Obligations of the Company and the Guarantors hereunder. The Trustee shall
have the power to institute and to maintain such suits and proceedings as it
may deem expedient to prevent any impairment of the Collateral by any acts that
may be unlawful or in violation of the Security Documents or this Indenture,
and such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interest and the interests of the Holders in the Collateral
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interest hereunder or be prejudicial to the interests of
the Holders or the Trustee).
Section 10.6. Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents.
The Trustee is authorized to receive any funds for the benefit of the
Holders distributed under the Security Documents, and to make further
distributions of such funds to the Holders according to the provisions of this
Indenture and the Security Documents.
Section 10.7. Guaranty.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, subject to Section 10.9 hereof, each Guarantor,
jointly and severally, hereby unconditionally guarantees (such guarantees,
together with further guarantees granted from time to time pursuant to Section
10.12, being the "Guaranty") to each Holder, the Trustee and the Collateral
Agent, irrespective of the validity or enforceability of this Indenture, the
Notes, the Security Documents or the Obligations hereunder or thereunder: (i)
the due and punctual payment of the principal and premium, if any, of, and
interest on, the Notes (including, without limitation, interest after the
filing of a petition initiating any proceedings referred to in clause (10) or
(11) of Section 6.1 hereof), whether at maturity or on an interest payment
date, by acceleration, call for redemption or otherwise; (ii) the due and
punctual payment of interest on the overdue principal and premium, if any, of,
and interest on, the Notes, if lawful; (iii) the due and punctual payment and
performance of all other Obligations, all in accordance with the terms set
forth herein and in the Notes and the Security Documents; and (iv) in case of
any extension of time of payment or renewal of any Notes or any of such other
Obligations, the due and punctual payment or performance thereof in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.
Failing payment when due by the Company of any amount so guaranteed
for whatever reason, the Guarantors shall be jointly and severally obligated to
pay the same immediately.
Each Guarantor hereby agrees that (i) its obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Notes, this Indenture, the Security Documents or the Obligations hereunder
or thereunder, the absence of any action to enforce the same, any waiver or
consent by any Holder with respect to any provisions hereof or thereof, any
releases of Collateral, any amendment of the Indenture, the Notes or Security
Documents, any delays in obtaining or realizing upon or failures to obtain or
realize upon Collateral, the recovery of any judgment against the Company or
any of its Subsidiaries, any action to enforce the same, or any other
circumstance that might otherwise constitute a legal or equitable discharge or
defense of a guarantor and (ii) this Guaranty will not be discharged except by
complete performance of the Obligations.
Each Guarantor hereby agrees that it shall not be entitled to and
irrevocably waives (i) diligence, presentment, demand of payment, filing of
claim with a court in the event of insolvency or bankruptcy of the Company, any
Guarantor, any other Subsidiary of the Company or any other obligor under the
Notes, any right to require a proceeding first against the Company, any
Guarantor, any other Subsidiary of the Company or any other obligor under the
Indenture, the Notes or the Security Documents, protest, notice and all demands
whatsoever, (ii) any right of subrogation, reimbursement, exoneration,
contribution or indemnification in respect of any Obligations guaranteed hereby
and (iii) any claim or other rights that it may now or hereafter acquire
against the Company or any of its Subsidiaries that arise from the existence or
performance of its Obligations under this Guaranty, including, without
limitation, any right to participate in any claim or remedy of a Holder against
the Company or any of its Subsidiaries or any Collateral that a Holder now has
or hereafter acquires, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, by any payment made hereunder
or otherwise, and including, without limitation, the right to take or receive
from the Company or any of its Subsidiaries, directly or indirectly, in cash or
other property, by setoff or in any other manner, payment or security on
account of such claim or other rights.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, any Guarantor, any other Subsidiary of the Company or
any other obligor under the Indenture, the Notes or the Security Documents,
trustee, liquidator, or other similar official, any amount paid by the Company,
any Guarantor, any other Subsidiary of the Company or any other obligor under
the Indenture, the Notes or the Security Documents to the Trustee or such
Holder, this Guaranty, to the extent theretofore discharged, shall be
reinstated in full force and effect.
Each Guarantor agrees that, as between the Guarantors, on the one
hand, and the Holders and the Trustee, on the other hand, (i) the maturity of
the Obligations guaranteed hereby may be accelerated as provided in Section 6.2
for the purposes of this Guaranty, notwithstanding any stay, injunction or
other prohibition preventing such acceleration as to the Company of the
Obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of those Obligations as provided in Section 6.2, those Obligations
(whether or not due and payable) will forthwith become due and payable by each
of the Guarantors for the purpose of this Guaranty.
Section 10.8. Execution and Delivery of Guaranty.
To evidence the Guaranty set forth in Section 10.7, the Company and
each of the Guarantors hereby agree that (a) a notation of such Guaranty
substantially as set forth on Exhibit C hereto shall be endorsed on each Note
authenticated and delivered by the Trustee such endorsement shall be executed
on behalf of each Guarantor by its Chairman of the Board, President, Chief
Financial Officer, Chief Operating Officer, Treasurer, Secretary or any
Vice-President and (b) a counterpart signature page to this Indenture shall be
executed on behalf of each Guarantor by its Chairman of the Board, President or
one of its Vice Presidents and attested to by another officer acknowledging
such Guarantor's agreement to be bound by the provisions hereof and thereof.
Each of the Guarantors hereby agrees that its Guaranty set forth in
Section 10.7 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guaranty.
If an officer whose signature is on this Indenture no longer holds
that office at the time the Trustee authenticates the Notes on which a Guaranty
is endorsed, the Guaranty shall nevertheless be valid.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty set forth in
this Indenture on behalf of the Guarantor.
Section 10.9. Limitation on Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by
such Guarantor pursuant to its Guaranty not constitute a fraudulent transfer or
conveyance for purposes of any Federal or state law. To effectuate the
foregoing intention, the Holders and the Guarantors hereby irrevocably agree
that the obligations of each Guarantor under its Guaranty shall be limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor and 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 Guaranty, result in the Obligations of such
Guarantor under the Guaranty not constituting a fraudulent conveyance or
fraudulent transfer under Federal or state law.
Section 10.10. Rights under the Guaranty.
(a) No payment by any Guarantor pursuant to the provisions hereof
shall entitle such Guarantor to any payment out of any Collateral or give rise
to any claim of the Guarantors against the Trustee or any Holder.
(b) Each Guarantor waives notice of the issuance, sale and purchase
of the Notes and notice from the Trustee or the Holders from time to time of
any of the Notes of their acceptance and reliance on this Guaranty.
(c) No set-off, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature (other than performance by the
Guarantors of their obligations hereunder) that any Guarantor may have or
assert against the Trustee or any Holder shall be available hereunder to such
Guarantor.
(d) Each Guarantor shall pay all costs, expenses and fees, including
all reasonable attorneys' fees, that may be incurred by the Trustee in
enforcing or attempting to enforce the Guaranty or protecting the rights of the
Trustee or the Securityholder, if any, in accordance with this Indenture.
Section 10.11. Primary Obligations.
The Obligations of each Guarantor hereunder shall constitute a
guaranty of payment and not of collection. Each Guarantor agrees that it is
directly liable to each Holder hereunder, that the Obligations of each
Guarantor hereunder are independent of the Obligations of the Company or any
other Guarantor, and that a separate action may be brought against each
Guarantor, whether such action is brought against the Company or any other
Guarantor or whether the Company or any other Guarantor is joined in such
action. Each Guarantor agrees that its liability hereunder shall be immediate
and shall not be contingent upon the exercise or enforcement by the Trustee or
the Holders of whatever remedies they may have against the Company or any other
Guarantor, or the enforcement of any lien or realization upon any security
Trustee may at any time possess. Each Guarantor agrees that any release that
may be given by the Trustee or the Holders to the Company or any other
Guarantor shall not release such Guarantor.
Section 10.12. Guarantee by Subsidiary.
The Company shall:
(a) cause each Restricted Subsidiary (i) that is formed or acquired
after the date hereof or (ii) that becomes a Material Subsidiary after the date
hereof, in each case concurrently therewith, to execute a Subsidiary Security
Agreement (substantially in the form of the Subsidiary Security Agreements
entered into on the Closing Date) and Mortgage (substantially in the form of
the Mortgages entered into on the Closing Date) and other Security Documents
necessary to grant a security interest in the assets of such Subsidiary
(specified in such Security Document) to secure the Obligations, and to execute
and deliver all documents, and take all such other actions as may be necessary
or reasonably requested by the Trustee to grant the Trustee a valid,
enforceable, perfected first priority Lien on the assets of the Restricted
Subsidiary included in the Collateral described therein, subject only to Liens
permitted under Section 4.12, provided, however, that a Restricted Subsidiary
formed after the date hereof shall not be required to execute and deliver the
documents referred to above until such time as such Restricted Subsidiary owns
assets having a book value in excess of $500,000;
(b) cause each Restricted Subsidiary that either (i) on or after the
date hereof guarantees the payment of, or in any manner becomes liable with
respect to, any Indebtedness of the Company or any Guarantor or (ii) is a
Material Subsidiary organized under the laws of the United States or any
jurisdiction therein that is formed or acquired after the date hereof, to
concurrently become a Guarantor hereunder and execute a Guaranty in the form of
Exhibit C; and
(c) deliver to the Trustee an Opinion of Counsel, in form reasonably
satisfactory to the Trustee, that such Subsidiary Security Agreement and
Mortgage (and, if applicable, this Indenture and such Guaranty) are the valid,
binding and enforceable obligations of such Restricted Subsidiary, subject to
customary exceptions for bankruptcy, fraudulent transfer and equitable
principles.
Each Note issued after the date of execution by any Guarantor of a
Guaranty shall be endorsed with a form of Guaranty that has been executed by
such Guarantor. However, the failure of any Note to have endorsed thereon a
Guaranty executed by such Guarantor shall not affect the validity or
enforceability of such Guaranty against such Guarantor.
ARTICLE 11
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA s. 318(c), the imposed duties shall control.
Section 11.2. Notices.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by
first-class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' addresses:
If to the Company:
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Attention: Marvin B. Rosenberg
Telecopier No.: (203) 222-7976
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
Telecopier No.: (212) 852-1625
The Company or the Trustee by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; upon receipt, if deposited in the mail, postage prepaid;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery. All notices and
communications to the Trustee shall be deemed to have been duly given only if
actually received by the Trustee.
Any notice or communication to a Holder shall be mailed by
first-class mail, certified or registered, return receipt requested, to his
address shown on the register kept by the Registrar. Failure to mail 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 communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.3. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA s. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA s.
312(c).
Section 11.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.5) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.5) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been complied with.
Section 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA s. 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, 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
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with,
provided that with respect to matters of fact, an Opinion of Counsel may rely
upon an Officers' Certificate or a certificate of a public official.
Section 11.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.7. Legal Holidays.
If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section 11.8. No Recourse Against Others.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company under the Notes, the Indenture, the Security Documents or the
Registration Rights Agreement or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release shall be part
of the consideration for the issuance of the Notes. Notwithstanding the
foregoing, nothing in this provision shall be construed as a waiver or release
of any claims under the Federal securities laws.
Section 11.9. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS OF THE
PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY IRREVOCABLY
CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS ADDRESS SET FORTH
HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
Section 11.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 11.11. Successors.
All agreements of the Company and the Guarantors in this Indenture
and the Notes shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.
Section 11.12. Severability.
In case any provision in this Indenture or in the Notes 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.
Section 11.13. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.14. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Indenture as of the date first written above.
TEREX CORPORATION
Attest: /s/ Marvin B. Rosenberg By: /s/ Ronald M. DeFeo
Name: Ronald M. DeFeo
Title: President
Name: Marvin B. Rosenberg
Title: Secretary
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By: /s/ John Guiliano
Attest: /s/ H. Victor Evans, Jr Name: John Guiliano
Title: Vice President
Name: H. Victor Evans, Jr.
Title:
CMH ACQUISITION CORP.
By: /s/ Ronald M. DeFeo
Attest: /s/ Marvin B. Rosenberg Name: Ronald M. DeFeo
Title: Vice President
Name: Marvin B. Rosenberg
Title: Secretary
CLARK MATERIAL HANDLING COMPANY
By: /s/ Ronald M. DeFeo
Attest: /s/ Marvin B. Rosenberg Name: Ronald M. DeFeo
Title: Vice President
Name: Marvin B. Rosenberg
Title: Secretary
CMH ACQUISITION INTERNATIONAL CORP.
By:/s/ Ronald M. DeFeo
Attest: /s/ Marvin B. Rosenberg Name: Ronald M. DeFeo
Title: Vice President
Name: Marvin B. Rosenberg
Title: Secretary
KOEHRING CRANES, INC.
By: /s/ Ronald M. DeFeo
Attest: /s/ Marvin B. Rosenberg Name: Ronald M. DeFeo
Title: Vice President
Name: Marvin B. Rosenberg
Title: Secretary
LEGRIS INDUSTRIES, INC.
By:/s/ Ronald M. DeFeo
Attest:/s/ Marvin B. Rosenberg Name: Ronald M. DeFeo
Title: Vice President
Name: Marvin B. Rosenberg
Title: Secretary
PPM CRANES, INC.
By: /s/ Ronald M. DeFeo
Attest: /s/ Marvin B. Rosenberg Name: Ronald M. DeFeo
Title: Vice President
Name: Marvin B. Rosenberg
Title: Secretary
EXHIBIT A
(Face of Security)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY
OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE 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 ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY 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 MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO. OR SUCH OTHER ENTITY AS MAY BE 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.1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT 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, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT 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 (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE.
THE ISSUE PRICE OF THE NOTES WILL BE $987.20 PER UNIT AND THE ISSUE PRICE OF
THE RIGHTS WILL BE $12.80 PER UNIT. THE ISSUE PRICE OF THE NOTES REPRESENTS A
YIELD TO MATURITY OF 14.041% PER ANNUM COMPUTED ON A SEMI-ANNUAL BOND
EQUIVALENT BASIS AND CALCULATED FROM MAY 9, 1995. THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT ON THE NOTES WILL BE $12.80 PER NOTE. THE CALCULATION OF
ORIGINAL ISSUE DISCOUNT WILL BE ADJUSTED ACCORDINGLY WHEN THE INTEREST RATE ON
THE NOTES DECREASES TO 13 1/4%.
TEREX CORPORATION
13 1/4% [SERIES A] [SERIES B] SENIOR SECURED NOTE
DUE 2002
No. $___________
CUSIP NO.
Terex Corporation, a Delaware corporation (the "Company"), as obligor, for
value received promises to pay to ______________ or registered assigns, the
principal sum of ______________ Dollars on May 15, 2002. Interest Payment
Dates: May 15 and November 15 and on the maturity date. Record Dates: May 1
and November 1 (whether or not a Business Day).
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated:
TEREX CORPORATION
By:
Name:
Title:
By:
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the Notes referred to
in the within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:______________________________
Authorized Signature
(Back of Security)
13 1/4% [SERIES A] [SERIES B] SENIOR SECURED NOTE
DUE May 15, 2002
1. Interest. Terex Corporation, a Delaware corporation (the
"Company"), as obligor, promises to pay interest on the principal amount of
this Note at the rate and in the manner specified below.
The Company shall pay, in cash, interest on the principal amount of
this Note, at the rate of [13r% per annum (subject to adjustment as provided
below)]2 [13 1/4% per annum, except that interest accrued on this Note
pursuant to this Section 1 for periods prior to the consummation of the
Exchange Offer (as defined in the Registration Rights Agreement referred to
below) will accrue at the rate of 13r%].3 The Company shall pay interest
semi-annually on May 15 and November 15 of each year, and on the maturity
date, commencing on November 15, 1995, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date").
[The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement (defined below). Upon (a) the consummation of
the Exchange Offer (as defined in the Registration Rights Agreement) or (b) the
effectiveness of a Shelf Registration Statement (as defined in the Registration
Rights Agreement) with respect to the Notes, as the case may be, the interest
rate borne by this Note will decrease to 13 1/4% per annum.]*
Interest shall be computed on the basis of a 360-day year consisting
of twelve 30-day months. Interest shall accrue from the most recent date to
which interest has been paid [on this Note or the Note surrendered in exchange
herefor] or, if no interest has been paid, from the date of the original
issuance of the Notes. To the extent lawful, the Company shall pay interest on
overdue principal at the rate of 1% per annum in excess of the then applicable
interest rate on the Notes; the Company shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at
the same rate to the extent lawful.
2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date next preceding the Interest Payment
Date, even if such Notes are cancelled after such record date and on or before
such Interest Payment Date. The Holder must surrender this Note to a Paying
Agent to collect principal payments. The Company shall 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. The Company, however, may pay
principal and interest by check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee shall act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-registrar without notice to any Holder. Subject to certain exceptions,
the Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture
dated as of May 9, 1995 (the "Indenture") among the Company, the Guarantors
named therein and the 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 (the "TIA") (15 U.S. Code ss. 77aaa-77bbbb) as in effect
on the date of the Indenture until such time as the Indenture is qualified
under the TIA and thereafter as in effect on the date the Indenture is so
qualified. The Notes are subject to all such terms, and Holders are referred
to the Indenture and such act for a statement of such terms. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the Notes.
Terms not otherwise defined herein shall have the meanings assigned in the
Indenture. The Notes are limited to $250,000,000 in aggregate principal
amount.
5. Optional Redemption. The Notes are not redeemable at the
Company's option prior to May 15, 2000. On and after May 15, 2000, the Notes
will be subject to redemption at the option of the Company, in whole or in
part, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon, if any, to the
applicable date of redemption, if redeemed during the 12-month period beginning
on May 15 of the years indicated below:
Year Percentage
2000 103.79 %
2001 101.89
2002 100.00
Notwithstanding the foregoing, prior to May 15, 2000, the Company
may, but shall not be obligated to, redeem up to one third of the original
principal amount of the Notes with the net proceeds of a bona fide public
offering of common stock of the Company or any Restricted Subsidiary, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the applicable date
of redemption, if redeemed during the 12-month period beginning on May 15 of
the years indicated below:
Year Percentage
1995 113.25 %
1996 111.36
1997 109.46
1998 107.57
1999 and thereafter 105.69
provided, however, that such redemption will occur within 60 days of the date
of the closing of such public offering.
6. Mandatory Redemption. There shall be no mandatory redemption of
the Notes.
7. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar and the Company need not exchange
or register the transfer (i) of any Note or portion of a Note selected for
redemption or (ii) of any Notes for a period of 15 days before a selection of
Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
9. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange
offer for Notes), and any existing Default or Event of Default (except a
payment default) may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes). Without the
consent of any Holders, the Indenture and the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
assumption of the Company's obligations to the Holders in the case of a merger
or consolidation, to provide for uncertificated Notes in addition to or in
place of certificated Notes, to make any change that would provide any
additional rights or benefits to the Holders of the Notes, or that does not
adversely affect the legal rights of any Holder, or to comply with requirements
of the Commission in order to effect or maintain the qualification of the
Indenture under the TIA.
10. 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 then outstanding Notes may declare all the Notes to be due and payable
immediately, except that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes become due
and payable immediately without further action or notice. Holders may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes 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 it determines that withholding notice is in the interests of the
Holders. The Company must furnish an annual compliance certificate to the
Trustee.
11. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not Trustee.
12. No Recourse Against Others. No director, officer, employee,
agent, manager, partner or interest holder or stockholder, as such, of the
Company or Guarantor, as such, shall have any liability for any obligations of
the Company under the Notes or the Indenture, or for any claim based on, in
respect of or by reason of such obligations. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Notwithstanding the foregoing,
nothing in this provision shall be construed as a waiver or release of any
claims under the Federal securities laws.
13. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
14. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
15. 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 Notes and have 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 Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
16. Holders' Compliance with Registration Rights Agreement. Each
Holder of a Note, by his acceptance thereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, dated as of May 9, 1995,
between the Company and the parties named on the signature page thereof (the
"Registration Rights Agreement"), including but not limited to the obligations
of the Holders with respect to a registration and the indemnification of the
Company and the Purchaser (as defined therein) to the extent provided therein.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to: Terex
Corporation, 500 Post Road East, Westport, Connecticut 06880, Attention:
Marvin B. Rosenberg.
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint______________________________
agent to transfer this Note 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 face of this Note)
Signature Guarantee*
________________
* NOTICE: The signature must be guaranteed by an institution which is a
member of one of the following recognized signature guarantee programs:
(1) The Securities Transfer Agent Medallian Program (STAMP);
(2) The New York Stock Exchange Medallian Program (MSP);
(3) The Stock Exchange Medallian Program (SEMP).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, as the case
may be, state the amount you elect to have purchased (if all, write "ALL"):
$______________
Date:__________________________
Your Signature:_________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
______________
* NOTICE: The signature must be guaranteed by an institution which is a
member of one of the following recognized signature guarantee programs:
(1) The Securities Transfer Agent Medallian Program (STAMP);
(2) The New York Stock Exchange Medallian Program (MSP);
(3) The Stock Exchange Medallian Program (SEMP).
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES4
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
Principal
[Form of endorsement relating to the Rights for use prior to the separation of
the rights from the Note by the Holder thereof]
TEREX CORPORATION
DEPOSIT OF COMMON STOCK APPRECIATION RIGHTS OF TEREX CORPORATION
Under the terms of the Common Stock Rights Appreciation Agreement,
dated as of May 9, 1995 (the "Rights Agreement"), between Terex Corporation, a
Delaware corporation (the "Company"), and the United States Trust Company of
New York, as rights agent (the "Rights Agent"), and until such time as the
Holder of this Note shall have surrendered this Note to the Rights Agent for
the exchange of this Note, in whole or in part, for such Rights Certificate or
Rights Certificates (as defined in the Rights Agreement) and for a Note or
Notes of a like aggregate principal amount and of authorized denominations not
bearing this endorsement, the Holder of this Note is the beneficial owner of
_______ Rights expiring May 15, 2002.
The Company has deposited with the Rights Agent, as custodian for
Holders of Notes bearing this endorsement, certificates for such Rights. Prior
to the exchange of this Note for a certificate(s) evidencing a Right(s) and a
new Note or Notes not bearing this endorsement as described above, beneficial
ownership of such Rights is transferable only by the transfer of this Note
pursuant to the Indenture. After such exchange, ownership of a Rights is
transferable only by the transfer of the certificate representing such Rights
in accordance with the provisions of the Rights Agreement.
By accepting a Note bearing this endorsement, each Holder of this
Note shall be bound by all of the terms and provisions of the Rights Agreement
(a copy of which is available on request to the Company or the Rights Agent) as
fully and effectively as if such Holder had signed the same.
NOTICE OF ELECTION
The undersigned registered Holder of this Note hereby irrevocably
elects to exercise _____ Rights (evidenced by Rights Certificates deposited
with the Rights Agent, the beneficial ownership of which is evidenced by this
Note), and requests that payment of the Differential in respect of such Rights,
be issued and delivered as follows:
DELIVER TO:
(Name)
(Address, Including Zip Code)
WIRE INSTRUCTIONS:
(Account Number and Name)
(Bank Name and Address)
(Bank ABA Number)
The undersigned hereby irrevocably instructs the Rights Agent (A) to
deliver this Note to the Trustee pursuant to the provisions of the Indenture
with instructions to issue in the name of the registered Holder a new Note not
containing the above endorsement in the principal amount equal to the principal
amount of this Note; (B) to issue in the name of the undersigned registered
Holder a Rights Certificate representing the number of Rights equal to the
difference between (x) the number of Rights represented by this Note and (y)
the Rights exercised hereby on behalf of the undersigned registered Holder; and
(C) as custodian of the underlying Rights on behalf of such registered Holder,
to cause such Rights to be exercised on behalf of the undersigned Holder as
provided in the Rights Agreement.
Dated:
Name of Holder of this Note:
Address:
Signature:
[Note: the above signature must correspond with the name as written upon the
face of this Note in every particular, without alteration or enlargement
whatever.]
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: [Series A] [Series B] 13 1/4% Senior Notes due May 15, 2002 (the "Notes")
of Terex Corporation
This Certificate relates to $______ principal amount of Notes held in * *
book-entry or * * definitive form by __________ (the "Transferor").
The Transferor, by written order, has requested the Trustee:
* to deliver in exchange for its beneficial interest in the Global Note held
by the depository, a Note or Notes in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Note (or the portion thereof indicated above); or
* to exchange or register the transfer of a Note or Notes. In connection
with such request and in respect of each such Note, the Transferor does hereby
certify that Transferor is familiar with the Indenture relating to the above
captioned Notes and, the transfer of this Note does not require registration
under the Securities Act of 1933, as amended (the "Securities Act") because
such Note:
* is being acquired for the Transferor's own account, without
transfer;
* is being transferred pursuant to an effective registration statement;
* is being transferred to a "qualified institutional buyer" (as defined
in
Rule 144A under the Securities Act, in reliance on such Rule 144A;
* is being transferred pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act;**
* is being transferred pursuant to Rule 144 under the Securities Act;**
or
* is being transferred pursuant to another exemption from the
registration requirements of the Securities Act (explain:
).**
[INSERT NAME OF TRANSFEROR]
By:_______________________________
Date:_____________________
* Check applicable box.
** If this box is checked, this certificate must be accompanied by an
opinion of counsel to the effect that such transfer is in compliance with the
Securities Act.
EXHIBIT C
[FORM OF GUARANTY]
GUARANTY
For good and valuable consideration received from the Company by the
undersigned (hereinafter referred to as the "Guarantors," which term includes
any successor or additional Guarantors), the receipt and sufficiency of which
is hereby acknowledged, subject to Section 10.9 of the Indenture, each
Guarantor, jointly and severally, hereby unconditionally guarantees,
irrespective of the validity or enforceability of the Indenture, the Notes, the
Security Documents or the Obligations, (a) the due and punctual payment of the
principal and premium, if any, of and interest on the Notes (including, without
limitation, interest after the filing of a petition initiating any proceedings
referred to in Sections 6.1(10) or (11) of the Indenture), whether at maturity
or on an interest payment date, by acceleration, call for redemption or
otherwise, (b) the due and punctual payment of interest on the overdue
principal and premium, if any, of and interest, if any, on the Notes, if
lawful, (c) the due and punctual payment and performance of all other
Obligations, all in accordance with the terms set forth in the Indenture, the
Notes and the Security Documents, and (d) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the due and
punctual payment or performance thereof in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the undersigned shall have any personal liability under
this Guaranty by reason of his or its status as such stockholder, officer,
director or incorporator.
[SUBSIDIARY]
By:_________________
Its:_________________
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.8; 7.10
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.5
(b) 11.3
(c) 11.3
313(a) 7.6
(b)(1) 7.6
(b)(2) 7.6
(c) 7.6
(d) 7.6
314(a) 4.3; 4.4
(b) 10.2
(c)(1) 11.4
(c)(2) 11.4
(c)(3) N.A.
(d) 10.3; 10.4
(e) 11.5
(f) N.A.
315(a) 7.1(2)
(b) 7.5
(c) 7.1(1)
(d) 7.1(3)
(e) 6.11
316(a)(last sentence) 2.9
(a)(1)(A) 6.5
(a)(1)(B) 6.4
(a)(2) N.A.
(b) 9.2
(c) 9.4
317(a)(1) 6.8
(a)(2) 6.9
(b) 2.4
318(a) 11.1
(b) N.A.
(c) 11.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions 1
Section 1.2. Other Definitions 18
Section 1.3. Incorporation by Reference of Trust
Indenture Act 19
Section 1.4. Rules of Construction. 19
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating 20
Section 2.2. Execution and Authentication 20
Section 2.3. Registrar, Paying Agent and Depository 21
Section 2.4. Paying Agent to Hold Money in Trust 22
Section 2.5. Holder Lists 22
Section 2.6. Transfer and Exchange 23
Section 2.7. Replacement Notes 27
Section 2.8. Outstanding Notes 28
Section 2.9. Treasury Notes 28
Section 2.10. Temporary Notes 28
Section 2.11. Cancellation 29
Section 2.12. Defaulted Interest 30
Section 2.13. Legends 30
ARTICLE 3
REDEMPTION
Section 3.1. Notices to Trustee 31
Section 3.2. Selection of Notes to Be Redeemed 31
Section 3.3 Notice of Redemption. 32
Section 3.4. Effect of Notice of Redemption. 33
Section 3.5. Deposit of Redemption Price. 33
Section 3.6. Notes Redeemed in Part. 33
Section 3.7. Optional Redemption. 33
ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes. 35
Section 4.2. Maintenance of Office or Agency. 35
Section 4.3. Reports. 36
Section 4.4. Compliance Certificate 37
Section 4.5. Taxes. 38
Section 4.6. Stay, Extension and Usury Laws. 38
Section 4.7. Limitation on Restricted Payments. 38
Section 4.8. Limitation on Restrictions on Subsidiary
Dividends. 41
Section 4.9. Limitation on Incurrence of Indebtedness and
Issuance of Preferred Stock 41
Section 4.10. Limitation on Asset Sales. 44
Section 4.11. Limitation on Transactions With Affiliates 47
Section 4.12. Limitation on Liens. 47
Section 4.13. Corporate Existence. 48
Section 4.14. Change of Control. 48
Section 4.15. Maintenance of Properties 50
Section 4.16. Maintenance of Insurance. 51
Section 4.17. Liquidation. 51
ARTICLE 5
SUCCESSORS
Section 5.1. When the Company May Merge, etc. 52
Section 5.2. Successor Substituted. 53
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default. 54
Section 6.2. Acceleration 56
Section 6.3. Other Remedies 57
Section 6.4. Waiver of Past Defaults 57
Section 6.5. Control by Majority 58
Section 6.6. Limitation on Suits 58
Section 6.7. Rights of Holders to Receive Payment 59
Section 6.8. Collection Suit by Trustee 59
Section 6.9. Trustee May File Proofs of Claim 59
Section 6.10. Priorities 60
Section 6.11. Undertaking for Costs 61
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee 61
Section 7.2. Rights of Trustee 62
Section 7.3. Individual Rights of Trustee 63
Section 7.4. Trustee's Disclaimer 64
Section 7.5. Notice of Defaults 64
Section 7.6. Reports by Trustee to Holders 64
Section 7.7. Compensation and Indemnity 65
Section 7.8. Replacement of Trustee 66
Section 7.9. Successor Trustee by Merger, etc. 67
Section 7.10. Eligibility; Disqualification 67
Section 7.11. Preferential Collection of Claims Against
Company 68
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's Obligations 68
Section 8.2. Application of Trust Money. 70
Section 8.3. Repayment to the Company 70
Section 8.4. Reinstatement. 71
ARTICLE 9
AMENDMENTS
Section 9.1. Without Consent of Holders 71
Section 9.2. With Consent of Holders 72
Section 9.3. Compliance with Trust Indenture Act 74
Section 9.4. Revocation and Effect of Consents 74
Section 9.5. Notation on or Exchange of Notes 74
Section 9.6. Trustee to Sign Amendments, etc. 74
Section 9.7 Payment for Consent 75
ARTICLE 10
COLLATERAL AND SECURITY AND GUARANTY
Section 10.1 Collateral Documents 75
Section 10.2 Recording and Opinions 76
Section 10.3 Release of Collateral 76
Section 10.4 Certificates of the Company 77
Section 10.5 Authorization of Actions to be Taken by the
Trustee Under the Security Documents 77
Section 10.6 Authorization of Receipt of Funds by the
Trustee Under the Collateral Documents 78
Section 10.7 Guaranty 78
Section 10.8 Execution and Delivery of Guaranty 80
Section 10.9 Limitation on Guarantor's Liability 81
Section 10.10 Rights under the Guaranty 81
Section 10.11 Primary Obligations 81
Section 10.12 Guarantee by Subsidiary 82
ARTICLE 11
MISCELLANEOUS
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. 85
Section 11.6. Rules by Trustee and Agents 85
Section 11.7. Legal Holidays 85
Section 11.8. No Recourse Against Others 86
Section 11.9. Governing Law 86
Section 11.10. No Adverse Interpretation of Other
Agreements 87
Section 11.11. Successors 87
Section 11.12. Severability 87
Section 11.13. Counterpart Originals 87
Section 11.14. Table of Contents, Headings, etc. 87
SIGNATURES
EXHIBIT A - FORM OF NOTE A-1
EXHIBIT B - CERTIFICATE OF TRANSFEROR B-1
EXHIBIT C - FORM OF GUARANTYC-1
1 1 This paragraph should be included only if the Note is issued in global
form.
2 2 Include only for Series A Notes.
3 3 Include only for Series B Notes.
4
5 4 This should be included only if the Note is issued in global form.
TEREX CORPORATION
250,000 Units
consisting in the aggregate of
$250,000,000 13.25% Senior Secured Notes due 2002
and
1,000,000 Common Stock Appreciation Rights
PURCHASE AGREEMENT
April 27, 1995
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
DILLON, READ & CO. INC.
535 Madison Avenue
New York, New York 10021
Ladies and Gentlemen:
Terex Corporation, a Delaware corporation ("Terex"), and the other
Terex Entities (defined below), hereby jointly and severally agree with you as
follows:
1. Issuance of Securities. Terex proposes to issue and sell to
purchasers listed on Schedule A hereto (the "Purchasers") (each such Purchaser
in the amount set forth opposite its name on Schedule A hereto) a total of
250,000 units (the "Units") consisting in the aggregate of (i) $250,000,000
aggregate principal amount of 13.25% Senior Secured Notes due 2002, Series A,
each with the related Guaranty (defined below) endorsed thereon (the "Series A
Notes"), and (ii) 1,000,000 Common Stock Appreciation Rights, Series A (the
"Series A Rights") of Terex. The Series A Notes will be issued pursuant to an
indenture (the "Indenture") to be dated as of the Closing Date (as defined
below) among Terex, the guarantors named in the Indenture (the "Guarantors")
and United States Trust Company of New York, as trustee (the "Trustee"). The
Guarantors will unconditionally guaranty the obligations under the Series A
Notes and the Indenture (collectively, the "Guaranty"). The obligations under
the Notes will be secured by security interests in or pledges of (the "Security
Interests") certain assets (the "Collateral") of Terex and certain of the
Subsidiaries (defined below) (collectively, the "Grantors") as set forth in the
Offering Circular (defined below). The Rights will be issued pursuant to a
common stock appreciation rights agreement (the "Rights Agreement") to be dated
as of the Closing Date between Terex and United States Trust Company of New
York, a New York banking corporation, as rights agent (the "Rights Agent").
Each Unit will consist of $1,000 principal amount of Series A Notes
and 4 Rights. Prior to separation, (i) the Units will be physically
represented by the Series A Notes, which will bear an endorsement representing
beneficial ownership of the Rights evidenced by a rights certificate (a "Rights
Certificate") on deposit with the Rights Agent, as custodian for the registered
holders of the Series A Notes, and (ii) transfer of a Series A Note also will
constitute transfer of a holder's beneficial interest in the related Rights.
On or after the Separation Date (as defined in the Indenture), the registered
holder of a Unit may surrender the Series A Note bearing the endorsement
relating to the Rights to the Rights Agent in exchange for a Series A Note and
a Rights Certificate.
The Units are being sold to refinance existing indebtedness and in
connection with the acquisition (the "Acquisition") of all of the outstanding
capital stock of Legris Industries, Inc. ("PPM North America") and 99.18% of
the outstanding capital stock of P.P.M., S.A. ("PPM Europe" and, together with
PPM North America, "PPM") from Legris Industries, S.A. ("Legris") by Terex
Cranes, Inc. ("Cranes"), a newly formed, wholly owned subsidiary of Terex. As
part of the Acquisition, pursuant to subscription letters, dated the Closing
Date (the "Subscription Agreements") between Terex and Cranes, Terex will
contribute substantially all of the assets and liabilities of its Koehring
Cranes and Excavators and Marklift division (the "Koehring Contribution") to
Koehring Cranes, Inc. ("Koehring"), a newly formed, wholly owned subsidiary of
Cranes. The Units will be offered and sold to the Purchasers pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "Act"). Terex has prepared a preliminary offering circular,
dated April 10, 1995 (the "Preliminary Offering Circular") and a final offering
circular, dated April 28, 1995 (the "Offering Circular"), relating the offer
and sale of the Units.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A
Notes and the Rights Certificates shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS THREE
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH TEREX OR ANY AFFILIATE OF TEREX WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO TEREX, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT 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, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR
(7) OF RULE 501 UNDER THE SECURITIES ACT 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 (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO TEREX'S AND THE [TRUSTEE'S] [RIGHTS AGENT'S]
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING
CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE [TRUSTEE]
[RIGHTS AGENT].
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained herein, and subject to the terms and
conditions hereof, Terex shall issue and sell to the Purchasers (and, in order
to induce the Purchasers to purchase such Units, the Guarantors shall grant the
Guaranty and the Grantors shall grant the Security Interests), and each of the
Purchasers agrees, severally and not jointly, to purchase from Terex, the
number of Units set forth opposite its name on Schedule A hereto. The purchase
price for each Unit shall be $965.00.
3. Terms of Offering. The Purchasers have advised Terex that the
Purchasers will make offers (the "Exempt Resales") of some or all of the Units
purchased by the Purchasers hereunder on the terms set forth in the Offering
Circular, as amended or supplemented, solely to (i) persons whom the Purchasers
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBs") and (ii) a limited number of institutional
"accredited investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the
Act ("Accredited Investors") (such persons specified in clauses (i) and (ii)
being referred to herein as the "Eligible Purchasers").
Holders of the Series A Notes will have the registration rights set
forth in the registration rights agreement (the "Debt Registration Rights
Agreement"), to be executed on and dated as of the Closing Date. Pursuant to
the Debt Registration Rights Agreement, Terex and the Guarantors will agree,
among other things, to file with the Securities and Exchange Commission (i) a
registration statement under the Act (the "Debt Exchange Offer Registration
Statement") relating to the 13.25% Senior Notes due 2002, Series B of Terex,
each with the related Guaranty endorsed thereon (the "Debt Series B Notes" and,
together with the Series A Notes, the "Notes"), to be offered in exchange for
the Series A Notes (such offer to exchange being referred to as the "Debt
Registered Exchange Offer") and/or (ii) a shelf registration statement pursuant
to Rule 415 under the Act (the "Debt Shelf Registration Statement") relating to
the resale by certain holders of the Series A Notes. Holders of the Series A
Rights will have the registration rights set forth in the common stock
appreciation rights registration rights agreement (the "SAR Registration Rights
Agreement" and together with the Debt Registration Rights Agreement, the
"Registration Rights Agreements"), to be executed on and dated as of the
Closing Date. Pursuant to the SAR Registration Rights Agreement, Terex will
agree, among other things, to file with the Securities and Exchange Commission
(i) a registration statement under the Act (the "SAR Exchange Offer
Registration Statement" and together with the Debt Exchange Offer Registration
Statement, the "Exchange Offer Registration Statements") relating to the
1,000,000 Common Stock Appreciation Rights, Series B of Terex (the "Series B
Rights" and together with the Series A Rights, the "Rights", and the Series B
Rights together with the Series B Notes, the "Exchange Securities"), to be
offered in exchange for the Series A Rights (the "SAR Registered Exchange
Offer" and together with the Debt Registered Exchange Offer, the "Registered
Exchange Offers") and/or (ii) a shelf registration statement pursuant to Rule
415 under the Act (the "SAR Shelf Registration Statement" and together with the
Debt Shelf Registration Statement, the "Shelf Registration Statements")
relating to the resale of the Series A Rights.
On the Closing Date, the Grantors will enter into security
agreements, mortgages, deeds of trust and certain other collateral assignment
agreements (collectively, the "Collateral Agreements") that will provide for
the grant of the Security Interests in the Collateral to the Trustee, as
collateral agent (in such capacity, the "Collateral Agent"), for the benefit of
the holders of the Notes. The Security Interests will secure the payment and
performance when due of all of the obligations of the Company, the Guarantors
and the Grantors, under the Indenture, the Notes, and the Collateral
Agreements.
The Indenture, the Rights Agreement, the Registration Rights
Agreements, and the Collateral Agreements are hereinafter referred to
collectively as the "Operative Documents." The documents necessary to
consummate the transactions contemplated by the Offering Circular, including,
without limitation, this Agreement and the Operative Documents, the Notes, the
Rights, the Share Purchase Agreement among New Terex Holdings UK Limited,
Legris and Potain S.A. dated October 19, 1994, as amended, modified or
otherwise supplemented through the date hereof, the Assignment Agreement
between New Terex Holdings UK Limited and Cranes, and the Subscription
Agreements (collectively, the "Acquisition Agreements") and any documents or
instruments contemplated by or executed in connection with any of them, are
referred to herein as the "Documents." The Units, the Notes, and the Rights
are referred to herein as the "Securities." Terex, the Guarantors and the
Grantors are collectively referred to herein as the "Terex Entities."
4. Delivery and Payment. Delivery to the Purchasers of and payment
for the Units shall be made at a Closing (the "Closing") to be held at 9:00
A.M., New York time, on May 9, 1995 (the "Closing Date") at the offices of
Robinson Silverman Pearce Aronsohn & Berman, 1290 Avenue of the Americas, New
York, New York. The Closing Date and the location of delivery of and the form
of payment for the Units may be varied by agreement among the Purchasers and
Terex.
Terex shall deliver to the Purchasers (i) one or more certificates
representing the Units, Notes and/or Rights (collectively, the "Global
Securities"), each in definitive form, registered in the name of Cede & Co., as
nominee of The Depository Trust Company ("DTC"), or such other names as the
Purchasers may request upon at least one business day's notice to Terex, in an
amount corresponding to the aggregate number or principal amount, as the case
may be, of Units, Notes and/or Rights sold pursuant to Exempt Resales to QIBs,
and (ii) one or more certificates representing the Units, Notes and/or Rights
(collectively, the "Individual Securities") in definitive form, registered in
such names and denominations as the Purchasers may so request, in an aggregate
amount corresponding to the aggregate number or principal amount, as the case
may be, of Units, Notes and/or Rights sold to Accredited Investors, in each
case against payment by the Purchasers of the purchase price thereof by an
immediately available Federal funds check made payable to Terex, or to its
order, or by Federal funds bank wire transfer to such bank account as Terex
shall designate at least two business days prior to the Closing.
The Global Securities and the Individual Securities in definitive
form shall be made available to the Purchasers for inspection not later than
9:30 A.M. on the business day immediately preceding the Closing Date.
5. Agreements of Terex Entities. Terex and the other Terex Entities
jointly and severally hereby agree with the Purchasers:
(a) To (i) advise the Purchasers promptly after obtaining
knowledge thereof and, if requested by the Purchasers, confirm such advice in
writing of (A) the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification of any of
the Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purpose by any state securities commission or other
regulatory authority, or (B) the happening of any event that makes any
statement of a material fact made in the Offering Circular untrue or that
requires the making of any additions to or changes in the Offering Circular in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading, (ii) use their best efforts to prevent the
issuance of any stop order or order suspending the qualification or exemption
from qualification of any of the Securities under any state securities or Blue
Sky laws, and (iii) if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of any of the Securities under any such laws, use
their best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To (i) furnish the Purchasers, without charge, as many
copies of the Preliminary Offering Circular and the Offering Circular, and any
amendments or supplements thereto, as the Purchasers may reasonably request and
(ii) promptly prepare, upon the Purchasers' request, any amendment or
supplement to the Preliminary Offering Circular or the Offering Circular that
the Purchasers deem may be reasonably necessary in connection with Exempt
Resales. Terex and the other Terex Entities consent to the use of the
Preliminary Offering Circular and the Offering Circular, and any amendments and
supplements thereto, by the Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering
Circular or the Offering Circular prior to the Closing Date unless the
Purchasers shall previously have been advised thereof and shall not have
objected thereto within five business days after being furnished a copy thereof
unless Terex makes a good faith determination (after consulting with counsel)
that such amendment or supplement is required to comply with applicable law.
(d) If any event shall occur as a result of which, in the
reasonable judgment of any of them or the Purchasers, it becomes necessary or
advisable to amend or supplement the Offering Circular in order to make the
statements therein, in the light of the circumstances at the time the Offering
Circular is delivered to prospective Eligible Purchasers, not misleading, or if
it is necessary to amend or supplement the Offering Circular to comply with
applicable law, forthwith to prepare an appropriate amendment or supplement to
the Offering Circular (in form and substance reasonably satisfactory to the
Purchasers) so that (i) as so amended or supplemented the Offering Circular
will not include an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances existing at the time it is delivered to prospective Exempt
Purchasers, not misleading, and (ii) the Offering Circular will comply with
applicable law.
(e) To cooperate with the Purchasers and the Purchasers'
counsel in connection with the qualification of the Securities under the
securities or Blue Sky laws of such jurisdictions as the Purchasers may request
and to continue such qualification in effect so long as required for Exempt
Resales; provided, however, that neither Terex nor any other Terex Entity shall
be required in connection therewith to qualify as a foreign corporation where
it is not now so qualified.
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay (i) all
costs, expenses, fees and all taxes incident to and in connection with: (A) the
preparation, printing and distribution of the Preliminary Offering Circular and
the Offering Circular and all amendments and supplements thereto (including,
without limitation, financial statements and exhibits), and all preliminary and
final Blue Sky memoranda and all other agreements, memoranda, correspondence
and other documents prepared and delivered in connection herewith and with
Exempt Resales, (B) the preparation (including, without limitation, word
processing and duplication costs) and delivery of, and performance under, each
of the Documents, (C) the issuance and delivery of the Securities, (D) the
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states (including, without limitation, the fees and
disbursements of the Purchasers' counsel relating to such registration or
qualification), (E) furnishing such copies of the Preliminary Offering Circular
and the Offering Circular, and all amendments and supplements thereto, as may
reasonably be requested for use in connection with Exempt Resales, and (F) the
preparation of certificates for the Securities (including, without limitation,
printing and engraving thereof), (ii) all fees and expenses of the counsel and
accountants of Terex, (iii) all expenses and listing fees in connection with
the application for quotation of the Securities in the National Association of
Securities Dealers, Inc. ("NASD") Automated Quotation System - PORTAL
("PORTAL"), (iv) all fees and expenses (including fees and expenses of counsel)
of Terex and Cranes in connection with approval of the Securities by DTC for
"book-entry" transfer, (v) all fees charged by rating agencies in connection
with the rating of the Notes and (vi) all fees and expenses (including
reasonable fees and expenses of counsel) incurred by the Purchasers in
connection with the preparation, negotiation and execution of the Documents and
the transactions contemplated hereby and thereby. Notwithstanding the
foregoing, Terex and the other Terex Entities shall not be required to pay for
more than one separate firm of attorneys for the Purchasers (together with
local counsel), unless Terex shall have approved the retention of additional
firms.
(g) To use the proceeds from the sale of the Units in the
manner described in the Offering Circular under the caption "Use of Proceeds."
(h) To the extent they may lawfully do so, not to insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension, usury or other law, wherever enacted, now or at any time
hereafter in force, that would prohibit or forgive the payment of all or any
portion of the principal of or interest on the Notes, or that may affect the
covenants or the performance of the Indenture, the Securities or any of the
Collateral Agreements. To the extent that they may lawfully do so, each of
Terex and each other Terex Entity hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power granted to the
Trustee in the Indenture or the Collateral Agent in the Collateral Agreements
but shall suffer and permit the execution of every such power as though no such
law had been enacted.
(i) To do and perform in all material respects all things
required to be done and performed under the Operative Documents by them prior
to and after the Closing Date and to satisfy in all material respects or obtain
the waiver of all conditions precedent on their part to the delivery of the
Units.
(j) Not to, and to use its best efforts to ensure that no
affiliate (as defined in Rule 501(b) of the Act) of any of them will, sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as defined in the Act) that would be integrated with the sale of
the Units in a manner that would require the registration under the Act of the
sale to the Purchasers or to the Eligible Purchasers of the Units.
(k) For so long as any of the Securities remain outstanding and
during any period in which any of them is not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any Eligible Purchasers or beneficial owner of the Securities in
connection with any sale thereof and any prospective purchaser of such
Securities from such Eligible Purchasers or beneficial owner, the information
required by Rule 144A(d)(4) under the Act.
(l) To comply with all of its agreements set forth in the
representation letters of Terex to DTC relating to the approval of the
Securities by DTC for "book-entry" transfer.
(m) To use their best efforts to effect the inclusion of the
Securities in PORTAL.
(n) For so long as any of the Securities remain outstanding, to
deliver to the Purchasers promptly upon their becoming available, copies of all
current, regular and periodic reports filed by any of them with the Securities
and Exchange Commission or any securities exchange.
(o) Not to (i) distribute any offering material in connection
with the offering and sale of the Units other than the Preliminary Offering
Circular and the Offering Circular and any amendments and supplements to the
Offering Circular prepared in compliance with Section 5(c) hereof or (ii)
solicit any offer to buy or sell the Units by means of any form of general
solicitation or advertising.
(p) Prior to the Closing Date, to furnish to the Purchasers,
promptly after they are filed with the Securities and Exchange Commission, a
copy of all consolidated financial statements of any of them, if any, for any
period subsequent to the period covered by the financial statements appearing
in the Offering Circular.
(q) Not to, directly or indirectly, without the prior consent
of the Purchasers, offer, sell, grant any option to purchase, or otherwise
dispose (or announce any offer, sale, grant of any option to purchase or other
disposition) of any securities of any of them for a period of 90 days after the
date of the Offering Circular, except for (i) the Exchange Securities as
contemplated by the Registration Rights Agreements, (ii) any options or other
securities issued pursuant to the 1986 Incentive Plan (as defined in the
Offering Circular) or the 1994 Incentive Plan (as defined in the Offering
Circular), and (iii) securities issued upon conversion of the Series A Common
Stock Purchase Warrants of Terex, the Series B Common Stock Purchase Warrants
of Terex, the Series A Cumulative Redeemable Convertible Preferred Stock of
Terex or the Series B Cumulative Redeemable Convertible Preferred Stock of
Terex.
(r) For so long as the Purchasers shall hold any Securities, to
promptly notify each Purchaser in writing if Terex or any of its ERISA
Affiliates becomes a party in interest or a disqualified person with respect to
any employee benefit plan other than any such plans described on Annex A of the
Offering Circular. The terms "ERISA," "Affiliates," "party in interest,"
"disqualified person" and "employee benefit plan" shall have the meanings as
set forth in Section 6(y) hereof.
6. Representations and Warranties of Terex Entities. Terex and the
other Terex Entities jointly and severally represent and warrant to each of the
Purchasers that:
(a) The Preliminary Offering Circular as of its date did not,
and the Offering Circular as of its date does not and the Offering Circular as
amended or supplemented as of the Closing Date will not, and each supplement or
amendment thereto as of its date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. No stop order preventing the use of the Preliminary
Offering Circular or the Offering Circular, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated by
this Agreement are subject to the registration requirements of the Act, has
been issued. Each of the Preliminary Offering Circular and the Offering
Circular, as of their respective dates contained, the Offering Circular as
amended or supplemented as of the Closing Date will contain, and each amendment
or supplement thereto as of its date will contain, all the information
specified in, and meet the requirements of, Rule 144A(d)(4) under the Act.
(b) There are no securities of Terex or any of the other Terex
Entities registered under the Exchange Act or listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted in a United
States automated inter-dealer quotation system, other than the common stock,
par value $.01 per share, of Terex (the "Common Stock").
(c) Each of Terex and each Subsidiary has been duly organized,
is validly existing and, in the case of domestic organizations, is in good
standing under the laws of its respective jurisdiction of organization, and has
all requisite power and authority to carry on its business and to own, lease
and operate its properties and assets as described in the Offering Circular.
Each of Terex and each Subsidiary is duly qualified or licensed to do business
and is in good standing as a foreign corporation authorized to do business in
each jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure to be
so qualified could not, singly or in the aggregate, have a material adverse
effect on (i) the properties, business, prospects, operations, earnings,
assets, liabilities or condition (financial or otherwise) of Terex and the
Subsidiaries, taken as a whole, (ii) the ability of Terex and the Subsidiaries
to perform their respective obligations under any of the Documents or (iii) the
perfection or priority of any Security Interest in any material portion of the
Collateral (a "Material Adverse Effect").
(d) Immediately following the Closing, (i) the only direct or
indirect subsidiaries of Terex (collectively, the "Subsidiaries") will be (A)
the corporations identified on Schedule 6(d), and (B) other Subsidiaries that
are not (and if taken in the aggregate would not be) Material Subsidiaries (as
defined in the Indenture) (ii) except as set forth in clause (i) above, Terex
will not directly or indirectly own any capital stock or other equity interest
in any other person, and (iii) except as set forth on Schedule 6(d), Terex will
directly and indirectly beneficially own 100% of the outstanding shares of
capital stock of each Subsidiary, free and clear of any security interest,
mortgage, pledge, transfer restriction, defect, claim, lien, limitation on
voting rights, encumbrance, equity or adverse interest of any nature (each, a
"Lien"), except as granted pursuant to the Collateral Agreements, the
Stockholders Agreement to be dated the Closing Date among Terex, Legris and
Potain S.A., the Stockholders Agreement (the "Potain Agreement"), entered into
on March 18, 1991, among Potain Tower Cranes, Inc., ("Potain Towers"), Century
II Acquisition Corp. (currently known as PPM Cranes, Inc.), and Group Legris
Industries S.A. ("Group"), and the Post-Merger Agreement (the "Merger
Agreement"), entered into on April 10, 1991, among Potain Towers, Century and
Group and except for Permitted Liens, and all of such shares of capital stock
will be duly authorized and validly issued, fully paid and nonassessable and
not issued in violation of, or subject to, any preemptive or similar rights.
(e) Immediately following the Closing, the total authorized
capital stock of Terex shall consist of 40,000,000 shares of capital stock,
$.01 par value, consisting of 30,000,000 shares of common stock, 10,314,217 of
which shall be issued and outstanding, and 10,000,000 shares of preferred
stock, 1,289,800 shares of which shall be issued and outstanding. All of the
outstanding shares of capital stock of Terex have been duly authorized and
validly issued, are fully paid and nonassessable and were not issued in
violation of, and are not subject to, any preemptive or similar rights. The
pro forma table under the caption "Capitalization" in the Offering Circular
sets forth and identifies all outstanding long-term indebtedness of Terex, on a
consolidated basis, after giving effect to the transactions described in the
Offering Circular. Except as set forth in such table, immediately following
the Closing, neither Terex nor any of the Subsidiaries shall have any
liabilities, absolute, accrued, contingent or otherwise other than any such
liabilities that either (x) are reflected in the Financial Statements (defined
below), (y) were incurred in the ordinary course of business and adequately
disclosed in the Offering Circular or (z) could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 6(e), there are no outstanding (x) securities convertible
into or exchangeable for any capital stock of Terex or any of the Subsidiaries,
(y) options, warrants or other rights to purchase or subscribe to capital stock
of Terex or any of the Subsidiaries or securities convertible into or
exchangeable for capital stock of Terex or any of the Subsidiaries, or (z)
contracts, commitments, agreements, understandings, arrangements, calls or
claims of any kind relating to the issuance of any capital stock of Terex or
any of the Subsidiaries, any such convertible or exchangeable securities or any
such options, warrants or rights.
(f) Except for this Agreement and the Registration Rights
Agreements, and as set forth on Schedule 6(f), neither Terex nor any of the
Subsidiaries has entered into any agreement (i) to register its securities
under the Act or (ii) to purchase or offer to purchase any of its securities.
(g) Each of Terex and each Subsidiary has all requisite power
and authority to enter into, deliver and perform its obligations under the
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. This Agreement and each other Document has
been duly and validly authorized by Terex and each Subsidiary that is, or that
will be, a party thereto, and this Agreement is, and on the Closing Date each
other Document will be, the legal, valid and binding obligation of each such
person that is a party hereto or thereto, enforceable against each such person
in accordance with its terms. Each Document conforms in all material respects
or, when executed and delivered, will conform in all material respects, to the
description thereof in the Offering Circular. The Securities, when issued and
delivered, will conform in all material respects to the description thereof in
the Offering Circular.
(h) The Series A Notes have been duly and validly authorized by
Terex for issuance and sale to the Purchasers pursuant to this Agreement and,
when issued in accordance with the terms hereof and of the Indenture, will be
legal, valid and binding obligations of Terex, enforceable against Terex in
accordance with their terms. The Series B Notes have been duly and validly
authorized by Terex and, when issued in accordance with the terms of the
Indenture, will be legal, valid and binding obligations of Terex, enforceable
against Terex in accordance with their terms. Each Guaranty has been duly and
validly authorized by the applicable Guarantor and, when issued in accordance
with the terms of the Indenture, will be a legal, valid and binding obligation
of such Guarantor, enforceable against such Guarantor in accordance with its
terms.
(i) The Series A Rights have been duly and validly authorized
by Terex for issuance and sale to the Purchasers pursuant to this Agreement
and, when issued in accordance with the terms hereof and of the Rights
Agreement, will be legal, valid and binding obligations of Terex, enforceable
against Terex in accordance with their terms. Neither the issuance nor
exercise of such Rights is subject to any preemptive or similar rights. The
Series B Rights have been duly and validly authorized by Terex and, when issued
in accordance with the terms of the Rights Agreement, will be legal, valid and
binding obligations of Terex, enforceable against Terex in accordance with
their terms.
(j) Neither Terex nor any of the Subsidiaries is (i) in
violation of its respective charter or by-laws (collectively, "Charter
Documents"), (ii) other than violations that could not, singly or in the
aggregate, result in a Material Adverse Effect, in violation of any Federal,
state, local or foreign statute, law (including, without limitation, common
law) or ordinance, or any judgment, decree, rule, regulation or order
(collectively, "Applicable Law") of any government, governmental or regulatory
agency or body, court or arbitrator, domestic or foreign (each, a "Governmental
Authority") or (iii) other than breaches or defaults that could not, singly or
in the aggregate, result in a Material Adverse Effect, in breach of or default
under any bond, debenture, note or other evidence of indebtedness, indenture,
mortgage, deed of trust, lease or any other agreement or instrument to which
any such person is a party or by which any of them or their respective property
is bound (collectively, "Applicable Agreements"). There exists no condition
that, with the passage of time or otherwise, would constitute a violation of
such Charter Documents or Applicable Laws or a breach of or default under any
Applicable Agreement or result in the imposition of any penalty or the
acceleration of any indebtedness, other than breaches, violations, penalties,
defaults or conditions which could not, singly or in the aggregate, result in a
Material Adverse Effect.
(k) Neither the execution, delivery or performance of the
Documents, nor the consummation of the transactions contemplated hereby or
thereby shall conflict with, violate, constitute a breach of or a default (with
the passage of time or otherwise) under, require the consent of any person
(other than consents already obtained) under, or result in the imposition of a
Lien on any assets of Terex or any of the Subsidiaries, or an acceleration of
indebtedness pursuant to (i) the Charter Documents of Terex or any of the
Subsidiaries, (ii) any Applicable Agreement, other than such breaches,
violations or defaults that could not, singly or in the aggregate, result in a
Material Adverse Effect or (iii) any Applicable Law, other than violations that
could not, singly or in the aggregate, result in a Material Adverse Effect.
After giving effect to the transactions contemplated by the Documents, no
Default or Event of Default (as defined in the Indenture) will exist.
(l) No authorization, approval, consent, license or order of,
or filing, registration or qualification with, any Governmental Authority and
no approval or consent of any other Person, is required in connection with, or
as a condition to, the execution, delivery or performance of this Agreement and
the other Documents or the consummation of the transactions contemplated hereby
and thereby other than such authorizations, approvals, consents, licenses,
orders, filings, registrations and qualifications, (i) as have been made or
obtained on or prior to the Closing Date, (ii) as are not required to be made
or obtained on or prior to the Closing Date that will be made or obtained when
required and (iii) the failure of which to make or obtain could not, singly or
in the aggregate, result in a Material Adverse Effect.
(m) Except as adequately disclosed in the Offering Circular,
there is no action, claim, suit or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition) (collectively,
"Proceedings") pending or threatened that either (i) seeks to restrain,
enjoin, prevent the consummation of, or otherwise challenge any of the
Documents or any of the transactions contemplated hereby or thereby or (ii)
could, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as adequately disclosed in the Offering Circular,
neither Terex nor any of the Subsidiaries is subject to any judgment, order,
decree, rule or regulation of any Governmental Authority that could, singly or
in the aggregate, have a Material Adverse Effect.
(n) Each of Terex and the Subsidiaries has such permits,
licenses, franchises and authorizations of Governmental Authorities
(collectively, "Permits") as are necessary to own, lease and operate its
respective properties and to conduct its business in the manner described in
the Offering Circular except where the failure to so have such Permits could
not, singly or in the aggregate, have a Material Adverse Effect. All such
Permits are in full force and effect, and each of Terex and the Subsidiaries
has fulfilled and performed all of its obligations with respect to such
Permits, except where the failure to do so could not, singly or in the
aggregate, have a Material Adverse Effect. To the best knowledge of Terex and
the Subsidiaries, after due inquiry, no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination by the
issuer thereof or which results in any other material impairment of the rights
of the holder of any such material Permits. Neither Terex nor any of the
Subsidiaries has any reason to believe that any issuer is considering limiting,
suspending or revoking any such material Permit.
(o) Immediately following the Closing, each of Terex and the
Subsidiaries (i) will have good title, free and clear of all Liens (except for
Liens permitted under the Indenture), to all property and assets described in
the Offering Circular as being owned by it and (ii) will enjoy peaceful and
undisturbed possession under all such leases to which it is a party as lessee.
All Applicable Agreements are valid and binding and no default has occurred or
is continuing thereunder other than such defaults that could not, singly or in
the aggregate, have a Material Adverse Effect. Terex and the Subsidiaries
maintain insurance (including self-insurance consistent with prior practice as
adequately disclosed in the Offering Circular) covering their properties,
operations, personnel and businesses against such losses and risks as they
reasonably deem adequate in accordance with customary industry practice. Any
such insurance is outstanding and duly in force. Upon execution and delivery
thereof, the Collateral Agreements will create, in favor of the Collateral
Agent, for the benefit of the holders of the Notes, a valid grant of a security
interest in the Collateral and the proceeds thereof and, upon the filings or
the recording required by the Operative Documents, the Collateral Agent will
have a first priority perfected security interest in such Collateral, except to
the extent so limited in the Collateral Agreements. As of the Closing Date,
the book value of the Collateral in which the Collateral Agent has a perfected
security interest will be not less than $405 million.
(p) Concurrently with the Closing, (i) Terex will defease and
irrevocably call for redemption the 13% Senior Secured Notes (the "1996
Notes"), issued pursuant to an indenture as amended or supplemented (the "1996
Indenture"), dated July 31, 1992, among Terex, the guarantors named therein and
United States Trust Company of New York, as trustee thereunder, (ii) Terex will
defease and irrevocably call for redemption the 13-1/2% Senior Subordinated
Notes (the "1997 Notes" and together with the 1996 Notes, the "Existing
Notes"), issued pursuant to an indenture as amended or supplemented (the "1997
Indenture" and, together with the 1996 Indenture, the "Old Indentures"), dated
July 31, 1987, among Terex, the guarantors named therein and Bank of America
Illinois (formerly known as Continental Bank, N.A.), as trustee thereunder, and
(iii) Terex will have no further obligations with respect to the Existing Notes
except for those that the Old Indentures expressly state survive the defeasance
of the Existing Notes.
(q) Except as adequately disclosed on the Offering Circular,
all tax returns required to be filed by Terex and the Subsidiaries in any
jurisdiction (including foreign jurisdictions) have been filed and when filed
by Terex or its Subsidiaries, as the case may be, were accurate in all material
respects, and all material taxes, assessments, fees and other charges
(including, without limitation, withholding taxes, penalties and interest) due
or claimed to be due from such entities have been paid, other than those being
contested in good faith, or that are currently payable without penalty or
interest and for which an adequate reserve or accrual has been established or
extensions duly filed. Except as adequately disclosed in the Offering
Circular, (i) neither Terex nor any Terex Entity knows of any actual or
proposed additional tax assessments for any fiscal period against Terex or any
of the Subsidiaries that could, singly or in the aggregate, have a Material
Adverse Effect and (ii) the charges, accruals and reserves on the consolidated
books of each of Terex and the Subsidiaries in respect of any income and tax
liability for any years not finally determined are adequate to meet any
assessments or re-assessments for additional income tax for any years not
finally determined, except to the extent of any inadequacies that could not,
singly or in the aggregate, have a Material Adverse Effect, provided, however,
that no reserves are on the books with respect to the examination by the
Internal Revenue Service which is disclosed in the Offering Circular under the
heading "Risk Factors -- Net Operating Loss Carryovers and Other Tax Issues."
(r) Terex and the Subsidiaries own, or are licensed under, and
have the right to use all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "Intellectual
Property") currently employed by them in connection with, or necessary for the
conduct of, their businesses as set forth in the Offering Circular, except for
Intellectual Property the loss of ownership or license of which could not,
singly or in the aggregate, have a Material Adverse Effect. The consummation
of the transactions contemplated by the Documents shall not alter or impair any
such rights except with respect to Intellectual Property the loss of ownership
or license of which could not, singly or in the aggregate, have a Material
Adverse Effect. No claims have been asserted by any person and remain
outstanding, relating to the use of any Intellectual Property by Terex or any
of the Subsidiaries or challenging or questioning the validity or effectiveness
of any license or agreement related thereto, which claims could not, singly or
in the aggregate, have a Material Adverse Effect. Except for such as could not
singly or in the aggregate have a Material Adverse Effect, there is no valid
basis for any such claim and, to the best knowledge of Terex and the
Subsidiaries after due inquiry, the use of such Intellectual Property by Terex
and the Subsidiaries does not and will not infringe on the Intellectual
Property rights of any person.
(s) Each of Terex and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) material transactions are executed in accordance with management's general
or specific authorization, (ii) material transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles of the United States, consistently applied
("GAAP"), and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any material differences.
(t) The audited financial statements and related notes
contained in the Preliminary Offering Circular and the Offering Circular
(collectively, the "Financial Statements") present fairly the consolidated
financial position, results of operations and cash flows of the entities named
therein as of the respective dates and for the respective periods to which they
apply and have been prepared in accordance with GAAP and with the instructions
to Form 10-K and Regulation S-X. The summary and selected consolidated
financial data included in the Preliminary Offering Circular and the Offering
Circular have been prepared on a basis consistent with that of the Financial
Statements and present fairly the consolidated financial position and results
of operations of Terex as of the respective dates and for the respective
periods indicated, except as noted in the Offering Circular. The pro forma
financial data included in the Offering Circular (i) present fairly the pro
forma financial position and results of operations of the Company and the
Subsidiaries as of the dates and for the periods indicated, after giving effect
to the transactions contemplated by the Documents, (ii) have been prepared on a
basis consistent with the Financial Statements, except for the pro forma
adjustments specified therein, and (iii) are based on the good faith estimates
and assumptions of Terex and all of such estimates and assumptions are
reasonable. All other financial and statistical data included in the Offering
Circular are fairly and accurately presented. Price Waterhouse LLP and Ernst &
Young LLP are independent public accountants with respect to Terex and the
Subsidiaries.
(u) Subsequent to the respective dates as of which information
is given in the Offering Circular, except as adequately disclosed in the
Offering Circular, (i) neither Terex nor any of the Subsidiaries has incurred
any liabilities, direct or contingent, that are material, singly or in the
aggregate, to any of them, or has entered into any material transactions not in
the ordinary course of business, (ii) there has not been any decrease in the
capital stock or any increase in long-term indebtedness or any material
increase in short-term indebtedness of any of them, or any payment of or
declaration to pay any dividends or any other distribution with respect to any
of them, and (iii) there has not been any material adverse change in the
properties, business, prospects, operations, earnings, assets, liabilities or
condition (financial or otherwise) of Terex and the Subsidiaries taken as a
whole (a "Material Adverse Change"). There is no fact known to Terex or any of
the Subsidiaries that is reasonably likely to occur and if occurred, could,
singly or in the aggregate, have a Material Adverse Effect that has not been
adequately disclosed in the Offering Circular.
(v) Immediately following the Closing, after giving effect to
the transactions contemplated by the Documents, (i) the present fair salable
value of the assets of each of Terex and each of the Subsidiaries will exceed
the amount that will be required to be paid on or in respect of the then
existing debts and other liabilities (including contingent liabilities) as they
become absolute and matured and (ii) the assets of Terex and the Subsidiaries
will not constitute unreasonably small capital to carry out their respective
businesses as conducted or as proposed to be conducted including the capital
needs of each of them, taking into account their respective projected capital
requirements and capital availability. Neither Terex nor any of the
Subsidiaries intends to, or believes that it will, incur debts beyond its
ability to pay such debts as they mature.
(w) Except as contemplated by this Agreement, neither Terex nor
any of the Subsidiaries has (i) taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of any of them to facilitate the sale or resale of any of
the Securities or (ii) except as disclosed in the Offering Circular, (A) sold,
bid for, purchased, or paid anyone any compensation for soliciting purchases
of, any of the Securities or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of any of
them.
(x) No registration under the Act, and no qualification of the
Indenture or the Rights Agreement under the Trust Indenture Act of 1939, as
amended (the "TIA"), is required for the sale of the Units to the Purchasers as
contemplated hereby or for the Exempt Resales, assuming (i) that the Eligible
Purchasers who buy the Units in the Exempt Resales are QIBs or Accredited
Investors, (ii) the accuracy of the Purchasers' representations contained
herein regarding the absence of general solicitation in connection with the
sale of the Units to the Purchasers and the Exempt Resales, and (iii) the
accuracy of the representations made by each Accredited Investor who purchases
the Units pursuant to an Exempt Resale as set forth in the letters of
representation in the form of Annex A to the Offering Circular. No form of
general solicitation or general advertising was used by Terex or any of the
Subsidiaries or any of their representatives in connection with the offer and
sale of any of the Units or in connection with Exempt Resales. No securities
of the same class as any of the Securities have been offered, issued or sold by
Terex or any of the Subsidiaries within the six-month period immediately prior
to the date hereof.
(y) Based on the representation of the Purchasers set
forth in Section 7(e) hereof, the execution and delivery of this Agreement and
the other Documents, and the sale of the Securities to be purchased by the
Purchasers will not involve any non-exempt prohibited transaction within the
meaning of Section 406 of the Employee Retirement Income Act of 1974, as
amended, or the rules and regulations promulgated thereunder ("ERISA") or
Section 4975 of the Internal Revenue Code of 1986, as amended, or the rules,
regulations and published interpretations promulgated thereunder (the "Code").
Neither Terex nor any of its ERISA Affiliates is a "party in interest" or a
"disqualified person" except with respect to those employee benefit plans set
forth on Annex A of the Offering Circular. No condition exists or event or
transaction has occurred in connection with any employee benefit plan that
could result in Terex or any such ERISA Affiliate incurring any liability, fine
or penalty that could, singly or in the aggregate, have a Material Adverse
Effect. With respect to any employee pension benefit plan that is subject to
Title IV of ERISA, except as adequately disclosed in the Offering Circular, (i)
the fair market value of the assets of such employee pension benefit plan
equals or exceeds the present value of the liabilities of such pension plan (as
determined in accordance with the actuarial methods and assumptions set forth
in the latest actuarial report for such employee pension benefit plan), except
where the failure to so equal or exceed would not, singly or in the aggregate,
have a Material Adverse Effect and (ii) there exists no accumulated funding
deficiency which would have, singly or in the aggregate, a Material Adverse
Effect. The terms "employee benefit plan," "employee pension benefit plan,"
and "party in interest" shall have the meanings assigned to such terms in
Section 3 of ERISA, the term "Affiliate" shall have the meaning assigned to
such term in Section 407(d)(7) of ERISA, and the term "disqualified person"
shall have the meaning assigned to such term in section 4975 of the Code.
(z) None of the transactions contemplated by the Documents will
violate or result in a violation of Section 7 of the Exchange Act (including,
without limitation, Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System, in each case as in effect now or as the same may
hereafter be in effect on the Closing Date). Neither Terex nor any of the
Subsidiaries is subject to regulation, or shall become subject to regulation
upon the consummation of the transactions contemplated by the Documents, under
the Investment Company Act of 1940, as amended, and the rules and regulations
and interpretations promulgated thereunder, the Public Utility Holding Company
Act of 1935, as amended, the Federal Power Act, the Interstate Commerce Act,
the Commodity Exchange Act or any Federal or state statute or regulation
limiting its ability to incur or assume indebtedness for borrowed money. Terex
has complied with all provisions of Florida H.B. 1771, codified as Section
517.075 of the Florida Statutes, and all regulations promulgated thereunder
relating to issuers doing business with the Government of Cuba or with any
person or any affiliate located in Cuba.
(aa) Neither Terex nor any of the Subsidiaries has dealt with
any broker, finder, commission agent or other person (other than the
Purchasers) in connection with the transactions contemplated by the Documents,
and none of them is under any obligation to pay any broker's fee or commission
in connection with such transactions (other than commissions and fees to the
Purchasers as set forth in the Offering Circular).
(ab) Neither Terex nor any of the Subsidiaries is engaged in
any unfair labor practice that could, singly or in the aggregate, have a
Material Adverse Effect. Except as adequately disclosed in the Offering
Circular, there is (i) no unfair labor practice complaint or other proceeding
pending or, to the best of their knowledge after due inquiry, threatened
against Terex or any of the Subsidiaries before the National Labor Relations
Board or any industrial tribunal, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is so pending or, to
the best of their knowledge after due inquiry, threatened, (ii) no strike,
labor dispute, slowdown or stoppage pending or, to the best of their knowledge
after due inquiry, threatened against Terex or any of the Subsidiaries, and
(iii) no union representation question existing with respect to the employees
of Terex or any of the Subsidiaries, and, to the best of their knowledge after
due inquiry, no union organizing activities are taking place, that could,
singly or in the aggregate, have a Material Adverse Effect.
(ac) Except as adequately disclosed in the Offering Circular or
as otherwise could not, singly or in the aggregate, have a Material Adverse
Effect:
(1) each of Terex and the Subsidiaries (i) has obtained
all Permits that are required with respect to the operation of its business,
property and assets under the Environmental Laws (as defined below) and are in
compliance with all terms and conditions of such required Permits, and (ii) is
in compliance with all Environmental Laws (including, without limitation,
compliance with standards, schedules and timetables therein);
(2) no real property or facility owned, used, operated,
leased, managed or controlled by Terex or any of the Subsidiaries, or any
predecessor in interest, is listed or proposed for listing on the National
Priorities List or the Comprehensive Environmental Response, Compensation, and
Liability Information System, both promulgated under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or on any other state or local list established pursuant to any
Environmental Law, and neither Terex nor any of the Subsidiaries has received
any notification of potential or actual liability or request for information
under CERCLA or any comparable state or local law;
(3) no underground storage tank or other underground
storage receptacle, or related piping, is located on a facility or property
currently owned, operated, leased, managed or controlled by Terex or any of the
Subsidiaries;
(4) there have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping, on-site or,
to the best knowledge of Terex and the Subsidiaries after due inquiry,
off-site) of Hazardous Materials (as defined below) by Terex, any of the
Subsidiaries or, to the best knowledge of Terex and the Subsidiaries after due
inquiry, any predecessor in interest or any person or entity whose liability
for any release of Hazardous Materials, Terex or any of the Subsidiaries has
retained or assumed either contractually or by operation of law at, on, under,
from or into any facility or real property owned, operated, leased, managed or
controlled by any such person;
(5) neither Terex, the Subsidiaries nor any person or
entity whose liability Terex or any of the Subsidiaries has retained or assumed
either contractually or, to the best knowledge of Terex and the Subsidiaries
after due inquiry, by operation of law has any liability, absolute or
contingent, under any Environmental Law, and there is no civil, criminal or
administrative action, suit, demand, hearing, notice of violation or
deficiency, investigation, proceeding, notice or demand letter pending or, to
the best of their knowledge after due inquiry, threatened against any of them
under any Environmental Law;
(6) there are no events, activities, practices, incidents
or actions or, to the best knowledge of Terex and the Subsidiaries after due
inquiry, conditions, circumstances or plans that may interfere with or prevent
compliance by Terex or any of the Subsidiaries with any Environmental Law, or
that may give rise to any liability under any Environmental Laws; and
(7) in the ordinary course of their businesses, Terex and
each of the Subsidiaries conduct a periodic review of the effect of
Environmental Laws on the business, operations and properties of the Company
and each of the Subsidiaries in the course of which they identify and evaluate
associated costs and liabilities (including, without limitation, any capital or
operating expenditures required for cleanup, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company and each of the
Subsidiaries have reasonably concluded that such associated costs and
liabilities could not reasonably be expected, singly or in the aggregate, to
have a Material Adverse Effect on the Company and each of the Subsidiaries,
taken as a whole.
"Environmental Laws" means all Applicable Laws, now or
hereafter in effect, relating to pollution or protection of human health or the
environment, including, without limitation, laws relating to (1) emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous constituents, substances or
wastes, including, without limitation, asbestos or asbestos-containing
materials, polychlorinated biphenyls, petroleum or any constituents relating to
or arising out of any oil production activities, including crude oil or any
fraction thereof, or any petroleum product or other wastes, chemicals or
substances regulated by any Environmental Law (collectively referred to as
"Hazardous Materials"), into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
(2) the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of Hazardous Materials and (3)
underground storage tanks, and related piping, and emissions, discharges,
releases or threatened releases therefrom.
(ad) No statement, representation, warranty or covenant
made by Terex, any of the Subsidiaries, or any other person in any of the
Documents or made in any certificate or document required by this Agreement to
be delivered to the Purchasers was or will be, when made, inaccurate, untrue or
incorrect in any material respect.
(ae) (i) the Acquisition Agreements and the transactions
contemplated thereunder have been duly authorized, executed, delivered and,
immediately following the Closing, will be performed in accordance with their
terms by the respective parties thereto in all material respects, including the
fulfillment (not merely the waiver, except as may be disclosed to the
Purchasers and consented to in writing by the Purchasers) of all conditions
precedent set forth therein, and after giving effect to the terms of the
Acquisition Agreements and the assignments to be executed and delivered by
Legris and Potain, S.A. thereunder, Cranes will acquire and have good title to
the stock so purchased thereunder, free and clear of all Liens (except for
Liens permitted under the Indenture) and (ii) all actions required by the
Acquisition Agreements, applicable law or regulation (including, but not
limited to, compliance with the Hart-Scott-Rodino Anti-trust Improvements Act
of 1976, as amended) will have been taken and the transactions required
thereunder have been duly and validly consummated.
7. Representations and Warranties of the Purchasers.
Each Purchaser severally represents and warrants to Terex that:
(a) It is a QIB.
(b) It (i) is not acquiring the Units with a view to any
distribution thereof that would violate the Act or the securities laws of any
state of the United States or any other applicable jurisdiction and (ii) will
be reoffering and reselling the Units only to (A) persons in the United States
whom it reasonably believes to be QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (B) a limited
number of Accredited Investors that execute and deliver a letter containing
certain representations and agreements in the form attached as Annex A to the
Offering Circular.
(c) No form of general solicitation or general advertising in
violation of the Securities Act has been or will be used by such Purchaser or
any of its representatives in connection with the offer and sale of any of the
Units.
(d) In connection with the Exempt Resales, it will solicit
offers to buy the Units only from, and will offer to sell the Units only to,
Eligible Purchasers. It will offer to sell the Units only to, and will solicit
offers to buy the Units only from, persons who, in purchasing such Units, will
be deemed to have represented and agreed (i) if such Eligible Purchasers are
QIBs, that they are purchasing the Units for their own accounts or accounts
with respect to which they exercise sole investment discretion and that they or
such accounts are QIBs, (ii) that such Units will not have been registered
under the Act and may be resold, pledged or otherwise transferred only (A)
inside the United States to a person who the seller reasonably believes is a
QIB in a transaction meeting the requirements of Rule 144A, in a transaction
meeting the requirements of Rule 144, or in accordance with another exemption
from the registration requirements of the Act, (B) to Terex, (C) pursuant to an
effective registration statement, and (D) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
Act and, in each case, in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction, and (iii) that
the holder will, and each subsequent holder is required to, notify any
purchaser from it of the security evidenced thereby of the resale restrictions
set forth in (ii) above.
(e) It is not a pension or welfare plan (as defined in Section
3 of ERISA) and it is not acquiring the Securities on behalf of a person whose
funds to be used for the purchase of the Securities constitute assets allocated
to any qualified trust that contains the assets of any employee benefit plan
with respect to which Terex is a party in interest or disqualified person or
the use of such assets would not constitute a non-exempt prohibited transaction
under ERISA or the Code. The representation made in the preceding sentence is
made solely in reliance upon such Purchasers' review of Annex A of the Offering
Circular, which sets forth the employee benefit plans with respect to which
Terex is a party in interest or a disqualified person.
(f) It has all requisite power and authority to enter into,
deliver and perform its obligations under this Agreement and the Registration
Rights Agreements and each of this Agreement and the Registration Rights
Agreements have been duly and validly authorized by it.
8. Indemnification.
(a) Terex and each other Terex Entity, jointly and severally,
shall, without limitation as to time, indemnify and hold harmless each
Purchaser and each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act) either Purchaser (any of
such persons being hereinafter referred to as a "controlling person") and the
respective officers, directors, partners, employees, representatives and agents
of each Purchaser and controlling person (collectively, the "Indemnified
Parties") to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, costs of
preparation and reasonable attorneys' fees) and expenses (including, without
limitation, costs and expenses incurred in connection with investigating,
preparing, pursuing or defending against any of the foregoing) (collectively,
"Losses"), as incurred, directly or indirectly caused by, related to, based
upon, arising out of or in connection with (i) any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Circular or the Offering Circular (or any amendment or supplement thereto), or
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading except for the
description of the Purchasers on the cover of the Offering Circular and for
statements contained in or omissions from the "Plan of Distribution" section of
the Offering Circular furnished in writing by, and relating to, the Purchasers
or (ii) any act, omission, transaction or event contemplated by the Documents;
provided, however, that neither Terex nor any other Terex Entity shall be
liable to any Indemnified Party for any Losses that arise solely from the gross
negligence or willful misconduct of such Indemnified Party. Terex shall notify
the Purchasers promptly of the institution, threat or assertion of any
Proceeding of which Terex or any Subsidiary is aware in connection with the
matters addressed by this Agreement which involves Terex, any of the
Subsidiaries or any of the Indemnified Parties.
(b) If any Proceeding shall be brought or asserted against any
Indemnified Party entitled to indemnification hereunder, such Indemnified Party
shall give prompt written notice to Terex; provided, however, that the failure
to so notify Terex shall not relieve Terex or any other Terex Entity from any
obligation or liability except to the extent (but only to the extent) that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal) that the Terex Entities have been
prejudiced materially by such failure.
Neither Terex nor any of its Subsidiaries shall consent to entry
of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
Indemnified Party of a release, in form and substance satisfactory to the
Indemnified Party, from all liability in respect of such Proceeding for which
such Indemnified Party would be entitled to indemnification hereunder (whether
or not any Indemnified Party is a party thereto).
(c) If the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party or is insufficient to hold such Indemnified
Party harmless for any Losses in respect of which this Section 8 would
otherwise apply by its terms (other than by reason of exceptions provided in
this Section 8), then Terex and the other Terex Entities, in lieu of
indemnifying such Indemnified Party, shall have a joint and several obligation
to contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Terex Entities, on the one hand, and the
Purchasers, on the other hand, from the offering of the Units or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Terex
Entities, on the one hand, and the Purchasers, on the other hand, in connection
with the actions, statements or omissions that resulted in such Losses, as well
as any other relevant equitable considerations. The relative benefits received
by the Terex Entities, on the one hand, and the Purchasers, on the other hand,
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by Terex, and the total discounts
received by the Purchasers, bear to the total price of the Units in Exempt
Resales in each case as set forth in the table on the cover page of the
Offering Circular. The relative fault of the Terex Entities, on the one hand,
and the Purchasers, on the other hand, shall be determined by reference to,
among other things, whether any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by any Terex Entity, on the one hand, or the
Purchasers, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by an Indemnified Party as a result of
any Losses shall be deemed to include any legal or other fees or expenses
incurred by such party in connection with any Proceeding, to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section 8 was available to such party.
Each party hereto agrees that it would not be just and equitable
if contribution pursuant to this Section 8(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8(c), the Purchasers
shall not be required to contribute, in the aggregate, any amount in excess of
the amount by which the total discounts received by it with respect to the
Units exceeds the amount of any damages that the Purchasers has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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.
(d) The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that Terex or the other Terex
Entities may otherwise have to the Indemnified Parties.
9. Conditions. (i) The obligation of the Purchasers to
purchase the Units under this Agreement is subject to the satisfaction of each
of the following conditions:
(a) All the representations and warranties of Terex and the
other Terex Entities contained in this Agreement shall be true and correct in
all material respects (except that any representation or warranty that already
contains a materiality exception therein, in each such case shall be true and
correct as written) at and as of the Closing Date after giving effect to the
transactions contemplated by the Documents, with the same force and effect as
if made on and as of such date. On or prior to the Closing Date, each of Terex
and the other Terex Entities shall have performed or complied in all material
respects with all of the agreements and satisfied in all material respects all
conditions on their part to be performed, complied with or satisfied pursuant
to the Documents.
(b) The Offering Circular shall have been printed and copies
distributed to the Purchasers not later than 12:00 noon, New York City time, on
April 30, 1995 or at such later date and time as the Purchasers may approve.
(c) No injunction, restraining order or order of any nature by
a Governmental Authority shall have been issued as of the Closing Date that
would prevent or interfere with the issuance and sale of the Units; and no stop
order suspending the qualification or exemption from qualification of any of
the Units in any jurisdiction designated by the Purchasers pursuant to Section
5(e) hereof shall have been issued and no Proceeding for that purpose shall
have been commenced or be pending or contemplated.
(d) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
Governmental Authority that would, as of the Closing Date, prevent the issuance
or sale of the Units; and on the Closing Date, no Proceeding shall be pending
against or affecting or, to the knowledge of any of the Terex Entities after
due inquiry, threatened against Terex or any of the Subsidiaries before any
Governmental Authority, except for such Proceedings that if adversely
determined could not, singly or in the aggregate, either (i) adversely affect
the issuance or marketability of the Units or (ii) are reasonably likely to be
adversely determined to Terex and if so adversely determined could have a
Material Adverse Effect.
(e) Since the date as of which information is given in the
Offering Circular,
(1) there shall not have been any Material Adverse Change;
and
(2) other than as adequately disclosed in the Offering
Circular, there shall not have been any material change in the capital stock or
long-term debt, or material increase in short-term debt, of Terex or any of the
Subsidiaries and (B) neither Terex nor any of the Subsidiaries shall have
incurred any liability, direct or contingent, that, singly or in the aggregate,
could have a Material Adverse Effect.
(f) On the Closing Date, the Purchasers shall have received (i)
certificates dated the Closing Date, signed by (A) the President and (B) a
principal financial or accounting officer of Terex, on behalf of all of the
Terex Entities, (x) confirming the matters set forth in paragraphs (a), (b),
(c), (d) and (e) of this Section 9 and (y) certifying as to such other matters
as the Purchasers may reasonably request, (ii) a certificate, dated the Closing
Date, signed by the Secretary or an Assistant Secretary of each domestic Terex
Entity, certifying such matters as the Purchasers may reasonably request and
(iii) a certificate of solvency, dated the Closing Date, signed by the chief
financial officer of Terex on behalf of each Terex Entity substantially in the
form previously approved by the Purchasers.
(g) The Purchasers shall have received on the Closing Date an
opinion (reasonably satisfactory in form and substance to the Purchasers and
counsel to the Purchasers), dated the Closing Date, of Robinson Silverman
Pearce Aronsohn & Berman, special counsel to Terex, substantially in the form
of Exhibit A hereto.
(h) The Purchasers shall have received on the Closing Date an
opinion (in form and substance reasonably satisfactory to the Purchasers and
counsel to the Purchasers), dated the Closing Date, of Marvin Rosenberg,
general counsel to Terex, substantially in the form of Exhibit B hereto.
(i) The Purchasers shall have received on the Closing Date the
opinions (in form and substance reasonably satisfactory to the Purchasers and
counsel to the Purchasers), dated the Closing Date, of (i) Maclay Murray &
Spens, special Scottish counsel to Terex, (ii) Simeon & Associes, special
French counsel to Terex, (iii) Henseler, Nusser & Partner, special German
counsel to Terex, (iv) Magrone E. Ardito, special Italian counsel to Terex, and
(v) Cohn & Wolf, P.C., special Connecticut counsel to Terex, Morris Nichols
Arsht & Tunnell, special Delaware counsel to Terex, Dickenson, Throckmorton,
Parker, Mannheimer & Raife, special Iowa counsel to Terex, Greenebaum Doll
McDonald, special Kentucky counsel to Terex, Butzel Long, special Michigan
counsel to Terex, Watkins, Ludlam & Stennis, special Mississippi counsel to
Terex, Hall, Estill, Hardwick, Gable, Golden & Nelson, special Oklahoma counsel
to Terex, Turner, Padget, Graham & Laney, special South Carolina counsel to
Terex, and Brown and Drew, special Wyoming counsel to Terex, in each case
substantially in the form of Exhibit C hereto.
(j) The Purchasers shall have received on the Closing Date
an opinion, dated the Closing Date, of Skadden, Arps, Slate, Meagher & Flom, in
form and substance reasonably satisfactory to the Purchasers covering such
matters as are customarily covered in such opinions.
(k) The Purchasers shall have received from Price Waterhouse
and Ernst & Young (i) a customary comfort letter, dated the date of the
Offering Circular, in form and substance reasonably satisfactory to the
Purchasers, with respect to the financial statements and certain financial
information contained in the Offering Circular, and (ii) a customary comfort
letter, dated the Closing Date, in form and substance reasonably satisfactory
to the Purchasers, to the effect that they reaffirm the statements made in the
letter furnished pursuant to clause (i), except that the specified date
referred to shall be a date not more than five days prior to the Closing Date.
(l) The Operative Documents shall have been executed and
delivered by all parties thereto and the Purchasers shall have received a fully
executed original of each Operative Document, other than the Mortgages, in
which case the Purchasers shall be supplied a copy of each such Mortgage.
(m) On or prior to the Closing Date, each Terex Entity, Legris
and Potain, S.A. shall have entered into all of the agreements and consummated
all of the transactions required to be consummated on or prior to the Closing
Date described in, or contemplated by, the Offering Circular under the captions
"Summary--The Refinancing," "Use of Proceeds" and "The Acquisition" in each
case in form and substance reasonably satisfactory to the Purchasers,
including, but not limited to, (i) the consummation of the Acquisition of PPM
by Cranes and the Koehring Contribution and (ii) the issuance of one or more
intercompany notes by PPM Europe and its subsidiaries in an aggregate principal
amount reasonably satisfactory to the Purchasers in favor of Terex and the
application of the proceeds therefrom to repay existing indebtedness of PPM
Europe and its subsidiaries. The Purchasers shall have received all opinions,
certificates, letters and other documents delivered under or in connection with
the Acquisition Transaction, including the Acquisition Agreements, and letters
to the effect that the Purchasers may rely on such opinion, certificates,
letters and other documents as if addressed to it.
(n) The Purchasers shall have received (i) such UCC-3
termination statements, mortgages releases and other collateral releases and
terminations required by the Purchasers, each in form and substance reasonably
satisfactory to the Purchasers, duly executed and delivered by (A) United
States Trust Company of New York, relating to each item of collateral securing
the 1996 Notes and each public filing related thereto, and (B) Bank of America
Illinois (formerly known as Continental Bank, N.A.), relating to each item of
collateral securing the 1997 Notes and each public filing related thereto, and
each such release and termination shall be in full force and effect, (ii)
copies of all documents delivered pursuant to Article 3 and Article 8 of the
1996 Note Indenture, and all other documents evidencing the call of the 1996
Notes and the termination of the 1996 Note Indenture and the discharge of the
obligations relating to the 1996 Notes; and (iii) copies of all documents
delivered pursuant to Article 3 and Article 8 of the 1997 Note Indenture, and
all other documents evidencing the call of the 1997 Notes and the termination
of the 1997 Note Indenture and the discharge of the obligations relating to the
1997 Notes.
(o) The Purchasers shall have received such payoff letters,
UCC-3 termination statements and other collateral releases and terminations
deemed necessary by the Purchasers, each in form and substance satisfactory to
the Purchasers, (i) duly executed and delivered by Foothill Capital Corporation
("Foothill"), evidencing (A) the termination of each credit facility entered
into between Foothill and Terex and Foothill and any of Terex's subsidiaries
(the "Foothill Agreements"), and (B) the termination and release of each item
of collateral securing any of the Foothill Agreements and each public filing
related thereto, (ii) duly executed and delivered by each secured party with
respect thereto, the termination and release of each item of collateral
securing any obligations of PPM and each public filing related thereto, and
(iii) duly executed and delivered by each secured party thereto, the
termination and release of all other Liens (other than Liens permitted under
the Indenture) and, in each case, each such payoff letter, release and
termination shall be in full force and effect.
(p) The Collateral Agent shall have received (i) a certificate
of insurance demonstrating insurance coverage of types, in amounts, with
insurers and with other terms required by the terms of the Operative Documents,
(ii) executed copies of each UCC-1 financing statement signed by Terex and each
Subsidiary that is organized in, or has assets located in, any jurisdiction in
the United States, naming the Collateral Agent as secured party and filed in
such jurisdictions as the Purchasers may reasonably require, (iii) bailee
letters, in form and substance reasonably satisfactory to the Purchasers,
executed by Terex or the appropriate Grantors for delivery to each of the
Persons identified in the Collateral Agreements as holding Collateral, and (iv)
the original stock certificates and promissory notes pledged to the Collateral
Agent pursuant to the Operative Documents, together with undated stock powers
or endorsements duly executed in blank in connection therewith.
(q) Each of Terex, the Collateral Agent, Foothill and Congress
Financial shall have duly executed and delivered an intercreditor agreement in
form and substance satisfactory to the Purchasers.
(r) All documents and agreements shall have been filed, and
other actions shall have been taken, as may be required to perfect the Security
Interests of the Collateral Agent in the Collateral of Grantors organized in
jurisdictions outside of the United States, and to accord the Collateral Agent
the priorities over other creditors of such Grantors contemplated by the
Offering Circular and the Operative Documents.
(s) The Collateral Agent shall have received irrevocable
commitments for title insurance from First American Title Insurance Company, in
a form and substance reasonably satisfactory to the Purchasers, subject only to
Liens permitted under the Indenture, for title insurance for each of the
properties listed on Schedule 9(s) hereto.
(t) Terex, Clark Material Handling Company, Koehring Cranes,
Inc., PPM Cranes, Inc. (collectively, the "Revolving Borrowers"), Congress
Financial and Foothill, individually and as agent, shall have entered into a
Loan and Security Agreement, satisfactory in form and substance to the
Purchasers, all conditions to the effectiveness thereof shall have been
satisfied, and the Revolving Borrowers shall have received proceeds from loans
thereunder in an amount reasonably satisfactory to the Purchasers, which
proceeds shall have been applied as contemplated in the Offering Circular.
(u) Counsel to the Purchasers shall have been furnished with
such documents as they may reasonably require for the purpose of enabling them
to review or pass upon the matters referred to in this Section 9 and in order
to evidence the accuracy, completeness or satisfaction in all material respects
of any of the representations, warranties or conditions herein contained. All
opinions, certificates, letters and other documents required by this Section 9
to be delivered by Terex will be in compliance with the provisions hereof only
if they are reasonably satisfactory in form and substance to the Purchasers.
(v) On the date hereof, Terex, Cranes and each domestic
subsidiary of Terex that is a Material Subsidiary (as defined in the Indenture)
shall have executed this Agreement and on or prior to the Closing Date, Terex
shall have caused each other Terex Entity to duly authorize, execute and
deliver this Agreement and this Agreement shall be enforceable against each
such Terex Entity as if executed on the date hereof.
(ii) The obligation of Terex to sell the Units under this
Agreement is subject to the satisfaction of each of the following conditions:
(a) The Purchasers shall have delivered payment to Terex in
respect of the several purchases of Units pursuant to Section 4 of this
Agreement.
(b) All of the representations and warranties of the Purchasers
shall be true and correct in all material respects at and as of the Closing
Date, after giving effect to the transactions contemplated by this Agreement.
(c) No injunction, restraining order, action, statute, rule or
regulation of any Governmental Authority shall have been issued as of the
Closing Date that would prevent or interfere with the issuance
and sale of the Units hereunder or subject any Terex Entity to any material
penalty if the Units were to be issued and sold hereunder.
10. Termination.
The Purchasers may terminate this Agreement at any time prior to the
Closing Date by written notice to Terex if any of the following has occurred:
(a) since the date as of which information is given in the
Offering Circular, any material adverse effect or development involving a
prospective adverse effect on the properties, business, prospects, operations,
earnings, assets, liabilities or condition (financial or otherwise), of Terex
or any Subsidiary, whether or not arising in the ordinary course of business,
that could, in the Purchasers' judgment, (i) make it impracticable or
inadvisable to proceed with the offering or delivery of the Units on the terms
and in the manner contemplated in the Offering Circular or (ii) materially
impair the investment quality of any of the Securities;
(b) any outbreak or escalation of hostilities or other national
or international calamity or crisis or material adverse change in economic
conditions or the financial markets of the United States or elsewhere, if the
effect of such outbreak, escalation, calamity, crisis or material adverse
change in the economic conditions or in the financial markets of the United
States or elsewhere could, in the Purchasers' judgment, make it impracticable
or inadvisable to market or proceed with the offering or delivery of the Units
on the terms and in the manner contemplated in the Offering Circular or to
enforce contracts for the sale of any of the Units;
(c) the suspension or limitation of trading generally in
securities on the New York Stock Exchange, the American Stock Exchange or the
NASDAQ National Market System or any setting of limitations on prices for
securities on any such exchange or National Market System;
(d) the enactment, publication, decree or other promulgation
after the date hereof of any Applicable Law that in the Purchasers' opinion
materially and adversely affects, or could materially and adversely
affect, the properties, business, prospects, operations, earnings, assets,
liabilities or condition (financial or otherwise) of Terex or any Subsidiary;
(e) any securities of Terex or any Subsidiary shall have been
downgraded or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization;
(f) the declaration of a banking moratorium by either Federal,
California or New York authorities; or
(g) the taking of any Governmental Authority after the date
hereof in respect of its monetary or fiscal affairs that in the Purchasers'
opinion could have a material adverse effect on the financial markets in the
United States.
The indemnities and contribution and expense reimbursement provisions
and the other agreements, representations and warranties of Terex and the other
Terex Entities set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Purchasers, (ii) acceptance of the Units, and payment for them hereunder,
and (iii) any termination of this Agreement.
Without limiting the foregoing, notwithstanding any termination of
this Agreement, Terex and the other Terex Entities shall be liable (i) for all
expenses that they have agreed to pay pursuant to Section 5(f) hereof, and (ii)
pursuant to Section 8 hereof.
11. Default by Purchaser. If any Purchaser or Purchasers default in
their obligations to purchase the Units on the Closing Date, and arrangements
satisfactory to you and Terex for the purchase of such Units by other persons
are not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Purchaser, Terex or any
other Terex Entity, except as provided in Section 10. Nothing herein will
relieve a defaulting Purchaser from liability for its default.
12. Miscellaneous.
(a) Notices given pursuant to any provision of this Agreement
shall be addressed as follows: (i) if to any Terex Entity, c/o Terex
Corporation, 500 Post Road East, Westport, Connecticut 06880, Attention:
Marvin B. Rosenberg, Esq., Fax # (203) 222-7978, and (ii) if to the Purchasers,
Jefferies & Company, Inc., 11100 Santa Monica Boulevard, 10th Floor, Los
Angeles, California 90025, Attention: Jerry M. Gluck, Esq., with a copy to
Skadden, Arps, Slate, Meagher & Flom, 300 S. Grand Avenue, Suite 3400, Los
Angeles, California 90071, Attention: Michael A. Woronoff (provided that any
notice to the Purchasers pursuant to Section 8 hereof will be mailed,
delivered, telegraphed or telecopied and confirmed to the Purchasers and its
counsel), or in any case to such other address as the person to be notified may
have requested in writing.
(b) Except as otherwise provided, this Agreement has been and
is made solely for the benefit of and shall be binding upon Terex, the other
Terex Entities, the Purchasers, any controlling persons referred to herein and
their respective successors and assigns, all as and to the extent provided in
this Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Units from the Purchasers merely because of such
purchase.
(c) THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE
RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH TEREX ENTITY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH TEREX ENTITY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH
TEREX ENTITY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO EACH TEREX ENTITY AT THE
ADDRESS SET FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASERS TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST ANY TEREX ENTITY IN ANY OTHER JURISDICTION.
(d) This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
(e) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their best efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.
(g) This Agreement may be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may be given,
provided that the same are in writing and signed by each of the signatories
hereto.
Please confirm that the foregoing correctly sets forth the agreement
between Terex, the Guarantors and the Purchasers.
Very truly yours,
TEREX CORPORATION
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CMH ACQUISITION CORP.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CLARK MATERIAL HANDLING GMBH
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Director
CLARK MATERIAL HANDLING FRANCE S.A.
By: /s/ Fil Filipov
Name: Fil Filipov
Title:
CLARK MATERIAL HANDLING COMPANY
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CLARKLIFT OF WESTERN MICHIGAN, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CMH ACQUISITION INTERNATIONAL CORPORATION
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
KOEHRING CRANES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
TEREX CRANES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
TEREX EQUIPMENT LIMITED
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Director
UNIT RIG AUSTRALIA (PTY) LIMITED
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
LEGRIS INDUSTRIES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
PPM CRANES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
P.P.M., S.A.
By: /s/ Fil Filipov
Name: Fil Filipov
Title:
BENDINI S.P.A.
By: /s/ Fil Filipov
Name: Fil Filipov
Title:
PPM KRANE GMBH
By: /s/ Fil Filipov
Name: Fil Filipov
Title:
BRIMONT AGRAIRE S.A.
By: /s/ Fil Filipov
Name: Fil Filipov
Title:
BAULIFT BAUMASCHINEN UND KRANE HANDELS GMBH
By: /s/ Fil Filipov
Name: Fil Filipov
Title:
Accepted and Agreed to:
JEFFERIES & COMPANY, INC.
By: /s/Brent Stevens
Name: Brent Stevens
Title:
DILLON, READ & CO., INC.
By: /s/ Robert Weeden
Name: Robert Weeden
Title: Managing Director
Exhibit C
Jefferies & Company, Inc.
Dillon, Read & Co. Inc.
United States Trust Company
of New York, as Trustee and
Collateral Agent
April ___, 1995
[Form of Local Domestic Counsel Opinion]
April ___, 1995
Jefferies & Company, Inc.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, New York 10021
United States Trust Company
of New York, as Trustee and
Collateral Agent (each as defined below)
114 West 47th Street
New York, New York 10036
Re: Terex Corporation
Ladies and Gentlemen:
We have acted as special [insert State] counsel to Terex Corporation,
a Delaware corporation ("Terex"), and [insert name of each subsidiary
incorporated or owning real or personal property located in State], a
("Subsidiary"), in connection with the negotiation, execution and delivery by
[Terex/Subsidiary] of the Relevant Documents (as defined below). This opinion
is being delivered pursuant to Section 9(i) of the Purchase Agreement (as
defined below). Capitalized terms used herein and not otherwise defined herein
shall have the same meanings herein as ascribed thereto in the Indenture (as
defined below).
In our examination, we have assumed the genuineness of all
signatures, including endorsements, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies, and the authenticity of the originals of such copies. As to any facts
material to this opinion that we did not independently establish or verify, we
have relied upon statements and representations of Terex and the Subsidiary and
its officers and other representatives, and of public officials.
In rendering the opinions set forth herein, we have examined and
relied on originals or copies of the following:
(i) the Purchase Agreement, dated as of April , 1995
among Terex, certain of its Subsidiaries [including Subsidiary] (the
"Guarantors") and the Initial Purchasers named therein (the "Purchase
Agreement") relating to the purchase and sale of 240,000 Units consisting in
the aggregate of $240,000,000 in principal amount of Terex's % Senior
Secured Notes due 2002 (the "Notes") and ___ Common Stock Appreciation Rights
(the "Rights");
(ii) that certain Indenture (the "Indenture") dated as of
April , 1995 among Terex, the Guarantors and United States Trust Company of
New York, as trustee (in such capacity, the "Trustee") relating to the Notes;
(iii) that certain Security and Pledge Agreement (the
"Security Agreement") dated as of April __, 1995 made by [Terex/Subsidiary and
the other Guarantors] in favor of United States Trust Company, as Collateral
Agent (in such capacity, the "Collateral Agent");
(iv) that certain [Mortgage] dated as of April __, 1995
made by [Terex/Subsidiary] in favor of the Collateral Agent (the "Mortgage");
(v) [list each other security document, if any, executed
by Subsidiary];
(vi) [signed, but unfiled, copies of financing statements
naming Terex as a debtor and the Collateral Agent as secured party, which we
understand will be filed within ten days of the transfer of the security
interests in the filing offices set forth on Schedule I hereto (such filing
offices, the "Terex Filing Offices" and such financing statements, the "Terex
Financing Statements");]
(vii) [signed, but unfiled, copies of financing statements
naming Subsidiary as debtor and the Collateral Agent as secured party, which we
understand will be filed within ten days of the transfer of the security
interests in the filing offices set forth on Schedule II hereto (such filing
offices, the "Subsidiary Filing Offices" and together with the Terex Filing
Offices, the "Filing Offices"; and such financing statements the "Subsidiary
Financing Statements"; and together with the Terex Financing Statements, the
"Financing Statements");]1
[ (viii) certified copies of the certificate of
incorporation and by-laws of Subsidiary;]
[ (ix) a certified copy of certain resolutions of the Board
of Directors of Subsidiary adopted on April ___, 1995];2 and
(x) such other documents as we have deemed necessary or
appropriate as a basis for the opinions set forth below.
The documents identified in clauses ( ) through ( ) [relevant
documents executed by Terex and/or Subsidiary] above shall hereinafter be
referred to herein as the "Relevant Documents."
Members of our firm are admitted to practice law in [state] and we
express no opinion as to the laws of any other jurisdiction.
We are of the opinion that:
[ 1. Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of [state].] [[Terex/Subsidiary] is duly
qualified to do business and is in good standing under the laws of [State]].
[ 2. Subsidiary has the corporate power and corporate authority to
execute, deliver and perform all of its obligations under each of the Relevant
Documents. The execution and delivery by Subsidiary of each of the Relevant
Documents and the consummation by Subsidiary of the transactions contemplated
thereby have been duly authorized by all requisite corporate action on the part
of Subsidiary. Each of the Relevant Documents has been duly executed and
delivered by Subsidiary.]3
3. The Mortgage constitutes the valid and binding obligation of
[Terex/Subsidiary], enforceable against [Terex/Subsidiary] in accordance with
its terms.
4. Neither the execution, delivery or performance by the Subsidiary
of the Relevant Documents nor the consummation of the transactions contemplated
thereby shall conflict with, violate, constitute a breach of or a default (with
the passage of time or otherwise) under, or require the consent of any person
(other than consents that have already been obtained) under, or result in the
imposition of any security interest, mortgage, pledge, transfer restriction,
defect, claim, lien, limitation on voting rights, encumbrance or adverse
interest on any asset of the Subsidiary, or an acceleration of any indebtedness
pursuant to [(i) the Charter Documents of the Subsidiary, or (ii)]4 any
statute, law or ordinance, or any judgment, decree, rule, regulation or order
of any court, judicial body, regulatory body, governmental agency or
administrative agency of [state].
5. No consent, approval, license, authorization or validation of, or
filing, recording or registration with any [state] legislative, judicial,
administrative or regulatory body which has not been obtained or taken and is
not in full force and effect is required to authorize or is required in
connection with the execution, delivery or performance of any of the Relevant
Documents by [Terex/Subsidiary].
6. The provisions of the Mortgage are effective to create, in favor
of the Collateral Agent, for the benefit of the holders of the Notes (the
"Secured Creditors"), to secure the Obligations (as defined therein), a valid
Lien on the Collateral (as defined therein).
7. The Financing Statements are in appropriate form for filing in
each of the Filing Offices under the Uniform Commercial Code as in effect in
[State]. To the extent that the filing of a financing statement in [State] is
effective to perfect a security interest in the Collateral (as defined in the
[Security Agreement][Subsidiary Security Agreement]), the security interest in
favor of the Collateral Agent for the benefit of the Secured Parties (as
defined in the [Security Agreement][Subsidiary Security Agreement]) in such
Collateral will be perfected upon the filing of the Financing Statements in the
Filing Offices.
8. The Mortgage is in proper form so as to comply with the recording
requirements of the recording offices identified on Exhibit attached hereto
(collectively, the "Recording Offices"), and upon recordation of the Mortgage
in the Recording Offices, the Mortgage will create in favor of the Collateral
Agent, for the benefit of the Secured Creditors, a valid, perfected,
first-priority lien on [all real property and other collateral described in the
Mortgage] [the "Property" (as defined in the Mortgage)], securing payment [of
the obligations contemplated to be secured by the Mortgage] [of the
"Obligations" (as defined in the Mortgage)], and no further action will be
required to create, perfect or maintain such lien.
9. The Mortgage contains such rights and remedies in favor of the
Collateral Agent, for the benefit of the Secured Creditors, as are customarily
found in mortgages recorded in [state].
10. No lien [on the Property] of any other creditor of Subsidiary is
or can be equal or senior in priority to the lien contemplated by the Mortgage.
11. There is no recording tax due in connection with the recording
of the Mortgage or the Financing Statements. No intangibles tax, documentary
stamp tax or similar taxes or charges are required to be paid in connection
with the recording of or as a condition of the legality or enforceability of
the Mortgage, the Relevant Documents or the Financing Statements. There will
be no recording, filing, privilege or other tax due upon the foreclosure of the
Mortgage.
12. The foreclosure of the Mortgage will not in any manner restrict,
affect or impair (i) [Terex's/the Subsidiary's] liability with respect to the
Obligations secured thereby or (ii) to the extent any deficiency remains unpaid
after application of the proceeds of the foreclosure of the Mortgage, the
Collateral Agent's rights or remedies with respect to the foreclosure or
enforcement of any other security interests or liens securing such Obligations.
13. The law of [state] does not require a lienholder to make an
election of remedies where such lienholder holds security interests and liens
in both the real estate and the personal property of the debtor or require a
lienholder to take recourse first or solely against its collateral.
14. In any action to enforce the liens of the Mortgage or the
security interests in the Collateral in [state], the law of the State of New
York will govern the legality of the interests and the other amounts to be paid
and received with respect to the Notes. If the law of [state] were to apply,
the interest and other amounts to be paid with respect to the Notes would not
be usurious.
15. The Collateral Agent is not required to register as a foreign
entity or qualify to do business in [State] solely by reason of the
transactions contemplated by the Relevant Documents.
Very truly yours,
Schedule A
Number
Purchaser of Units
Jefferies & Company, Inc. 162,500
Dillon, Read & Co. Inc. 87,500
TOTAL 250,000
Schedule 6(d)
Subsidiaries
I. Consolidated Wholly Owned Subsidiaries of Terex
Jurisdiction of
Name of Subsidiary Organization
CMH Acquisition Corp. Delaware
Clark Material Handling GmbH Germany
Clark Material Handling Company Kentucky
Clarklift of Western Michigan, Inc. Michigan
CMH Acquisition International Corporation Delaware
Koehring Cranes, Inc. Delaware
Terex Cranes, Inc. Delaware
Terex Equipment Limited Scotland
Unit Rig Australia (Pty) Limited New South Wales,
Australia
Legris Industries, Inc. Delaware
(1) Terex will own 100% of the outstanding common stock. Legris will own
1,000 shares of Series A Redeemable Exchangeable Preferred Stock which may be
redeemed for cash or approximately 20% of the Common Stock of Terex Cranes,
Inc.
II. Other Consolidated Subsidiaries of Terex
Terex Jurisdiction of
Name of Subsidiary Ownership Interest Organization
P.P.M., S.A. 99.18% France
PPM Cranes, Inc. 92.40% Delaware
P.P.M., S.A. 99.18% France
Bendini S.p.A. 99.18% Italy
PPM Krane GmbH 95.21% Germany
Brimont Agraire S.A. 99.18% France
Baulift Baumaschinen und
Krane Handels GmbH 95.21% Germany
Clark Material Handling France S.A. 99.997% France
Schedule 6(e)
Rights to Securities
Set forth below are all outstanding (i) securities convertible into or
exchangeable for any capital stock of Terex or any of the Subsidiaries, (ii)
options, warrants or other rights to purchase or subscribe to capital stock of
Terex or any of the Subsidiaries or securities convertible into or exchangeable
for any capital stock of Terex or any of the Subsidiaries, or (iii) contracts,
commitments, agreements, understandings, arrangements, calls or claims of any
kind relating to the issuance of any capital stock of Terex or any of the
Subsidiaries, any such convertible or exchangeable securities or any such
options, warrants or rights:
1. Options issuable pursuant to the Terex Corporation Incentive Stock
Option Plan (Successor to Northwest Engineering Company Incentive Stock Option
Plan) dated May 5, 1988, as amended.
2. Securities, options or other rights to acquire securities issuable
pursuant to the 1986 Incentive Plan of Terex (as defined in the Offering
Circular) and the 1994 Incentive Plan of Terex (as defined in the Offering
Circular).
3. The Series A Common Stock Purchase Warrants of Terex
4. The Series B Common Stock Purchase Warrants of Terex
5. The Series A Cumulative Redeemable Convertible Preferred Stock of
Terex
6. The Series B Cumulative Redeemable Convertible Preferred Stock of
Terex
7. Seller Note (as defined in the Offering Circular)
8. Series A Redeemable Exchangeable Preferred Stock of Cranes
9. The Agreement, entered into on March 18, 1991, by and among
Harnischfeger Corporation, Potain Tower Cranes, Inc., Century II Acquisition
Corp. (now known as PPM Cranes, Inc.), and Groupe Legris Industries S.A.
10. The Post-Merger Agreement, entered into on April 10, 1991, by and
among Harnischfeger Corporation, Potain Tower Cranes, Inc., Century II
Acquisition Corp. (now known as PPM Cranes, Inc.), and Groupe Legris Industries
S.A., as modified by the Settlement Agreement and Release, effective December
9, 1992, by and among Harnischfeger Corporation, Harnischfeger Industries,
Inc., their respective subsidiaries, affiliates, parent corporations,
successors and assigns, and PPM Cranes, Legris Industries (formerly, Groupe
Legris Industries S.A.), Potain Tower Cranes, Inc., Legris Industries, Inc. and
their respective subsidiaries, affiliates, parent corporations, successors and
assigns.
Schedule 6(f)
Registration Rights With Respect to Terex
Registration rights covering Common Stock Appreciation Rights pursuant to
SAR Registration Rights Agreement dated as of July 31, 1992.
Registration rights covering Senior Secured Notes due 1996 pursuant to
Debt Registration Rights Agreement dated as of July 31, 1992.
Registration rights covering (i) the Series A Common Stock Purchase
Warrants of Terex, (ii) the Series B Common Stock Purchase Warrants of Terex,
(iii) the Series A Cumulative Redeemable Convertible Preferred Stock of Terex
and (iv) the Series B Cumulative Redeemable Convertible Preferred Stock of
Terex.
Registration Rights granted by Terex in favor of Randolph W. Lenz, David
J. Langevin, Marvin B. Rosenberg and The Airlie Group L.P.
Registration Rights granted pursuant to the Stockholders Agreement among
Terex, Legris Industries, S.A. and Potain S.A.
Schedule 9(s)
Properties Subject to Title Insurance
1. Waverly Plant
106 12th Street S.E.
Waverly, Iowa 50677
2. Koehring Machinery Center
1575 Big Rock Road
Waterloo, Iowa 50707
3. Unit Rig, Tulsa
5400 South 49th
West Avenue
Tulsa, Oklahoma 74107
4. Unit Rig - Parts Depot
3801 Hwy. 14-10 N
Gillette, Wyoming 82716
5. Terex Distribution Center
8800 Rostin Road
Southhaven, Mississippi 38671
6. Engineering and Training Center
(Grantor: CMHC)
749 West Short Street
Lexington, Kentucky 40507
7. Leestown Plant
(Grantor: CMHC)
172 Trade Street
Lexington, Kentucky 40510
8. PPM Cranes Facility
Highway 501 East
Building #15
Conway, South Carolina 29526
1 1 Insert one or both of the preceding paragraphs, as appropriate.
2 2 Previous two paragraphs to be included if Subsidiary is incorporated in
State.
3 3 Previous two paragraphs to be included if Subsidiary is incorporated in
State.
4 4 Clause (i) to be included if Subsidiary is incorporated in State.
COMMON STOCK APPRECIATION RIGHTS AGREEMENT
This Common Stock Appreciation Rights Agreement (the "Agreement") is
made and entered into as of May 9, 1995, by and between Terex Corporation, a
Delaware corporation (together with its permitted successors and assigns, the
"Company"), and United States Trust Company of New York, a New York
corporation, as rights agent (together with its permitted successors and
assigns, the "Rights Agent"), for the benefit of the registered holders from
time to time of the Company's Common Stock Appreciation Rights issued hereunder
(the "Rights").
This Agreement is made pursuant to the Purchase Agreement, dated as
of April 27, 1995, among the Company, certain of its subsidiaries and the
Purchasers named therein (the "Purchase Agreement"), relating to the sale and
purchase of 250,000 Units (the "Units") consisting in the aggregate of
$250,000,000 principal amount of the Company's Senior Secured Notes due 2002
(the "Notes") and 1,000,000 Rights.
Prior to Separation (defined below), (i) record ownership of the
Notes and beneficial ownership of the Rights, respectively, will be evidenced
by record ownership of the Notes containing thereon an endorsement set forth on
Exhibit A to the Indenture (the "Rights Endorsement"), and (ii) definitive
certificates evidencing the Rights will be held by the Rights Agent as
custodian for the registered holders of the Notes containing a Rights
Endorsement.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
Capitalized terms used herein without definition shall have the
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Adjustment Amount" initially means $0, and thereafter means the
Adjustment Amount as determined in accordance with Section 9.1 hereof.
"Business Day" means any day other than (i) Saturday or Sunday, or
(ii) a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to be closed.
"Closing Date" means May 9, 1995.
"Closing Price" as to any Share means for any trading day:
(a) if the Shares are then traded on a national securities
exchange (i) the last sales price of a Share on such date or (ii) if there was
no sale on such date, the last sales price of a Share on the next preceding
trading day on which there was a sale, all as made available over the
Consolidated Last Sale Reporting System of the Consolidated Tape Association
Plan, or if the Shares were not at the relevant time eligible for reporting
over such system, the last sales price of a Share on such national securities
exchange; or
(b) if the Shares are not then traded on a national securities
exchange, the average of the bid and asked quotations as quoted in any of The
Wall Street Journal, the National Quotation Bureau, Inc. pink sheets, quotation
sheets of registered market makers and, if necessary, dealers' quotations; or
(c) if a Closing Price as of such date cannot be determined on
the basis of any of the foregoing methods of valuation, then Current Market
Price as of such date of determination shall be determined in good faith by an
independent investment banking firm of nationally recognized standing (an
"Independent Investment Bank").
"Common Stock" means the common stock, par value $0.01 per share, of
the Company and any other shares of capital stock or other securities into
which such stock shall be reclassified or changed (including, without
limitation, pursuant to any merger or consolidation).
"Current Market Price" as to any Share means, as of any date, the
average of the daily per Share Closing Prices (a) for either (i) the 60
consecutive trading days prior to such date or (ii) in the event of the
announcement or commencement of a tender offer to purchase all of the shares of
Common Stock, the 10 consecutive trading days prior to such date or (b) if
applicable, as determined in accordance with clause (c) of the definition of
Closing Price.
"Definitive Rights" means Rights issued in definitive form,
substantially in the form of Exhibit A.
"Depository" means initially The Depository Trust Company until a
successor shall be appointed by the Company and thereafter, such person as
shall from time to time be appointed depository of the global Note by the
Company.
"Differential" means, with respect to any Right on any Exercise Date,
a dollar amount equal to the excess of (a) the sum
of (i) the Current Market Price plus (ii) the Adjustment Amount over (b) the
Exercise Price, in each case as of such Exercise Date.
"Election Notice" means a Notice of Election, substantially in the
form contained in each Rights Certificate.
"Eligible Guarantor Institution" means "eligible guarantor
institution" as defined in Rule 17Ad-715(a)(2) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
"Exercise Date" with respect to any Right means the date such Right
is exercised pursuant to Section 8.2.
"Exercise Price" as to each Right means $7.288, as such amount may be
adjusted from time to time in accordance with Section 9 hereof.
"Expiration Date" means May 15, 2002.
"Global Right" means Rights issued in global form, substantially in
the form of Exhibit A.
"Indenture" means the indenture relating to the Notes.
"Instrument" has the meaning given that term in Section 13.3.
"Majority Rightholders" on any date means Rightholders registered as
holding a majority of the number of Rights outstanding on such date.
"Restricted Rights" means Rights that were acquired by the holder
thereof other than pursuant to an effective registration statement under the
Securities Act or Rule 144 (or any successor rule) thereunder.
"Rightholder" means any holder, registered as such in the Rights
Register, of one or more Rights.
"Rights Certificate" means a Rights Certificate including without
limitation the Global Right, substantially in the form attached hereto as
Exhibit A, evidencing ownership of one or more Rights.
"Rights Payment Date" with respect to any Exercise Date means the
tenth business day following such Exercise Date.
"Rights Register" means a register maintained in the principal office
of the Rights Agent, which shall be maintained in New York, New York.
"Securities Act" means the Securities Act of 1933, as amended.
"Separated" has the meaning given that term in Section 6.
"Separation" has the meaning given that term in Section 6.
"Separation Date" means the earlier of (i) the date 180 days
following the Closing Date, (ii) the business day immediately preceding the
date on which the Shelf Registration Statement (as defined in the Indenture) or
a registration statement with respect to the Exchange Offer is filed with the
Securities and Exchange Commission, or (iii) such earlier date as Jefferies &
Company, Inc. and Dillon, Read & Co. Inc. may determine (as specified to the
Trustee in writing).
"Share" means a share of Common Stock; provided, that if the Common
Stock has been reclassified or changed (including, without limitation, pursuant
to a merger or consolidation), or if the Company pays a dividend or makes a
distribution on its Common Stock in shares of capital stock, or subdivides (or
combines) its outstanding shares of Common Stock into a greater (or smaller)
number of shares of Common Stock, a share of Common Stock shall be deemed to be
such number of shares of capital stock and amount of other securities to which
a share of Common Stock outstanding immediately prior to such reclassification,
exchange, dividend, distribution, subdivision or combination would be entitled.
"Standing Instructions" means the standing instructions and
procedures existing between the Depository and the Rights Agent.
"Time of Determination" means the time and date of the earlier of (i)
the time and date of determination of stockholders entitled to receive any
dividend or other distribution to which Section 9.1(a) applies, and (ii) the
time and date immediately prior to the commencement of "ex-dividend" trading of
the Shares with respect to such dividend or distribution on the national or
regional exchange or market on which the Shares are then listed or quoted.
"Trustee" means the person named as trustee under the Indenture.
SECTION 2. APPOINTMENT OF RIGHTS AGENT
The Company hereby appoints the Rights Agent, and the Rights Agent
agrees to act, as agent for the Company in accordance with this Agreement in
connection with the issuance, division, transfer and exercise of the Rights.
SECTION 3. RIGHTS; GLOBAL RIGHTS; RIGHTS
CERTIFICATES
(a) Each Right shall represent the right to receive, upon
exercise thereof in accordance with Section 9, the Differential with respect to
such Right. On the Closing Date, the Company shall deliver to the Rights Agent
a Rights Certificate or Certificates evidencing in the aggregate 1,000,000
Rights, executed on behalf of the Company by its Chairman of the Board, its
President or a Vice President, and by its Secretary or an Assistant Secretary,
and the Rights Agent shall countersign such Rights Certificate or Certificates
and hold them as custodian in accordance with Section 6 hereof.
(b) The Global Right shall represent the aggregate number of
outstanding Rights from time to time endorsed thereon; provided that the
aggregate number of outstanding Rights represented thereby may from time to
time be reduced or increased by appropriate endorsements thereon, as
appropriate, to reflect exchanges and redemptions. Any endorsement of the
Global Right to reflect the amount of any increase or decrease in the aggregate
number of outstanding Rights represented thereby shall be made by the Rights
Agent in accordance with instructions given by the holder thereof. The Global
Right shall be registered in the name of the Depository, or the nominee of such
Depository. So long as the Depository or its nominee is the registered owner
of such Global Right it will be deemed the sole owner and holder of such Global
Right for all purposes hereunder and under such Global Right. Neither the
Company nor the Rights Agent will have any responsibility or liability for any
aspects of the records relating to beneficial ownership interests of the Rights
evidenced by the Global Right in the name of the Depository or its nominee or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
(c) If any mutilated Rights Certificate is surrendered to the
Rights Agent, or the Company and the Rights Agent receive evidence to their
reasonable satisfaction of the destruction, loss or theft of any Rights
Certificate, the Company
shall issue and the Rights Agent, upon the written order of the Company, shall
countersign a replacement Rights Certificate if the Company's and the Rights
Agent's requirements for replacements of Rights Certificates are met. If
required by the Rights Agent or the Company, an indemnity bond must be supplied
by the holder of such Rights Certificate that is sufficient in the judgment of
the Rights Agent and the Company to protect the Company, the Rights Agent and
any agent of either from any loss that any of them may suffer if a Rights
Certificate is replaced.
(d) At the written direction of the Chairman of the Board, the
President or a Vice President of the Company, the Rights Agent shall cancel any
Rights Certificate surrendered for exchange, substitution, transfer or exercise
in whole or in part.
SECTION 4. EXECUTION OF RIGHTS CERTIFICATES
Rights Certificates shall be signed on behalf of the Company by its
Chairman of the Board, its President or a Vice President, and by its Secretary
or an Assistant Secretary. Each such signature may be in the form of a
facsimile signature. In case any officer of the Company who shall have signed
any of the Rights Certificates shall cease to be such officer before the Rights
Certificates so signed shall have been delivered or disposed of by the Company,
such Rights Certificates nevertheless may be delivered or disposed of as though
such person had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
SECTION 5. REGISTRATION AND COUNTERSIGNATURE
Rights Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned. The
Rights Agent shall, upon written instructions of the Chairman of the Board, the
President or a Vice President of the Company, countersign and deliver Rights
Certificates as provided in this Agreement. Such countersignature shall be
valid notwithstanding the fact that the persons whose manual signature appear
thereon as proper officers of the Rights Agent shall have ceased to be such
officers at the time of such countersignature, issuance or delivery. Rights
Certificates shall be dated as of the date of countersignature thereof by the
Rights Agent. The registered holder of the Note containing a Rights
Endorsement relating to a Right shall be deemed the registered holder of such
Right for all purposes hereunder.
The Company shall cause the Trustee (or any other registrar) under
the Indenture to act as registrar with respect to the Rights that are not
Separated. The Rights Agent shall be the registrar with respect to the Rights
that are Separated. After Rights are Separated, the Rights Agent shall number
and register the Rights Certificates in the Rights Register.
Prior to due presentment for registration of transfer, the Company
and the Rights Agent may deem and treat the registered holder of a Right as the
absolute owner thereof for all purposes (notwithstanding any notation of
ownership or other writing on the Rights Certificate relating thereto), and
shall not be affected by any notice to the contrary and shall not be bound to
recognize any equitable or other claim to or in such Right or Rights
Certificate on the part of any other person.
SECTION 6. SEPARATION
The Notes and Rights constituting a Unit shall not be separable until
the Separation Date. Prior to Separation, beneficial ownership of the Rights
shall be evidenced by record ownership of the Notes containing a Rights
Endorsement.
The Rights Certificates will be held by the Rights Agent, as
custodian for the holders of the Units, until such time as (i) in the case of a
definitive Note, the registered holder of such Note containing a Rights
Endorsement shall have surrendered such Note to the Rights Agent for the
exchange of such Unit, in whole or in part, for a Right Certificate or
Certificates and for a Note or Notes of a like aggregate principal amount of
such surrendered Note of authorized denominations and not containing a Rights
Endorsement or (ii) in the case of a beneficial interest in a global Note
containing a Rights Endorsement, appropriate endorsements are made on such
global Note, the Global Right and the global Note not containing a Rights
Endorsement (any such separation is herein referred to as a "Separation" and
the related Rights are referred to as being "Separated"). Each definitive Note
containing a Rights Endorsement presented for Separation shall be duly endorsed
by the registered holder thereof or by the duly appointed legal representative
thereof or by a duly authorized attorney-in-fact duly appointed or authorized,
as the case may be, in writing. The Rights Agent shall deliver such Note to
the Trustee, with instructions to issue a new Note or Notes not containing a
Rights Endorsement in authorized denominations for an aggregate principal
amount equal to the aggregate principal amount of the Note surrendered in the
name of such registered holder. The Rights Agent, as custodian, shall deliver
(or cause to be delivered) the Note or Notes so received from the Trustee and a
Rights Certificate or Certificates executed by the Company and countersigned by
the Rights Agent in the name of such registered holder for such aggregate
number of Rights as shall equal 4 Rights for each $1,000 principal amount of
Notes so exchanged for Separation, bearing numbers not contemporaneously
outstanding, to the holder or holders entitled thereto.
SECTION 7. REGISTRATION OF TRANSFERS AND
EXCHANGES AFTER SEPARATION
(a) Transfer and Exchange of Definitive Rights. When
Definitive Rights are presented to the Rights Agent with a request (1) to
register the transfer of the Definitive Rights or (2) to exchange such
Definitive Rights for an equal number of Definitive Rights of other authorized
denominations, the Rights Agent shall register the transfer or make the
exchange as requested if its requirements for such transactions are met;
provided, however, that the Definitive Rights so presented (A) have been duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Rights Agent, duly executed by the registered holder
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney-in-fact duly appointed or authorized, as the case may be,
in writing; and (B) in the case of Restricted Rights, such request shall be
accompanied by the following additional documents:
(i) if such Restricted Right is being delivered to the
Rights Agent by a registered holder for registration in the name of such
registered holder, without transfer, a certification from such registered
holder to that effect (in substantially the form of Exhibit B hereto); or
(ii) if such Restricted Right is being transferred to a
QIB in accordance with Rule 144A or pursuant to an effective registration
statement under the Securities Act, a certification to that effect (in
substantially the form of Exhibit B hereto); or
(iii) if such Restricted Right is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially the form of
Exhibit B hereto) and an opinion of counsel reasonably acceptable to the
Company and the Rights Agent to the effect that such transfer is in compliance
with the Securities Act.
(b) Transfer of a Definitive Right for a Beneficial Interest in
Global Right. A Definitive Right may be exchanged for a beneficial interest in
the Global Right only upon receipt by the Rights Agent of such Definitive
Right, duly endorsed by the registered holder thereof or accompanied by
appropriate instruments of transfer, in form satisfactory to the Rights Agent,
together with:
(i) written instructions directing the Rights Agent to
make an endorsement on the Global Right to reflect an increase in the number of
Rights represented by the Global Right, and
(ii) if such Definitive Right is a Restricted Right, a
certification (in substantially the form of Exhibit B hereto) to the effect
that such Definitive Right is being transferred to a QIB in accordance with
Rule 144A;
in which case the Rights Agent shall cancel such Definitive Right and endorse
the Global Right to reflect the increase in the number of Rights represented by
the Global Right. If no Global Right is then outstanding, the Company shall
issue and the Rights Agent shall countersign a new Global Right representing
the appropriate number of Rights.
(c) Transfer and Exchange of Global Right. The transfer and
exchange of the Global Right or beneficial interests therein shall be effected
through the Depository, in accordance with this Agreement and the procedures of
the Depository therefor, which shall include the restrictions on transfer
comparable to those set forth herein and to the extent required by the
Securities Act.
(d) Transfer of a Beneficial Interest in Global Right for a
Definitive Right. Upon receipt by the Rights Agent of written transfer
instructions (or such other form of instructions as is customary for the
Depository) from the Depository (or its nominee) on behalf of any person having
a beneficial interest in the Global Right, the Rights Agent shall cause, in
accordance with the Standing Instructions, the number of Rights represented by
the Global Right to be reduced and, following such reduction, the Company shall
execute and the Rights Agent shall countersign and deliver to the beneficiary
or transferee, as the case may be, a Definitive Right; provided, that in the
case of a Restricted Right, such instructions shall be accompanied by the
following additional documents:
(i) if such beneficial interest is being transferred to
the person designated by the Depository as being the beneficial owner, a
certification to that effect (in substantially the form of Exhibit B hereto);
or
(ii) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A or pursuant to an effective registration
statement under the Securities Act, a certification to that effect (in
substantially the form of Exhibit B hereto); or
(iii) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially the form of
Exhibit B hereto) and an opinion of counsel reasonably acceptable to the
Company and to the Rights Agent to the effect that such transfer is in
compliance with the Securities Act.
Definitive Rights issued in exchange for a beneficial interest in the
Global Right shall be registered in such names and in such authorized
denominations as the Depository shall instruct the Rights Agent.
(e) Transfer and Exchange of Global Right. Notwithstanding any
other provisions hereof, the Global Right may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository; provided, that if:
(i) the Depository notifies the Company that the Depository is
unwilling or unable to continue as Depository for the Global Right and a
successor Depository for the Global Right is not appointed by the Company
within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Rights
Agent in writing that it elects to cause the issuance of Definitive Rights
under this Rights Agreement,
then the Company shall execute, and the Rights Agent shall countersign and
deliver, Definitive Rights, evidencing Rights in an aggregate number equal to
the number of Rights evidenced by the Global Right, in exchange for such Global
Right.
(f) Cancellation and/or Adjustment of Global Right. At such
time as all beneficial interests of the Rightholders in Rights evidenced by the
Global Right have either been exchanged for Definitive Rights, exercised or
cancelled, the Global Right shall be returned to or retained and cancelled by
the Rights Agent. At any time prior to such cancellation, if any beneficial
interest of a Rightholder of a Right evidenced by the Global Right is exchanged
for Definitive Rights, exercised or cancelled, the number of Rights represented
by such Global Right shall be reduced and an endorsement shall be made on such
Global Right, by the Rights Agent to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Company shall execute and
the Rights Agent is hereby authorized to countersign, in accordance with the
provisions of Sections 4, 5, 6 and this Section 7, Definitive Rights and the
Global Right as required pursuant to the provisions of this Section 7. All
Definitive Rights and Global Rights issued upon any registration of transfer or
exchange of Definitive Rights or Global Rights shall evidence Rights that are
the valid obligations of the Company, entitled to the same benefits under this
Rights Agreement, as the Rights evidenced by the Definitive Rights or the
Global Right surrendered upon such registration of transfer or exchange.
No service charge shall be made to a holder for any registration, transfer
or exchange but the Company may require the payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable by the Company in
connection with any transfer involved in the issuance or delivery of any Rights
in the name other than that of the registered holder of the Rights so
transferred or exchanged.
SECTION 8. EXERCISE OF RIGHTS
8.1 Term of Rights
Subject to the provisions of this Agreement, each Right may be
exercised at the option of the Rightholder thereof at any time until 5:00 p.m.
New York City time on the Expiration Date. Each Right not exercised prior to
5:00 p.m., New York City time on the Expiration Date shall become null and void
and all rights thereunder and in respect thereof shall cease as of such time.
8.2 Method of Exercise
(a) A Rightholder may exercise all or a portion of the
Definitive Rights then held by it upon surrender of the Rights Certificate or
Rights Certificates evidencing the Rights to be exercised to the Company at the
principal office of the Rights Agent in New York City, New York, with the form
of election to purchase on the reverse side thereof duly filled in and signed,
which signature shall be guaranteed by an Eligible Guarantor Institution.
(b) To exercise Rights prior to Separation, the registered
holder of the related Note or Notes must surrender such Note or Notes to the
Rights Agent with the form of election to exercise set forth on the reverse
side thereof duly filled in and signed, which signature shall be guaranteed by
an Eligible Guarantor Institution.
Upon receipt of the items referred to in the preceding paragraph, the
Rights Agent shall:
(1) deliver such Note or Notes to the Trustee with instructions to
issue in the name of the registered holder of such Note or Notes a new Note or
Notes not containing a Rights Endorsement in the aggregate principal amount
equal to the aggregate principal amount of the Note or Notes so surrendered;
(2) issue in the name of the registered holder of such Note or Notes
a Rights Certificate representing the number of Rights equal to the difference
between (x) the number of Rights represented by the Note or Notes so
surrendered and (y) the number of Rights exercised on behalf of such holder as
provided in this Section 8; and
(3) as custodian of the underlying Rights on behalf of such
Rightholder, cause such Rights to be exercised on behalf of such Rightholder as
provided in this Section 8.
(c) All Rights Certificates (or Notes containing a Rights
Endorsement, as the case may be) surrendered upon exercise of Rights shall be
cancelled by the Rights Agent and disposed of by the Company in accordance with
applicable law. The Rights Agent shall account promptly to the Company with
respect to Rights exercised.
(d) The holder of the Global Right shall not be able to
exercise the Global Right. In order to exercise the Global Right, the
beneficial owner thereof must furst obtain a Definitive Right pursuant to the
provisions of this Agreement and comply with the procedures set forth in this
Section 8.
8.3 Payment of Rights Amount
(a) On each applicable Rights Payment Date, the Rights Agent
shall pay, on behalf of the Company, the Differential as determined by the
Company with respect to each Right being exercised as of the applicable
Exercise Date, which shall be payable, at the option of the Company (as
designated in the notice given pursuant to Section 8.3(a)), by delivery of
either
(i) an immediately available Federal funds check made
payable to such Rightholder, or to its order, or, at such Rightholder's option
(provided that such holder has provided wire transfer instructions to the
Rights Agent at least two Business Days prior to the Rights Payment Date), by
wire transfer of immediately available Federal funds for the account, or to the
order, of such Rightholder, or
(ii) a number of fully paid and non-assessable Shares
(together with cash in lieu of fractional Shares) with an aggregate Current
Market Price as of such Exercise Date equal to the Differential, which Shares
shall be registered in the name of (or as directed by) the Rightholder (as of
5:00 p.m. New York City time on such Exercise Date); provided, that the Company
shall not satisfy its obligations with respect to any Right by delivery of
Shares unless (A) upon such delivery such Shares are fully paid, nonassessable,
and free of preemptive rights and from all, liens, charges and security
interest, arising from the issue or delivery thereof, (B) the Company has
obtained and kept effective all permits, consents, approvals of governmental
agencies and authorities, and made all filings under Federal and state
securities laws necessary to permit such issuance and delivery of such Shares
and (C) upon such issuance and delivery, such Shares are not "restricted
securities" (as defined in Rule 144 under the Securities Act (or any successor
rule)) and are listed on the principal securities exchanges and markets, if
any, on which other Shares are then listed.
(b) Upon payment in full of the Differential with respect to
any Right so exercised (together with interest thereon at the rate of 13 1/4%
per annum, compounded semi-annually, if such payment is made after the
applicable Rights Payment Date), all obligations of the Company in respect of
such Right shall terminate.
(c) Not later than two Business Days following each Exercise
Date, the Rights Agent shall notify the Company of the number of Rights that
were exercised on such Exercise Date. Not later than 12:00 noon, New York City
time on the second business day preceding each Rights Payment Date, the Company
shall provide the Rights Agent with written notice of the aggregate amount of
the Differential to be paid on such Rights Payment Date and prior to the Rights
Payment Date shall deposit with the Rights Agent funds or Shares as provided in
this Section 8.3.
8.4 Partial Exercise of Rights
If less than all of the Rights held by any Rightholder shall have
been exercised as of an Exercise Date, then such Rightholder shall be entitled,
without charge, to a new Rights Certificate in replacement of the Rights
Certificate surrendered upon such Exercise Date, indicating the number of
Rights remaining outstanding, or the original Rights Certificate shall be
endorsed to give effect to such partial exercise of the Rights represented
thereby. The Rights Agent is hereby irrevocably authorized to countersign and
deliver any such new Rights Certificate pursuant to this Section 8.4 or to make
any such endorsement. All Rights Certificates surrendered in the exercise of
the Rights evidenced thereby shall, unless endorsed as aforementioned, be
cancelled by the Rights Agent and thereafter delivered to the Company.
8.5 Payment of Taxes
The Company shall pay all taxes (other than taxes on income of the
Rightholders) and other governmental charges that may be imposed upon the
issuance or exercise of the Rights; provided, however, that the Company shall
not be required to pay any taxes payable in connection with any issuance of
Shares upon exercise of a Right if such Shares are to be issued in a name other
than that of the Rightholder of the Rights so exercised.
SECTION 9. ADJUSTMENTS
9.1 Adjustment of Adjustment Amount, Exercise Price.
(a) If the Company or any of its subsidiaries shall, by
dividend or otherwise, distribute to holders of Shares (i) cash, property or
assets (other than ordinary cash dividends paid out of consolidated earnings or
earned surplus) or (ii) evidences of indebtedness or other securities
(excluding shares of Common Stock or other shares of capital stock of the
Company but including, without limitation, rights, warrants or options
entitling the holders thereof to subscribe for or purchase shares of Common
Stock or shares of capital stock or other securities of any subsidiary of the
Company) the Adjustment Amount shall be adjusted to equal the sum of (i) the
Adjustment Amount immediately prior to the Time of Determination plus (ii) the
amount of cash or the fair market value (as determined by an Independent
Investment Bank) of the other property, assets, evidences of indebtedness or
other securities, distributed with respect to one Share, such adjustment to
become effective at the Time of Determination.
(b) If the Company shall issue Shares (whether for cash or
otherwise) at a net price per share less than the Closing Price on the date the
Company fixes the offering price of such Shares, the Exercise Price shall be
adjusted immediately thereafter to equal the product of (i) the Exercise Price
immediately prior thereto times (ii) a fraction, the numerator of which shall
be the sum of (A) the number of Shares outstanding immediately prior to the
issuance of such additional Shares plus (B) (x) the aggregate offering price of
the total number of Shares so offered divided by (y) such Closing Price, and
the denominator of which shall be the aggregate number of shares that would be
outstanding immediately after the issuance of such additional Shares; provided,
however, that no adjustment need be made with respect to Shares issued (i)
pursuant to the exercise of any rights, options or warrants (A) outstanding on
the date hereof, or (B) for which an adjustment has been made pursuant to
Section 9.1(a) or (ii) upon conversion of shares of Series A Cumulative
Redeemable Convertible Preferred Stock, par value $.01 per share, of the
Company or Series B Cumulative Redeemable Convertible Preferred Stock, par
value $.01 per share, of the Company.
(c) Shares owned by or held for the account of the Company or
any subsidiary of the Company shall not be deemed outstanding for the purpose
of any computation pursuant to this Section 9 and the sale or other disposition
of any such Shares shall be deemed to be an issuance thereof.
9.2 Calculations; Exceptions
All calculations under this Section 9 shall be made to the nearest
one-hundredth of a cent. No adjustment need be made in connection with the
issuance of any Shares (i) in a bona fide public offering pursuant to a firm
commitment underwriting managed by a firm that is a member of the National
Association of Securities Dealers, Inc., or (ii) pursuant to a bona fide
employee stock option, stock purchase or stock bonus plan or agreement or
equity incentive plan approved by the Board of Directors (but only to the
extent that the aggregate number of shares excluded by this clause (ii) and
issued after the date of this Agreement shall not exceed 5% of the Common Stock
outstanding on the date hereof).
9.3 No Dilution or Impairment
The Company shall not (a) amend its charter, effect any
consolidation, merger, reorganization, transfer of assets, dissolution, issue
or sale of securities, or take any other voluntary action, for the sole purpose
of avoiding the observance or performance of any of the terms of this Agreement
or (b) cause the dilution or impairment of the rights of the Rightholders
unless, in the case of this clause (b), the rights of the Rightholders are
diluted or impaired ratably with any dilution or other impairment of the rights
of the holders of Shares.
9.4 Notice of Adjustment
Whenever the Adjustment Amount or the Exercise Price shall be subject
to adjustment, as provided in this Section 9, or any event described in the
proviso of the definition of the term "Share" shall occur, the Company shall
promptly deliver to the Rights Agent notice of such adjustment or event,
setting forth a brief statement of the facts relating thereto and the
computation by which such adjustment was made or by which the definition of the
term Share will be revised, which notice shall include a certificate of a firm
of independent public accountants setting forth the Adjustment Amount, the
Exercise Price and the composition of a single Share, in each case after such
adjustment or event. Promptly upon receipt thereof, the Rights Agent shall
send to each Rightholder copies of such notice.
SECTION 10. OTHER NOTICES
Nothing contained in this Agreement shall be construed as conferring
upon any Rightholder, in its capacity as such, the right to vote or receive
dividends or to consent or to receive notice as a stockholder in respect of any
meeting of the stockholders of the Company for the election of the directors of
the Board of Directors of the Company or for any other matter.
If at any time prior to the expiration, cancellation or exercise of
all of the Rights, the Company shall:
(a) declare any dividend payable to all holders of Common Stock
(or other equity securities) or make any other distribution to all holders of
Common Stock (or other equity securities); or
(b) offer to the holders of Common Stock (or other equity
securities) rights to subscribe for or purchase any shares of any class of
stock or any other rights or options; or
(c) effect any reclassification of Common Stock (or other
equity securities) or any capital reorganization or any consolidation or
merger, or any sale, transfer or other disposition of its property, assets and
business substantially as an entirety, or the liquidation, dissolution or
winding up of the Company;
then, in each such case, the Company shall cause written notice of such
proposed action to be mailed to the Rights Agent at least fifteen (15) Business
Days prior to the record date for determining holders of the Common Stock (or
other equity securities) as referred to further below. Such notice shall
specify the date on which the books of the Company shall close, or a record be
taken, for determining holders of Common Stock (or other equity securities)
entitled to receive such stock dividend or other distribution or such rights or
options, or the date on which such reclassification, reorganization
consolidation, merger, sale, transfer, other disposition, liquidation,
dissolution or winding up shall take place or commence, as the case may be, and
the date as of which it is expected that holders of record of Common Stock (or
other equity securities) shall be entitled to receive securities or other
property deliverable upon such action, if any such date has been fixed.
Promptly upon receipt thereof, the Rights Agent shall cause copies of such
notice to be sent to each Rightholder, in the case of any action covered by
clause (a) or (b) above, at least ten (10) Business Days prior to the record
date for determining holders of the Common Stock (or other equity securities)
for purposes of receiving such payment or offer, and, in the case of any action
covered by clause (c) above, at least ten (10) Business Days prior to the
earlier of the date upon which such action is to take place or any record date
to determine holders of Common Stock (or other equity securities) entitled to
receive such securities or other property.
SECTION 11. MERGER OR CONSOLIDATION OF THE COMPANY
The Company shall not merge or consolidate with or into any other
corporation, or transfer all or substantially all of its properties and assets
to any other corporation, unless (i) the corporation resulting from such merger
or consolidation (if not the Company), or receiving such properties and assets,
shall have expressly assumed, by supplemental agreement reasonably satisfactory
in form and substance to the Majority Rightholders and the Rights Agent, the
due and punctual performance and observance of each and every covenant and
condition of this Agreement to be performed and observed by the Company,
whereupon such successor shall be substituted for the Company for purposes of
this Agreement or (ii) the Company is the corporation resulting from such
merger or consolidation.
SECTION 12. SUPPLEMENTS AND AMENDMENTS
The Company and the Rights Agent may from time to time supplement or
amend this Agreement or the form of Rights Certificate, without the approval of
any Rightholder, in order to cure any ambiguity, defect or inconsistency.
Except as provided in the first sentence of this Section 12, neither this
Agreement nor the form of Rights Certificate may be amended or supplemented,
nor may any provision hereof or thereof be waived, without the written consent
of the Majority Rightholders. The consent of each Rightholder affected shall
be required for any supplement or amendment pursuant to which (i) the
Differential would directly or indirectly be decreased or (ii) the Company
could satisfy its obligations with respect to the exercise of Rights other than
with cash or Shares.
SECTION 13. CONCERNING THE RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which the
Company and each Rightholder, by its holding of one or more Rights, shall be
bound.
13.1 Breach of Covenants
The Rights Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or the
Rights Certificates to be complied with by the Company. The Rights Agent makes
no representation as to the validity, sufficiency or adequacy of this Agreement
or the Rights. The recitals and statements contained herein and in the Rights
Certificates, except the Rights Agent's certificates of authentication, shall
be taken as statements of the Company, and the Rights Agent shall not be
responsible for any statement or recital herein or any statement in the Rights
Certificate other than its certificate of authentication and each of its
endorsements on any Rights Certificate.
13.2 Performance of Duties
The Rights Agent undertakes to perform such duties and only such
duties that are specifically set forth in the Agreement and no others, and no
implied covenants or obligations shall be read into this Agreement against the
Rights Agent except for the implied duty to perform its obligations in good
faith. The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any of its duties hereunder either itself or by
or through its attorneys or agents.
13.3 Rights of Rights Agent
(a) The Rights Agent may rely and shall be protected in acting
in good faith or refraining from acting in good faith upon any resolution,
certificate, instrument or written opinion, report, notice, request, direction,
consent, or order, or any other document reasonably believed by it to be
genuine and to have been signed or presented by the proper person
(collectively, "Instruments"). The Rights Agent shall not be bound to make any
investigation into the facts or matters stated in any Instrument unless
requested in writing so to do by the Majority Rightholders; provided, however,
that, if the payment within a reasonable time to the Rights Agent of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Rights Agent, not reasonably assured to
the Rights Agent, the Rights Agent may require reasonable indemnity against
such expenses or liabilities as a condition to proceeding. The reasonable
expenses of every such investigation shall be paid by the Company or, if paid
by the Rights Agent, shall be repaid by the Company upon five Business Days'
prior written notice. The Rights Agent in its reasonable discretion may make
such further inquiry or investigation into such facts or matters as may relate
to whether an Instrument is genuine and has been signed or presented by the
proper person, and, if the Rights Agent shall determine to make such further
inquiry or investigation, upon two Business Days' prior written notice it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney during normal business hours provided that
the conduct of the business of the Company will not be unreasonably disrupted.
(b) Before the Rights Agent acts or refrains from acting, it
may require an officers' certificate, an opinion of counsel or both. The
Rights Agent shall not be liable for any action it takes in good faith or omits
to take in good faith in reliance on such officers' certificate or opinion of
counsel.
(c) Unless otherwise expressly provided in this Agreement, any
demand, request, direction or notice from the Company shall be sufficient if
signed by the Chairman of the Board, the President or a Vice President of the
Company.
13.4 Compensation; Indemnification
The Company shall pay to the Rights Agent from time to time and the
Rights Agent shall be entitled to reasonable compensation for its acceptance
hereof and for services rendered hereunder. The Rights Agent's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Rights Agent upon five Business Days'
prior written notice for all reasonable disbursements, advances and expenses
incurred or made by or on behalf of it arising out of the acceptance or
administration of its duties hereunder. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Rights Agent's
agents and counsel, and of persons not regularly in its employ.
The Company shall indemnify the Rights Agent for, and hold it
harmless against, any loss, liability or expense incurred by it arising out of
or in connection with the acceptance or administration of its duties under this
Agreement, except as set forth in the next paragraph. The Rights Agent shall
notify the Company promptly of any claim for which it may seek indemnity. The
Rights Agent may have separate counsel reasonably acceptable to the Company to
advise the Rights Agent as to matters arising out of the acceptance or
administration of its duties hereunder and the Company shall pay the reasonable
fees and expenses of such counsel.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Rights Agent through its or any of its
agent's negligence, bad faith or wilful misconduct.
13.5 Other Transactions by the Rights Agent
The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in the Rights, the Shares or any
other securities of the Company or any affiliate of the Company or become
pecuniarily interested in any transaction in which the Company or any affiliate
of the Company may be interested, or contract with or lend money to the Company
or any affiliate of the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
affiliate of the Company, or from acting as Trustee.
13.6 Copies of Agreement and Notices
The Rights Agent shall keep copies of this Agreement, all amendments,
supplements or other modifications thereto and any notices given or received
hereunder available for inspection by the Rightholders during normal business
hours at its principal office in New York, New York. The Company shall supply
the Rights Agent from time to time with such numbers of copies of this
Agreement and all amendments, supplements or other modifications thereto as the
Rights Agent may reasonably request. At any time any calculation is made or to
be made pursuant to the terms of this Agreement, the Company shall make such
calculation in accordance with this Agreement and give the Rights Agent prompt
written notice of such calculation at such time as such information is
available and the Rights Agent so requests in writing.
13.7 Change of Rights Agent
The Rights Agent may resign at any time and be discharged from its
duties under this Agreement by giving to the Company 30 days' notice in
writing. The Rights Agent may be removed at any time by written notice from
the Majority Rightholders. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. The Rights Agent shall promptly notify the
Company in writing of its resignation, removal or incapacity; the Majority
Rightholders shall notify the Company of the resignation, removal or incapacity
of the Rights Agent promptly upon obtaining knowledge thereof. If the Company
shall fail to make such appointment within a period of 30 days after it has
been notified in writing of such resignation, removal or incapacity by the
resigning or incapacitated Rights Agent or by the Majority Rightholders, then
any Rightholder may apply to any court of competent jurisdiction for the
appointment of a successor to the Rights Agent.
Any successor Rights Agent, whether appointed by the Company or such
a court, shall be a bank or trust company, in good standing, incorporated under
the laws of the United States of America or any state thereof and having at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100,000,000. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
former Rights Agent shall deliver and transfer to the successor Rights Agent
any property, documents, Instruments or certificates at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for such purpose. Failure to file any notice provided for in
this Section 13.7, however, or any defect therein, shall not affect the
legality or validity of the resignation, incapacity or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Promptly following each such resignation, incapacity or removal, the successor
Rights Agent shall deliver to the Company and each Rightholder written notice
of such removal, incapacity, or resignation and the name and address of such
successor Rights Agent pursuant to Section 15.1. Notwithstanding the
resignation, incapacity or removal of the Rights Agent, the Company's
obligations under Section 13.4 hereof shall continue for the benefit of the
replaced Rights Agent.
13.8 Merger or Consolidation or Change of Name
Any corporation or national banking association into which the Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent shall be a
party, or any corporation or national banking association succeeding to the
corporate trust business of the Rights Agent, shall, with the consent of the
Company, be the successor to the Rights Agent hereunder without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 13.7 hereof. If, at the
time such successor to the Rights Agent shall succeed to the agency created by
this Agreement, (a) any of the Rights Certificates shall have been
countersigned but not delivered, any such successor to the Rights Agent may
adopt the countersignature of the original Rights Agent and deliver such Rights
Certificates so countersigned; and (b) any of the Rights Certificates shall not
have been countersigned, any successor to the Rights Agent may countersign such
Rights Certificates whether in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases Rights
Certificates shall have the full force provided herein and in such Rights
Certificates. If at any time the name of the Rights Agent shall be changed and
at such time (i) any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignatures under its
prior name and deliver such Rights Certificates so countersigned; and (ii) any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
SECTION 14. LEGENDS
(a) Except for any sale or transfer of a Restricted Right
(including any Restricted Right represented by the Global Right) pursuant to an
effective registration statement under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act, each Right
Certificate issued upon such sale or transfer shall bear a legend in
substantially the form set forth on Exhibit A hereto unless each of the Rights
Agent and the Company receive a written opinion of counsel reasonably
satisfactory in form and content to the Company and the Rights Agent.
(b) Upon any sale or transfer of a Restricted Right (including
any Restricted Right represented by the Global Right) pursuant to an effective
registration statement under the Securities Act or pursuant to an exemption
from the registration requirements of the Securities Act, or that is the
subject of the legal opinion referred to in paragraph (a) above:
(i) in the case of any Restricted Right that is a
Definitive Right, the Rights Agent shall permit the holder thereof to exchange
such Restricted Right for a Definitive Right that does not bear the legend
required by subsection (a) above; and
(ii) in the case of any Restricted Right represented by
the Global Right, such Restricted Right shall not be required to bear the
legend required by subsection (a) above but shall continue to be subject to the
provisions of Section 7(c) hereof; provided, however, that with respect to any
request for an exchange of a Restricted Right that is represented by the Global
Right for a Definitive Right that does not bear the legend set forth in clause
(a) above, which request is made in reliance upon Rule 144, the holder thereof
shall certify in writing to the Rights Agent that such request is being made
pursuant to Rule 144.
SECTION 15. MISCELLANEOUS
15.1 Notices
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, certified first-class mail
(return receipt requested), next-day air courier, telex or telecopy. All such
notices and communications to the Company shall be deemed to have been duly
given when delivered by hand, if personally delivered; five business days after
being deposited in the mail, or air courier, postage prepaid, if mailed or sent
by air courier; when answered back, if telexed; and when receipt is
acknowledged, if telecopied.
Any notice pursuant to this Agreement, shall be delivered (i) if to
the Company, to Terex Corporation, 500 Post Road East, Suite 320, Westport,
Connecticut 06880, Attention: Marvin Rosenberg, Esq., or (ii) if to the Rights
Agent, to United States Trust Company of New York, 114 West 47th Street, New
York, New York 10036, Attention: Corporate Trust Department, with a copy to
Larry I. Glick, P.C., 1205 Franklin Avenue, Garden City, New York 11530. Each
party hereto may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in writing to the other
party. Any notice mailed pursuant to this Agreement to the Rightholders shall
be in writing and shall be mailed first class, postage prepaid, or delivered to
such Rightholders at their respective addresses on the Rights Register, with a
copy to Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Los
Angeles, California 90071, Attention: Michael A. Woronoff, Esq.
15.2 Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto, including without
limitation and without the need for an express assignment, subsequent holders
of the Rights, and no other persons shall acquire or have any right under or by
virtue of this Agreement.
15.3 Governing Law and Submission to Jurisdiction
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW
YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR
ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK
IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS
SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE RIGHTS AGENT OR ANY RIGHTHOLDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
15.4 Severability
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their best efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.
15.5 Attorneys' Fees
In any action or proceeding brought to enforce any provision of this
Agreement, or where any provision hereof or thereof is validly asserted as a
defense, the prevailing party, as determined by the court, shall be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.
15.6 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.
15.7 Headings
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Common Stock
Appreciation Rights Agreement to be executed and delivered by their respective
officers thereunto duly authorized as of the date first written above.
TEREX CORPORATION
By: Ronald M. DeFeo
Title: President and CEO
(Corporate Seal)
Attest:
Marvin B. Rosenberg
Secretary
UNITED STATES TRUST COMPANY OF NEW YORK, as Rights Agent
By: John Guiliano
Title: Vice President
Exhibit A
FORM OF RIGHTS CERTIFICATE
TEREX CORPORATION
COMMON STOCK APPRECIATION RIGHTS CERTIFICATE
No. R-____________ Date:
CERTIFICATE FOR ________ COMMON STOCK APPRECIATION RIGHTS
EXERCISABLE AS PROVIDED IN THE RIGHTS AGREEMENT (AS DEFINED BELOW)
UNTIL 5:00 P.M. NEW YORK CITY TIME,
ON MAY 15, 2002
[Unless and until it is exchanged in whole or in part for a Rights Certificate
in definitive form, the Rights evidenced by this Rights Certificate may not be
transferred except as a whole by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the 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
("DTC"), New York, New York, to the 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 may be requested by an authorized
representative of DTC (and any payment hereon is made to Cede & Co. or such
other entity as may be 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.]1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE RIGHTS ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT 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 144, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT 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 (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE RIGHTS AGENT'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE RIGHTS AGENT.
THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF A
COMMON STOCK APPRECIATION RIGHTS AGREEMENT, DATED AS OF MAY 9, 1995 AND MAY NOT
BE TRANSFERRED, SOLD, PLEDGED OR OTHERWISE DISPOSED OF, EXCEPT AS THEREIN
PROVIDED. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICES OF THE COMPANY.
THIS CERTIFIES that
or registered assigns is the registered holder (the "Holder") of the number of
stock appreciation rights ("Rights") set forth above, each Right representing
the right to receive the Differential with respect to such Right, in the manner
specified in the Common Stock Appreciation Rights Agreement, dated as of May 9,
1995 (the "Rights Agreement"), between Terex Corporation, a Delaware
corporation (the "Company"), and United States Trust Company of New York, as
Rights Agent. The Differential is payable at the option of the Company in cash
or shares of common stock, par value $.01 per share, of the Company upon
exercise of the Rights represented hereby in accordance with and in the manner
specified in the Rights Agreement.
No rights may be exercised at or after 5:00 p.m. New York City time
on the Expiration Date. All Rights evidenced hereby shall thereafter become
null and void.
This Certificate is issued under and in accordance with the Rights
Agreement and, except as otherwise provided in this Certificate, is subject to
the terms and provisions contained in said Rights Agreement, to all of which
terms and provisions the Holder consents by acceptance hereof. All capitalized
terms used herein and not otherwise defined shall have the respective meanings
given such terms in the Rights Agreement.
THE PROVISIONS HEREOF SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF).
IN WITNESS WHEREOF, the Company has caused this Certificate to be
duly executed under its seal.
TEREX CORPORATION
By:
Title:
[Seal]
Attest: __________________
[Assistant] Secretary
UNITED STATES TRUST COMPANY OF
NEW YORK, as Rights Agent
By:
Title:
NOTICE OF ELECTION
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Common Stock Appreciation Rights Certificate, and requests
that payment of the Differential in respect of such Rights, be issued and
delivered as follows:
DELIVER TO:
(Name)
(Address, Including Zip Code)
WIRE INSTRUCTIONS:
(Account Number and Name)
(Bank Name and Address)
(Bank ABA Number)
If the number of Rights hereby exercised is less than all the Rights
represented by this Certificate, the undersigned requests that (check one):
[ ] this Certificate be appropriately endorsed by the Rights Agent and
returned to the holder hereof.
[ ] a new Certificate representing the number of full Rights not
exercised be issued and delivered as set forth below.
Name of Rightholder or Assignee:
Address:
Dated: ____________, ______
Signature of Registered Holder
(The above signature must conform in all respects to name of Holder as written
on the face of this Rights Certificate.)
Signature Guaranteed:
PLEASE INSERT SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER OF HOLDER
ASSIGNMENT
(To be signed only upon assignment of Rights)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers to
(Name and Address of Assignee)
the within Certificate hereby irrevocably constituting and appointing
_________________________ Attorney to transfer said Certificate on the books of
the Company, with full power of substitution in the premises.
DATED: ____________, _____
(The above signature must correspond in all respects
to the name as written on the face of this Rights Certificate.)
Signature
Guaranteed:
__________________________
SCHEDULE OF EXCHANGES OF DEFINITIVE RIGHTS2
The following exchanges of a part of this Global Right for definitive Rights
have been made:
Number of
ANNEX B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF RIGHTS
Re: Common Stock Appreciation Rights ("Rights") of Terex Corporation
This Certificate related to _____ Rights held in ** book-entry or * *
definite form by _____ (the "Transferor").
The Transferor by written order, has requested the Rights Agent*:
* to deliver, in exchange of its beneficial interest in the Global Right
held by the depository, a Right or Rights in definitive, registered form of
authorized denominations and an aggregate amount equal to its beneficial
interest in such Global Right (or the portion thereof indicated above); or
* to exchange or register the transfer of a Right or Rights. In connection
with such request and in respect of each such Right, the Transferor does hereby
certify that the Transferor is familiar with the Common Stock Appreciation
Rights Agreement relating to such Rights and that the transfer of this Right is
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act') or does not require registration under
the Securities Act because such Right:
* is being acquired for the Transferor's own account, without transfer;
* is being transferred pursuant to an effective registration statement;
* is being transferred to a qualified institutional buyer (as defined
in Rule 144A under the Securities Act), in reliance on such Rule 144A;
* is being transferred pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act;**
* is being transferred pursuant to Rule 144 under the Securities Act;**
* is being transferred pursuant to another exemption from the
registration requirements of the Securities Act
(explain:______________________________________).**
NAME OF TRANSFEROR
By: Date:
__________________
* Check applicable box.
** If this box is checked, this certificate must be accompanied by an
opinion of counsel to the effect that such transfer is in compliance with the
Securities Act.
1 1 This paragraph is to be included only if the Right is in global form.
2 2 This is to be included only if the Right is in global form.
TEREX CORPORATION
$250,000,000 13 1/4% Senior Secured Notes due 2002
REGISTRATION RIGHTS AGREEMENT
May 9, 1995
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
DILLON, READ & CO. INC.
535 Madison Avenue
New York, New York 10021
Ladies and Gentlemen:
TEREX CORPORATION, a Delaware corporation (the "Company"), is issuing
and selling to Jefferies & Company, Inc. and Dillon, Read & Co. Inc.
(collectively, the "Purchasers"), upon the terms set forth in a purchase
agreement, dated as of April 27, 1995 (the "Purchase Agreement"), $250,000,000
aggregate principal amount of its 13 1/4% Senior Secured Notes due 2002, Series
A, including the guarantees endorsed thereon (the "Notes"). As an inducement to
the Purchasers to enter into the Purchase Agreement, the Company and each of
the guarantors (the "Guarantors") named in the Purchase Agreement agrees with
the Purchasers, for the benefit of the holders of the Securities (defined
below) (including the Purchasers), 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 terms shall have the following meanings:
Advice: See Section 6.
Affiliate: An "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", as used with respect to any Person means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership of
10% or more of the voting securities of a Person will be deemed to constitute
control; and the terms "controlling" and "controlled" have meanings correlative
to the foregoing. Notwithstanding the foregoing to the contrary, neither
Jefferies & Company, Inc., Dillon, Read & Co. Inc. nor any of their respective
Affiliates will be deemed Affiliates of the Company.
Agreement: This Registration Rights Agreement.
Applicable Period: See Section 2.
Business Days: Any day other than (i) Saturday or Sunday, or (ii) a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to be closed.
Closing Date: May 9, 1995.
Effectiveness Date: The date on which the Initial Shelf Registration
is declared effective under the Securities Act.
Effectiveness Period: See Section 3.
Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2.
Exchange Offer Registration Statement: See Section 2.
Exchange Securities: See Section 2.
Filing Date: The 4-month anniversary of the Closing Date.
Holder: Each holder of Registrable Securities.
Indenture: The Indenture, dated the date hereof, between the Company
and United States Trust Company of New York, as trustee, pursuant to which the
Securities are being issued, as amended or supplemented from time to time, in
accordance with the terms thereof.
Initial Shelf Registration: See Section 3.
Liens: Any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind 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 and any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction, including
any foreign nation and any political subdivision thereof).
Losses: See Section 8.
NASD: The National Association of Securities Dealers, Inc.
Participating Broker-Dealer: See Section 2.
Person: An individual, trustee, corporation, partnership, joint
stock company, joint venture, trust, unincorporated organization or government
or any agency or political subdivision thereof, union, business association,
firm or other entity.
Private Exchange: See Section 2.
Private Exchange Securities: See Section 2.
Prospectus: 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 promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities covered by such Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
Registrable Securities: (i) Notes and Private Exchange Securities
acquired by the holder thereof other than pursuant to an effective registration
statement under the Securities Act or Rule 144 and (ii) Exchange Securities
held by Participating Broker-Dealers.
Registration Statement: Any registration statement of the Company
that covers any of the Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Notes, the Private Exchange Securities and the
Exchange Securities, collectively.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(i).
Shelf Registration: The Initial Shelf Registration and any
Subsequent Shelf Registration.
Special Counsel: Counsel chosen by the holders of a majority in
aggregate principal amount of Securities.
Subsequent Shelf Registration: See Section 3.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if any, the trustee
under any indenture governing the Exchange Securities or the Private Exchange
Securities.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
Weekly Liquidated Damages Amount: See Section 4.
2. Exchange Offer
(a) The Company and the Guarantors shall (i) prepare and file with
the SEC promptly after the date hereof, but in no event later than the Filing
Date, a registration statement (the "Exchange Offer Registration Statement") on
an appropriate form under the Securities Act with respect to a proposed offer
(the "Exchange Offer") to the Holders to issue and deliver to such Holders, in
exchange for the Notes, a like principal amount of 13 1/4% Senior Secured Notes
due 2002, Series B, of the Company, including like guarantees endorsed thereon
(the "Exchange Securities"), substantially identical in all respects to the
Notes, except for references to series and restrictive legends, (ii) use their
best efforts to cause the Exchange Offer Registration Statement to become
effective as promptly as practicable after the filing thereof and keep the
Exchange Offer Registration Statement effective until the consummation of the
Exchange Offer pursuant to its terms, and (iii) unless the Exchange Offer would
not be permitted by a policy of the SEC, commence the Exchange Offer and use
their best efforts to issue, on or prior to 30 business days after the date on
which the Exchange Offer Registration Statement is declared effective, Exchange
Securities in exchange for all Notes tendered prior thereto in the Exchange
Offer. To the extent not prohibited by any law or applicable interpretation of
the Staff of the SEC, the Company shall use its best efforts to complete the
Exchange Offer as provided in this Section 2, and shall comply with the
applicable requirements of the Exchange Act. The Exchange Offer shall not be
subject to any conditions, other than that the Exchange Offer does not violate
applicable law or any applicable interpretation of the Staff of the SEC.
(b) The Exchange Securities shall be issued under the Indenture or a
trust indenture that is identical to the Indenture (other than such changes to
the Indenture or any such identical indenture as are necessary to comply with
any requirements of the SEC to effect or maintain the qualification thereof
under the TIA).
(c) In connection with the Exchange Offer, the Company and the
Guarantors 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 that
is an exhibit thereto and related documents;
(ii)
keep the 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 depository for the Exchange Offer with an address in
the Borough of Manhattan, The City of New York;
(iv)
permit Holders to withdraw tendered Notes at any time prior to the close of
business, New York time, on the last Business Day on which the Exchange Offer
shall remain open; and
(v)
otherwise comply in all material respects with all laws applicable to the
Exchange Offer.
(d) As soon as practicable after the close of the Exchange Offer,
the Company and the Guarantors shall:
(i)
accept for exchange all Notes properly tendered and not validly withdrawn
pursuant to the Exchange Offer in accordance with the terms of the Exchange
Offer Registration Statement and the letter of transmittal that is an exhibit
thereto;
(ii)
deliver to the Trustee for cancellation all Notes so accepted for exchange; and
(iii)
cause the Trustee promptly to authenticate and deliver to each Holder of Notes,
Exchange Securities equal in aggregate principal amount to the Notes of such
Holder so accepted for exchange.
(e) Interest on each Exchange Security and Private Exchange Security
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the date of original issue of the Notes. Each Exchange
Security and Private Exchange Security shall bear interest at the rate set
forth thereon; provided, that interest with respect to the period prior to the
issuance thereof shall accrue at the rate or rates borne by the Notes from time
to time during such period.
(f) The Company and the Guarantors shall include within the
Prospectus contained in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution," reasonably acceptable to the Purchasers,
containing a summary statement of the positions taken or policies made by the
Staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Securities received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"). Such "Plan of Distribution"
section shall also allow the use of the Prospectus by all Persons subject to
the prospectus delivery requirements of the Securities Act, including all
Participating Brokers-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Securities. The
Company shall use its best efforts to keep the Exchange Offer Registration
Statement effective and to amend and supplement the Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirement of the
Securities Act for such period of time as such Persons must comply with such
requirements in order to resell the Exchange Securities; provided that such
period shall not exceed 180 days after consummation of the Exchange Offer (or
such longer period if extended pursuant to the last paragraph of Section 6
hereof (the "Applicable Period").
(g) If, prior to consummation of the Exchange Offer, any Purchaser
holds any Securities acquired by it and having the status as an unsold
allotment in the initial distribution, the Company upon the request of such
Purchaser shall, simultaneously with the delivery of the Exchange Securities in
the Exchange Offer, issue (pursuant to the same indenture as the Exchange
Securities) and deliver to such Purchaser, in exchange (the "Private Exchange")
for the Securities held by such Purchaser, a like principal amount of debt
securities of the Company that are identical to the Exchange Securities (the
"Private Exchange Securities"). The Private Exchange Securities shall bear the
same CUSIP number as the Exchange Securities.
(h) The Company may require each holder of Registrable Securities
participating in the Exchange Offer to represent to the Company that at the
time of the consummation of the Exchange Offer (i) any Exchange Securities
received by such holder will be acquired in the ordinary course of its
business, (ii) such holder will have no agreement or understanding with any
Person to participate in the distribution within the meaning of the Securities
Act or resale of the Exchange Securities in violation of the Securities Act and
(iii) such holder will not be in the business of underwriting securities.
(i) If (i) prior to the consummation of the Exchange Offer, either
the Company or a majority of the holders of Registrable Securities determines
in its or their reasonable judgment that (A) the Exchange Securities would not,
upon receipt, be tradeable by such holders without restriction under the
Securities Act and the Exchange Act and without material restrictions under
applicable Blue Sky or state securities laws, (B) the interests of the holders
under this Agreement, taken as a whole, would be materially adversely affected
by the consummation of the Exchange Offer or (C) the SEC is unlikely to permit
the consummation of the Exchange Offer prior to the Effectiveness Date, (ii)
subsequent to the consummation of the Private Exchange but within one year of
the Closing Date, the Purchasers so request, (iii) the Exchange Offer is
commenced and not consummated within 240 days of the Closing Date for any
reason or (iv) the Exchange Offer is commenced and, in the case of any holder
of Registrable Securities participating in the Exchange Offer, such holder does
not receive freely tradeable Exchange Securities upon the consummation thereof
and such holder notifies the Company within six months of such consummation,
then the Company shall promptly deliver to the Holders (or in the case of any
occurrence of the event described in clause (iv) hereof, to any such holder)
and the Trustee notice thereof (the "Shelf Notice") and shall thereafter file
an Initial Shelf Registration pursuant to Section 3. Following the delivery of
a Shelf Notice, neither the Company nor any of the Guarantors shall have any
further obligation under this Section 2 .
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(i)(i),
(ii) or (iii), then this Section 3 shall apply to all Registrable Securities.
Otherwise, upon consummation of the Exchange Offer in accordance with Section
2, the provisions of this section shall apply solely with respect to
Registrable Securities that are (i) Private Exchange Securities or Exchange
Securities held by Participating Broker-Dealers or (ii) held by any holder
thereof participating in the Exchange Offer that did not receive freely
tradeable Exchange Securities as contemplated by Section 2(i)(iv) hereof.
(a) Initial Shelf Registration. The Company and the Guarantors
shall prepare and file with the SEC a Registration Statement for an offering to
be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Securities (the "Initial Shelf Registration"). If the Company and
the Guarantors have not yet filed an Exchange Offer, the Company and the
Guarantors shall file with the SEC the Initial Shelf Registration on or prior
to the Filing Date. Otherwise, the Company and the Guarantors shall use their
best efforts to file the Initial Shelf Registration within 20 days of the
delivery of the Shelf Notice or as promptly as possible following the request
of the Purchasers. The Initial Shelf Registration shall be on Form S-1 or
another appropriate form permitting registration of such Registrable Securities
for resale by such holders in the manner or manners designated by them
(including, without limitation, one or more underwritten offerings). The
Company and the Guarantors shall (i) not permit any securities other than the
Registrable Securities, the Rights and the underlying Common Stock to be
included in the Initial Shelf Registration or any Subsequent Shelf
Registration, and (ii) use their best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act as promptly as
practicable after the filing thereof and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date that is 28
months from the Effectiveness Date (subject to extension pursuant to the last
paragraph of Section 6 hereof) (the "Effectiveness Period"), or such shorter
period ending when (i) all Registrable Securities covered by the Initial Shelf
Registration have been sold or (ii) a Subsequent Shelf Registration covering
all of the Registrable Securities has been declared effective under the
Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for
any reason at any time during the Effectiveness Period (other than because of
the sale of all of the securities registered thereunder), the Company and the
Guarantors shall use their best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall, to the
extent possible, within 30 days of such cessation of effectiveness amend the
Shelf Registration in a manner reasonably expected to obtain the withdrawal of
the order suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Securities (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Company and the Guarantors shall use their best
efforts to cause the Subsequent Shelf Registration to be declared effective as
soon as practicable after such filing and to keep such Subsequent Shelf
Registration continuously effective for a period equal to the number of days in
the Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration, and any Subsequent Shelf Registration, was
previously effective.
4. Liquidated Damages.
(a) The Company and the Guarantors acknowledge and agree that the
holders of Registrable Securities will suffer damages, and that it would not be
feasible to ascertain the extent of such damages with precision, if the Company
and the Guarantors fail to fulfill their obligations hereunder and the Initial
Shelf Registration is filed and declared effective but thereafter ceases to be
effective without being succeeded within 30 days by a Subsequent Shelf
Registration filed and declared effective (an "Event," and the date on which
the 30-day limit is exceeded being referred to herein as an "Event Date").
Accordingly, upon the occurrence of any Event, the Company shall pay,
or cause to be paid (and the Guarantors hereby guarantee the payment of), in
addition to amounts otherwise due under the Indenture and the Registrable
Securities, as liquidated damages, and not as a penalty, to each holder of a
Registrable Security, an additional amount (the "Weekly Liquidated Damages
Amount") equal to (A) for each weekly period beginning on the Event Date for
the first 90-day period immediately following such Event Date, $.05 per week
per $1,000 principal amount of Registrable Securities held by such holder, and
(B) for each weekly period beginning with the first full week after the 90-day
period set forth in the foregoing clause (A), $.10 per week per $1,000
principal amount of Registrable Securities held by such holder; provided that
such liquidated damages will, in each case, cease to accrue (subject to the
occurrence of another Event) on the date on which the applicable Shelf
Registration is no longer subject to an order suspending the effectiveness
thereof or proceedings relating thereto or a new Subsequent Shelf Registration
is declared effective.
(b) The Company shall notify the Trustee within five Business Days
after each Event Date. The Company shall pay the liquidated damages due on the
Registrable Securities by depositing with the Trustee, in trust, for the
benefit of the holders thereof, by 12:00 noon, New York City time, on or before
the applicable semi-annual interest payment date for the Registrable
Securities, immediately available funds in sums sufficient to pay the
liquidated damages then due. The liquidated damages amount due shall be
payable on each interest payment date to the record holder of Registrable
Securities entitled to receive the interest payment to be made on such date as
set forth in the Indenture.
5. Hold-Back Agreements
The Company and the Guarantors agree (i) without the prior written
consent of the holders of a majority of the aggregate principal amount of the
then outstanding Securities, not to effect any public or private sale or
distribution (including a sale pursuant to Regulation D under the Securities
Act) of any securities the same as or similar to those covered by a
Registration Statement filed pursuant to Section 2 or 3 hereof, or any
securities convertible into or exchangeable or exercisable for such securities,
during the 10 days prior to, and during the 90-day period beginning on, (A) the
effective date of any Registration Statement filed pursuant to Sections 2 and 3
hereof unless the holders of a majority in aggregate principal amount of
Registrable Securities to be included in such Registration Statement consent or
(B) the commencement of an underwritten public distribution of Registrable
Securities, where the managing underwriter so requests; and (ii) to cause each
holder of such securities that are the same as or similar to Registrable
Securities issued at any time after the date of this Agreement (other than
securities purchased in a registered public offering) to agree not to effect
any public sale or distribution of any such securities during such periods,
including a sale pursuant to Rule 144 or Rule 144A.
6. Registration Procedures
In connection with the registration of any Securities pursuant to
Sections 2 or 3 hereof, each of the Company and each Guarantor shall effect
such registrations to permit the sale of such Securities in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Company and each Guarantor shall:
(a) Prepare and file with the SEC, as soon as practicable after the
date hereof but in any event prior to the Filing Date, a Registration Statement
or Registration Statements as prescribed by Section 2 or 3, and use its best
efforts to cause each such Registration Statement to become effective and
remain effective as provided herein; provided, however, that, if (i) such
filing is pursuant to Section 3 or (ii) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto,
the Company and the Guarantors shall, if requested, furnish to and afford the
holders of the Registrable Securities covered by such Registration Statement,
their Special Counsel, each Participating Broker-Dealer, the managing
underwriters, if any, and their counsel a reasonable opportunity to review and
make available for inspection by such Persons copies of all such documents
(including copies of any documents to be incorporated by reference therein and
all exhibits thereto) proposed to be filed, such financial and other
information and books and records of the Company and the Guarantors, and cause
the officers, directors and employees of the Company and the Guarantors,
Company counsel and independent certified public accountants of the Company, to
respond to such inquiries (such actions are hereinafter collectively referred
to as the "Review"), as shall be reasonably necessary, in the opinion of
respective counsel to such holders, Participating Broker-Dealer and
underwriters, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company may require each holder of Registrable Securities
to agree (i) to keep confidential any non-public information relating to the
Company received by such holders and not disclose such information (other than
to an Affiliate or prospective purchaser who agrees to respect the
confidentiality provisions of this Section 6(a)) and (ii) to abstain from
trading in any securities of the Company on the basis of material, non-public
information, in each case until such information has been made generally
available to the public and, in the case of clause (i) above, unless the
release of such information is required by law or necessary to respond to
inquiries of regulatory authorities (including the National Association of
Insurance Commissioners, or similar organizations or their successors).
Neither the Company nor any Guarantor shall file any Registration Statement or
Prospectus or any amendments or supplements thereto in respect of which the
Holders must be afforded an opportunity to review prior to the filing of such
document, if the holders of a majority in aggregate principal amount of the
Registrable Securities covered by such Registration Statement, their Special
Counsel, any Participating Broker-Dealer or the managing underwriters, if any,
or their counsel shall reasonably object to the Company if such objection
states that the person or persons making such objection believe that such
Registration Statement, Prospectus or amendment does not comply in any material
respect with any applicable law.
(b) Provide an indenture trustee for the Registrable Securities or
the Exchange Securities, as the case may be, and cause the Indenture to be
qualified under the TIA not later than the effective date of the first
Registration Statement relating to the Securities; and in connection therewith,
cooperate with the trustee under any such indenture and the holders of the
Securities, to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the TIA; and
execute, and use its best efforts to cause such trustee to execute, all
documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(c) Use its best efforts to prepare and file with the SEC such
amendments and post-effective amendments to the Registration Statement as may
be necessary to keep such Registration Statement continuously effective for the
time periods required hereby; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply in all material respects with the provisions of the
Securities Act, the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable thereto with respect to the disposition of
all securities covered by such Registration Statement, as so amended, or in
such Prospectus, as so supplemented, and with respect to the subsequent resale
of any Securities being sold by a Participating Broker-Dealer covered by any
such Prospectus.
(d) Furnish to such selling holders and Participating Broker-Dealers
who so request (i) upon the Company's receipt, a copy of the order of the SEC
declaring such Registration Statement and any post-effective amendment thereto
effective and (ii) such reasonable number of copies of such Registration
Statement and of each amendment and supplement thereto (in each case including
any documents incorporated therein by reference and all exhibits), (iii) such
reasonable number of copies of the Prospectus included in such Registration
Statement (including each preliminary Prospectus), and such reasonable number
of copies of the final Prospectus as filed by the Company pursuant to Rule
424(b) under the Securities Act, in conformity with the requirements of the
Securities Act, and (iv) such other documents (including any amendments
required to be filed pursuant to clause (c) of this Section), as any such
Person may reasonably request. The Company and the Guarantors hereby consent
to the use of the Prospectus by each of the selling holders of Registrable
Securities or each such Participating Broker-Dealer, as the case may be, and
the underwriters or agents, if any, and dealers (if any), in connection with
the offering and sale of the Registrable Securities covered by, or the sale by
Participating Broker-Dealers of the Exchange Securities pursuant to, such
Prospectus and any amendment thereto.
(e) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, notify the selling holders of Registrable Securities,
their Special Counsel, each Participating Broker-Dealer and the managing
underwriters, if any, promptly (but in any event within five Business Days with
respect to clause (e)(i), below, and two Business Days with respect to clauses
(e)(ii)-(e)(vi), below), and confirm such notice in writing, (i) when a
Prospectus has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
Prospectus or the initiation of any proceedings for that purpose, (iii) if, at
any time when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities, the representations and
warranties of the Company or of any Guarantor contained in any agreement
(including any underwriting agreement) contemplated by Section 6(n) below cease
to be true and correct in any material respect, (iv) of the receipt by the
Company or any Guarantor of any notification with respect to the suspension of
the qualification or exemption from qualification of a Registration Statement
or any of the Registrable Securities or the Exchange Securities to be sold by
any Participating Broker-Dealer for offer or sale in any jurisdiction, or the
contemplation, initiation or threatening of any proceeding for such purpose,
(v) of the happening of any event that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in such Registration Statement,
Prospectus or documents so that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, and (vi) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(f) Use its best efforts to register or qualify, and, if applicable,
to cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, Securities to be included in a Registration Statement for
offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling holder, Participating Broker-Dealer or
the managing underwriters reasonably request in writing; and, if Securities are
offered other than through an Underwritten Offering, the Company agrees to
cause its counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 6(f) at the
expense of the Company; keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the Securities
covered by the applicable Registration Statement, provided, however, that none
of the Company nor the Guarantors shall be required to (i) qualify generally to
do business in any jurisdiction where it is not then so qualified, (ii) to
take action that would subject it to general service of process in any
jurisdiction where it is not so subject or (iii) subject it to taxation in
excess of a nominal dollar amount in any such jurisdiction.
(g) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Securities for
sale in any jurisdiction, and, if any such order is issued, to use its best
efforts to obtain the withdrawal of any such order at the earliest possible
time.
(h) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, and if requested by the managing underwriters, if any,
or the holders of a majority in aggregate principal amount of the Registrable
Securities, (i) promptly incorporate in a Prospectus or post-effective
amendment such information as the managing underwriters, if any, or such
holders reasonably request to be included therein required to comply with any
applicable law and (ii) make all required filings of such Prospectus or such
post-effective amendment as soon as practicable after the Company has received
notification of such matters required by applicable law to be incorporated in
such Prospectus or post-effective amendment.
(i) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends and shall be
in a form eligible for deposit with The Depository Trust Company; and enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriters, if any, or holders may reasonably request.
(j) If (i) a Shelf Registration is filed pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 6(e)(v) or 6(e)(vi) above, as promptly as practicable prepare a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder or to the purchasers of the Exchange Securities to whom
such Prospectus will be delivered by a Participating Broker-Dealer, such
Prospectus will not 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, in light of the circumstances under which they were made,
not misleading.
(k) Use its best efforts to cause the Securities covered by a
Registration Statement to be rated with the appropriate rating agencies, if
appropriate, if so requested by the holders of a majority in aggregate
principal amount of securities covered by such Registration Statement or the
managing underwriters, if any.
(l) Prior to the effective date of the first Registration Statement
relating to the Securities, (i) provide the applicable trustee with printed
certificates for the Securities in a form eligible for deposit with The
Depository Trust Company and (ii) provide a CUSIP number for each of the
Securities.
(m) Use its best efforts to cause all Securities covered by such
Registration Statement to be listed on each securities exchange, if any, on
which similar debt securities issued by the Company are then listed.
(n) If a Shelf Registration is filed pursuant to Section 3, enter
into such agreements (including an underwriting agreement in form, scope and
substance as is customary in Underwritten Offerings) and take all such other
reasonable actions in connection therewith (including those reasonably
requested by the managing underwriters, if any, or the holders of a majority of
the Registrable Securities being sold) in order to expedite or facilitate the
registration or the disposition of such Registrable Securities, and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, (i) make such
representations and warranties to the holders of such Registrable Securities
and the underwriters, if any, with respect to the business of the Company and
its subsidiaries, and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in each
case, in form, substance and scope as are customarily made by issuers to
underwriters in Underwritten Offerings, and confirm the same if and when
reasonably requested; (ii) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and the
holders of a majority in principal amount of the Registrable Securities being
sold), addressed to each selling holder of Registrable Securities and each of
the underwriters, if any, covering the matters customarily covered in opinions
requested in Underwritten Offerings; (iii) obtain "cold comfort" letters and
updates thereof (which letters and updates (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters) from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters and each selling holder of
Registrable Securities, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with Underwritten Offerings and such other matters as reasonably requested by
underwriters; and (iv) deliver such documents and certificates as may be
reasonably requested by the holders of a majority in principal amount of the
Registrable Securities being sold and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties of the
Company and its subsidiaries made pursuant to clause (i) above and to evidence
compliance with any conditions contained in the underwriting agreement or other
similar agreement entered into by the Company. The above shall be done at each
closing under such underwriting agreement or similar agreement, or as and to
the extent required thereunder.
(o) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its security holders
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing on the first day of the fiscal quarter following each
fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(p) Upon consummation of an Exchange Offer or Private Exchange,
obtain an opinion of counsel to the Company (in form, scope and substance
reasonably satisfactory to the Purchasers), addressed to all holders of
Registrable Securities participating in the Exchange Offer or Private Exchange,
as the case may be, to the effect that (i) the Company and the Guarantors have
duly authorized, executed and delivered the Exchange Securities and the
Indenture, (ii) the Exchange Securities or the Private Exchange Securities, as
the case may be, and Indenture constitute legal, valid and binding obligations
of the Company and the Guarantors, enforceable against the Company and the
Guarantors in accordance with their respective terms, except as such
enforcement may be subject to (x) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and (y) general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law), and (iii) all
obligations of the Company and the Guarantors under the Exchange Securities or
the Private Exchange Securities, as the case may be, and the Indenture are
secured by Liens on the assets securing the obligations of the Company under
the Notes.
(q) If an Exchange Offer or Private Exchange is to be consummated,
upon delivery of the Registrable Securities by such holders to the Company (or
to such other Person as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Company
shall mark, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no event
shall such Registrable Securities be marked as paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD.
(s) Use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities covered by a Registration
Statement contemplated hereby.
The Company may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities as the Company may, from time to time, reasonably request in writing
and to provide comments with respect to the Registration Statement to be used
in connection with any Shelf Registration. The Company may exclude from such
registration the Registrable Securities of any seller or Exchange Securities of
any Participating Broker-Dealer who unreasonably fails to furnish such
information or provide such comments within a reasonable time after receiving
such request.
Each holder of Registrable Securities and each Participating
Broker-Dealer agrees by acquisition of such Registrable Securities or Exchange
Securities of any Participating Broker-Dealer that, upon receipt of written
notice from the Company of the happening of any event of the kind described in
Section 6(e)(ii), 6(e)(iv), 6(e)(v) or 6(e)(vi), such holder will forthwith
discontinue disposition (in the jurisdictions specified in a notice of a
6(e)(iv) event, and elsewhere in a notice of a 6(e)(ii), 6(e)(v) or 6(e)(vi)
event) of such Securities covered by such Registration Statement or Prospectus
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(j), or until it is advised in writing (the
"Advice") by the Company that offers or sales in a particular jurisdiction may
be resumed or that the use of the applicable Prospectus may be resumed, as the
case may be, and has received copies of any amendments or supplements thereto.
In the event the Company shall give such notice, each of the Effectiveness
Period and the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of such Securities covered by such
Registration Statement shall have received (x) the copies of the supplemented
or amended Prospectus contemplated by Section 6(j) or (y) the Advice.
7. Registration Expenses
(a) All reasonable fees and expenses incident to the performance of
or compliance with this Agreement by the Company and the Guarantors shall be
borne by the Company and the Guarantors whether or not the Exchange Offer or a
Shelf Registration is filed or becomes effective, including, without
limitation:
(i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Registrable Securities or
Exchange Securities and determination of the eligibility of the Registrable
Securities or Exchange Securities for investment under the laws of such
jurisdictions (x) where the holders of Registrable Securities are located, in
the case of the Exchange Securities, or (y) as provided in Section 6(f), in the
case of Registrable Securities or Exchange Securities to be sold by a
Participating Broker-Dealer during the Applicable Period);
(ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities or Exchange
Securities in a form eligible for deposit with The Depository Trust Company and
of printing prospectuses if the printing of prospectuses is requested by the
managing underwriters, if any, or, in respect of Registrable Securities or
Exchange Securities to be sold by a Participating Broker-Dealer during the
Applicable Period, by the holders of a majority in aggregate principal amount
of the Registrable Securities included in any Registration Statement or of such
Exchange Securities, as the case may be);
(iii) messenger, telephone, duplication, word processing
and delivery expenses incurred by the Company in the performance of its
obligations hereunder;
(iv) fees and disbursements of counsel for the Company;
(v) fees and disbursements of all independent certified
public accountants for the Company referred to in Section 6(m)(iii) (including,
without limitation, the expenses of any special audit and "cold comfort"
letters required by or incident to such performance);
(vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the By-laws of the NASD, but only where
the need for such a "qualified independent underwriter" arises due to a
relationship with the Company;
(vii) Securities Act liability insurance, if the Company
so desires such insurance;
(viii) fees and expenses of all other Persons retained by
the Company; internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties); and the expense of any annual audit; and
(ix) rating agency fees and the fees and expenses incurred
in connection with the listing of the Securities to be registered on any
securities exchange.
(b) The Company shall reimburse the holders of the Registrable
Securities for the reasonable fees and disbursements of not more than one
counsel (in addition to appropriate local counsel approved by the Company in
its reasonable discretion) chosen by the holders of a majority in aggregate
principal amount of the Registrable Securities to be included in any
Registration Statement and other reasonable and necessary out-of-pocket
expenses of the holders of Registrable Securities incurred in connection with
the registration of the Registrable Securities.
8. Indemnification
(a) Indemnification by the Company. The Company and each of the
Guarantors, jointly and severally, shall, without limitation as to time,
indemnify and hold harmless each holder of Registrable Securities and each
Participating Broker-Dealer selling Exchange Securities during the Applicable
Period, the officers, directors and agents and employees of each of them, each
Person who controls each such holder (within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act) and the officers,
directors, agents and employees of each such controlling person, to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys' fees) and expenses (including, without
limitation, reasonable costs and expenses incurred in connection with
investigating, preparing, pursuing or defending against any of the foregoing)
(collectively, "Losses"), as incurred, directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or form of prospectus, or in any amendment or supplements
thereto, or in any preliminary prospectus, or any omission or alleged omission
to state therein a material fact required to be stated therein, in the light of
the circumstances under which they were made, or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such Losses are based solely upon
information relating to such holder or Participating Broker-Dealer and
furnished in writing to the Company (or reviewed and approved in writing) by
such holder or Participating Broker-Dealer expressly for use therein; provided,
however, that neither the Company nor any of the Guarantors shall be liable to
any Indemnified Party to the extent that any such losses arise solely out of an
untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if (i) such Indemnified Party or related
holder of a Registrable Security failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the sale by
such Indemnified Party or the related holder of a Registrable Security to the
person asserting the claim from which such Losses arise, (ii) the Prospectus
would have corrected such untrue statement or alleged untrue statement or
omission or alleged omission, and (iii) the Company and the Guarantors have
complied with their obligations under Section 6(e) hereof. The Company and
each of the Guarantors shall also indemnify underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution, their officers, directors, agents and employees and each
Person who controls such Persons (within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the holders of
Registrable Securities or the Participating Broker-Dealer except insofar as
such Losses are based solely upon such Underwriter's actions, or gross
negligence or willful misconduct.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a holder of Registrable
Securities is participating, such holder of Registrable Securities shall
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any Registration Statement or Prospectus
and shall, without limitation as to time, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person, if any,
who controls the Company (within the meaning of Section 15 of the Securities
Act and Section 20(a) of the Exchange Act), and the directors, officers, agents
or employees of such controlling persons, to the fullest extent lawful, from
and against all Losses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or form of prospectus or in any amendment or supplements thereto or
in any preliminary prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing
by such holder to the Company expressly for use therein. In no event shall the
liability of any selling holder of Registrable Securities hereunder be greater
in amount than the dollar amount of the proceeds (net of payment of all
expenses) received by such holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"indemnified party"), such indemnified party shall promptly notify the party or
parties from which such indemnity is sought (the "indemnifying parties") in
writing; provided, however, that the failure to so notify the indemnifying
parties shall not relieve the indemnifying parties from any obligation or
liability except to the extent (but only to the extent) that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal) that the indemnifying parties have been prejudiced
materially by such failure.
The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party, within 20 business days after receipt
of written notice from such indemnified party of such Proceeding, to assume, at
its expense, the defense of any such Proceeding, provided, however, that an
indemnified party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or parties
unless: (1) the indemnifying party has agreed to pay such fees and expenses; or
(2) the indemnifying party shall have failed promptly to assume the defense of
such Proceeding or shall have failed to employ counsel reasonably satisfactory
to such indemnified party; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party or any of its affiliates or controlling persons, and such
indemnified party shall have been advised by counsel that there may be one or
more material defenses available to such indemnified party that are in addition
to, or in conflict with, those material defenses available to the indemnifying
party or such affiliate or controlling person (in which case, if such
indemnified party notifies the indemnifying parties in writing that it elects
to employ separate counsel at the expense of the indemnifying parties, the
indemnifying parties shall not have the right to assume the defense thereof and
the reasonable fees and expenses of such counsel shall be at the expense of the
indemnifying party; it being understood, however, that, the indemnifying party
shall not, in connection with any one such Proceeding or separate but
substantially similar or related Proceedings in the same jurisdiction, arising
out of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for such indemnified party).
No indemnifying party shall be liable for any settlement of any such
Proceeding effected without its written consent, but if settled with its
written consent, or if there be a final judgment for the plaintiff in any such
Proceeding, each indemnifying party jointly and severally agrees, subject to
the exceptions and limitations set forth above, to indemnify and hold harmless
each indemnified party from and against any and all Losses by reason of such
settlement or judgment. The indemnifying party shall not consent to the entry
of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release, in form and substance reasonably satisfactory
to the indemnified party, from all liability in respect of such Proceeding for
which such indemnified party would be entitled to indemnification hereunder
(whether or not any indemnified party is a party thereto).
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party or is insufficient to hold
such indemnified party harmless for any Losses in respect of which this Section
8 would otherwise apply by its terms (other than by reason of exceptions
provided in this Section 8), then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the amount paid or payable by such indemnified
party as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such statement or
omission. The amount paid or payable by an indemnified party as a result of
any Losses shall be deemed to include any legal or other fees or expenses
incurred by such party in connection with any Proceeding, to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in Section 8(a) or 8(b) was available to such
party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8(d), an indemnifying
party that is a selling holder of Registrable Securities shall not be required
to contribute, in the aggregate, any amount in excess of such holder's Maximum
Contribution Amount. A selling holder's "Maximum Contribution Amount" shall
equal the excess of (i) the aggregate proceeds received by such holder pursuant
to the sale of such Registrable Securities over (ii) the aggregate amount of
damages that such holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 8
are in addition to any liability that the indemnifying parties may have to the
indemnified parties, provided that any excess payment made by the Company or
the Guarantors shall be refunded to the Company or the Guarantors by the
Indemnified Party securing such excess payment.
9. Rule 144 and Rule 144A
Each of the Company and each Guarantor covenants that it shall (a)
file the reports required to be filed by it (if so required) under the
Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder in a timely manner and, if at any time any such Person is
not required to file such reports, it will, upon the request of any holder of
Registrable Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A and (b) take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Securities Act pursuant
to the exemptions provided by Rule 144 and Rule 144A. Upon the request of any
holder of Registrable Securities, the Company and the Guarantors shall deliver
to such holder a written statement as to whether they have complied with such
information and requirements.
10. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an Underwritten Offering, the investment banker
or investment bankers and manager or managers that will manage the offering
will be selected by the holders of a majority in aggregate principal amount of
such Registrable Securities included in such offering with the consent of the
Company, which consent will not be unreasonably withheld.
No holder of Registrable Securities may participate in any
underwritten registration hereunder unless such holder (a) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
11. Miscellaneous
(a) Remedies. In the event of a breach by the Company or any of the
Guarantors of any of its respective obligations under this Agreement, each
holder of Registrable Securities, in addition to being entitled to exercise all
rights provided herein, in the Indenture or, in the case of the Purchasers, in
the Purchase Agreement, or granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Agreement. The
Company and each of the Guarantors agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not entered into,
as of the date hereof, and shall not enter into, after the date of this
Agreement, any agreement with respect to any of its securities that is
inconsistent with the rights granted to the holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of
holders of at least a majority of the then outstanding aggregate principal
amount of Registrable Securities; provided, however, that Sections 6(a) and 8
shall not be amended, modified or supplemented, and waivers or consents to
departures from this proviso may not be given, unless the Company has obtained
the written consent of each holder of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other holders of Registrable Securities may be given by
holders of at least a majority in aggregate principal amount of the Registrable
Securities being sold by such holders pursuant to such Registration Statement,
provided that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee)
provided for or permitted hereunder shall be made in writing by hand-delivery,
certified first-class mail, return receipt requested, next-day air courier or
facsimile:
(i) if to a holder of Registrable Securities, at the most
current address given by such holder to the Company in accordance with the
provisions of this Section 11(d), which address initially is, with respect to
each holder, the address of such holder maintained by the Registrar under the
Indenture, with a copy to Skadden, Arps, Slate, Meagher & Flom, 300 South Grand
Avenue, Los Angeles, California 90071, telecopy number (213) 687-5600,
Attention: Michael A. Woronoff, Esq.; and
(ii) if to the Company or any of the Guarantors, initially
c/o Terex Corporation, 500 Post Road East, Westport, Connecticut 06880,
Attention: Marvin B. Rosenberg, Esq., telecopy number (203) 222-7978, and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 11(d).
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) 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 limitation and without the need for an express
assignment, subsequent holders of Registrable Securities.
(f) 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.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE COMPANY AND EACH GUARANTOR
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF THE COMPANY
AND EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE COMPANY AND EACH GUARANTOR IRREVOCABLY CONSENTS, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE COMPANY AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY OR ANY GUARANTOR IN ANY
OTHER JURISDICTION.
(i) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Company in
respect of securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the courts, shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
(l) Securities Held by the Company or its Affiliates. Whenever the
consent or approval of holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
(other than the Holders or subsequent holders of Registrable Securities if such
Holders or subsequent holders are deemed to be such affiliates solely by reason
of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the holders of such
required percentage.
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
TEREX CORPORATION
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CMH ACQUISITION CORP.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CLARK MATERIAL HANDLING COMPANY
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CMH ACQUISITION INTERNATIONAL
CORPORATION
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
KOEHRING CRANES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
TEREX CRANES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
LEGRIS INDUSTRIES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
PPM CRANES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
ACCEPTED AND AGREED TO:
JEFFERIES & COMPANY, INC.
By: /s/ Brent Stevens
Name: Brent Stevens
Title:
DILLON, READ & CO. INC.
By: /s/ Robert Weeden
EXHIBIT 10.31
TEREX CORPORATION
1,000,000 Common Stock Appreciation Rights
SAR REGISTRATION RIGHTS AGREEMENT
May 9, 1995
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
DILLON, READ & CO. INC.
535 Madison Avenue
New York, New York 10021
Ladies and Gentlemen:
TEREX CORPORATION, a Delaware corporation (the "Company"), is issuing
and selling to Jefferies & Company, Inc. and Dillon, Read & Co. Inc.
(collectively, the "Purchasers"), upon the terms set forth in a purchase
agreement, dated as of April 27, 1995 (the "Purchase Agreement"), 1,000,000
Common Stock Appreciation Rights (the "Rights"). As an inducement to the
Purchasers to enter into the Purchase Agreement, the Company agrees with the
Purchasers, for the benefit of the holders of the Securities (defined below)
(including the Purchasers), 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 terms shall have the following meanings:
Advice: See Section 5.
Affiliate: An "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", as used with respect to any Person means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership of
10% or more of the voting securities of a Person will be deemed to constitute
control; and the terms "controlling" and "controlled" have meanings correlative
to the foregoing. Notwithstanding the foregoing to the contrary, neither
Jefferies & Company, Inc., Dillon, Read & Co. Inc. nor any of their respective
Affiliates will be deemed Affiliates of the Company.
Agreement: This SAR Registration Rights Agreement.
Applicable Period: See Section 2.
Business Days: Any day other than (i) Saturday or Sunday, or (ii) a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to be closed.
Closing Date: May 9, 1995.
Effectiveness Date: The date on which the Initial Shelf Registration
is declared effective under the Securities Act.
Effectiveness Period: See Section 3.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2.
Exchange Offer Registration Statement: See Section 2.
Exchange Securities: See Section 2.
Filing Date: The 4-month anniversary of the Closing Date.
Holder: Each holder of Registrable Securities.
Initial Shelf Registration: See Section 3.
Liens: Any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind 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 and any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction, including
any foreign nation and any political subdivision thereof).
Losses: See Section 8.
NASD: The National Association of Securities Dealers, Inc.
Participating Broker-Dealer: See Section 2.
Person: An individual, trustee, corporation, partnership, joint
stock company, joint venture, trust, unincorporated organization or government
or any agency or political subdivision thereof, union, business association,
firm or other entity.
Private Exchange: See Section 2.
Private Exchange Securities: See Section 2.
Prospectus: 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 promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities covered by such Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
Registrable Securities: (i) Rights and Private Exchange Securities
acquired by the holder thereof other than pursuant to an effective registration
statement under the Securities Act or Rule 144 and (ii) Exchange Securities
held by Participating Broker-Dealers.
Registration Statement: Any registration statement of the Company
that covers any of the Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rights Agent: The rights agent under the Rights Agreement and, if
any, the rights agent under any rights agreement governing the Exchange
Securities or the Private Exchange Securities.
Rights Agreement: The Rights Agreement, dated the date hereof,
between the Company and United States Trust Company of New York, as rights
agent, pursuant to which the Securities are being issued, as amended or
supplemented from time to time, in accordance with the terms thereof.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Rights, the Private Exchange Securities and the
Exchange Securities, collectively.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(i).
Shelf Registration: The Initial Shelf Registration and any
Subsequent Shelf Registration.
Special Counsel: Counsel chosen by the holders of a majority in
aggregate principal amount of Securities.
Subsequent Shelf Registration: See Section 3.
TIA: The Trust Indenture Act of 1939, as amended.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. Exchange Offer
(a) The Company shall (i) prepare and file with the SEC promptly
after the date hereof, but in no event later than the Filing Date, a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act with respect to a proposed offer (the
"Exchange Offer") to the Holders to issue and deliver to such Holders, in
exchange for the Rights, a like amount of new Rights of the Company (the
"Exchange Securities"), substantially identical in all respects to the Rights,
except for references to series and restrictive legends, (ii) use its best
efforts to cause the Exchange Offer Registration Statement to become effective
as promptly as practicable after the filing thereof and keep the Exchange Offer
Registration Statement effective until the consummation of the Exchange Offer
pursuant to its terms, and (iii) unless the Exchange Offer would not be
permitted by a policy of the SEC, commence the Exchange Offer and use their
best efforts to issue, on or prior to 30 business days after the date on which
the Exchange Offer Registration Statement is declared effective, Exchange
Securities in exchange for all Rights tendered prior thereto in the Exchange
Offer. To the extent not prohibited by any law or applicable interpretation of
the Staff of the SEC, the Company shall use its best efforts to complete the
Exchange Offer as provided in this Section 2, and shall comply with the
applicable requirements of the Exchange Act. The Exchange Offer shall not be
subject to any conditions, other than that the Exchange Offer does not violate
applicable law or any applicable interpretation of the Staff of the SEC.
(b) The Exchange Securities shall be issued under the Rights
Agreement or a rights agreement that is identical to the Rights Agreement
(other than such changes to the Rights Agreement or any such identical
indenture as are necessary to comply with any requirements of the SEC).
(c) In connection with the Exchange Offer, the Company 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 that is an exhibit thereto and related documents;
(ii) keep the 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 depository for the Exchange Offer with an address in
the Borough of Manhattan, The City of New York;
(iv) permit Holders to withdraw tendered Rights at any time
prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and
(v) otherwise comply in all material respects with all laws
applicable to the Exchange Offer.
(d) As soon as practicable after the close of the Exchange Offer,
the Company shall:
(i) accept for exchange all Rights properly tendered and not
validly withdrawn pursuant to the Exchange Offer in accordance with the terms
of the Exchange Offer Registration Statement and the letter of transmittal that
is an exhibit thereto;
(ii) deliver to the Rights Agent for cancellation all Rights so
accepted for exchange; and
(iii)
cause the Rights Agent promptly to countersign and deliver to each Holder of
Rights, Exchange Securities equal in number to the Rights of such Holder so
accepted for exchange.
(e) The Company shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Purchasers, containing a summary
statement of the positions taken or policies made by the Staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Securities received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"). Such "Plan of Distribution" section shall also
allow the use of the Prospectus by all Persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Brokers-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Securities. The Company
shall use its best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirement of the Securities
Act for such period of time as such Persons must comply with such requirements
in order to resell the Exchange Securities; provided that such period shall not
exceed 180 days after consummation of the Exchange Offer (or such longer period
if extended pursuant to the last paragraph of Section 5 hereof (the "Applicable
Period").
(f) If, prior to consummation of the Exchange Offer, any Purchaser
holds any Securities acquired by it and having the status as an unsold
allotment in the initial distribution, the Company upon the request of such
Purchaser shall, simultaneously with the delivery of the Exchange Securities in
the Exchange Offer, issue (pursuant to the same indenture as the Exchange
Securities) and deliver to such Purchaser, in exchange (the "Private Exchange")
for the Securities held by such Purchaser, a like principal amount of common
stock appreciation rights of the Company that are identical to the Exchange
Securities (the "Private Exchange Securities"). The Private Exchange
Securities shall bear the same CUSIP number as the Exchange Securities.
(g) The Company may require each holder of Registrable Securities
participating in the Exchange Offer to represent to the Company that at the
time of the consummation of the Exchange Offer (i) any Exchange Securities
received by such holder will be acquired in the ordinary course of its
business, (ii) such holder will have no agreement or understanding with any
Person to participate in the distribution within the meaning of the Securities
Act or resale of the Exchange Securities in violation of the Securities Act and
(iii) such holder will not be in the business of underwriting securities.
(h) If (i) prior to the consummation of the Exchange Offer, either
the Company or a majority of the holders of Registrable Securities determines
in its or their reasonable judgment that (A) the Exchange Securities would not,
upon receipt, be tradeable by such holders without restriction under the
Securities Act and the Exchange Act and without material restrictions under
applicable Blue Sky or state securities laws, (B) the interests of the holders
under this Agreement, taken as a whole, would be materially adversely affected
by the consummation of the Exchange Offer or (C) the SEC is unlikely to permit
the consummation of the Exchange Offer prior to the Effectiveness Date, (ii)
subsequent to the consummation of the Private Exchange but within one year of
the Closing Date, the Purchasers so request, (iii) the Exchange Offer is
commenced and not consummated within 240 days of the Closing Date for any
reason or (iv) the Exchange Offer is commenced and, in the case of any holder
of Registrable Securities participating in the Exchange Offer, such holder does
not receive freely tradeable Exchange Securities upon the consummation thereof
and such holder notifies the Company within six months of such consummation,
then the Company shall promptly deliver to the Holders (or in the case of any
occurrence of the event described in clause (iv) hereof, to any such holder)
and the Rights Agent notice thereof (the "Shelf Notice") and shall thereafter
file an Initial Shelf Registration pursuant to Section 3. Following the
delivery of a Shelf Notice, the Company shall not have any further obligation
under this Section 2.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(i)(i),
(ii) or (iii), then this Section 3 shall apply to all Registrable Securities.
Otherwise, upon consummation of the Exchange Offer in accordance with Section
2, the provisions of this section shall apply solely with respect to
Registrable Securities that are (i) Private Exchange Securities or Exchange
Securities held by Participating Broker-Dealers or (ii) held by any holder
thereof participating in the Exchange Offer that did not receive freely
tradeable Exchange Securities as contemplated by Section 2(i)(iv) hereof.
(a) Initial Shelf Registration. The Company shall prepare and file
with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable
Securities (the "Initial Shelf Registration"). If the Company has not yet
filed an Exchange Offer, the Company shall file with the SEC the Initial Shelf
Registration on or prior to the Filing Date. Otherwise, the Company shall use
its best efforts to file the Initial Shelf Registration within 20 days of the
delivery of the Shelf Notice or as promptly as possible following the request
of the Purchasers. The Initial Shelf Registration shall be on Form S-1 or
another appropriate form permitting registration of such Registrable Securities
for resale by such holders in the manner or manners designated by them
(including, without limitation, one or more underwritten offerings). The
Company shall (i) not permit any securities other than the Registrable
Securities, the underlying Common Stock and the Notes to be included in the
Initial Shelf Registration or any Subsequent Shelf Registration, and (ii) use
its best efforts to cause the Initial Shelf Registration to be declared
effective under the Securities Act as promptly as practicable after the filing
thereof and to keep the Initial Shelf Registration continuously effective under
the Securities Act until the date that is 28 months from the Effectiveness Date
(subject to extension pursuant to the last paragraph of Section 6 hereof) (the
"Effectiveness Period"), or such shorter period ending when (i) all Registrable
Securities covered by the Initial Shelf Registration have been sold or (ii) a
Subsequent Shelf Registration covering all of the Registrable Securities has
been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for
any reason at any time during the Effectiveness Period (other than because of
the sale of all of the securities registered thereunder), the Company shall use
its best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall, to the extent possible, within
30 days of such cessation of effectiveness amend the Shelf Registration in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Securities (a "Subsequent
Shelf Registration"). If a Subsequent Shelf Registration is filed, the Company
shall use its best efforts to cause the Subsequent Shelf Registration to be
declared effective as soon as practicable after such filing and to keep such
Subsequent Shelf Registration continuously effective for a period equal to the
number of days in the Effectiveness Period less the aggregate number of days
during which the Initial Shelf Registration, and any Subsequent Shelf
Registration, was previously effective.
4. Hold-Back Agreements
The Company agrees (i) without the prior written consent of the
holders of a majority of the then outstanding Securities, not to effect any
public or private sale or distribution (including a sale pursuant to Regulation
D under the Securities Act) of any securities the same as or similar to those
covered by a Registration Statement filed pursuant to Section 2 or 3 hereof, or
any securities convertible into or exchangeable or exercisable for such
securities, during the 10 days prior to, and during the 90-day period beginning
on, (A) the effective date of any Registration Statement filed pursuant to
Sections 2 and 3 hereof unless the holders of a majority in aggregate principal
amount of Registrable Securities to be included in such Registration Statement
consent or (B) the commencement of an underwritten public distribution of
Registrable Securities, where the managing underwriter so requests; and (ii) to
cause each holder of such securities that are the same as or similar to
Registrable Securities issued at any time after the date of this Agreement
(other than securities purchased in a registered public offering) to agree not
to effect any public sale or distribution of any such securities during such
periods, including a sale pursuant to Rule 144 or Rule 144A.
5. Registration Procedures
In connection with the registration of any Securities pursuant to
Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of such Securities in accordance with the intended method or methods
of disposition thereof, and pursuant thereto the Company shall:
(a) Prepare and file with the SEC, as soon as practicable after the
date hereof but in any event prior to the Filing Date, a Registration Statement
or Registration Statements as prescribed by Section 2 or 3, and use its best
efforts to cause each such Registration Statement to become effective and
remain effective as provided herein; provided, however, that, if (i) such
filing is pursuant to Section 3 or (ii) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto,
the Company shall, if requested, furnish to and afford the holders of the
Registrable Securities covered by such Registration Statement, their Special
Counsel, each Participating Broker-Dealer, the managing underwriters, if any,
and their counsel a reasonable opportunity to review and make available for
inspection by such Persons copies of all such documents (including copies of
any documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed, such financial and other information and books and
records of the Company, and cause the officers, directors and employees of the
Company, Company counsel and independent certified public accountants of the
Company, to respond to such inquiries, as shall be reasonably necessary, in the
opinion of respective counsel to such holders, Participating Broker-Dealer and
underwriters, to conduct a reasonable investigation within the meaning of the
Securities Act. The Company may require each holder of Registrable Securities
to agree (i) to keep confidential any non-public information relating to the
Company received by such holders and not disclose such information (other than
to an Affiliate or prospective purchaser who agrees to respect the
confidentiality provisions of this Section 5(a)) and (ii) to abstain from
trading in any securities of the Company on the basis of material, non-public
information, in each case until such information has been made generally
available to the public and, in the case of clause (i) above, unless the
release of such information is required by law or necessary to respond to
inquiries of regulatory authorities (including the National Association of
Insurance Commissioners, or similar organizations or their successors). The
Company shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must be
afforded an opportunity to review prior to the filing of such document, if the
holders of a majority in aggregate principal amount of the Registrable
Securities covered by such Registration Statement, their Special Counsel, any
Participating Broker-Dealer or the managing underwriters, if any, or their
counsel shall reasonably object to the Company if such objection states that
the person or persons making such objection believe that such Registration
Statement, Prospectus or amendment does not comply in any material respect with
any applicable law.
(b) Provide a Rights Agent for the Registrable Securities or the
Exchange Securities, as the case may be, and, if necessary, use its best
efforts to cause the Rights Agent to make such filings with the SEC as may be
required under the Securities Act or other applicable securities laws not later
than the effective date of the first Registration Statement relating to the
Securities; and in connection therewith, cooperate with the Rights Agent and
the holders of the Securities, to effect such changes to such Rights Agreement
as may be required under the Securities Act or other applicable securities
laws; and execute, and use its best efforts to cause such Rights Agent to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC.
(c) Use its best efforts to prepare and file with the SEC such
amendments and post-effective amendments to the Registration Statement as may
be necessary to keep such Registration Statement continuously effective for the
time periods required hereby; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply in all material respects with the provisions of the
Securities Act, the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable thereto with respect to the disposition of
all securities covered by such Registration Statement, as so amended, or in
such Prospectus, as so supplemented, and with respect to the subsequent resale
of any Securities being sold by a Participating Broker-Dealer covered by any
such Prospectus.
(d) Furnish to such selling holders and Participating Broker-Dealers
who so request (i) upon the Company's receipt, a copy of the order of the SEC
declaring such Registration Statement and any post-effective amendment thereto
effective and (ii) such reasonable number of copies of such Registration
Statement and of each amendment and supplement thereto (in each case including
any documents incorporated therein by reference and all exhibits), (iii) such
reasonable number of copies of the Prospectus included in such Registration
Statement (including each preliminary Prospectus), and such reasonable number
of copies of the final Prospectus as filed by the Company pursuant to Rule
424(b) under the Securities Act, in conformity with the requirements of the
Securities Act, and (iv) such other documents (including any amendments
required to be filed pursuant to clause (c) of this Section), as any such
Person may reasonably request. The Company hereby consents to the use of the
Prospectus by each of the selling holders of Registrable Securities or each
such Participating Broker-Dealer, as the case may be, and the underwriters or
agents, if any, and dealers (if any), in connection with the offering and sale
of the Registrable Securities covered by, or the sale by Participating
Broker-Dealers of the Exchange Securities pursuant to, such Prospectus and any
amendment thereto.
(e) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, notify the selling holders of Registrable Securities,
their Special Counsel, each Participating Broker-Dealer and the managing
underwriters, if any, promptly (but in any event within five Business Days with
respect to clause (e)(i), below, and two Business Days with respect to clauses
(e)(ii)-(e)(vi), below), and confirm such notice in writing, (i) when a
Prospectus has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
Prospectus or the initiation of any proceedings for that purpose, (iii) if, at
any time when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities, the representations and
warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated by Section 5(m) below cease to be true and
correct in any material respect, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Registrable
Securities or the Exchange Securities to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the contemplation,
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus
or documents so that it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, and (vi) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(f) Use its best efforts to register or qualify, and, if applicable,
to cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, Securities to be included in a Registration Statement for
offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling holder, Participating Broker-Dealer or
the managing underwriters reasonably request in writing; and, if Securities are
offered other than through an Underwritten Offering, the Company agrees to
cause its counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(f) at the
expense of the Company; keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration Statement is
required to be kept effective and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the Securities
covered by the applicable Registration Statement, provided, however, that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) to take action that would
subject it to general service of process in any jurisdiction where it is not so
subject or (iii) subject it to taxation in excess of a nominal dollar amount in
any such jurisdiction.
(g) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Securities for
sale in any jurisdiction, and, if any such order is issued, to use its best
efforts to obtain the withdrawal of any such order at the earliest possible
time.
(h) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, and if requested by the managing underwriters, if any,
or the holders of a majority in aggregate principal amount of the Registrable
Securities, (i) promptly incorporate in a Prospectus or post-effective
amendment such information as the managing underwriters, if any, or such
holders reasonably request to be included therein required to comply with any
applicable law and (ii) make all required filings of such Prospectus or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus or
post-effective amendment.
(i) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, which certificates shall not bear any restrictive legends and shall be
in a form eligible for deposit with The Depository Trust Company; and enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriters, if any, or holders may reasonably request.
(j) If (i) a Shelf Registration is filed pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(e)(v) or 5(e)(vi) above, as promptly as practicable prepare a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder or to the purchasers of the Exchange Securities to whom
such Prospectus will be delivered by a Participating Broker-Dealer, such
Prospectus will not 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, in light of the circumstances under which they were made,
not misleading.
(k) Prior to the effective date of the first Registration Statement
relating to the Securities, (i) provide the applicable Rights Agent with
printed certificates for the Securities in a form eligible for deposit with The
Depository Trust Company and (ii) provide a CUSIP number for each of the
Securities.
(l) Use its best efforts to cause all Securities covered by such
Registration Statement to be listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed.
(m) If a Shelf Registration is filed pursuant to Section 3, enter
into such agreements (including an underwriting agreement in form, scope and
substance as is customary in Underwritten Offerings) and take all such other
reasonable actions in connection therewith (including those reasonably
requested by the managing underwriters, if any, or the holders of a majority of
the Registrable Securities being sold) in order to expedite or facilitate the
registration or the disposition of such Registrable Securities, and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, (i) make such
representations and warranties to the holders of such Registrable Securities
and the underwriters, if any, with respect to the business of the Company and
its subsidiaries, and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in each
case, in form, substance and scope as are customarily made by issuers to
underwriters in Underwritten Offerings, and confirm the same if and when
reasonably requested; (ii) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any, and the
holders of a majority in principal amount of the Registrable Securities being
sold), addressed to each selling holder of Registrable Securities and each of
the underwriters, if any, covering the matters customarily covered in opinions
requested in Underwritten Offerings; (iii) obtain "cold comfort" letters and
updates thereof (which letters and updates (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters) from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters and each selling holder of
Registrable Securities, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with Underwritten Offerings and such other matters as reasonably requested by
underwriters; and (iv) deliver such documents and certificates as may be
reasonably requested by the holders of a majority in principal amount of the
Registrable Securities being sold and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties of the
Company and its subsidiaries made pursuant to clause (i) above and to evidence
compliance with any conditions contained in the underwriting agreement or other
similar agreement entered into by the Company. The above shall be done at each
closing under such underwriting agreement or similar agreement, or as and to
the extent required thereunder.
(n) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its security holders
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing on the first day of the fiscal quarter following each
fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(o) Upon consummation of an Exchange Offer or Private Exchange,
obtain an opinion of counsel to the Company (in form, scope and substance
reasonably satisfactory to the Purchasers), addressed to all holders of
Registrable Securities participating in the Exchange Offer or Private Exchange,
as the case may be, to the effect that (i) the Company has duly authorized,
executed and delivered the Exchange Securities and the Rights Agreement, and
(ii) the Exchange Securities or the Private Exchange Securities, as the case
may be, and the Rights Agreement constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as such enforcement may be subject to (x)
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and (y) general principles
of equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law).
(p) If an Exchange Offer or Private Exchange is to be consummated,
upon delivery of the Registrable Securities by such holders to the Company (or
to such other Person as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Company
shall mark, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no event
shall such Registrable Securities be marked as paid or otherwise satisfied.
(q) Cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD.
(r) Use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities covered by a Registration
Statement contemplated hereby.
The Company may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities as the Company may, from time to time, reasonably request in writing
and to provide comments with respect to the Registration Statement to be used
in connection with any Shelf Registration. The Company may exclude from such
registration the Registrable Securities of any seller or Exchange Securities of
any Participating Broker-Dealer who unreasonably fails to furnish such
information or provide such comments within a reasonable time after receiving
such request.
Each holder of Registrable Securities and each Participating
Broker-Dealer agrees by acquisition of such Registrable Securities or Exchange
Securities of any Participating Broker-Dealer that, upon receipt of written
notice from the Company of the happening of any event of the kind described in
Section 5(e)(ii), 5(e)(iv), 5(e)(v) or 5(e)(vi), such holder will forthwith
discontinue disposition (in the jurisdictions specified in a notice of a
5(e)(iv) event, and elsewhere in a notice of a 5(e)(ii), 5(e)(v) or 5(e)(vi)
event) of such Securities covered by such Registration Statement or Prospectus
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(j), or until it is advised in writing (the
"Advice") by the Company that offers or sales in a particular jurisdiction may
be resumed or that the use of the applicable Prospectus may be resumed, as the
case may be, and has received copies of any amendments or supplements thereto.
In the event the Company shall give such notice, each of the Effectiveness
Period and the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of such Securities covered by such
Registration Statement shall have received (x) the copies of the supplemented
or amended Prospectus contemplated by Section 5(j) or (y) the Advice.
6. Registration Expenses
(a) All reasonable fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation:
(i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Registrable Securities or
Exchange Securities and determination of the eligibility of the Registrable
Securities or Exchange Securities for investment under the laws of such
jurisdictions (x) where the holders of Registrable Securities are located, in
the case of the Exchange Securities, or (y) as provided in Section 5(f), in the
case of Registrable Securities or Exchange Securities to be sold by a
Participating Broker-Dealer during the Applicable Period);
(ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities or Exchange
Securities in a form eligible for deposit with The Depository Trust Company and
of printing prospectuses if the printing of prospectuses is requested by the
managing underwriters, if any, or, in respect of Registrable Securities or
Exchange Securities to be sold by a Participating Broker-Dealer during the
Applicable Period, by the holders of a majority in aggregate principal amount
of the Registrable Securities included in any Registration Statement or of such
Exchange Securities, as the case may be);
(iii) messenger, telephone, duplication, word processing
and delivery expenses incurred by the Company in the performance of its
obligations hereunder;
(iv) fees and disbursements of counsel for the Company;
(v) fees and disbursements of all independent certified
public accountants for the Company referred to in Section 5(m)(iii) (including,
without limitation, the expenses of any special audit and "cold comfort"
letters required by or incident to such performance);
(vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the By-laws of the NASD, but only where
the need for such a "qualified independent underwriter" arises due to a
relationship with the Company;
(vii) Securities Act liability insurance, if the Company
so desires such insurance;
(viii) fees and expenses of all other Persons retained by
the Company; internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties); and the expense of any annual audit; and
(ix) rating agency fees and the fees and expenses incurred
in connection with the listing of the Securities to be registered on any
securities exchange.
(b) The Company shall reimburse the holders of the Registrable
Securities for the reasonable fees and disbursements of not more than one
counsel (in addition to appropriate local counsel approved by the Company in
its reasonable discretion) chosen by the holders of a majority in aggregate
principal amount of the Registrable Securities to be included in any
Registration Statement and other reasonable and necessary out-of-pocket
expenses of the holders of Registrable Securities incurred in connection with
the registration of the Registrable Securities.
7. Indemnification
(a) Indemnification by the Company. The Company shall, without
limitation as to time, indemnify and hold harmless each holder of Registrable
Securities and each Participating Broker-Dealer selling Exchange Securities
during the Applicable Period, the officers, directors and agents and employees
of each of them, each Person who controls each such holder (within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) and
the officers, directors, agents and employees of each such controlling person,
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys' fees) and expenses (including, without
limitation, reasonable costs and expenses incurred in connection with
investigating, preparing, pursuing or defending against any of the foregoing)
(collectively, "Losses"), as incurred, directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or form of prospectus, or in any amendment or supplements
thereto, or in any preliminary prospectus, or any omission or alleged omission
to state therein a material fact required to be stated therein, in the light of
the circumstances under which they were made, or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such Losses are based solely upon
information relating to such holder or Participating Broker-Dealer and
furnished in writing to the Company (or reviewed and approved in writing) by
such holder or Participating Broker-Dealer expressly for use therein; provided,
however, that the Company shall not be liable to any Indemnified Party to the
extent that any such losses arise solely out of an untrue statement or alleged
untrue statement or omission or alleged omission made in any preliminary
prospectus if (i) such Indemnified Party or related holder of a Registrable
Security failed to send or deliver a copy of the Prospectus with or prior to
the delivery of written confirmation of the sale by such Indemnified Party or
the related holder of a Registrable Security to the person asserting the claim
from which such Losses arise, (ii) the Prospectus would have corrected such
untrue statement or alleged untrue statement or omission or alleged omission,
and (iii) the Company has complied with their obligations under Section 5(e)
hereof. The Company shall also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers, directors, agents and employees and each Person
who controls such Persons (within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act) to the same extent as provided above
with respect to the indemnification of the holders of Registrable Securities or
the Participating Broker-Dealer except insofar as such Losses are based solely
upon such Underwriter's actions, or gross negligence or willful misconduct.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement in which a holder of Registrable
Securities is participating, such holder of Registrable Securities shall
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any Registration Statement or Prospectus
and shall, without limitation as to time, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person, if any,
who controls the Company (within the meaning of Section 15 of the Securities
Act and Section 20(a) of the Exchange Act), and the directors, officers, agents
or employees of such controlling persons, to the fullest extent lawful, from
and against all Losses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or form of prospectus or in any amendment or supplements thereto or
in any preliminary prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in writing
by such holder to the Company expressly for use therein. In no event shall the
liability of any selling holder of Registrable Securities hereunder be greater
in amount than the dollar amount of the proceeds (net of payment of all
expenses) received by such holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"indemnified party"), such indemnified party shall promptly notify the party or
parties from which such indemnity is sought (the "indemnifying parties") in
writing; provided, however, that the failure to so notify the indemnifying
parties shall not relieve the indemnifying parties from any obligation or
liability except to the extent (but only to the extent) that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal) that the indemnifying parties have been prejudiced
materially by such failure.
The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party, within 20 business days after receipt
of written notice from such indemnified party of such Proceeding, to assume, at
its expense, the defense of any such Proceeding, provided, however, that an
indemnified party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or parties
unless: (1) the indemnifying party has agreed to pay such fees and expenses; or
(2) the indemnifying party shall have failed promptly to assume the defense of
such Proceeding or shall have failed to employ counsel reasonably satisfactory
to such indemnified party; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party or any of its affiliates or controlling persons, and such
indemnified party shall have been advised by counsel that there may be one or
more material defenses available to such indemnified party that are in addition
to, or in conflict with, those material defenses available to the indemnifying
party or such affiliate or controlling person (in which case, if such
indemnified party notifies the indemnifying parties in writing that it elects
to employ separate counsel at the expense of the indemnifying parties, the
indemnifying parties shall not have the right to assume the defense thereof and
the reasonable fees and expenses of such counsel shall be at the expense of the
indemnifying party; it being understood, however, that, the indemnifying party
shall not, in connection with any one such Proceeding or separate but
substantially similar or related Proceedings in the same jurisdiction, arising
out of the same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for such indemnified party).
No indemnifying party shall be liable for any settlement of any such
Proceeding effected without its written consent, but if settled with its
written consent, or if there be a final judgment for the plaintiff in any such
Proceeding, each indemnifying party jointly and severally agrees, subject to
the exceptions and limitations set forth above, to indemnify and hold harmless
each indemnified party from and against any and all Losses by reason of such
settlement or judgment. The indemnifying party shall not consent to the entry
of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release, in form and substance reasonably satisfactory
to the indemnified party, from all liability in respect of such Proceeding for
which such indemnified party would be entitled to indemnification hereunder
(whether or not any indemnified party is a party thereto).
(d) Contribution. If the indemnification provided for in this
Section 7 is unavailable to an indemnified party or is insufficient to hold
such indemnified party harmless for any Losses in respect of which this Section
7 would otherwise apply by its terms (other than by reason of exceptions
provided in this Section 7), then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the amount paid or payable by such indemnified
party as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such statement or
omission. The amount paid or payable by an indemnified party as a result of
any Losses shall be deemed to include any legal or other fees or expenses
incurred by such party in connection with any Proceeding, to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in Section 7(a) or 7(b) was available to such
party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 7(d), an indemnifying
party that is a selling holder of Registrable Securities shall not be required
to contribute, in the aggregate, any amount in excess of such holder's Maximum
Contribution Amount. A selling holder's "Maximum Contribution Amount" shall
equal the excess of (i) the aggregate proceeds received by such holder pursuant
to the sale of such Registrable Securities over (ii) the aggregate amount of
damages that such holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 7
are in addition to any liability that the indemnifying parties may have to the
indemnified parties, provided that any excess payment made by the Company shall
be refunded to the Company by the Indemnified Party securing such excess
payment.
8. Rule 144 and Rule 144A
The Company covenants that it shall (a) file the reports required to
be filed by it (if so required) under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder in a timely manner
and, if at any time any such Person is not required to file such reports, it
will, upon the request of any holder of Registrable Securities, make publicly
available other information so long as necessary to permit sales pursuant to
Rule 144 and Rule 144A and (b) take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act pursuant to the exemptions provided by
Rule 144 and Rule 144A. Upon the request of any holder of Registrable
Securities, the Company shall deliver to such holder a written statement as to
whether they have complied with such information and requirements.
9. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an Underwritten Offering, the investment banker
or investment bankers and manager or managers that will manage the offering
will be selected by the holders of a majority in aggregate principal amount of
such Registrable Securities included in such offering with the consent of the
Company, which consent will not be unreasonably withheld.
No holder of Registrable Securities may participate in any
underwritten registration hereunder unless such holder (a) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Company of any of its
respective obligations under this Agreement, each holder of Registrable
Securities, in addition to being entitled to exercise all rights provided
herein, in the Rights Agreement or, in the case of the Purchasers, in the
Purchase Agreement, or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not entered into,
as of the date hereof, and shall not enter into, after the date of this
Agreement, any agreement with respect to any of its securities that is
inconsistent with the rights granted to the holders of Registrable Securities
in this Agreement or otherwise conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of
holders of at least a majority of the then outstanding aggregate principal
amount of Registrable Securities; provided, however, that Sections 5(a) and 7
shall not be amended, modified or supplemented, and waivers or consents to
departures from this proviso may not be given, unless the Company has obtained
the written consent of each holder of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other holders of Registrable Securities may be given by
holders of at least a majority in aggregate principal amount of the Registrable
Securities being sold by such holders pursuant to such Registration Statement,
provided that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Rights Agent)
provided for or permitted hereunder shall be made in writing by hand-delivery,
certified first-class mail, return receipt requested, next-day air courier or
facsimile:
(i) if to a holder of Registrable Securities, at the most
current address given by such holder to the Company in accordance with the
provisions of this Section 10(d), which address initially is, with respect to
each holder, the address of such holder maintained by the Registrar under the
Indenture, with a copy to Skadden, Arps, Slate, Meagher & Flom, 300 South Grand
Avenue, Los Angeles, California 90071, telecopy number (213) 687-5600,
Attention: Michael A. Woronoff, Esq.; and
(ii) if to the Company, initially c/o Terex Corporation,
500 Post Road East, Westport, Connecticut 06880, Attention: Marvin B.
Rosenberg, Esq., telecopy number (203) 222-7978, and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 10(d).
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) 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 limitation and without the need for an express
assignment, subsequent holders of Registrable Securities.
(f) 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.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY IRREVOCABLY
CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY PURCHASER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
(i) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any
of such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Company in
respect of securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the courts, shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
(l) Securities Held by the Company or its Affiliates. Whenever the
consent or approval of holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
(other than the Holders or subsequent holders of Registrable Securities if such
Holders or subsequent holders are deemed to be such affiliates solely by reason
of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the holders of such
required percentage.
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
TEREX CORPORATION
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
ACCEPTED AND AGREED TO:
JEFFERIES & COMPANY, INC.
By: /s/ Brent Stevens
Name: Brent Stevens
Title:
DILLON, READ & CO. INC.
By: /s/ Robert Weeden
Name: Robert Weeden
Title:
________________________________________________
SECURITY AND PLEDGE AGREEMENT
between
TEREX CORPORATION
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Collateral Agent
Dated as of May 9, 1995
________________________________________________
TABLE OF CONTENTS
Page
1. Definitions 1
2. Creation of Security Interest, etc. 13
3. Representations and Warranties 15
3.1 Validity, Perfection and Priority 15
3.2 No Liens; Other Financing Statements 16
3.3 Chief Executive Office 17
3.4 Location of Inventory and Equipment 17
3.5 Fair Labor Standards Act 17
3.6 Tradenames; Prior Names 17
3.7 Certificate of Title 17
3.8 Pledged Securities 18
3.9 Receivables 19
3.10 Intellectual Property 19
4. Covenants 21
4.1 Books and Records 21
4.2 Further Assurances 22
4.3 Change of Chief Executive Office 22
4.4 Change of Location of Inventory and Equipment 23
4.5 Change of Name; Identity or Corporate Structure 24
4.6 Subsequently Acquired Pledged Securities, etc. 24
4.7 Delivery of Instruments. 25
4.8 Delivery of Chattel Paper 25
4.9 Right of Inspection 25
4.10 Insurance 26
4.11 Warehouse Receipts Non-negotiable 29
4.12 Motor Vehicles 29
4.13 Compliance with Laws 30
4.14 Payment of Obligations 30
4.15 No Impairment 30
4.16 Negative Pledge 30
4.17 Limitations on Dispositions of Collateral 31
4.18 Maintenance of Equipment 31
4.19 Provisions Regarding Receivables 31
4.20 Intellectual Property 32
4.21 Notice 34
4.22 Performance by Collateral Agent of
Company's Obligations; Reimbursement 34
5. Appointment of Sub-Agents 34
6. Voting, etc. 35
7. Payments and Other Distributions 36
8. Collateral Account 37
8.1 Collateral Account 37
8.2 Deposit of Proceeds 37
8.3 Investment of Balance in Collateral Account 37
9. Power of Attorney 38
9.1 Collateral Agent's Appointment as Attorney-in-Fact 38
10. Remedies 41
10.1 Rights and Remedies Generally 41
10.2 Proceeds 42
10.3 Direct Company to Dispose of Collateral 43
10.4 Collateral Account 44
10.5 Possession of Collateral 44
10.6 Disposition of the Collateral 45
10.7 Voting of Pledged Securities etc. 46
10.8 Registration Rights; Private Sales 47
10.9 Provisions Regarding Receivables 49
10.10 Recourse 50
10.11 Expenses; Attorneys' Fees 50
10.12 Preventing Impairment of the Collateral 50
10.13 Limitation on Duties
Regarding Preservation of Collateral 50
10.14 Waiver of Claims 51
10.15 Discontinuance of Proceedings 52
10.16 Intellectual Property License 53
11. Additional Collateral 53
12. Compensation and Indemnification 53
12.1 Compensation 53
12.2 Indemnity, etc. 53
12.3 Indemnity Obligations Secured by Collateral; Survival 55
13. Governing Law; Submission to Jurisdiction 55
14. Limitation of Liability 56
15. Notices 57
16. Successors and Assigns 57
17. Waivers and Amendments 57
18. No Waiver; Remedies Cumulative 58
19. Termination; Release 58
20. Counterparts 58
21. Headings Descriptive 59
22. Marshalling 59
23. Severability 59
24. Survival 59
25. Powers Coupled with an Interest 59
26. Authority of Collateral Agent 59
27. Waiver 60
Schedules
SECURITY AND PLEDGE AGREEMENT
THIS SECURITY AND PLEDGE AGREEMENT, dated as of May 9, 1995 is
entered into between TEREX CORPORATION, a Delaware corporation (together with
its permitted successors and assigns, the "Company"), and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York corporation, as collateral agent (together with
its successors and assigns, the "Collateral Agent").
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, covenant and agree as follows:
1. Definitions. Unless the context hereof clearly requires
otherwise:
(a) words and terms defined in the Indenture and not defined
herein shall have the same meanings herein as therein provided; and
(b) the following words and terms shall have the following
meanings:
"Account Debtor" shall mean the person who is obligated on a
Receivable.
"Accounts" shall mean "accounts" as such term is defined in Section
9-106 of the UCC.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes.
"Baulift" shall mean Baulift Baumaschinen und Krane Handels GmbH, a
Gesellschaft mit beschrankter Haftung organized under the laws of the Federal
Republic of Germany, and its successors and assigns.
"Baulift Note" shall mean that certain promissory note dated May 9,
1995 in the principal amount of U.S.$733,000 made by Baulift to the order of
the Company, as the same may be amended, modified, supplemented, restated,
refunded or replaced from time to time.
"Chattel Paper" shall mean "chattel paper" as such term is defined in
Section 9-105(b) of the UCC.
"Collateral" shall have the meaning assigned to it in Section 2
hereof.
"Collateral Account" shall mean the account (which may be a
securities account) established and maintained pursuant to Section 8 of this
Security Agreement by the Collateral Agent, entitled "Terex Corporation
Collateral Account, United States Trust Company of New York, as collateral
agent, secured party", and all funds, securities and other property or other
items from time to time credited to such account and all interest, income and
distributions thereon.
"Collateral Records" shall mean books, records, computer software,
computer printouts, customer lists, blueprints, technical specifications,
manuals, and similar items which relate to any Collateral other than such items
obtained under license or franchise agreements that prohibit assignment or
disclosure of such items.
"Congress Intercreditor Agreement" shall mean that certain
Intercreditor Agreement dated as of May 9, 1995, between Congress Financial
Corporation and Foothill Capital Corporation, individually and as Revolving
Loan Agent, and the Collateral Agent, as the same may be amended, modified,
supplemented or restated from time to time.
"Copyright Licenses" means all of the Company's right, title, and
interest in and to any and all agreements providing for the granting of any
right in or to Copyrights (whether the Company is licensee or licensor
thereunder) including, without limitation, each agreement referred to in Item B
of Schedule VI.
"Copyrights" means all of the Company's right, title, and interest in
and to all United States and foreign copyrights and all semiconductor chip
product mask works, whether registered or unregistered, now or hereafter in
force throughout the world, all registrations and applications therefor
including, without limitation, the copyright and mask work registrations and
applications referred to in Item A of Schedule VI, all rights corresponding
thereto throughout the world, all extensions and renewals of any thereof, the
right to sue for past infringements of any of the foregoing, and all proceeds
of the foregoing, including, without limitations, license, royalties, income,
payments, claims, damages, and proceeds of suit.
"Distributions" shall mean all dividends, distributions, payments of
interest and principal and other amounts (whether consisting of cash,
securities, personalty or other property) from time to time received,
receivable or otherwise distributed in respect of or in exchange or
substitution for any of the Pledged Securities.
"Documents" shall mean "documents" as such term is defined in Section
9-105(f) of the UCC.
"Equipment" shall mean "equipment" as such term is defined in Section
9-109(2) of the UCC and shall include, without limitation and in any event, all
machinery, manufacturing and assembly equipment, data processing equipment,
motor vehicles not constituting Inventory of the Company, computers, office
equipment, furniture, appliances, tools, dies and material handling equipment.
"Exempt Instruments" shall have the meaning provided in Section
3.8(b) of this Security Agreement.
"Existing Notes" shall mean the collective reference to the PPM
France Note, the PPM U.S. Note, the Terex Cranes Note, the PPM Krane Note, the
Baulift Note and each other promissory note and Instrument identified on
Schedule II hereto.
"Fixtures" shall mean "fixtures" as such term is defined in Section
9-313 of the UCC.
"General Intangibles" shall mean "general intangibles" as such term
is defined in Section 9-106 of the UCC, including, without limitation and in
any event, rights to the payment of money, Trademarks, Copyrights, Patents, and
contracts, licenses and franchises (except in the case of licenses and
franchises in respect of which the Company is the licensee or franchisee if,
and for so long as, the agreement in respect of such license or franchise
prohibits by its terms any assignment or grant of a security interest therein),
limited and general partnership interests and joint venture interests, federal
income tax refunds, trade names, distributions on certificated securities (as
defined in Section 8-102(1)(a) of the UCC) and uncertificated securities (as
defined in Section 8-102(1)(b) of the UCC), computer programs and other
computer software, inventions, designs, trade secrets, goodwill, proprietary
rights, customer lists, supplier contracts, sale orders, correspondence,
advertising materials, payments due in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any property, reversionary
interests in pension and profit-sharing plans and reversionary, beneficial and
residual interests in trusts, credits with and other claims against any Person,
together with any collateral for any of the foregoing and the rights under any
security agreement granting a security interest in such collateral.
"Hedging Agreements" shall mean interest rate, currency or commodity
protection or hedging arrangements, including without limitation, caps,
collars, floors, forwards and any other similar or dissimilar interest rate,
currency or commodity exchange agreements or other interest rate, currency or
commodity hedging arrangements.
"Indenture" shall mean that certain Indenture, dated as of the date
hereof, among the Company, the Guarantors named therein and the Trustee, as the
same may be amended, modified, supplemented or restated from time to time.
"Instruments" shall mean "instruments" as such term is defined in
Section 9-105(1)(i) of the UCC.
"Insurance Policies" shall mean insurance policies procured by or on
behalf of the Company relating to the Collateral identified in clauses (i)
through (xvi), inclusive, and (xviii) of Section 2 hereof.
"Intellectual Property Collateral" means, collectively, the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks, the Trademark Licenses, and the Trade Secrets Collateral.
"Inventory" shall mean "inventory" as such term is defined in Section
9-109(4) of the UCC, including without limitation and in any event, all goods
(whether such goods are in the possession of the Company or of a lessee, bailee
or other Person for sale, lease, storage, transit, processing, use or otherwise
and whether consisting of whole goods, spare parts, components, supplies,
materials or consigned or returned or repossessed goods) which are held for
sale or lease or are to be furnished (or which have been furnished) under any
contract of service or which are raw materials or work in progress or materials
used or consumed in the Company's or any of its Subsidiaries' business.
"Majority Holders" shall mean the Holder or Holders of a majority in
aggregate principal amount of the outstanding Notes.
"Mortgaged Property" shall mean all property and assets in which a
Lien is granted under the Mortgages.
"Non-located Assets" shall have the meaning provided in Section 4.4
of this Security Agreement.
"Patent Licenses" means all of the Company's right, title, and
interest in and to any and all agreements providing for the granting of any
right in or to Patents (whether the Company is licensee or licensor thereunder)
including, without limitation, each agreement referred to in Item D of Schedule
VI.
"Patents" means all of the Company's right, title, and interest in
and to all United States and foreign patents and applications for letters
patent throughout the world, including, but not limited to each patent and
patent application referred to in Item C of Schedule VI, all reissues,
divisions, continuations, continuations-in-part, extensions, renewals, and
reexaminations of any of the foregoing, all rights corresponding thereto
throughout the world, and all proceeds of the foregoing including, without
limitation, license, royalties, income, payments, claims, damages, and proceeds
of suit and the right to sue for past infringements of any of the foregoing.
"Permitted Liens" shall mean the Liens permitted pursuant to Section
4.12 of the Indenture.
"Permitted Working Capital Financers" shall mean those Persons
providing financing to the Company or its Subsidiaries permitted pursuant to
Section 4.9(b)(i) of the Indenture which is secured by Liens on all or part of
the Working Capital Collateral of the Company and/or its Subsidiaries permitted
pursuant to Section 4.12(i) of the Indenture.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Pledged Securities" shall mean the collective reference to (i) all
shares of capital stock of any corporation, and all ownership and equity
interests in any other Person, from time to time owned by the Company or
options or rights to acquire any such shares or interests now or hereafter
owned by the Company, including, without limitation, the capital stock and
interests identified on Schedule II hereto, (ii) the PPM France Note, the PPM
U.S. Note, the Terex Cranes Note, the PPM Krane Note, the Baulift Note and all
other promissory notes and other Instruments now or hereafter owned by the
Company, all security therefore and all rights of the Company under any and all
documents or agreements pursuant to which any such promissory note or other
such Instrument is secured, (iii) all Distributions on Pledged Securities (as
constituted immediately prior to such Distribution) constituting securities
(whether debt or equity securities or otherwise), (iv) all other or additional
stock, notes, securities or property (including cash) paid or distributed in
respect of Pledged Securities (as constituted immediately prior to such payment
or distribution) by way of stock-split, spin-off, split-up, reclassification,
combination of shares or similar rearrangement and (v) all other or additional
stock, notes, securities or property (including cash) that may be paid in
respect of Pledged Securities (as constituted immediately prior to such
payment) by reason of any consolidation, merger, exchange of stock, conveyance
of assets, liquidation, bankruptcy or similar corporate reorganization or other
disposition of Pledged Securities.
"PPM France" shall mean P.P.M., S.A., a societe anonyme organized
under the laws of the Republic of France, and its successors and assigns.
"PPM France Note" shall mean that certain promissory note dated May
9, 1995 in the principal amount of U.S.$56,861,000 made by PPM France to the
order of the Company, as the same may be amended, modified, supplemented,
restated, refunded or replaced from time to time.
"PPM Krane" shall mean PPM Krane GmbH, a Gesellschaft mit
beschrankter Haftung organized under the laws of the Federal Republic of
Germany, and its successors and assigns.
"PPM Krane Note" shall mean that certain promissory note dated May 9,
1995 in the principal amount of U.S.$733,000 made by PPM Krane to the order of
the Company, as the same may be amended, modified, supplemented, restated,
refunded or replaced from time to time.
"PPM U.S." shall mean PPM Cranes, Inc., a Delaware corporation, and
it successors and assigns.
"PPM U.S. Note" shall mean that certain promissory note dated May 9,
1995 in the principal amount of U.S.$21,200,000 made by PPM U.S. to the order
of the Company, as the same may be amended, modified, supplemented, restated,
refunded or replaced from time to time.
"Proceeds" shall mean "proceeds" as such term is defined in Section
9-306(1) of the UCC.
"Purchase Agreement" shall mean that certain Purchase Agreement,
dated as of the date hereof, among the Company, certain Subsidiaries of the
Company and each of the purchasers signatory thereto, as the same may be
amended, modified, supplemented or restated from time to time.
"Receivables" shall mean all rights to payment for goods sold or
leased or services rendered, whether or not earned by performance and all
rights in respect of the Account Debtor, including without limitation all such
rights constituting or evidenced by any Account, Chattel Paper or Instrument,
together with (a) any collateral assigned, hypothecated or held to secure any
of the foregoing and the rights under any security agreement granting a
security interest in such collateral, (b) all goods, the sale of which gave
rise to any of the foregoing, including, without limitation, all rights in any
returned or repossessed goods and unpaid seller's rights, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing and (d) all
powers of attorney for the execution of any evidence of indebtedness or
security or other writing in connection therewith.
"Receivables Records" shall mean (a) all original copies of all
documents, instruments or other writings evidencing the Receivables, (b) all
books, correspondence, credit or other files, records, ledger sheets or cards,
invoices, and other papers relating to Receivables, including without
limitation all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of the Company or
any computer bureau or agent from time to time acting for the Company or
otherwise and (c) all credit information, reports and memoranda relating
thereto.
"Security Agreement" shall mean this Security and Pledge Agreement,
as the same may be amended, modified, supplemented or restated from time to
time.
"Secured Obligations" shall mean all obligations, liabilities
(including, without limitation, contingent obligations) and indebtedness of
every nature of the Company or any of its Subsidiaries to the Secured Parties
now existing or hereafter incurred, arising under or in connection with the
Collateral, the Mortgaged Property or the Transaction Collateral or this
Security Agreement, the Purchase Agreement, the Indenture, the Registration
Rights Agreement, the Notes, the Mortgages or the Transaction Security
Documents, and shall include, interest on the Notes accruing after the filing
of any petition under the Bankruptcy Code at the default rate applicable under
the Indenture.
"Secured Parties" shall mean the collective reference to the
Collateral Agent, the Trustee and each Holder.
"Subject Subsidiary Chattel Paper" shall mean Chattel Paper
constituting Subsidiary Collateral and that has not been delivered to, or is
not being held by any Subsidiary party to the Subsidiary Security Agreement
subject to the Lien of, a Permitted Working Capital Financer as security.
"Subject Subsidiary Instruments" shall mean Instruments constituting
Subsidiary Collateral and representing Receivables that have not been delivered
to a Permitted Working Capital Financer as security.
"Subordination Agreement" shall have the meaning provided in Section
2(b) of this Security Agreement.
"Subsidiary" of any Person shall mean (i) a corporation a majority of
whose capital stock with voting power, under ordinary circumstances, to elect
directors is, at the date of determination, directly or indirectly, owned by
such Person, by one or more subsidiaries of such Person or by such Person and
one or more subsidiaries of such Person or (ii) a partnership in which such
Person or a subsidiary of such person is, at the date of determination, a
general partner of such partnership, or (iii) any other Person (other than a
corporation or a partnership) in which such Person, a subsidiary of such person
or such Person and one or more subsidiaries of such Person, directly or
indirectly, at the date of determination, has (x) at least a majority ownership
interest or (y) the power to elect or direct the election of the directors or
other governing body of such Person.
"Subsidiary Collateral" shall mean "Collateral" as defined in the
Subsidiary Security Agreement.
"Subsidiary Security Agreement" shall mean that certain Subsidiary
Security and Pledge Agreement dated as of the date hereof between certain
Subsidiaries of the Company and the Collateral Agent, as the same may be
amended, modified, supplemented or restated from time to time.
"Terex Cranes" shall mean Terex Cranes, Inc., a Delaware corporation,
and it successors and assigns.
"Terex Cranes Note" shall mean that certain promissory note dated May
9, 1995 in the principal amount of U.S.$13,360,000 made by Terex Cranes to the
order of the Company, as the same may be amended, modified, supplemented,
restated, refunded or replaced from time to time.
"Trademark Licenses" means all of the Company's right, title, and
interest in and to any and all agreements providing for the granting of any
right in or to Trademarks (whether the Company is licensee or licensor
thereunder) including, without limitation, each agreement referred to in Item F
of Schedule VI.
"Trademarks" means all of the Company's right, title, and interest in
and to all United States and foreign trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of business
identifiers, designs and general intangibles of a like nature, all
registrations and applications for any of the foregoing including, but not
limited to the registrations and applications referred to in Item E of Schedule
VI, all extensions or renewals of any of the foregoing; all of the goodwill of
the business connected with the use of and symbolized by the foregoing; the
right to sue for past infringement or dilution of any of the foregoing or for
any injury to goodwill, and all proceeds of the foregoing, including, without
limitation, license royalties, income, payments, claims, damages, and proceeds
of suit.
"Trade Secrets Collateral" means all of the Company's right, title,
and interest in and to trade secrets and all other confidential or proprietary
information and know-how now or hereafter owned or used in, or contemplated at
any time for use in, the business of the Company (all of the foregoing being
collectively called a "Trade Secret"), whether or not such Trade Secret has
been reduced to a writing or other tangible form, including all documents and
things embodying, incorporating, or referring in any way to such Trade Secret,
all licenses of Trade Secrets including, without limitation each such license
referred to in Item G of Schedule VI, the right to sue for past infringement or
dilution of any Trade Secret, and all proceeds of the foregoing, including,
without limitation, license royalties, income, payments, claims, damages, and
proceeds of suit.
"Transaction Collateral" shall mean the collective reference to
"Collateral" as defined in each of the Transaction Security Documents.
"Transaction Security Documents" shall mean the Subsidiary Security
Agreement each other security agreement, pledge agreement, mortgage, deed of
trust and other document, instrument and agreement executed or delivered by the
Company or any Subsidiary of the Company from time to time pursuant to which
the Company or any such Subsidiary shall grant a Lien on any of its properties
or revenues in favor of any Secured Party to secure any of the Secured
Obligations, including, without limitation, , as each such document, instrument
or agreement may be amended, modified, supplemented or restated from time to
time.
"Trustee" shall mean United States Trust Company of New York, as
trustee under the Indenture, and any successor trustee thereunder.
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the State of New York.
"Working Capital Collateral" shall mean those assets, properties and
rights of the Company identified on Schedule VII hereto.
(c) All terms defined in the UCC and not otherwise defined
herein shall have the meanings assigned to them in the UCC.
2. Creation of Security Interest, etc.
(a) As security for the prompt and complete payment and
performance in full of all the Secured Obligations, the Company hereby assigns,
pledges, transfers and delivers to the Collateral Agent for the benefit of
itself and the other Secured Parties and grants to the Collateral Agent for the
benefit of itself and the other Secured Parties a security interest in and
continuing lien on all of the Company's right, title and interest in, to and
under the following, in each case, whether now owned or existing or hereafter
acquired or arising, and wherever located (all of which being hereinafter
collectively called the "Collateral"):
(i) all Inventory;
(ii) all Accounts;
(iii) all Pledged Securities;
(iv) all Equipment;
(v) all Distributions;
(vi) the Collateral Account;
(vii) all Collateral Records;
(viii) all Documents;
(ix) all Fixtures;
(x) all Chattel Paper;
(xi) all General Intangibles;
(xii) all Hedging Agreements;
(xiii) all Instruments;
(xiv) all Receivables;
(xv) all Receivables Records;
(xvi) all Intellectual Property Collateral;
(xvii) all Insurance Policies; and
(xviii) all accessions and additions to, all substitutions and
replacements for, and all Proceeds or products of, any or all of the foregoing;
provided, however, that Collateral Agent shall not have any security interest
in, or Lien on, any Equipment or Fixtures acquired by the Company with the
proceeds of Purchase Money Obligations permitted under the terms of the
Indenture, which Equipment or Fixtures are subject to Purchase Money Liens
permitted under the terms of the Indenture, if, and for so long as, the
agreements governing the terms of such Purchase Money Obligations and Purchase
Money Liens prohibit the grant by the Company of such security interests and
Liens on the assets so acquired. If the agreements governing the terms of any
permitted Purchase Money Obligations and Purchase Money Liens prohibit the
grant by the Company of security interests and Liens on the assets so acquired,
the Collateral Agent shall (at the request and sole expense of the Company)
execute and deliver to the Person holding such Purchase Money Liens on
Equipment or Fixtures, partial releases on Form UCC-3 (or comparable form),
which partial releases shall provide that the Collateral Agent shall have no
security interests or Liens on the Equipment or Fixtures subject to such
Purchase Money Liens but only for so long as (i) such Purchase Money
Obligations are outstanding and (ii) such agreements prohibit the grant by the
Company of such security interests and Liens.
(b) Notwithstanding anything contained herein to the contrary,
the Collateral Agent on behalf of the Secured Parties hereby acknowledge that
the Lien of the Secured Parties in Working Capital Collateral, shall be junior
and subordinate in priority to any Liens in Working Capital Collateral of the
Company granted by the Company to Permitted Working Capital Financers. The
Collateral Agent is authorized to enter into the Congress Intercreditor
Agreement and any other intercreditor or subordination agreement necessary or
appropriate to effectuate and be consistent with the foregoing (each such
agreement being a "Subordination Agreement").
(c) The Company acknowledges that all its rights under each
Existing Note and any documents or agreements pursuant to which either such
note is secured, including, without limitation, all rights to make decisions
regarding amendments, consents and waivers with respect thereto, rights to
accept prepayments of the principal amount thereof, rights to make demands
thereunder and the exercise of rights and the taking or refraining from taking
of any actions thereunder, have been assigned to the Collateral Agent for the
benefit of the Secured Parties and the Company agrees that until the full and
final payment of the Secured Obligations, all such rights shall be exercised
only by the Collateral Agent, it being understood that the Collateral Agent
shall not make any demand for payment of principal under any Existing Note
unless an Event of Default shall have occurred and be continuing. The Company
hereby agrees that all such decisions shall be conclusive and binding on it and
waives any and all claim against the Collateral Agent and/or any Secured Party
in respect of any such decision, exercise, action or inaction.
3. Representations and Warranties. The Company represents and
warrants to the Collateral Agent and the other Secured Parties, which
representations and warranties shall survive the execution and delivery of this
Security Agreement, as follows:
3.1 Validity, Perfection and Priority.
(a) The security interests in the Collateral granted to the
Collateral Agent for the benefit of itself and the other Secured Parties
hereunder constitute valid and continuing security interests in the Collateral.
(b) Upon (i) the filing of financing statements naming the
Company as "debtor" and the Collateral Agent as "secured party" and describing
the Collateral in the filing offices set forth on Schedule I hereto, (ii) to
the extent not subject to Article 9 of the Applicable UCC, the recordation of
the security interests granted hereunder in Patents, Trademarks and Copyrights
in the applicable patent, trademark and copyright registries and the
registration of all Copyrights, (iii) upon the delivery by the Company of
certificates and instruments evidencing all of the Pledged Securities
identified on Schedule II hereto, indorsed in blank or accompanied by undated
stock powers duly executed in blank, as the case may be, with respect thereto,
and (iv) the consummation of all transactions and the taking of all actions
required under the Security Documents with respect to the perfection of
security interests in Pledged Securities consisting of equity securities issued
by Persons not organized in the United States or any State thereof, the
security interests in the Collateral granted to the Collateral Agent for the
benefit of itself and the other Secured Parties hereunder will constitute
perfected security interests therein superior and prior to all Liens (other
than Permitted Liens), rights or claims of all other Persons.
3.2 No Liens; Other Financing Statements.
(a) Except for the Lien granted to the Collateral Agent
hereunder for the benefit of itself and the other Secured Parties, the Company
owns and, as to all Collateral whether now existing or hereafter acquired will
continue to own, each item of the Collateral free and clear of any and all
Liens (other than Permitted Liens), rights and claims, and the Company shall
defend the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Collateral Agent or
any other Secured Parties other than holders of Permitted Liens on the
Collateral entitled to priority therein under applicable law.
(b) No financing statement or other evidence of Lien covering
or purporting to cover any of the Collateral is on file and is effective in any
public office other than (i) financing statements filed or to be filed in
connection with the security interests granted to the Collateral Agent
hereunder, (ii) financing statements for which proper, executed termination
statements have been delivered to the Collateral Agent for filing and (iii)
financing statements filed in connection with Permitted Liens.
3.3 Chief Executive Office. The chief executive office of the
Company is located at 500 Post Road East, Westport, Connecticut 06880. The
originals of the Receivables Records and all Collateral Records are located at
the locations identified on Schedule III as such or at the chief executive
office of the Company. All Receivables are maintained at, and controlled and
directed (including, without limitation, for general accounting purposes) from
the chief executive office or the offices identified on Schedule III as such.
3.4 Location of Inventory and Equipment. All Inventory and
Equipment (other than Non-located Assets with an aggregate book value (together
with the aggregate book value of all Non-located Assets (as defined in each
Transaction Security Document)) not in excess of $10 million) now or from time
to time included in the Collateral is kept only at (or shall be in transit to)
the locations listed on Schedule III and IV hereto. None of such Inventory or
Equipment is in the possession of an issuer of a negotiable document (as
defined in Section 7-104 of the UCC) therefor or otherwise in the possession of
a bailee or other Person, except as set forth on Schedule IV hereto.
3.5 Fair Labor Standards Act. Any goods now or hereafter produced
by the Company included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as amended.
3.6 Tradenames; Prior Names. The only names under which the Company
has conducted business during the last five years are as set forth on Schedule
V hereto.
3.7 Certificate of Title. There is no property of the Company the
title to which is governed by a certificate of title or ownership other than
(i) motor vehicles which constitute Inventory of the Company and (ii) motor
vehicles which constitute Equipment of the Company and (to the extent that
failure to have accomplished the same would render the representation contained
in the first sentence of Section 3.4 hereof incorrect) with respect to which
the Lien of the Collateral Agent is duly noted on the certificate of title
issued with respect to such motor vehicles.
3.8 Pledged Securities. (a) The Company is the legal, record and
beneficial owner of, and has good title to, the Pledged Securities listed on
Schedule II hereto and such Pledged Securities are not subject to any put,
call, option or other right in favor of any other Person whatsoever, (b) except
as disclosed on Schedule 3.8, the Pledged Securities listed on Schedule II
hereto constitutes all of the capital stock owned legally or beneficially by
the Company of any corporation organized under the laws of the United States or
any State thereof and all of the ownership and equity interests owned legally
or beneficially by the Company of any other business entity organized under the
laws of the United States or any State thereof and all promissory notes and
other Instruments in which the Company has a legal or beneficial ownership
interest on the date hereof (other than Instruments constituting Working
Capital Collateral that have been delivered to a Permitted Working Capital
Financer and other Instruments in a principal amount, individually or in the
aggregate, not required to be delivered to the Collateral Agent pursuant to
Section 4.7 hereof (collectively, "Exempt Instruments")), (c) except as set
forth on Schedule II hereto, the Company has no options or other rights to
acquire any capital stock or other ownership or equity interests of any other
Person, (d) the Company is not a party to or bound by any agreement with any
other Person (including, without limitation, any Subsidiary or any other
stockholder of any Subsidiary) which restricts the ability of the Company to
vote, transfer or dispose of any Capital Stock owned by the Company or any of
the other Pledged Securities, (e) no consent of any other Person (including,
without limitation, any Subsidiary of the Company or any other stockholder of
any such Subsidiary) is required to be obtained by the Company in connection
with the pledge by the Company of any of the Pledged Securities or the
consummation of the other transactions contemplated hereby, including, without
limitation, the exercise by the Collateral Agent of the voting or other rights
provided for in this Security Agreement with respect to the Pledged Securities
or the remedies in respect of the Pledged Securities provided pursuant to this
Security Agreement, (f) all of the Pledged Securities listed on Schedule II
have been duly and validly issued, and are fully paid and nonassessable and (g)
each of the Existing Notes (i) evidences bona fide indebtedness of the issuer
thereof to the Company, (ii) is not subject to any offset for counterclaim and
(iii) is enforceable against the maker thereof in accordance with its terms,
except as enforceability may be limited by bankruptcy, reorganization,
moratorium and other laws affecting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law).
3.9 Receivables.
(a) Each Receivable (i) is and will be the genuine, legal,
valid and binding obligation of the Account Debtor in respect thereof,
representing an unsatisfied obligation of such Account Debtor, (ii) is and will
be enforceable in accordance with its terms, (iii) is and will be in full force
and effect and is not and will not be subject to any setoffs, defenses, taxes,
counterclaims (except (x) with respect to refunds, returns and allowances in
the ordinary course of business and (y) to the extent that such Receivable may
not yet have been earned by performance) and (iv) is and will be in compliance
with all applicable laws, whether federal, state, local or foreign.
(b) No Receivables in excess of $250,000 individually or
$2,000,000 in the aggregate (together with Receivables represented by
Instruments not delivered to a Permitted Working Capital Financer and not
delivered to the Collateral Agent pursuant to the terms of the Transaction
Security Documents) are evidenced by any Instrument which has not been
delivered to the Collateral Agent or a Permitted Working Capital Financer.
(c) The representations and warranties contained in this
Section shall be deemed to be repeated by the Company as of the time when each
Receivable arises.
3.10 Intellectual Property. Except as disclosed in Item H of
Schedule VI, as of the date hereof:
(a) all Intellectual Property Collateral material to the
business of the Company is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part;
(b) to the best of the Company's knowledge, all Intellectual
Property Collateral material to the business of the Company is valid and
enforceable;
(c) all Trademark, Patent and Copyright registrations and
applications are (except as disclosed in Items A, C or E of Schedule VI hereof)
standing in the name of the Company, and none of the Trademarks, Patents,
Copyrights or Trade Secret Collateral material to the business of the Company
has been licensed by the Company to any affiliate or third party, except as
disclosed in Items B, D, F and G of Schedule VI;
(d) the Company has been using appropriate statutory notice of
registration in connection with its use of registered Trademarks material to
the business of the Company, proper marking practices in connection with the
use of Patents material to the business of the Company and appropriate notice
of copyright in connection with the publication of Copyrights material to the
business of the Company;
(e) the Company is the exclusive owner of the entire and
unencumbered right, title and interest in and to all Intellectual Property
Collateral material to the business of the Company (subject only to Permitted
Liens and the licenses and other disclosures identified in Items B, D, F and G
of Schedule VI) and, to the best of the Company's knowledge, no claim has been
made that the use of such Intellectual Property Collateral violates the
asserted rights of any third party;
(f) to the best of the Company's knowledge, the conduct of the
Company's business does not infringe upon any trademark, patent, copyright,
trade secret or similar intellectual property right owned or controlled by a
third party and, to the best of the Company's knowledge, no third party is
infringing upon any Intellectual Property Collateral;
(g) no holding, decision, or judgment has been rendered in any
action or proceeding challenging the validity of or the Company's rights to use
any Intellectual Property Collateral and no such action or proceeding is
pending or, to the best of the Company's knowledge, threatened;
(h) the Company has performed all acts and has paid all
required fees and taxes to maintain each and every registration and application
of Intellectual Property Collateral material to the business of the Company in
full force and effect;
(i) the Company owns or has valid rights to use, all patents,
trademarks, trade secrets, copyrights, and similar intellectual property rights
material to the business of the Company and used in the conduct of the
Company's business; and
(j) Schedule VI set forth (i) all United States, state and
foreign registrations of and applications for Patents, Trademarks and
Copyrights of the Company and (ii) all Patent Licenses, Trademark Licenses and
Copyright Licenses material to the business of the Company.
4. Covenants. The parties agree that the following provisions shall
be applicable to the Company and the Collateral, and the Company covenants and
agrees that at all times during the term of this Security Agreement and until
the Secured Obligations have been full and finally paid:
4.1 Books and Records.
(a) The Company shall keep accurate and complete books and
records concerning each category of the Collateral, including, but not limited
to, the originals of all documentation with respect to all Receivables and
records of all payments received and all credits granted on the Receivables,
all merchandise returned and all other dealings therewith. The Company shall,
at any time that Chattel Paper and Receivables are not pledged to a Permitted
Working Capital Financier, legend, in form and manner reasonably satisfactory
to the Collateral Agent, all Chattel Paper and Receivables Records with an
appropriate reference to the fact that the Chattel Paper and all other
Receivables have been assigned to the Collateral Agent for the benefit of the
Secured Parties and that the Collateral Agent has a security interest therein.
(b) The Company shall furnish to the Collateral Agent at such
times and in such form and substance as the Collateral Agent may reasonably
request, but in any event within ten business days after the occurrence of an
Event of Default and at least every 30 days thereafter during the continuance
of such Event of Default, information reasonably adequate to enable the
Collateral Agent to identify the Collateral and determine the amount and value
thereof, including, without limitation, the location, cost, net book value and
fair market value of Collateral.
4.2 Further Assurances. At any time and from time to time, upon the
reasonable request of the Collateral Agent, and at the sole expense of the
Company, the Company shall promptly do all such further things and duly execute
and deliver any and all such further conveyances, assignments, agreements,
instruments, indorsements, powers of attorney and other documents, make such
filings, give such notices and take such further action as the Collateral Agent
may reasonably deem necessary in obtaining the full benefits of this Security
Agreement and of the rights, remedies and powers herein granted or in order to
assure and confirm unto the Collateral Agent the Collateral Agent's rights,
powers and remedies hereunder, including, without limitation, the filing of any
financing statements, in form reasonably acceptable to the Collateral Agent
under the Uniform Commercial Code in effect in any jurisdiction with respect to
the Liens granted hereby. The Company also hereby authorizes the Collateral
Agent to file any such financing statement without the signature of the Company
to the extent permitted by applicable law. A photocopy or other reproduction
of this Security Agreement shall be sufficient as a financing statement and may
be filed in lieu of the original to the extent permitted by applicable law.
The Company will pay or reimburse the Collateral Agent for all filing fees and
related reasonable out-of-pocket expenses and will make or reimburse the
Collateral Agent for making all searches reasonably deemed necessary by the
Collateral Agent to establish and determine the priority of the security
interests of the Collateral Agent created hereunder or to determine the
presence or priority of other secured parties.
4.3 Change of Chief Executive Office. The Company will not move its
chief executive office from that disclosed in Section 3.3 hereof (or move or
establish any registered office in Kentucky) except to such new location as the
Company may establish in accordance with the last sentence of this Section.
The originals of all Receivables Records will continue to be kept at such chief
executive office, at the offices designated on Schedule III as offices at which
Receivables Records are located, or at such new locations as the Company may
establish in accordance with the last sentence of this Section. All
Receivables and Receivables Records of the Company will continue to be
maintained at, and controlled and directed (including, without limitation, for
general accounting purposes) from, such chief executive office or a location
identified as a location at which Receivables or Receivables records are
maintained, controlled and directed on Schedule III, or such new locations as
the Company may establish in accordance with the last sentence of this Section.
The Company shall not establish a new location for its chief executive office
or such activities (or move any such activities from any such locations) or
move or establish any registered office in Kentucky until (i) it shall have
given to the Collateral Agent not less than 30 days' prior written notice of
its intention to do so, clearly describing such new location and providing such
other information in connection therewith as the Collateral Agent may
reasonably request and (ii) with respect to such new location, it shall have
taken all action as the Collateral Agent may reasonably request to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected with the same or better priority
and in full force and effect.
4.4 Change of Location of Inventory and Equipment. The Company
agrees that (i) all Inventory and Equipment now held or subsequently acquired
by it shall only be kept at (or shall be in transit to) the locations shown on
Schedule III hereto (or, in the case of Inventory held by a bailee, those
locations shown on Schedule IV hereto), or such new locations as the Company
may establish in accordance with the last sentence of this Section. The
Company may establish a new location for Inventory and Equipment only if (i) it
shall have given to the Collateral Agent not less than 30 days' prior written
notice of its intention to do so, clearly describing such new location and
providing such other information in connection therewith as the Collateral
Agent may reasonably request and (ii) with respect to such new location, it
shall have taken all action as the Collateral Agent may reasonably request to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected with the same or
better priority and in full force and effect. Notwithstanding anything to the
contrary contained in this Section 4.4, the Company may keep Inventory and
Equipment at locations other than those set forth on Schedules III and IV
hereto and locations other than with respect to which it has notified the
Collateral Agent in advance (collectively, "Non-located Assets"); provided,
however, that at no time shall the aggregate book value of all Non-located
Assets (together with all other Non-located Assets (as defined in each of the
Transaction Security Documents)) and the book value of all Motor Vehicles
constituting Equipment owned by the Company or any of its Subsidiaries in which
the Collateral Agent does not have a perfected, first-priority Lien hereunder
or under the Transaction Security Documents exceed (a) $2,000,000 in any State
of the United States, province of Canada or in any other country or (b)
$10,000,000 in the aggregate for all such assets and at all locations.
4.5 Change of Name; Identity or Corporate Structure. The Company
shall not change its name (or conduct any significant portion of its business
under any tradenames (other than those identified with an asterisk on Schedule
V hereto)), identity or corporate structure unless (i) it shall have given to
the Collateral Agent not less than 30 days' prior written notice of its
intention to do so, clearly describing such new name, identity or corporate
structure or such new tradename and providing such other information in
connection therewith as the Collateral Agent may reasonably request and (ii)
with respect to such new name, identity or corporate structure or such new
tradename, it shall have taken all action as the Collateral Agent may
reasonably request to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected with
the same or better priority and in full force and effect.
4.6 Subsequently Acquired Pledged Securities, etc. If at any time
or from time to time after the date hereof, the Company shall acquire any
additional Pledged Securities (by purchase, stock dividend, in lieu of interest
or otherwise) (other than Exempt Instruments), the Company will forthwith
pledge and deposit such Pledged Securities with the Collateral Agent and
deliver to the Collateral Agent certificates or instruments therefor, indorsed
in blank by the Company or accompanied by undated stock powers duly executed in
blank by the Company or such other documentation reasonably required by the
Collateral Agent to perfect its first-priority Lien therein.
4.7 Delivery of Instruments. If any Instrument (other than
Instruments representing Receivables that have been delivered to a Permitted
Working Capital Financer as security) in excess of $250,000 individually or
(together with Subject Subsidiary Instruments) $2,000,000 in the aggregate
shall at any time comprise any portion of the Collateral and the Subsidiary
Collateral, combined, the Company shall within thirty days notify the
Collateral Agent thereof, and promptly deliver such Instrument or Instruments
to the Collateral Agent appropriately indorsed or assigned or to the order of
the Collateral Agent or in such other manner as shall be satisfactory to the
Collateral Agent.
4.8 Delivery of Chattel Paper. If Chattel Paper (other than Chattel
Paper representing Receivables that has been delivered to, or is being held by
the Company subject to the Lien of, a Permitted Working Capital Financer as
security) representing Receivables in excess of $250,000 individually or
(together with Subject Subsidiary Chattel Paper) $2,000,000 in the aggregate
shall at any time comprise any portion of the Collateral and the Subject
Collateral, combined, the Company shall within thirty days notify the
Collateral Agent thereof, and promptly deliver such Chattel Paper to the
Collateral Agent.
4.9 Right of Inspection. The Collateral Agent shall at all times
have full and free access during normal business hours to all the books,
correspondence and records of the Company relating to the Collateral, and the
Collateral Agent and its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and the Company agrees to render to the
Collateral Agent, at the Company's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. The Collateral
Agent and its representatives shall at all times during normal business hours
also have the right to enter into and upon any premises where any of the
Inventory or Equipment is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein. The
Collateral Agent shall, if no Event of Default shall then exist, provide
reasonable notice to the Company of any access and inspections permitted under
this Section and shall use all reasonable efforts to ensure that the business
of the Company will not be unreasonably disrupted thereby.
4.10 Insurance. The Company shall maintain or cause to be
maintained with financially sound and reputable insurers acceptable to the
Collateral Agent and licensed to do business in each state in which any of the
Collateral covered by any policy is located, insurance with respect to the
Collateral and its use, against loss or damage of the kinds customarily insured
against by reputable companies in the same or similar businesses, such
insurance to be of such types and in such amounts (with such deductible
amounts) as is customary for such companies under the same or similar
circumstances, and the types, amounts and terms of which (other than products
liability, which the Company self-insures) shall, in any event, be reasonably
acceptable to the Collateral Agent. Without limiting the generality of the
foregoing, the Company (a) will keep the Collateral insured on an "all risk"
basis, as appropriate for any particular Collateral against loss or damage by
fire, standard extended coverage perils and such other hazards, occurrences and
events customarily required by a prudent lender in the area where the
Collateral is located in amounts not less than the replacement cost of the
Collateral and (b) will maintain in the amount customarily obtained by the same
or similar businesses, general public liability insurance against claims for
bodily injury, death or property damage. The Company shall not obtain or carry
separate insurance concurrent in form or contributing in the event of loss with
that required in this Section to be furnished by the Company unless the
Collateral Agent and the other Secured Parties are included as named insured,
with loss payable as provided herein. All policies of insurance shall (i) name
the Collateral Agent, on behalf of itself and the other Secured Parties as
additional insured (with respect to liability insurance policies) or loss
payees with a lender's loss payable indorsement and a standard "New York"
mortgagee provision with a no contribution clause (with respect to property
insurance policies), in each case as their respective interests may appear,
(ii) include waivers by the insurer of all claims for insurance premiums
against the Collateral Agent and the other Secured Parties, (iii) provide that
any losses shall (subject to the terms of any Subordination Agreement) be
payable to the Collateral Agent notwithstanding (A) any act, failure to act or
negligence of or violation of warranties, declarations or conditions contained
in such policy by the Company, the Collateral Agent or any other Secured
Parties, (B) any foreclosure or other proceedings or notice of sale relating to
any Collateral insured thereunder, or (C) any change in the title to or
ownership of any Collateral insured thereunder and (iv) provide that no
cancellation, termination or lapse in coverage thereof shall be effective until
at least 30 days after receipt by the Collateral Agent of written notice
thereof. The Company shall pay the premiums for all policies of insurance as
the same become due and payable and shall deliver evidence thereof to the
Collateral Agent. At the request of the Collateral Agent, the Company will
(subject to the terms of any Subordination Agreement relating to casualty
insurance on Working Capital Collateral) assign and deliver all policies of
insurance to the Collateral Agent. In any event, a certificate of insurance
for each of the policies of insurance shall be issued to the Collateral Agent,
and copies of all original policies, together with the indorsements thereof
required hereunder, shall be delivered to the Collateral Agent within ten days
of the Collateral Agent's request therefor. Not later than fifteen days prior
to the expiration date of each of the policies, the Company will deliver to the
Collateral Agent a renewal policy or policies or certificates of insurance to
the Collateral Agent. If at any time the Collateral Agent is not in receipt of
written evidence that all insurance required hereunder is in full force and
effect, the Collateral Agent shall have the right upon seven days' prior
written notice to the Company to take such action as the Collateral Agent deems
necessary to protect its interest in the Collateral, including, without
limitation, the payment of any premiums that are due and payable or the
obtaining of such insurance coverage as the Collateral Agent in its reasonable
discretion deems appropriate, and all reasonable out-of-pocket expenses
incurred by the Collateral Agent in connection with such action or in obtaining
such insurance and keeping it in effect, together with interest thereon at the
rate of 10% per annum shall be paid by the Company to the Collateral Agent upon
demand and such payment obligations shall be secured hereby. Anything
contained in this Section to the contrary notwithstanding, any and all
insurance which the Company is obligated to carry pursuant to this Section may
be carried under a general coverage "floater" policy, master insurance policy,
"blanket" policy or policies covering other properties or liabilities, provided
that the coverage so provided in accordance with the requirements set forth
herein shall not be diminished or hindered by reason of the inclusion of any
such required insurance under a policy containing aggregate loss limits.
If the Collateral shall be damaged or destroyed, in whole or in part,
by fire or other casualty, the Company shall give prompt notice thereof to the
Collateral Agent. No settlement on account of any material loss covered by
insurance shall be made for less than insured value without the consent of the
Collateral Agent. Except with respect to third party liability insurance,
after the occurrence and during the continuance of an Event of Default, all
sums payable to the Company by any insurer with respect to a casualty relating
to all or any part of the Collateral shall be paid to the Collateral Agent.
Unless an Event of Default shall have occurred and be continuing and subject,
in any event, to the terms of the Mortgages and the Indenture, (i) all
insurance proceeds from any insurance policy held by the Company shall be paid
to the Company and (ii) the Company may invest such proceeds in assets related
to the business of the Company or its Subsidiaries or otherwise apply such
proceeds in the ordinary course of its business. If the Company shall receive
any insurance proceeds which are to be paid to the Collateral Agent pursuant to
this Section, the Company shall hold such proceeds in trust for the Collateral
Agent, shall segregate such proceeds from other funds of the Company, and shall
immediately forward such proceeds in the form received to the Collateral Agent
(appropriately indorsed by the Company to the order of the Collateral Agent or
in such other manner as shall be satisfactory to the Collateral Agent). All
such insurance proceeds may be retained by the Collateral Agent in the
Collateral Account as Collateral hereunder and/or applied by the Collateral
Agent toward payment of all or part of the Secured Obligations (whether matured
or unmatured) in such order as is provided herein. If any portion of the
insurance proceeds are made available to the Company, the Collateral Agent
shall not be obligated to see to the application of any amount paid to the
Company.
4.11 Warehouse Receipts Non-negotiable. The Company agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt or other
Document is issued with respect to any of its Inventory, such warehouse receipt
or receipt in the nature thereof or other Document shall not be "negotiable"
(as such term is used in Section 7-104 of the UCC or under other relevant law).
4.12 Motor Vehicles.
(a) Within the number of days permitted by the applicable
jurisdiction for delivery or filing in order to perfect a security interest as
of the time of its creation (but subject to the qualification contained in the
last sentence of Section 4.4 hereof relating to Motor Vehicles and Non-located
Assets), if after the date hereof the Company shall acquire any Motor Vehicle
or any other item of property the title to which is governed by a certificate
of title or ownership, the Company shall file in each office in each
jurisdiction or deliver to each Person which the Collateral Agent shall deem
necessary or advisable to perfect its first priority security interest in such
Motor Vehicles or other property, all applications for certificates of title or
ownership indicating the Collateral Agent's first priority lien on the Motor
Vehicle or other property covered by such certificate, and any other necessary
documentation and thereafter as soon as practicable, the Company shall deliver
to the Collateral Agent originals of the certificates of title or ownership for
such Motor Vehicles or other property with the Collateral Agent listed as
lienholder, together with the manufacturer's statement of origin; provided,
however, if the Motor Vehicle or other property acquired is subject to a
Purchase Money Lien, the Collateral Agent shall be listed as a junior
lienholder to the Person holding such Purchase Money Lien.
No Motor Vehicle or other property shall be removed from the state
which has issued a certificate of title therefor for a period equal to or in
excess of four months except for the purpose of reregistering such Motor
Vehicle or other property, in which case the Company shall take all steps
necessary to continue the perfection and priority of the Collateral Agent's
Lien on such Motor Vehicle or other property.
(b) Any certificates of title or ownership delivered pursuant
to the terms hereof shall be accompanied by odometer statements for each Motor
Vehicle covered thereby.
4.13 Compliance with Laws. The Company will comply in all material
respects with all requirements of law applicable to the Collateral or any part
thereof; provided, however, that the Company may contest any requirement of law
in any reasonable manner which shall not, in the reasonable opinion of the
Collateral Agent, materially and adversely affect the Collateral Agent's or the
Secured Parties' rights in any of the Collateral or adversely affect the
priority of the Liens created hereunder in any of the Collateral.
4.14 Payment of Obligations. The Company will pay promptly when due
all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials,
supplies and services) against or with respect to the Collateral, except that
no such charge need be paid if (i) the validity thereof is being contested in
good faith by appropriate proceedings, (ii) such proceedings do not involve, in
the reasonable opinion of the Collateral Agent, any material danger of the
sale, forfeiture or loss of any of the Collateral or any interest therein that
could reasonably be expected to have an adverse effect on the Secured Parties
and (iii) such charge is adequately reserved against on the Company's books in
accordance with GAAP.
4.15 No Impairment. Except as expressly permitted herein or in the
Indenture, the Company will not take or knowingly permit to be taken any action
which could impair the Collateral Agent's or any Secured Party's rights in the
Collateral.
4.16 Negative Pledge. The Company will not create, incur or permit
to exist, will defend the Collateral against, and will take such other action
as is necessary to remove, any Lien or claim on or to the Collateral, other
than the Liens created hereby and other than the Permitted Liens, and will
defend the right, title and interest of the Collateral Agent and the other
Secured Parties in and to any of the Collateral against the claims and demands
of all Persons whomsoever other than holders of Permitted Liens on the
Collateral entitled to priority therein under applicable law.
4.17 Limitations on Dispositions of Collateral. The Company will
not sell, transfer, lease or otherwise dispose of any of the Collateral or any
right or interest therein, or attempt, offer or contract to do so except for
dispositions of Collateral either permitted pursuant to or not prohibited by
the provisions of Section 4.10 of the Indenture and, to the extent provided for
in Section 4.10 of the Indenture, the proceeds of which are applied as
permitted or required by such section. In the event of a sale, transfer, lease
or other disposition of any of the Collateral permitted by this Section, the
Collateral Agent shall, subject to the terms of Section 10.3 of the Indenture,
at the sole cost and expense of the Company, execute such documents as the
Company shall reasonably request to evidence the release of the Lien created by
this Security Agreement with respect to such Collateral and, to the extent such
Collateral is in he possession of the Collateral Agent, deliver such Collateral
to the Company or its designee.
4.18 Maintenance of Equipment. The Company will maintain each item
of Equipment in good operating condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose, unless and to the
extent that the Company reasonably determines that such item of Equipment is
obsolete, worn out or that repair is not economically feasible or economically
desirable.
4.19 Provisions Regarding Receivables.
(a) The Company shall perform in all material respects all of
its obligations with respect to the Receivables.
(b) The Company shall use commercially reasonable efforts
(including, without limitation, prompt and diligent exercise of each material
right it may have under any Receivable (other than any right of termination))
to cause to be collected from each Account Debtor, as and when due (including,
without limitation, amounts which are delinquent, such amounts to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of any Receivable, and apply all collected
amounts to the outstanding balance of such Receivable immediately upon receipt
thereof. Notwithstanding the foregoing, the Company shall not be obligated to
exercise any rights with respect to any Receivables to the extent that it
determines in good faith that such exercise would not be commercially
reasonable or, in the exercise of its best business judgment, prudent. The
costs of collection, whether incurred by the Company or the Collateral Agent
shall be borne by the Company and if incurred by the Collateral Agent shall be
reimbursed, together with interest thereon at the rate of 10% per annum, to the
Collateral Agent upon demand and such reimbursement obligation shall be secured
hereby.
(c) Upon the occurrence and during the continuance of an Event
of Default, but subject to the terms of any Subordination Agreement, the
Company shall establish such lock-box arrangements for the collection of
Receivables as the Collateral Agent may require in its sole discretion.
(d) The Company shall, (i) and shall cause each of its
Subsidiaries organized in any jurisdiction in the United States (collectively,
"Domestic Subsidiaries") that has granted a Lien on any Working Capital
Collateral to secure Indebtedness owed to a Permitted Working Capital Financer
by the Company or any Domestic Subsidiary, to settle all Receivables owing by
the Company or any such Domestic Subsidiary to the Company or any such Domestic
Subsidiary within ninety days from the date such Receivable arises unless there
is a bona fide dispute as to the amount of any such Receivable, in which case
such Receivable shall be settled promptly after the resolution of such dispute
and (ii) and shall cause each of its Subsidiaries to, apply any payments on any
intercompany Indebtedness among or between the Company and its Subsidiaries
first to the payment of intercompany Indebtedness constituting intercompany
Receivables until such intercompany Receivables are paid in full.
4.20 Intellectual Property.
(a) The Company shall not do any act or omit to do any act
whereby any of the Intellectual Property Collateral may lapse or become
abandoned or dedicated to the public or unenforceable if the same could
reasonably be expected to have a material adverse effect on the business,
operations, condition (financial or otherwise) or prospects of the Company (a
"Material Adverse Effect").
(b) The Company shall not, in each case to the extent that it
could reasonably be expected to have a Material Adverse Effect, (i) cease the
use of any of the Trademarks or (ii) fail to maintain as in the past the level
of the quality of products and services offered under any of the Trademarks.
(c) The Company shall promptly notify the Collateral Agent if
it knows that any item of the Intellectual Property Collateral that is material
to the business of the Company may become (a) abandoned or dedicated to the
public or placed in the public domain, (b) invalid or unenforceable, or (c)
subject to any adverse determination or development (including the institution
of proceedings) or any adverse determination or development in any proceeding
in the United States Patent and Trademark Office, the United States Copyright
Office, and state registry any foreign counterpart thereof or any court.
(d) The Company shall take all commercially reasonable steps,
including in the United States Patent and Trademark Office, the United States
Copyright Office, or any state or foreign counterpart thereof, to maintain and
pursue any application and to maintain any registration of each Trademark,
Patent, and Copyright owned by the Company including, but not limited to, the
filing of applications for renewal, affidavits of use, affidavits of
incontestability, the prosecution and defense of opposition, interference, and
cancellation proceedings, and the payment of fees and taxes (except to the
extent that such dedication, abandonment, or invalidation, or the failure to
pursue and maintain the same could reasonably be expected to have a Material
Adverse Effect).
(e) The Company shall promptly (but in no event more than
ninety days after the Company obtains knowledge thereof) report to the
Collateral Agent (i) the filing of any application to register any Intellectual
Property Collateral (whether such application is filed by the Company or
through any agent, employee, licensee or designee thereof) with the United
States Patent and Trademark Office, the United States Copyright Office, or any
State or foreign counterpart thereof and (ii) the registration of any
Intellectual Property Collateral by any such office. Upon the request of the
Collateral Agent, the Company shall promptly execute and deliver any and all
agreements, instruments, documents, and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent's security interest in such
Intellectual Property Collateral.
(f) The Company shall, promptly upon the reasonable request of
the Collateral Agent, execute and deliver to the Collateral Agent any document
required to acknowledge, confirm, register, record or perfect the Collateral
Agent's interest in any part of the Intellectual Property Collateral.
4.21 Notice. The Company will advise the Collateral Agent promptly,
in reasonable detail, in accordance with the provisions hereof (a) of any Lien
(other than Permitted Liens) on, or claim asserted against, any of the
Collateral and (b) of the occurrence of any other event which could reasonably
be expected to have a material adverse effect on the aggregate value of the
Collateral or any material component thereof or an adverse effect on the Liens
created hereunder.
4.22 Performance by Collateral Agent of Company's Obligations;
Reimbursement. If the Company fails to perform or comply with any of its
agreements contained herein, the Collateral Agent may, without consent by the
Company and upon such notice to the Company as the Collateral Agent reasonably
deems appropriate under the circumstances, perform or comply or cause
performance or compliance therewith and the expenses of the Collateral Agent
incurred in connection with such performance or compliance, together with
interest thereon at a rate equal to 10% per annum, shall be payable by the
Company to the Collateral Agent on demand and such reimbursement obligation
shall be secured hereby.
5. Appointment of Sub-Agents. The Collateral Agent shall have the
right, with the consent of Company (which consent shall not be unreasonably
withheld) if an Event of Default shall not then have occurred and be
continuing, to appoint one or more sub-agents or nominees for the purpose of
retaining physical possession of the Collateral, which may be held (if
applicable and in the discretion of the Collateral Agent) in the name of the
Collateral Agent, indorsed or assigned in blank or in favor of the Collateral
Agent or any nominee or nominees of the Collateral Agent or a sub-agent
appointed by the Collateral Agent. All references to the Collateral Agent
herein shall be deemed to include such sub-agents or nominees acting in their
capacity as such.
6. Voting, etc. Unless and until (i) an Event of Default shall have
occurred and be continuing under Sections 6.1(1) or (2) of the Indenture or
(ii) an Event of Default shall have occurred and be continuing under any other
provision of the Indenture and the obligations of the Company under the
Indenture and the Notes shall have been accelerated pursuant to Section 6.2 of
the Indenture (either, a "Voting Divestiture Event"), the Company shall be
entitled to vote any and all of the Pledged Securities and to give consents,
waivers or ratifications in respect thereof; provided, that no vote shall be
cast or any consent, waiver or ratification given or any action taken which
would violate or be inconsistent with any of the terms of this Security
Agreement, the Purchase Agreement or the Indenture or any other instrument or
agreement relating to the Secured Obligations, or which would have the effect
of impairing the position or interests of the Collateral Agent or any other
Secured Party hereunder or thereunder or which would authorize or effect
actions prohibited under the terms of this Security Agreement, the Purchase
Agreement, the Indenture or any instrument or agreement relating to the Secured
Obligations. All such rights of the Company to vote and to give consents,
waivers and ratifications shall cease in the event that a Voting Divestiture
Event has occurred and is continuing. The Company hereby grants to the
Collateral Agent an irrevocable proxy to vote the Pledged Securities, which
proxy shall be effective immediately upon the occurrence and during the
continuance of a Voting Divestiture Event. After the occurrence and during the
continuance of a Voting Divestiture Event and upon request of the Collateral
Agent, the Company agrees to deliver to the Collateral Agent such further
evidence of such irrevocable proxy or such further irrevocable proxies to vote
the Pledged Securities as the Collateral Agent may reasonably request.
7. Payments and Other Distributions. Unless an Event of Default
shall have occurred and be continuing, all cash Distributions payable in
respect of the Pledged Securities (other than Exempt Instruments) shall be paid
to the Company, provided that all cash Distributions payable in respect of the
Pledged Securities which are determined by the Collateral Agent, in its
reasonable discretion, to represent in whole or in part a payment of principal
thereon or an extraordinary, liquidating or other distribution in return of
capital (or which, in the absence of any such determination by the Collateral
Agent, shall constitute such a distribution), shall be paid to the Collateral
Agent, deposited by it in the Collateral Account and retained by it as part of
the Collateral. The Collateral Agent shall at all times be entitled to receive
directly, and to retain as part of the Collateral:
(a) all other or additional stock or securities or property
(other than cash) paid or distributed by way of Distribution in respect of the
Pledged Securities (other than Exempt Instruments);
(b) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the Pledged
Securities (other than Exempt Instruments) by way of stock-split, spin-off,
split-up, reclassification, combination of shares or similar rearrangement; and
(c) all other or additional stock or other securities or
property which may be paid in respect of the Pledged Securities (other than
Exempt Instruments) by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation, bankruptcy or similar corporate
reorganization or other disposition of such Pledged Securities.
All monies and other property which are payable to the Collateral Agent or
which the Collateral Agent is entitled to receive pursuant to this Section 7
and which are received by the Company shall be held by the Company in trust for
the Collateral Agent and the other Secured Parties, segregated from other
monies and other property of the Company and shall forthwith upon receipt by
the Company be turned over to the Collateral Agent in the same form received by
the Company (appropriately indorsed or assigned by the Company to the order of
the Collateral Agent or in such other manner as shall be reasonably
satisfactory to the Collateral Agent).
8. Collateral Account.
8.1 Collateral Account. There is hereby established with the
Collateral Agent the Collateral Account. The Collateral Account shall be under
the sole and exclusive dominion and control of the Collateral Agent and the
Company shall have no rights with respect to the Collateral Account other than
with respect to the receipt of Proceeds of Collateral deposited therein upon
the termination of this Security Agreement and the full and final payment of
all of the Secured Obligations. Without limiting the generality of the
foregoing, the Company shall have no right of withdrawal or transfer from the
Collateral Account.
8.2 Deposit of Proceeds. There shall be deposited in the Collateral
Account from time to time the cash proceeds (as defined in Section 9-306(1) of
the UCC) of, and cash Distributions on, any of the Collateral (including
insurance proceeds thereon) required to be delivered to the Collateral Agent
pursuant hereto or under the Indenture. All amounts and investments and other
items credited to the Collateral Account from time to time shall constitute
Collateral hereunder and shall not constitute payment of the Secured
Obligations until applied as hereinafter provided. So long as no Default or
Event of Default has occurred and is continuing, the Collateral Agent shall,
upon five business days' prior written notice from the Company (which notice
shall be accompanied by a certificate (in form and substance satisfactory to
the Collateral Agent) executed by a senior officer of the Company as to the
absence of any such Default or Event of Default) release funds then credited to
the Collateral Account to the Company. At any time following the occurrence
and during the continuance of an Event of Default, the Collateral Agent may in
its discretion apply or cause to be applied (subject to collection) the balance
from time to time outstanding to the credit of the Collateral Account to the
payment of the Secured Obligations in the manner specified herein.
8.3 Investment of Balance in Collateral Account. If an Event of
Default shall not then have occurred and be continuing, substantially all
amounts credited to the Collateral Account shall be invested from time to time
by the Collateral Agent upon the direction of the Company in Cash Equivalents
reasonably satisfactory to the Collateral Agent and in which the Collateral
Agent shall have a first priority perfected security interest, which accounts,
investments, instruments and securities shall be held in the name and be under
the control of the Collateral Agent. If an Event of Default shall have
occurred and be continuing, all amounts credited to the Collateral Account
shall be invested by the Collateral Agent in such accounts (interest-bearing or
otherwise), investments, instruments and securities as the Collateral Agent
shall elect in its sole discretion. The Collateral Agent shall have no
responsibility or liability for any losses in connection with any investment in
connection with the Collateral Account, including, without limitation, losses
incurred in connection with the liquidation of any such investments.
9. Power of Attorney.
9.1 Collateral Agent's Appointment as Attorney-in-Fact.
(a) The Company hereby irrevocably constitutes and appoints the
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of
the Company or in its own name, from time to time in the Collateral Agent's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement, and, without limiting the generality of
the foregoing, the Company hereby gives the Collateral Agent the power and
right, on behalf of the Company, without assent by the Company and upon such
notice to the Company as the Collateral Agent deems appropriate under the
circumstances, to do the following:
(i) at any time after the occurrence and during the continuance
of an Event of Default, in the name of the Company or its own name, or
otherwise, to take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under, or
with respect to, any Collateral; in the name of the Company or otherwise to
direct any party liable for any payment under any of the Collateral (other
than, until amounts then payable to Permitted Working Capital Financers have
been paid in full, Account Debtors with respect to Receivables in which any
such Permitted Working Capital Financer has a Lien permitted under the
Indenture which are not Subject Accounts) to make payment of any and all moneys
due or to become due thereunder directly to the Collateral Agent or as the
Collateral Agent shall direct; to ask or demand for, collect, receive payment
of and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(ii) after the occurrence and during the continuance of an
Event of Default, to prepare, sign and file any Uniform Commercial Code
financing statements in the name of the Company as debtor;
(iii) after the occurrence and during the continuance of an
Event of Default, to take or cause to be taken all actions necessary to perform
or comply or cause performance or compliance with the terms of this Security
Agreement, including, without limitation, actions to pay or discharge taxes and
Liens levied or placed on or threatened against the Collateral, to effect any
repairs or obtain any insurance called for by the terms of this Security
Agreement and to pay all or any part of the premiums therefor and the costs
thereof; and
(iv) after the occurrence and during the continuance of any
Event of Default (a) to sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (b) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in respect
of any Collateral; (c) to defend any suit, action or proceeding brought against
the Company with respect to any Collateral; (d) to settle, compromise or adjust
any suit, action or proceeding described in the preceding clause and, in
connection therewith, to give such discharges or releases as the Collateral
Agent may deem necessary or commercially reasonable under the circumstances;
and (e) generally, to sell or transfer and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
the Collateral Agent were the absolute owner thereof for all purposes, and to
do, at the Collateral Agent's option and the Company's expense, at any time, or
from time to time, all acts and things which the Collateral Agent deems
necessary to protect, preserve or realize upon the Collateral and the Liens of
the Collateral Agent and the other Secured Parties thereon and to effect the
intent of this Security Agreement, all as fully and effectively as the Company
might do; and
(v) after the occurrence and during the continuance of an Event
of Default, at any time and from time to time, to execute, in connection with
any foreclosure, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
The Company hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
The Company hereby acknowledges and agrees that in acting pursuant to
this power-of-attorney the Collateral Agent shall be acting in its own interest
and in the interest of the other Secured Parties, and the Company acknowledges
and agrees that the Collateral Agent shall have no fiduciary duties to the
Company and the Company hereby waives any claims to the rights of a beneficiary
of a fiduciary relationship hereunder.
(b) No Duty on the Part of Collateral Agent or Secured Parties.
The powers conferred on the Collateral Agent hereunder are solely to protect
the interests of the Collateral Agent and the other Secured Parties in the
Collateral and shall not impose any duty upon the Collateral Agent or any other
Secured Party to exercise any such powers. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to the
Company for any act or failure to act hereunder unless the same shall result
from the gross negligence or willful misconduct of such Person.
10. Remedies.
10.1 Rights and Remedies Generally. (a) If an Event of Default
shall occur and be continuing, then and in every such case, the Collateral
Agent shall have all the rights of a secured party under the UCC, shall have
all rights now or hereafter existing under all other applicable laws, and,
subject to any mandatory requirements of applicable law then in effect, shall
have all the rights set forth in this Security Agreement and all the rights set
forth with respect to the Collateral or this Security Agreement in any other
agreement between the parties. No enumeration of rights in this Section or
elsewhere in this Security Agreement or in any related document or other
agreement shall be deemed to in any way limit the rights of the Collateral
Agent as described in this Section.
(b) If an Event of Default occurs and is continuing, the
Collateral Agent may, and within three Business Days after instructions from
the Majority Holders and the delivery of such indemnities from such Holders
against loss, liability or expense satisfactory to the Collateral Agent shall,
commence the taking of such actions toward collection or enforcement of this
Security Agreement and the Collateral (or any portion thereof), including,
without limitation, action toward foreclosure upon any Collateral, as the
Collateral Agent deems in its discretion to be appropriate or as otherwise
instructed by the Majority Holders.
10.2 Proceeds. (a) If an Event of Default shall occur and be
continuing, (i) all Proceeds and Distributions received by the Company
consisting of cash, checks and other near-cash items shall be held by the
Company in trust for the Collateral Agent and the other Secured Parties,
segregated from other funds of the Company in a separate deposit account
containing only Proceeds and Distributions, and shall forthwith upon receipt by
the Company, be turned over to the Collateral Agent in the same form received
by the Company (appropriately indorsed or assigned by the Company to the order
of the Collateral Agent or in such other manner as shall be satisfactory to the
Collateral Agent) and (ii) any and all such Proceeds and Distributions received
by the Collateral Agent (whether from the Company or otherwise), or any part
thereof, may, in the sole discretion of the Collateral Agent, be held by the
Collateral Agent in the Collateral Account as Collateral hereunder and/or then
or at any time or from time to time thereafter, be applied by the Collateral
Agent against the Secured Obligations (whether matured or unmatured), in the
order provided for herein.
(b) Except as otherwise provided in Section 10.3 of the
Indenture, the proceeds received by the Collateral Agent in respect of any sale
of, collection from or other realization upon all or any part of the Collateral
shall be applied, together with any other sums then held by the Collateral
Agent pursuant to this Agreement (including, without limitation, sums credited
to the Collateral Account), promptly by the Collateral Agent as follows:
First, to the payment of all costs and expenses, commissions and
taxes of such sale, collection or other realization, including, without
limitation, compensation to the Collateral Agent and its agents and counsel,
and all expenses, liabilities and advances made or incurred by the Collateral
Agent in connection therewith;
Second, to the payment of all other costs and expenses of such
sale, collection or other realization, including, without limitation,
compensation to the Secured Parties and their agents and counsel and all costs,
liabilities and indebtedness made or incurred by the Secured Parties in
connection therewith;
Third, to the payment of the remaining outstanding Secured
Obligations to the Trustee under the Indenture for application in accordance
with the Indenture;
Fourth, (i) if the Secured Obligations have not been paid and
performed in full, the Collateral Agent shall deposit such surplus in the
Collateral Account or (ii) if the Secured Obligations have been paid and
performed in full, the Collateral Agent shall pay such surplus to the Company,
or its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct.
10.3 Direct Company to Dispose of Collateral. If an Event of
Default shall occur and be continuing:
(a) the Collateral Agent may direct the Company to sell, assign
or otherwise liquidate or dispose of all or from time to time any portion of
the Collateral, and the Company shall do so. The Collateral Agent may direct
the Company to direct that all Proceeds of such Collateral be paid directly to
the Collateral Agent or may permit the Proceeds of such Collateral to be paid
to the Company and all such Proceeds consisting of cash, checks, or near-cash
items shall be held by the Company in trust for the Collateral Agent,
segregated from other funds of the Company in a separate deposit account
containing only Proceeds and shall forthwith upon receipt by the Company, be
turned over to the Collateral Agent, in the same form received by the Company
(appropriately indorsed or assigned by the Company to the order of the
Collateral Agent or in such other manner as shall be satisfactory to the
Collateral Agent); and
(b) any and all such Proceeds received by the Collateral Agent
(whether from the Company or otherwise) may, in the sole discretion of the
Collateral Agent, be held by the Collateral Agent in the Collateral Account as
Collateral hereunder and/or then or at any time or from time to time
thereafter, be applied by the Collateral Agent against the Secured Obligations
(whether matured or unmatured) in the order provided for herein.
10.4 Collateral Account. If an Event of Default shall occur and be
continuing, the Collateral Agent may liquidate any investments, instruments and
securities credited to the Collateral Account (without any liability for any
losses sustained in such liquidation) and apply the proceeds thereof and any
other amounts credited to the Collateral Account to the Secured Obligations
(whether matured or unmatured) in the order provided for herein.
10.5 Possession of Collateral.
(a) If an Event of Default shall occur and be continuing, and
subject to mandatory provisions of applicable law, (i) the Collateral Agent
may, personally or by agents or attorneys, immediately take possession of the
Collateral or any part thereof, from the Company or any other Person who then
has possession of any part thereof with or without notice or judicial process,
and for that purpose may enter upon the Company's premises where any of the
Collateral is located and remove the same and may use in connection with such
removal any and all services, supplies, aids and other facilities of the
Company and (ii) upon 15 days' notice to the Company, the Company shall, at its
own expense, assemble the Collateral (or from time to time any portion thereof)
and make it available to the Collateral Agent at any place or places designated
by the Collateral Agent, whether at the Company's or the Collateral Agent's
premises or elsewhere. The Company shall, at its sole expense, store and keep
any Collateral so assembled at such place or places pending further action by
the Collateral Agent and while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain the Collateral in good condition. The
Company's obligation so to assemble and deliver the Collateral is of the
essence of this Security Agreement and, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to
a decree requiring specific performance by the Company of said obligation.
(b) When Collateral is in the Collateral Agent's possession,
(i) the Company shall pay (or reimburse the Collateral Agent on demand for) all
out-of-pocket expenses (including the cost of any insurance and payment of
taxes or other charges) reasonably incurred in the custody, preservation, use
or operation of the Collateral, and the obligation to reimburse all such
expenses shall be secured hereby and (ii) the risk of accidental loss or damage
to the Collateral shall be on the Company to the extent of any deficiency in
any effective insurance coverage.
10.6 Disposition of the Collateral. If an Event of Default shall
occur and be continuing, the Collateral Agent may sell, assign, lease, give an
option or options to purchase or otherwise dispose of the Collateral (or
contract to do any of the foregoing) under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale of the
property to be sold, at public or private sale or sales, conducted by any
officer, nominee or agent of, or auctioneer or attorney for the Collateral
Agent at any location of any third party conducting or otherwise involved in
such sale or any office of the Collateral Agent or any other Secured Party or
elsewhere and in general in such manner, at such time or times and upon such
terms and conditions and at such price as it may consider commercially
reasonable, for cash or on credit or for future delivery without assumption of
any credit risk. The Collateral Agent may in its discretion restrict
prospective bidders as to their number, nature of their business and investment
intention. Any of the Collateral may be sold, leased, assigned or options or
contracts entered to do so, or otherwise disposed of, in the condition in which
the same existed when taken by the Collateral Agent or after any overhaul or
repair which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other
private proceeding shall be made upon not less than 10 days' written notice to
the Company (which the Company agrees to be commercially reasonable) specifying
the time after which such disposition is to be made and the intended sale price
or other consideration therefor. Any such disposition which shall be a public
sale shall be made upon not less than 10 days' written notice to the Company
(which the Company agrees to be commercially reasonable) specifying the time
and place of such sale and, in the absence of applicable requirements of law to
the contrary, shall be by public auction (which may, at the Collateral Agent's
option, be subject to reserve), after publication of notice of such auction for
not less than ten days prior thereto in two newspapers in general circulation
in New York City. To the extent permitted by applicable law, the Collateral
Agent and/or any other Secured Party may bid for and become purchasers of the
Collateral or any item thereof, offered for sale in accordance with this
Section without accountability to the Company (except to the extent of surplus
money received) as provided below. In the payment of the purchase price of the
Collateral, the purchaser shall be entitled to have credit on account of the
purchase price thereof of amounts owing to such purchaser on account of any
obligations of the Company to it and any such purchaser may deliver notes,
claims for interest, or claims for other payment with respect to such
obligations in lieu of cash up to the amount which would, upon distribution of
the net proceeds of such sale, be payable thereon. Such notes, if the amount
payable hereunder shall be less than the amount due thereon, shall be returned
to the holder thereof after being appropriately stamped to show partial
payment. Notwithstanding the foregoing, if the Collateral or any portion
thereof is perishable or threatens to decline speedily in value or is of a type
customarily sold in a recognized market, no notice of disposition shall be
required.
10.7 Voting of Pledged Securities etc. If an Event of Default shall
occur and be continuing under Sections 6.1(1) or (2) of the Indenture or if any
other Event of Default shall have occurred and be continuing and the
obligations of the Company under the Indenture and the Notes shall have been
accelerated pursuant to Section 6.2 of the Indenture with respect to such other
Event of Default, (a) the Collateral Agent shall be entitled to exercise all
voting, corporate and other rights pertaining to all or any portion of the
Pledged Securities at any meeting of the shareholders of the issuer thereof or
otherwise pursuant to the irrevocable proxy granted to it by the Company herein
and (b) the Collateral Agent may register all or any portion of the Pledged
Securities in the name of the Collateral Agent or its nominee, and the
Collateral Agent or its nominee may thereafter exercise (i) all voting,
corporate and other rights pertaining to such Pledged Securities at any meeting
of shareholders of the issuer thereof or otherwise and (ii) any and all rights
of conversion, exchange, subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of such Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of the issuer thereof, or upon the exercise by the Company or the
Collateral Agent of any right, privilege or option pertaining to such Pledged
Securities, and in connection therewith, the right to deposit and deliver any
and all of such Pledged Securities with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions as
it may determine), all without liability except to account for property
actually received by it, but the Collateral Agent shall have no duty to the
Company to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
10.8 Registration Rights; Private Sales.
(a) If the Collateral Agent shall determine to exercise its
rights to sell any or all of the Pledged Securities pursuant to this Section
10, and if in the opinion of the Collateral Agent it is necessary or advisable
to have the Pledged Securities, or that portion thereof to be sold, registered
under the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), the Company will use its best efforts to cause the issuer thereof to (i)
execute and deliver, and cause the directors and officers of the issuer thereof
to execute and deliver, all such instruments and documents, and do or cause to
be done all such other acts as may be, in the reasonable opinion of the
Collateral Agent, necessary to register the Pledged Securities, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii) to use its
best efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Securities, or that portion thereof to be
sold, and (iii) to make all amendments thereto and/or to the related prospectus
which, in the opinion of the Collateral Agent, are necessary or advisable, all
in conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. The
Company agrees to cause such issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the Collateral
Agent shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) The Company recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Pledged Securities, by reason
of certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. The
Company acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged
Securities for the period of time necessary to permit the issuer to register
such securities for public sale under the Securities Act, or under applicable
state securities laws, even if the issuer thereof would agree to do so.
(c) The Company further agrees to use its best efforts to do or
cause to be done all such other acts as may be reasonably necessary to make
such sale or sales of all or any portion of the Pledged Securities pursuant to
this Section 10.8 valid and binding and in compliance with any and all other
applicable requirements of law. The Company further agrees that a breach of
any of the covenants contained in this Section 10.8 will cause irreparable
injury to the Collateral Agent and the other Secured Parties, that the
Collateral Agent and the other Secured Parties have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 10.8 shall be specifically enforceable against the
Company, and the Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred.
10.9 Provisions Regarding Receivables.
(a) Anything herein to the contrary notwithstanding (including
without limitation the grant of any rights to the Collateral Agent), the
Company shall remain liable under each of the Receivables to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise to
each such Receivable. Neither the Collateral Agent nor any Secured Party shall
have any obligation or liability under any Receivable (or any agreement giving
rise thereto) by reason of or arising out of this Security Agreement or the
receipt by the Collateral Agent or any of the Secured Parties of any payment
relating to such Receivable pursuant hereto, nor shall the Collateral Agent or
any of the Secured Parties be obligated in any manner to perform any of the
obligations of the Company under or pursuant to any Receivable (or any
agreement giving rise thereto) to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Receivable (or any
agreement giving rise thereto), to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
(b) At any time after an Event of Default shall have occurred
and be continuing (but subject to the terms of any Subordination Agreement),
the Collateral Agent may, and upon request of the Collateral Agent the Company
shall, notify Account Debtors that the Receivables have been assigned to the
Collateral Agent and that payments in respect thereof shall be made directly to
the Collateral Agent. The Collateral Agent may in its own name or in the name
of others communicate with Account Debtors to verify with them to its
satisfaction the existence, amount and terms of any Receivables.
(c) If required by the Collateral Agent at any time that an
Event of Default shall have occurred and be continuing (but subject to the
terms of any Subordination Agreement), any payments of Receivables, when
collected by the Company, shall be forthwith (and, in any event, within two
Business Days) delivered by the Company to the Collateral Agent in the exact
form received, duly indorsed by the Company to the Collateral Agent if
required, for deposit in the Collateral Account, and, until so turned over,
shall be held by the Company in trust for the Collateral Agent and the Secured
Parties, segregated from other funds of the Company. All such Proceeds, while
held by the Collateral Agent (or by the Company in trust for the Collateral
Agent and the Secured Parties), shall continue to be Collateral securing all of
the Secured Obligations and shall not constitute payment thereof until applied
as hereinafter provided.
10.10 Recourse. The Company shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to satisfy the Secured Obligations.
10.11 Expenses; Attorneys' Fees. The Company shall reimburse the
Collateral Agent for all its reasonable out-of-pocket expenses in connection
with the exercise of its rights hereunder, including without limitation all
reasonable attorneys' fees and legal expenses incurred by the Collateral Agent
in connection therewith. Such out-of-pocket expenses including, without
limitation, all reasonable attorneys' fees and legal expenses shall constitute
Secured Obligations secured by this Security Agreement.
10.12 Preventing Impairment of the Collateral. Regardless of
whether there shall have occurred any Event of Default, the Collateral Agent
may institute and maintain or cause in the name of the Company or of the
Collateral Agent, or both, to be instituted or maintained, such suits and
proceedings as the Collateral Agent may be advised by counsel shall be
necessary to prevent any impairment of the Collateral in contravention of the
terms of this Security Agreement, of the Notes, of the Purchase Agreement or of
the Indenture.
10.13 Limitation on Duties Regarding Preservation of Collateral.
(a) The Collateral Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC or otherwise, shall be to deal with
it in the same manner as the Collateral Agent deals with similar property for
its own account, it being understood that neither the Collateral Agent nor any
Secured Party shall have responsibility for (i) ascertaining or taking action
with respect to calls, conversations, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Collateral Agent or any
Secured Party has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Collateral.
(b) The Collateral Agent shall have no obligation to take any
steps to preserve rights against prior parties to any Collateral.
(c) Neither the Collateral Agent nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Company or otherwise and the rights of the Collateral
Agent and the other Secured Parties hereunder shall not be conditioned or
contingent upon the pursuit by the Collateral Agent or any other Secured Party
of any right or remedy against the Company or against any other Person which
may be or become liable in respect of all or any part of the Secured
Obligations or against any collateral security therefor, guarantee therefore or
right of offset with respect thereto.
10.14 Waiver of Claims. Except as otherwise provided in this
Security Agreement, THE COMPANY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL
AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE COMPANY
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and the Company hereby further waives, to the extent permitted
by law:
(a) all damages occasioned by such taking of possession except
any damages which are the sole and direct result of the Collateral Agent's
gross negligence or willful misconduct as determined in a final, non-appealable
judgment of a court of competent jurisdiction;
(b) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the Collateral
Agent's and the other Secured Parties' rights hereunder;
(c) demand of performance or other demand, notice of intent to
demand or accelerate, notice of acceleration presentment, protest,
advertisement or notice of any kind to or upon the Company or any other Person;
and
(d) all rights of redemption, appraisement, valuation,
diligence, stay, extension or moratorium now or hereafter in force under any
applicable law in order to hinder, prevent or delay the enforcement of this
Security Agreement or the absolute sale of the Collateral or any portion
thereof and the Company, for itself and all who may claim under it, insofar as
it or they now or hereafter lawfully may, hereby waives the benefit of all such
laws.
To the extent permitted by applicable law, any sale of, or the
exercise of any options to purchase, or any other realization upon, any
Collateral shall operate to divest all right, title, interest, claim and
demand, at law or in equity, of the Company therein and thereto, and shall be a
perpetual bar both at law and in equity against the Company and against any and
all persons claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, through and under the Company.
10.15 Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy
under this Security Agreement by foreclosure, sale, entry or otherwise, and
such proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Collateral Agent, then and in every
such case the Company, the Collateral Agent and the other Secured Parties shall
be returned to their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this Security
Agreement, and all rights, remedies and powers of the Collateral Agent shall
continue as if no such proceeding had been instituted.
10.16 Intellectual Property License. Solely for the purpose of
enabling the Collateral Agent to exercise rights and remedies under this
Section 10 and at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, the Company hereby grants to the
Collateral Agent, to the extent it has the right to do so, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to the Company), but subject to appropriate rights to quality
control and inspection in favor of the Company, to use, license or sublicense
any Trademark, Trademark License, Patent, Patent License, Copyright, Copyright
License or Trade Secret Collateral, and any license with respect to any of the
foregoing, now owned or hereafter acquired by the Company, and wherever the
same may be located.
11. Additional Collateral. Without notice or consent of the Company
and without impairment of the security interest and rights created by this
Security Agreement, the Collateral Agent may accept from any person or persons
additional collateral or other security for the Secured Obligations. The
creation of the security interest created hereunder shall not prevent the
Collateral Agent from resorting to such additional collateral or security
without affecting the Collateral Agent's rights hereunder. The Collateral
Agent's acceptance of any such additional collateral or security shall not
prevent the Collateral Agent from resorting to the Collateral without affecting
the Collateral Agent's rights in and to such additional collateral or security.
12. Compensation and Indemnification.
12.1 Compensation. The Company shall pay to the Collateral Agent
from time to time reasonable compensation for its services. The Collateral
Agent's compensation shall not be limited by any law on compensation of a
collateral agent pursuant to a security agreement.
12.2 Indemnity, etc.
(a) The Company agrees to indemnify, reimburse and hold the
Collateral Agent and each other Secured Party, and their respective officers,
directors, employees, representatives, attorneys and agents (hereinafter in
this Section 12 referred to individually as "Indemnitee" and collectively as
"Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, suits, costs, expenses
or disbursements (including, without limitation, reasonable attorneys' fees and
expenses) (for the purposes of this Section the foregoing are collectively
called "expenses") of whatsoever kind or nature which may be imposed on,
asserted against or incurred by any of the Indemnitees in any way relating to
or arising out of the Security Documents or the documents executed in
connection therewith or in any other way connected with the administration of
the transactions contemplated thereby or the enforcement of any of the terms of
or the preservation of any rights hereunder, or in any way relating to or
arising out of the manufacture, ownership, ordering, purchase, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the
violation of the laws of any country, state or other governmental body or unit,
any tort (including, without limitation, claims arising or imposed under the
doctrine of strict liability, or for or on account of injury to or the death of
any Person (including any Indemnitee), or for property damage) or any contract
claim; provided that no Indemnitee shall be indemnified pursuant to this
section for expenses to the extent solely caused by the gross negligence or
wilful misconduct of such Indemnitee as determined in a final, non-appealable
judgment of a court of competent jurisdiction. The Company agrees that upon
written notice by any Indemnitee of any assertion that could give rise to an
expense, the Company shall, if so requested by such Indemnitee, assume full
responsibility for the defense thereof.
(b) Without limiting the application of subsection (a) above,
the Company agrees to pay, or reimburse the Collateral Agent for any and all
reasonable out-of-pocket fees, costs and expenses of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Collateral Agent's Liens on, and security interest in, the Collateral and the
acceptance or administration or performance by the Collateral Agent of its
duties under the Security Documents, including, without limitation, all fees
and taxes in connection with the search of the records of, and the recording or
filing of instruments and documents in, public offices, payment or discharge of
any taxes or Liens upon or in respect of the Collateral, premiums for insurance
with respect to the Collateral and all other reasonable out-of-pocket fees,
costs and expenses in connection with protecting, maintaining or preserving the
Collateral and the Collateral Agent's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of subsections (a) or (b),
above, the Company agrees to pay, indemnify and hold each Indemnitee harmless
from and against any expenses which such Indemnitee may suffer, expend or incur
in consequence of or growing solely out of any misrepresentation by the Company
and reliance thereon in this Security Agreement or in any statement or writing
contemplated by or made or delivered pursuant to or in connection with this
Security Agreement.
(d) If and to the extent that the obligations of the Company
under this Section 12 are unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
12.3 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Secured Obligations secured by the Collateral.
The indemnity obligations of the Company contained in this Security Agreement
shall continue in full force and effect notwithstanding the full payment and
performance of the Secured Obligations and notwithstanding the discharge
thereof.
13. Governing Law; Submission to Jurisdiction. THIS SECURITY
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. THE
COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS
SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
NOTHING SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
14. Limitation of Liability. No claim may be made by the Company or
any other Person against the Collateral Agent or any other Secured Party or the
affiliates, directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by the Security Documents, or any act,
omission or event occurring in connection therewith except that the same may be
determined by a final, non-appealable judgment of a court of competent
jurisdiction to have resulted solely from such Person's actions taken in bad
faith; and the Company hereby waives, releases and agrees not to sue upon any
claim for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor. The Company hereby agrees to indemnify the
Collateral Agent, each Secured Party and their affiliates, directors, officers,
employees, attorneys and agents for all of their costs and expenses (including
the attributed costs of internal counsel) incurred in connection with defending
any claim made by the Company or any other Person against any of them for any
special, indirect, consequential or punitive damages if in a final,
non-appealable judgment a court of competent jurisdiction does not award such
special, indirect, consequential or punitive damages or, if such damages are
awarded, the court does not determine that such person took actions in bad
faith. In performing its duties under the Security Documents, the Collateral
Agent shall be entitled to all of the powers, privileges and protections
afforded to the Trustee under the Indenture, including, without limitation, the
provisions contained in Article 7 thereof.
15. Notices. Except as otherwise expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by facsimile, telex, or cable
communication), in the case of each party hereto, at its address specified
opposite its signature below, or to such other address as may be designated by
any party in a written notice to the other party hereto, provided that notices
and communications to the Collateral Agent shall not be effective until
received by the Collateral Agent. All such notices, requests and demands shall
be deemed to have been duly given: when delivered by hand, if personally
delivered; one business day after being timely delivered to a next-day air
courier; five business days after being deposited in the mail, postage prepaid,
if mailed; when answered back if telexed; and when receipt is confirmed, if
sent by facsimile.
16. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of the Company, the Collateral Agent, the
other Secured Parties, all future Holders of the Secured Obligations and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Security Agreement without
the prior written consent of the Collateral Agent and each other Secured Party.
17. Waivers and Amendments. None of the terms or provisions of this
Security Agreement may be waived, amended, supplemented or otherwise modified
except in accordance with Article 9 of the Indenture.
18. No Waiver; Remedies Cumulative. No failure or delay on the part
of the Collateral Agent in exercising any right, power or privilege hereunder
and no course of dealing between the Company and the Collateral Agent shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by
the Collateral Agent of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Collateral Agent
would otherwise have on any future occasion. The rights and remedies herein
expressly provided are cumulative, may be exercised singly or concurrently and
as often and in such order as the Collateral Agent deems expedient and are not
exclusive of any rights or remedies which the Collateral Agent would otherwise
have whether by agreement or now or hereafter existing under applicable law.
No notice to or demand on the Company in any case shall entitle the Company to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand.
19. Termination; Release. When the Secured Obligations have been
finally paid and performed in full, this Security Agreement shall terminate,
and the Collateral Agent, at the request and sole expense of the Company, will
execute and deliver to the Company the proper instruments (including Uniform
Commercial Code termination statements) acknowledging the termination of this
Security Agreement, and will duly assign, transfer and deliver to the Company,
without recourse, representation or warranty of any kind whatsoever, such of
the Collateral as may be in possession of the Collateral Agent and has not
theretofore been disposed of, applied or released.
20. Counterparts. This Security Agreement may be executed in any
number of counterparts and by the parties hereto on 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 instrument.
21. Headings Descriptive. The headings in this Security Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning of this Security Agreement.
22. Marshalling. Neither the Collateral Agent nor any other Secured
Party shall be under any obligation to marshall any assets in favor of the
Company or any other Person or against or in payment of any or all of the
Secured Obligations.
23. Severability. If any term, provision, covenant or restriction
of this Security Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
24. Survival. All indemnities set forth herein shall survive the
execution and delivery of this Security Agreement and the making and repayment
of the Secured Obligations.
25. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
26. Authority of Collateral Agent. The Company acknowledges that
the rights and responsibilities of the Collateral Agent under this Security
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Security Agreement shall, as between the Collateral Agent and the
other Secured Parties, be governed by the Indenture and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Collateral Agent and the Company, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, to the extent it has the
right to do so and the Company shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
27. Waiver. To the extent permitted by applicable law, the Company
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Secured Obligations and this Security Agreement and
any requirement that the Collateral Agent protect, secure, perfect or insure
any security interest or any property subject thereto or exhaust any right or
take any action against the Company or any other person or entity.
IN WITNESS WHEREOF, the Company and the Collateral Agent have caused
this Security Agreement to be duly executed and delivered as of the date first
above written.
TEREX CORPORATION
By: Marvin B. Rosenberg
Title: Secretary
Address for Notices:
500 Post Road East
Westport, Connecticut 06880
Telex:
Facsimile: 203-222-7976
UNITED STATES TRUST COMPANY
OF NEW YORK, as Collateral Agent
By: John Guiliano
Title: Vice President
Address for Notices:
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division and Agency
Telex:
Facsimile: 212-852-1625
Schedules
Schedule I Filing Offices
Schedule II Pledged Securities
Schedule III Inventory and Equipment Locations
Schedule IV Inventory in Possession of Bailee
Schedule V Trade Names
Schedule VI Intellectual Property Collateral
Item A: Copyrights
Item B: Copyright Licenses
Item C: Patents
Item D: Patent Licenses
Item E: Trademarks
Item F: Trademark Licenses
Item G: Trade Secret Collateral
Item H: Intellectual Property Collateral Matters
Schedule VII Working Capital Collateral
________________________________________________
SUBSIDIARY SECURITY AND PLEDGE AGREEMENT
among
THE CORPORATIONS LISTED ON THE SIGNATURE
PAGES HEREOF
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Collateral Agent
Dated as of May 9, 1995
________________________________________________
TABLE OF CONTENTS
Page
1. Definitions 1
2. Creation of Security Interest, etc. 11
3. Representations and Warranties 13
3.1 Validity, Perfection and Priority 13
3.2 No Liens; Other Financing Statements 14
3.3 Chief Executive Office 15
3.4 Location of Inventory and Equipment 15
3.5 Fair Labor Standards Act 15
3.6 Tradenames; Prior Names 15
3.7 Certificate of Title 15
3.8 Pledged Securities 16
3.9 Receivables 17
3.10 Intellectual Property 17
4. Covenant 19
4.1 Books and Records 19
4.2 Further Assurances 20
4.3 Change of Chief Executive Office 20
4.4 Change of Location of Inventory and Equipment 21
4.5 Change of Name; Identity or Corporate Structure 22
4.6 Subsequently Acquired Pledged Securities, etc. 22
4.7 Delivery of Instruments 23
4.8 Delivery of Chattel Paper 23
4.9 Right of Inspection 23
4.10 Insurance 24
4.11 Warehouse Receipts Non-negotiable 27
4.12 Motor Vehicles 27
4.13 Compliance with Laws 28
4.14 Payment of Obligations 28
4.15 No Impairment 28
4.16 Negative Pledge 28
4.17 Limitations on Dispositions of Collateral 29
4.18 Maintenance of Equipment 29
4.19 Provisions Regarding Receivables 29
4.20 Intellectual Property 31
4.21 Notice 32
4.22 Performance by Collateral Agent of Company's
Obligations; Reimbursement 32
5. Appointment of Sub-Agents 33
6. Voting, etc. 33
7. Payments and Other Distributions 34
8. Collateral Account 35
8.1 Collateral Account 35
8.2 Deposit of Proceeds 35
8.3 Investment of Balance in Collateral Account 36
9. Power of Attorney 36
9.1 Collateral Agent's Appointment as Attorney-in-Fact 36
10. Remedies 39
10.1 Rights and Remedies Generally 39
10.2 Proceeds 40
10.3 Direct Companies to Dispose of Collateral 41
10.4 Collateral Account 42
10.5 Possession of Collateral 42
10.6 Disposition of the Collateral 43
10.7 Voting of Pledged Securities etc. 44
10.8 Registration Rights; Private Sales 45
10.9 Provisions Regarding Receivables 47
10.10 Recourse 48
10.11 Expenses; Attorneys' Fees 48
10.12 Preventing Impairment of the Collateral 48
10.13 Limitation on Duties Regarding Preservation of
Collateral 49
10.14 Waiver of Claims 49
10.15 Discontinuance of Proceedings 51
10.16 Intellectual Property License 51
11. Additional Collateral; etc. 51
12. Compensation and Indemnification 52
12.1 Compensation 52
12.2 Indemnity, etc. 52
12.3 Indemnity Obligations Secured by Collateral;
Survival 54
13. Governing Law; Submission to Jurisdiction 54
14. Limitation of Liability 55
15. Notices 55
16. Successors and Assigns 56
17. Waivers and Amendments 56
18. No Waiver; Remedies Cumulative 56
19. Termination; Release 56
20. Counterparts 57
21. Headings Descriptive 57
22. Marshalling 57
23. Severability 57
24. Survival 58
25. Powers Coupled with an Interest 58
26. Authority of Collateral Agent 58
27. Waiver 58
28. Obligations Absolute 58
29. Limitation on Secured Party Rights 59
SUBSIDIARY SECURITY AND PLEDGE AGREEMENT
THIS SUBSIDIARY SECURITY AND PLEDGE AGREEMENT, dated as of May 9,
1995 is entered into among EACH OF THE CORPORATIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each, together with its permitted successors and assigns, a
"Company", and collectively, the "Companies"), and UNITED STATES TRUST COMPANY
OF NEW YORK, a New York corporation, as collateral agent (together with its
successors and assigns, the "Collateral Agent").
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, covenant and agree as follows:
1. Definitions. Unless the context hereof clearly requires
otherwise:
(a) words and terms defined in the Indenture and not defined
herein shall have the same meanings herein as therein provided; and
(b) the following words and terms shall have the following
meanings:
"Account Debtor" shall mean the person who is obligated on a
Receivable.
"Accounts" shall mean "accounts" as such term is defined in Section
9-106 of the UCC.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes.
"Chattel Paper" shall mean "chattel paper" as such term is defined in
Section 9-105(b) of the UCC.
"Collateral" shall have the meaning assigned to it in Section 2
hereof.
"Collateral Account" shall mean the collective reference to one or
more accounts (which may be securities accounts) established and maintained
pursuant to Section 8 of this Security Agreement by the Collateral Agent,
entitled "Terex Corporation Subsidiary Collateral Account, United States Trust
Company of New York, as collateral agent, secured party" (with such other
designation the Collateral Agent may add thereto), and all funds, securities
and other property or other items from time to time credited to such accounts
and all interest, income and distributions thereon.
"Collateral Records" shall mean books, records, computer software,
computer printouts, customer lists, blueprints, technical specifications,
manuals, and similar items which relate to any Collateral other than such items
obtained under license or franchise agreements that prohibit assignment or
disclosure of such items.
"Congress Intercreditor Agreement" shall mean that certain
Intercreditor Agreement dated as of May 9, 1995, between Congress Financial
Corporation and Foothill Capital Corporation, individually and as Revolving
Loan Agent, and the Collateral Agent, as the same may be amended, modified,
supplemented or restated from time to time.
"Copyright Licenses" means, with respect to any Company, all of such
Company's right, title, and interest in and to any and all agreements providing
for the granting of any right in or to Copyrights (whether such Company is
licensee or licensor thereunder) including, without limitation, each agreement
referred to under such Company's name in Item B of Schedule VI.
"Copyrights" means, with respect to any Company, all of such
Company's right, title, and interest in and to all United States and foreign
copyrights and all semiconductor chip product mask works, whether registered or
unregistered, now or hereafter in force throughout the world, all registrations
and applications therefor including, without limitation, the copyright and mask
work registrations and applications referred to under such Company's name in
Item A of Schedule VI, all rights corresponding thereto throughout the world,
all extensions and renewals of any thereof, the right to sue for past
infringements of any of the foregoing, and all proceeds of the foregoing,
including, without limitations, license, royalties, income, payments, claims,
damages, and proceeds of suit.
"Distributions" shall mean all dividends, distributions, payments of
interest and principal and other amounts (whether consisting of cash,
securities, personalty or other property) from time to time received,
receivable or otherwise distributed in respect of or in exchange or
substitution for any of the Pledged Securities.
"Documents" shall mean "documents" as such term is defined in Section
9-105(f) of the UCC.
"Equipment" shall mean "equipment" as such term is defined in Section
9-109(2) of the UCC and shall include, without limitation and in any event, all
machinery, manufacturing and assembly equipment, data processing equipment,
motor vehicles not constituting Inventory of each Company, computers, office
equipment, furniture, appliances, tools, dies and material handling equipment.
"Exempt Instruments" shall have the meaning provided in Section
3.8(b) of this Security Agreement.
"Existing Notes" shall mean the collective reference to each
promissory note and Instrument identified on Schedule II hereto.
"Fixtures" shall mean "fixtures" as such term is defined in Section
9-313 of the UCC.
"General Intangibles" shall mean "general intangibles" as such term
is defined in Section 9-106 of the UCC, including, without limitation and in
any event, rights to the payment of money, Trademarks, Copyrights, Patents, and
contracts, licenses and franchises (except in the case of licenses and
franchises in respect of which any Company is the licensee or franchisee if,
and for so long as, the agreement in respect of such license or franchise
prohibits by its terms any assignment or grant of a security interest therein),
limited and general partnership interests and joint venture interests, federal
income tax refunds, trade names, distributions on certificated securities (as
defined in Section 8-102(1)(a) of the UCC) and uncertificated securities (as
defined in Section 8-102(1)(b) of the UCC), computer programs and other
computer software, inventions, designs, trade secrets, goodwill, proprietary
rights, customer lists, supplier contracts, sale orders, correspondence,
advertising materials, payments due in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any property, reversionary
interests in pension and profit-sharing plans and reversionary, beneficial and
residual interests in trusts, credits with and other claims against any Person,
together with any collateral for any of the foregoing and the rights under any
security agreement granting a security interest in such collateral.
"Hedging Agreements" shall mean interest rate, currency or commodity
protection or hedging arrangements, including without limitation, caps,
collars, floors, forwards and any other similar or dissimilar interest rate,
currency or commodity exchange agreements or other interest rate, currency or
commodity hedging arrangements.
"Indenture" shall mean that certain Indenture, dated as of the date
hereof, among Terex, the Guarantors named therein and the Trustee, as the same
may be amended, modified, supplemented or restated from time to time.
"Instruments" shall mean "instruments" as such term is defined in
Section 9-105(1)(i) of the UCC.
"Insurance Policies" shall mean insurance policies procured by or on
behalf of any Company relating to the Collateral identified in clauses (i)
through (xvi), inclusive, and (xviii) of Section 2 hereof.
"Intellectual Property Collateral" means, collectively, the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks, the Trademark Licenses, and the Trade Secrets Collateral.
"Inventory" shall mean "inventory" as such term is defined in Section
9-109(4) of the UCC, including without limitation and in any event, all goods
(whether such goods are in the possession of any Company or of a lessee, bailee
or other Person for sale, lease, storage, transit, processing, use or otherwise
and whether consisting of whole goods, spare parts, components, supplies,
materials or consigned or returned or repossessed goods) which are held for
sale or lease or are to be furnished (or which have been furnished) under any
contract of service or which are raw materials or work in progress or materials
used or consumed in any Company's or any of its Subsidiaries' business.
"Majority Holders" shall mean the Holder or Holders of a majority in
aggregate principal amount of the outstanding Notes.
"Mortgaged Property" shall mean all property and assets in which a
Lien is granted under the Mortgages.
"Non-located Assets" shall have the meaning provided in Section 4.4
of this Security Agreement.
"Patent Licenses" means, with respect to any Company, all of such
Company's right, title, and interest in and to any and all agreements providing
for the granting of any right in or to Patents (whether such Company is
licensee or licensor thereunder) including, without limitation, each agreement
referred to under such Company's name in Item D of Schedule VI.
"Patents" means, with respect to such Company, all of such Company's
right, title, and interest in and to all United States and foreign patents and
applications for letters patent throughout the world, including, but not
limited to each patent and patent application referred to under such Company's
name in Item C of Schedule VI, all reissues, divisions, continuations,
continuations-in-part, extensions, renewals, and reexaminations of any of the
foregoing, all rights corresponding thereto throughout the world, and all
proceeds of the foregoing including, without limitation, license, royalties,
income, payments, claims, damages, and proceeds of suit and the right to sue
for past infringements of any of the foregoing.
"Permitted Liens" shall mean the Liens permitted pursuant to Section
4.12 of the Indenture.
"Permitted Working Capital Financers" shall mean those Persons
providing financing to any Company permitted pursuant to Section 4.9(b)(i) of
the Indenture which is secured by Liens on all or part of the Working Capital
Collateral of such Company permitted pursuant to Section 4.12(i) of the
Indenture.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Pledged Securities" shall mean the collective reference to (i) all
shares of capital stock of any corporation, and all ownership and equity
interests in any other Person, from time to time owned by any Company or
options or rights to acquire any such shares or interests now or hereafter
owned by any Company, including, without limitation, the capital stock and
interests identified on Schedule II hereto; provided, however, that the capital
stock of PPM Far East Pte. Ltd., a Singapore company, Clark Material Handling
of Canada, Ltd., a Canadian company, and Samsung-Clark Co., Ltd., a Korean
company (each, a "Subject Company") shall not constitute Pledged Securities of
the owner thereof until and unless such Subject Company shall become a Material
Subsidiary, (ii) all promissory notes and other Instruments now or hereafter
owned by any Company, all security therefore and all rights of any Company
under any and all documents or agreements pursuant to which any such promissory
note or other such Instrument is secured, (iii) all Distributions on Pledged
Securities (as constituted immediately prior to such Distribution) constituting
securities (whether debt or equity securities or otherwise), (iv) all other or
additional stock, notes, securities or property (including cash) paid or
distributed in respect of Pledged Securities (as constituted immediately prior
to such payment or distribution) by way of stock-split, spin-off, split-up,
reclassification, combination of shares or similar rearrangement and (v) all
other or additional stock, notes, securities or property (including cash) that
may be paid in respect of Pledged Securities (as constituted immediately prior
to such payment) by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation, bankruptcy or similar corporate
reorganization or other disposition of Pledged Securities.
"Proceeds" shall mean "proceeds" as such term is defined in Section
9-306(1) of the UCC.
"Purchase Agreement" shall mean that certain Purchase Agreement,
dated as of the date hereof, among Terex, certain Subsidiaries of Terex and
each of the purchasers signatory thereto, as the same may be amended, modified,
supplemented or restated from time to time.
"Receivables" shall mean all rights to payment for goods sold or
leased or services rendered, whether or not earned by performance and all
rights in respect of the Account Debtor, including without limitation all such
rights constituting or evidenced by any Account, Chattel Paper or Instrument,
together with (a) any collateral assigned, hypothecated or held to secure any
of the foregoing and the rights under any security agreement granting a
security interest in such collateral, (b) all goods, the sale of which gave
rise to any of the foregoing, including, without limitation, all rights in any
returned or repossessed goods and unpaid seller's rights, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing and (d) all
powers of attorney for the execution of any evidence of indebtedness or
security or other writing in connection therewith.
"Receivables Records" shall mean (a) all original copies of all
documents, instruments or other writings evidencing the Receivables, (b) all
books, correspondence, credit or other files, records, ledger sheets or cards,
invoices, and other papers relating to Receivables, including without
limitation all tapes, cards, computer tapes, computer discs, computer runs,
record keeping systems and other papers and documents relating to the
Receivables, whether in the possession or under the control of any Company or
any computer bureau or agent from time to time acting for any Company or
otherwise and (c) all credit information, reports and memoranda relating
thereto.
"Security Agreement" shall mean this Subsidiary Security and Pledge
Agreement, as the same may be amended, modified, supplemented or restated from
time to time.
"Secured Obligations" shall mean all obligations, liabilities
(including, without limitation, contingent obligations) and indebtedness of
every nature of Terex, any Company or any of their respective Subsidiaries to
the Secured Parties now existing or hereafter incurred, arising under or in
connection with the Collateral, the Mortgaged Property or the Transaction
Collateral or this Security Agreement, the Purchase Agreement, the Indenture,
the Registration Rights Agreement, the Notes, the Mortgages or the other
Transaction Security Documents, and shall include, interest on the Notes
accruing after the filing of any petition under the Bankruptcy Code at the
default rate applicable under the Indenture.
"Secured Parties" shall mean the collective reference to the
Collateral Agent, the Trustee and each Holder.
"Subordination Agreement" shall have the meaning provided in Section
2(b) of this Security Agreement.
"Subject Terex Chattel Paper" shall mean Chattel Paper constituting
Terex Collateral and representing Receivables that has not been delivered to,
or is not being held by Terex subject to the Lien of, a Permitted Working
Capital Financer as security.
"Subject Terex Instruments" shall mean Instruments constituting Terex
Collateral and representing Receivables that have not been delivered to a
Permitted Working Capital Financer as security.
"Subsidiary" of any Person shall mean (i) a corporation a majority of
whose capital stock with voting power, under ordinary circumstances, to elect
directors is, at the date of determination, directly or indirectly, owned by
such Person, by one or more subsidiaries of such Person or by such Person and
one or more subsidiaries of such Person or (ii) a partnership in which such
Person or a subsidiary of such person is, at the date of determination, a
general partner of such partnership, or (iii) any other Person (other than a
corporation or a partnership) in which such Person, a subsidiary of such person
or such Person and one or more subsidiaries of such Person, directly or
indirectly, at the date of determination, has (x) at least a majority ownership
interest or (y) the power to elect or direct the election of the directors or
other governing body of such Person.
"Terex" shall mean Terex Corporation, a Delaware corporation, and its
successors and assigns.
"Terex Collateral" shall mean "Collateral" as defined in the Terex
Security Agreement.
"Terex Security Agreement" shall mean that certain Security and
Pledge Agreement dated as of the date hereof between Terex and the Collateral
Agent, as the same may be amended, modified, supplemented or restated from time
to time.
"Trademark Licenses" means, with respect to any Company, all of such
Company's right, title, and interest in and to any and all agreements providing
for the granting of any right in or to Trademarks (whether such Company is
licensee or licensor thereunder) including, without limitation, each agreement
referred to under such Company's name in Item F of Schedule VI.
"Trademarks" means, with respect to any Company, all of such
Company's right, title, and interest in and to all United States and foreign
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, certification marks,
collective marks, logos, other source of business identifiers, designs and
general intangibles of a like nature, all registrations and applications for
any of the foregoing including, but not limited to the registrations and
applications referred to under such Company's name in Item E of Schedule VI,
all extensions or renewals of any of the foregoing; all of the goodwill of the
business connected with the use of and symbolized by the foregoing; the right
to sue for past infringement or dilution of any of the foregoing or for any
injury to goodwill, and all proceeds of the foregoing, including, without
limitation, license royalties, income, payments, claims, damages, and proceeds
of suit.
"Trade Secrets Collateral" means, with respect to any Company, all of
such Company's right, title, and interest in and to trade secrets and all other
confidential or proprietary information and know-how now or hereafter owned or
used in, or contemplated at any time for use in, the business of such Company
(all of the foregoing being collectively called a "Trade Secret"), whether or
not such Trade Secret has been reduced to a writing or other tangible form,
including all documents and things embodying, incorporating, or referring in
any way to such Trade Secret, all licenses of Trade Secrets including, without
limitation each such license referred to under such Company's name in Item G of
Schedule VI, the right to sue for past infringement or dilution of any Trade
Secret, and all proceeds of the foregoing, including, without limitation,
license royalties, income, payments, claims, damages, and proceeds of suit.
"Transaction Collateral" shall mean the collective reference to
"Collateral" as defined in each of the Transaction Security Documents.
"Transaction Security Documents" shall mean the Terex Security
Agreement and each other document, instrument and agreement executed or
delivered by Terex, any Company or any Subsidiaries from time to time pursuant
to which Terex or any such Company or Subsidiary shall grant a Lien on any of
its properties or revenues in favor of any Secured Party to secure any of the
Secured Obligations, as each such document, instrument or agreement may be
amended, modified, supplemented or restated from time to time.
"Trustee" shall mean United States Trust Company of New York, as
trustee under the Indenture, and any successor trustee thereunder.
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the State of New York.
"Working Capital Collateral" shall mean, with respect to each
Company, those assets, properties and rights of such Company identified on
Schedule VII hereto.
(c) All terms defined in the UCC and not otherwise defined
herein shall have the meanings assigned to them in the UCC.
2. Creation of Security Interest, etc.
(a) As security for the prompt and complete payment and
performance in full of all the Secured Obligations, each Company hereby
assigns, pledges, transfers and delivers to the Collateral Agent for the
benefit of itself and the other Secured Parties and grants to the Collateral
Agent for the benefit of itself and the other Secured Parties a security
interest in and continuing lien on all of such Company's right, title and
interest in, to and under the following, in each case, whether now owned or
existing or hereafter acquired or arising, and wherever located (all of which
being hereinafter collectively called the "Collateral"):
(i) all Inventory;
(ii) all Accounts;
(iii) all Pledged Securities;
(iv) all Equipment;
(v) all Distributions;
(vi) the Collateral Account;
(vii) all Collateral Records;
(viii) all Documents;
(ix) all Fixtures;
(x) all Chattel Paper;
(xi) all General Intangibles;
(xii) all Hedging Agreements;
(xiii) all Instruments;
(xiv) all Receivables;
(xv) all Receivables Records;
(xvi) all Intellectual Property Collateral;
(xvii) all Insurance Policies; and
(xviii) all accessions and additions to, all substitutions and
replacements for, and all Proceeds or products of, any or all of the foregoing;
provided, however, that Collateral Agent shall not have any security interest
in, or Lien on, any Equipment or Fixtures acquired by any Company with the
proceeds of Purchase Money Obligations permitted under the terms of the
Indenture, which Equipment or Fixtures are subject to Purchase Money Liens
permitted under the terms of the Indenture, if, and for so long as, the
agreements governing the terms of such Purchase Money Obligations and Purchase
Money Liens prohibit the grant by such Company of such security interests and
Liens on the assets so acquired. If the agreements governing the terms of any
permitted Purchase Money Obligations and Purchase Money Liens prohibit the
grant by such Company of security interests and Liens on the assets so
acquired, the Collateral Agent shall (at the request and sole expense of any
Company) execute and deliver to the Person holding such Purchase Money Liens on
Equipment or Fixtures, partial releases on Form UCC-3 (or comparable form),
which partial releases shall provide that the Collateral Agent shall have no
security interests or Liens on the Equipment or Fixtures subject to such
Purchase Money Liens but only for so long as (i) such Purchase Money
Obligations are outstanding and (ii) such agreements prohibits the grant by
such Company of such security interests and Liens.
(b) Notwithstanding anything contained herein to the contrary,
the Collateral Agent on behalf of the Secured Parties hereby acknowledge that
the Lien of the Secured Parties in Working Capital Collateral, shall be junior
and subordinate in priority to any Liens in Working Capital Collateral of any
Company granted by such Company to Permitted Working Capital Financers. The
Collateral Agent is authorized to enter into the Congress Intercreditor
Agreement and any other intercreditor or subordination agreement necessary or
appropriate to effectuate and be consistent with the foregoing (each such
agreement being a "Subordination Agreement").
3. Representations and Warranties. Each Company jointly and
severally represents and warrants to the Collateral Agent and the other Secured
Parties, which representations and warranties shall survive the execution and
delivery of this Security Agreement, as follows:
3.1 Validity, Perfection and Priority.
(a) The security interests in the Collateral granted to the
Collateral Agent for the benefit of itself and the other Secured Parties
hereunder constitute valid and continuing security interests in the Collateral.
(b) Upon (i) the filing of financing statements naming the
appropriate Company as "debtor" and the Collateral Agent as "secured party" and
describing the Collateral in the filing offices set forth under each Company's
name on Schedule I hereto, (ii) to the extent not subject to Article 9 of the
Applicable UCC, the recordation of the security interests granted hereunder in
Patents, Trademarks and Copyrights in the applicable patent, trademark and
copyright registries and the registration of all Copyrights, (iii) upon the
delivery by the appropriate Company of certificates and instruments evidencing
all of the Pledged Securities identified under each Company's name on Schedule
II hereto, indorsed in blank or accompanied by undated stock powers duly
executed in blank, as the case may be, with respect thereto and (iv) the
consummation of all transactions, and the taking of all actions required under
the Security Documents with respect to the perfection of security interests in
Pledged Securities consisting of equity securities issued by Persons not
organized in the United States or any State thereof, the security interests in
the Collateral granted to the Collateral Agent for the benefit of itself and
the other Secured Parties hereunder will constitute perfected security
interests therein superior and prior to all Liens (other than Permitted Liens),
rights or claims of all other Persons.
3.2 No Liens; Other Financing Statements.
(a) Except for the Lien granted to the Collateral Agent
hereunder for the benefit of itself and the other Secured Parties, the
Companies own and, as to all Collateral whether now existing or hereafter
acquired will continue to own, each item of the Collateral free and clear of
any and all Liens (other than Permitted Liens), rights and claims, and each
Company shall defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the
Collateral Agent or any other Secured Parties other than holders of Permitted
Liens on the Collateral entitled to priority therein under applicable law.
(b) No financing statement or other evidence of Lien covering
or purporting to cover any of the Collateral is on file and is effective in any
public office other than (i) financing statements filed or to be filed in
connection with the security interests granted to the Collateral Agent
hereunder, (ii) financing statements for which proper, executed termination
statements have been delivered to the Collateral Agent for filing and (iii)
financing statements filed in connection with Permitted Liens.
3.3 Chief Executive Office. The chief executive office of each
Company is located opposite such Company's name on Schedule III hereto. The
originals of the Receivables Records and all Collateral Records of each Company
are located at the locations identified under the name of such Company on
Schedule III as such or at the chief executive office of such Company. All
Receivables are maintained at, and controlled and directed (including, without
limitation, for general accounting purposes) from the chief executive office or
the offices identified on Schedule III as such.
3.4 Location of Inventory and Equipment. All Inventory and
Equipment (other than Non-located Assets with an aggregate book value (together
with the aggregate book value of all Non-located Assets (as defined in each of
the other Transaction Security Documents)) not in excess of $10 million) now or
from time to time included in the Collateral is kept only at (or shall be in
transit to) the locations listed on Schedule III and IV hereto. None of such
Inventory or Equipment is in the possession of an issuer of a negotiable
document (as defined in Section 7-104 of the UCC) therefor or otherwise in the
possession of a bailee or other Person, except as set forth on Schedule IV
hereto.
3.5 Fair Labor Standards Act. Any goods now or hereafter produced
by each Company included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as amended.
3.6 Tradenames; Prior Names. The only names under which any Company
has conducted business during the last five years are as set forth under such
Company's name on Schedule V hereto.
3.7 Certificate of Title. There is no property of any Company the
title to which is governed by a certificate of title or ownership other than
(i) motor vehicles which constitute Inventory of the Companies and (ii) motor
vehicles which constitute Equipment of the Companies and (to the extent that
failure to have accomplished the same would render the representation contained
in the first sentence of Section 3.4 hereof incorrect) with respect to which
the Lien of the Collateral Agent is duly noted on the certificate of title
issued with respect to such motor vehicles.
3.8 Pledged Securities. (a) Each Company is the legal, record and
beneficial owner of, and has good title to, the Pledged Securities listed under
such Company's name on Schedule II hereto and such Pledged Securities are not
subject to any put, call, option or other right in favor of any other Person
whatsoever, (b) except as disclosed on Schedule 3.8 hereto, the Pledged
Securities listed under each Company's name on Schedule II hereto constitutes
all of the capital stock owned legally or beneficially by such Company of any
corporation organized under the laws of the United States or any State thereof
and all of the ownership and equity interests owned legally or beneficially by
such Company of any other business entity organized under the laws of the
United States or any State thereof and all promissory notes and other
Instruments in which such any Company has a legal or beneficial ownership
interest on the date hereof (other than Instruments constituting Working
Capital Collateral that have been delivered to a Permitted Working Capital
Financier and other Instruments in a principal amount, individually or in the
aggregate, not required to be delivered to the Collateral Agent pursuant to
Section 4.7 hereof (collectively, "Exempt Instruments")), (c) except as set
forth on Schedule II hereto, no Company has any options or other rights to
acquire any capital stock or other ownership or equity interests of any other
Person, (d) no Company is a party to or bound by any agreement with any other
Person (including, without limitation, any Subsidiary or any other stockholder
of any Subsidiary) which restricts the ability of such Company to vote,
transfer or dispose of any Capital Stock owned by such Company or any of the
other Pledged Securities, (e) no consent of any other Person (including,
without limitation, any Subsidiary of any Company or any other stockholder of
any such Subsidiary) is required to be obtained by any Company in connection
with the pledge by such Company of any of the Pledged Securities or the
consummation of the other transactions contemplated hereby, including, without
limitation, the exercise by the Collateral Agent of the voting or other rights
provided for in this Security Agreement with respect to the Pledged Securities
or the remedies in respect of the Pledged Securities provided pursuant to this
Security Agreement, (f) all of the Pledged Securities listed on Schedule II
have been duly and validly issued, and are fully paid and nonassessable and (g)
each of the Existing Notes (i) evidences bona fide indebtedness of the issuer
thereof to such Company, (ii) is not subject to any offset for counterclaim and
(iii) is enforceable against the maker thereof in accordance with its terms,
except as enforceability may be limited by bankruptcy, reorganization,
moratorium and other laws affecting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law).
3.9 Receivables.
(a) Each Receivable (i) is and will be the genuine, legal,
valid and binding obligation of the Account Debtor in respect thereof,
representing an unsatisfied obligation of such Account Debtor, (ii) is and will
be enforceable in accordance with its terms, (iii) is and will be in full force
and effect and is not and will not be subject to any setoffs, defenses, taxes,
counterclaims (except (x) with respect to refunds, returns and allowances in
the ordinary course of business and (y) to the extent that such Receivable may
not yet have been earned by performance) and (iv) is and will be in compliance
with all applicable laws, whether federal, state, local or foreign.
(b) No Receivables in excess of $250,000 individually or
$2,000,000 in the aggregate (together with Receivables represented by
Instruments not delivered to the Collateral Agent pursuant to the terms of any
other Transaction Security Document) are evidenced by any Instrument which has
not been delivered to the Collateral Agent or a Permitted Working Capital
Financier.
(c) The representations and warranties contained in this
Section shall be deemed to be repeated by each Company as of the time when each
Receivable arises.
3.10 Intellectual Property. Except as disclosed in Item H of
Schedule VI, as of the date hereof:
(a) all Intellectual Property Collateral material to the
business of each Company is subsisting and has not been adjudged invalid or
unenforceable, in whole or in part;
(b) to the best of each Company's knowledge, all Intellectual
Property Collateral material to the business of such Company is valid and
enforceable;
(c) all Trademark, Patent and Copyright registrations and
applications of each Company are (except as disclosed on items A, C or E of
Schedule VI hereof) standing in the name of such Company, and none of the
Trademarks, Patents, Copyrights or Trade Secret Collateral material to the
business of any Company has been licensed by such Company to any affiliate or
third party, except as disclosed in Items B, D, F and G of Schedule VI;
(d) each Company has been using appropriate statutory notice of
registration in connection with its use of registered Trademarks material to
the business of such Company, proper marking practices in connection with the
use of Patents material to the business of such Company and appropriate notice
of copyright in connection with the publication of Copyrights material to the
business of such Company;
(e) each Company is the exclusive owner of the entire and
unencumbered right, title and interest in and to all Intellectual Property
Collateral material to the business of such Company (subject only to Permitted
Liens and the licenses and other disclosures identified in Items B, D, F and G
of Schedule VI) and, to the best of each Company's knowledge, no claim has been
made that the use of such Intellectual Property Collateral violates the
asserted rights of any third party;
(f) to the best of each Company's knowledge, the conduct of
each Company's business does not infringe upon any trademark, patent,
copyright, trade secret or similar intellectual property right owned or
controlled by a third party and, to the best of each Company's knowledge, no
third party is infringing upon any Intellectual Property Collateral;
(g) no holding, decision, or judgment has been rendered in any
action or proceeding challenging the validity of or any Company's rights to use
any Intellectual Property Collateral and no such action or proceeding is
pending or, to the best of any Company's knowledge, threatened;
(h) each Company has performed all acts and has paid all
required fees and taxes to maintain each and every registration and application
of Intellectual Property Collateral material to the business of such Company in
full force and effect;
(i) each Company owns or has valid rights to use, all patents,
trademarks, trade secrets, copyrights, and similar intellectual property rights
material to the business of such Company and used in the conduct of such
Company's business; and
(j) Schedule VI set forth, under the name of each Company, (i)
all United States, state and foreign registrations of and applications for
Patents, Trademarks and Copyrights of such Company and (ii) all Patent
Licenses, Trademark Licenses and Copyright Licenses material to the business of
such Company.
4. Covenants. The parties agree that the following provisions shall
be applicable to each Company and the Collateral, and each Company jointly and
severally covenants and agrees that at all times during the term of this
Security Agreement and until the Secured Obligations have been full and finally
paid.
4.1 Books and Records.
(a) Each Company shall keep accurate and complete books and
records concerning each category of the Collateral, including, but not limited
to, the originals of all documentation with respect to all Receivables and
records of all payments received and all credits granted on the Receivables,
all merchandise returned and all other dealings therewith. Each Company shall,
at any time that Chattel Paper and Receivables are not pledged to a Permitted
Working Capital Financier, legend, in form and manner reasonably satisfactory
to the Collateral Agent, all Chattel Paper and Receivables Records with an
appropriate reference to the fact that the Chattel Paper and all other
Receivables have been assigned to the Collateral Agent for the benefit of the
Secured Parties and that the Collateral Agent has a security interest therein.
(b) Each Company shall furnish to the Collateral Agent at such
times and in such form and substance as the Collateral Agent may reasonably
request, but in any event within ten business days after the occurrence of an
Event of Default and at least every 30 days thereafter during the continuance
of such Event of Default, information reasonably adequate to enable the
Collateral Agent to identify the Collateral and determine the amount and value
thereof, including, without limitation, the location, cost, net book value and
fair market value of Collateral.
4.2 Further Assurances. At any time and from time to time, upon the
reasonable request of the Collateral Agent, and at the sole expense of the
affected Company, each Company shall promptly do all such further things and
duly execute and deliver any and all such further conveyances, assignments,
agreements, instruments, endorsements, powers of attorney and other documents,
make such filings, give such notices and take such further action as the
Collateral Agent may reasonably deem necessary in obtaining the full benefits
of this Security Agreement and of the rights, remedies and powers herein
granted or in order to assure and confirm unto the Collateral Agent the
Collateral Agent's rights, powers and remedies hereunder, including, without
limitation, the filing of any financing statements, in form reasonably
acceptable to the Collateral Agent under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens granted hereby. Each Company
also hereby authorizes the Collateral Agent to file any such financing
statement without the signature of such Company to the extent permitted by
applicable law. A photocopy or other reproduction of this Security Agreement
shall be sufficient as a financing statement and may be filed in lieu of the
original to the extent permitted by applicable law. Each Company will pay or
reimburse the Collateral Agent for all filing fees and related reasonable
out-of-pocket expenses and will make or reimburse the Collateral Agent for
making all searches reasonably deemed necessary by the Collateral Agent to
establish and determine the priority of the security interests of the
Collateral Agent created hereunder or to determine the presence or priority of
other secured parties.
4.3 Change of Chief Executive Office. No Company will move its
chief executive office from that disclosed in Schedule III hereto (or move or
establish any registered office in Kentucky) except to such new location as
such Company may establish in accordance with the last sentence of this
Section. The originals of all Receivables Records will continue to be kept at
such chief executive office, at the offices designated under such Company's
name on Schedule III as offices at which Receivables Records are located, or at
such new locations as such Company may establish in accordance with the last
sentence of this Section. All Receivables and Receivables Records of each
Company will continue to be maintained at, and controlled and directed
(including, without limitation, for general accounting purposes) from, the
chief executive office of such Company or a location identified as a location
at which Receivables or Receivables Records are maintained, controlled and
directed under such Company's name on Schedule III, or such new locations as
such Company may establish in accordance with the last sentence of this
Section. No Company shall establish a new location for its chief executive
office or such activities (or move any such activities from any such locations)
or move or establish any registered office in Kentucky until (i) it shall have
given to the Collateral Agent not less than 30 days' prior written notice of
its intention to do so, clearly describing such new location and providing such
other information in connection therewith as the Collateral Agent may
reasonably request and (ii) with respect to such new location, it shall have
taken all action as the Collateral Agent may reasonably request to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected with the same or better priority
and in full force and effect.
4.4 Change of Location of Inventory and Equipment. Each Company
agrees that (i) all Inventory and Equipment now held or subsequently acquired
by it shall only be kept at (or shall be in transit to) the locations shown
under such Company's name on Schedule III hereto (or, in the case of Inventory
held by a bailee, those locations under such Company's name shown on Schedule
IV hereto), or such new locations as such Company may establish in accordance
with the last sentence of this Section. No Company may establish a new
location for Inventory and Equipment unless (i) it shall have given to the
Collateral Agent not less than 30 days' prior written notice of its intention
to do so, clearly describing such new location and providing such other
information in connection therewith as the Collateral Agent may reasonably
request and (ii) with respect to such new location, it shall have taken all
action as the Collateral Agent may reasonably request to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted
hereby at all times fully perfected with the same or better priority and in
full force and effect. Notwithstanding anything to the contrary contained in
this Section 4.4, any Company may keep Inventory and Equipment at locations
other than those set forth under such Company's name on Schedules III and IV
hereto and locations other than with respect to which such Company has notified
the Collateral Agent in advance (collectively, "Non-located Assets"); provided,
however, that at no time shall the aggregate book value of all the Companies of
all Non-located Assets (together with all other Non-located Assets (as defined
in each of the other Transaction Security Documents)) and the book value of
all Motor Vehicles constituting Equipment owned by any Company or Terex in
which the Collateral Agent does not have a perfected, first priority Lien under
the Transaction Security Documents exceed (a) $2,000,000 in any State of the
United States, province of Canada or in any other country or (b) $10,000,000 in
the aggregate for all such assets and at all locations.
4.5 Change of Name; Identity or Corporate Structure. No Company
shall change its name (or conduct any significant portion of its business under
any tradenames (other than those identified with an asterisk under such
Company's name on Schedule V hereto)), identity or corporate structure unless
(i) it shall have given to the Collateral Agent not less than 30 days' prior
written notice of its intention to do so, clearly describing such new name,
identity or corporate structure or such new tradename and providing such other
information in connection therewith as the Collateral Agent may reasonably
request and (ii) with respect to such new name, identity or corporate structure
or such new tradename, it shall have taken all action as the Collateral Agent
may reasonably request to maintain the security interest of the Collateral
Agent in the Collateral intended to be granted hereby at all times fully
perfected with the same or better priority and in full force and effect.
4.6 Subsequently Acquired Pledged Securities, etc. If at any time
or from time to time after the date hereof, any Company shall acquire any
additional Pledged Securities (by purchase, stock dividend, in lieu of interest
or otherwise) (other than Exempt Instruments), such Company will forthwith
pledge and deposit such Pledged Securities with the Collateral Agent and
deliver to the Collateral Agent certificates or instruments therefor, indorsed
in blank by such Company or accompanied by undated stock powers duly executed
in blank by such Company or such other documentation reasonably required by the
Collateral Agent to perfect its first-priority Lien therein.
4.7 Delivery of Instruments. If any Instrument (other than
Instruments representing Receivables that have been delivered to a Permitted
Working Capital Financier as security) in excess of $250,000 individually or
(together with Subject Terex Instruments) $2,000,000 in the aggregate shall at
any time comprise any portion of the Collateral and the Terex Collateral,
combined, any Company with an interest therein shall within thirty days notify
the Collateral Agent thereof, and promptly deliver such Instrument or
Instruments to the Collateral Agent appropriately indorsed or assigned or to
the order of the Collateral Agent or in such other manner as shall be
satisfactory to the Collateral Agent.
4.8 Delivery of Chattel Paper. If Chattel Paper (other than Chattel
Paper representing Receivables that has been delivered to, or is being held by
any Company subject to the Lien of, a Permitted Working Capital Financier as
security) representing Receivables in excess of $250,000 individually or
(together with Subject Terex Chattel Paper) $2,000,000 in the aggregate shall
at any time comprise any portion of the Collateral and the Terex Collateral,
combined, any Company with an interest therein shall within thirty days notify
the Collateral Agent thereof, and promptly deliver such Chattel Paper to the
Collateral Agent.
4.9 Right of Inspection. The Collateral Agent shall at all times
have full and free access during normal business hours to all the books,
correspondence and records of each Company relating to the Collateral, and the
Collateral Agent and its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and each Company agrees to render to
the Collateral Agent, at such Company's cost and expense, such clerical and
other assistance as may be reasonably requested with regard thereto. The
Collateral Agent and its representatives shall at all times during normal
business hours also have the right to enter into and upon any premises where
any of the Inventory or Equipment is located for the purpose of inspecting the
same, observing its use or otherwise protecting its interests therein. The
Collateral Agent shall, if no Event of Default shall then exist, provide
reasonable notice to the affected Company of any access and inspections
permitted under this Section and shall use all reasonable efforts to ensure
that the business of such Company will not be unreasonably disrupted thereby.
4.10 Insurance. Each Company shall maintain or cause to be
maintained with financially sound and reputable insurers acceptable to the
Collateral Agent and licensed to do business in each state in which any of the
Collateral covered by any policy is located, insurance with respect to the
Collateral and its use, against loss or damage of the kinds customarily insured
against by reputable companies in the same or similar businesses, such
insurance to be of such types and in such amounts (with such deductible
amounts) as is customary for such companies under the same or similar
circumstances, and the types, amounts and terms of which (other than products
liability, which each Company may self-insure) shall, in any event, be
reasonably acceptable to the Collateral Agent. Without limiting the generality
of the foregoing, each Company (a) will keep the Collateral insured on an "all
risk" basis, as appropriate for any particular Collateral against loss or
damage by fire, standard extended coverage perils and such other hazards,
occurrences and events customarily required by a prudent lender in the area
where the Collateral is located in amounts not less than the replacement cost
of the Collateral and (b) will maintain in the amount customarily obtained by
the same or similar businesses, general public liability insurance against
claims for bodily injury, death or property damage. No Company shall obtain or
carry separate insurance concurrent in form or contributing in the event of
loss with that required in this Section to be furnished by such Company unless
the Collateral Agent and the other Secured Parties are included as named
insured, with loss payable as provided herein. All policies of insurance shall
(i) name the Collateral Agent, on behalf of itself and the other Secured
Parties as additional insured (with respect to liability insurance policies) or
loss payees with a lender's loss payable indorsement and a standard "New York"
mortgagee provision with a no contribution clause (with respect to property
insurance policies), in each case as their respective interests may appear,
(ii) include waivers by the insurer of all claims for insurance premiums
against the Collateral Agent and the other Secured Parties, (iii) provide that
any losses shall (subject to the terms of any Subordination Agreement) be
payable to the Collateral Agent notwithstanding (A) any act, failure to act or
negligence of or violation of warranties, declarations or conditions contained
in such policy by any Company, the Collateral Agent or any other Secured
Parties, (B) any foreclosure or other proceedings or notice of sale relating to
any Collateral insured thereunder, or (C) any change in the title to or
ownership of any Collateral insured thereunder and (iv) provide that no
cancellation, termination or lapse in coverage thereof shall be effective until
at least 30 days after receipt by the Collateral Agent of written notice
thereof. Each Company shall pay the premiums for all policies of insurance as
the same become due and payable and shall deliver evidence thereof to the
Collateral Agent. At the request of the Collateral Agent, each Company will
(subject to the terms of any Subordination Agreement relating to casualty
insurance on Working Capital Collateral) assign and deliver all policies of
insurance to the Collateral Agent. In any event, a certificate of insurance
for each of the policies of insurance shall be issued to the Collateral Agent,
and copies of all original policies, together with the endorsements thereof
required hereunder, shall be delivered to the Collateral Agent within ten days
of the Collateral Agent's request therefor. Not later than fifteen days prior
to the expiration date of each of the policies, each Company will deliver to
the Collateral Agent a renewal policy or policies or certificates of insurance
to the Collateral Agent. If at any time the Collateral Agent is not in receipt
of written evidence that all insurance required hereunder is in full force and
effect, the Collateral Agent shall have the right upon seven days' prior
written notice to the affected Company to take such action as the Collateral
Agent deems necessary to protect its interest in the Collateral, including,
without limitation, the payment of any premiums that are due and payable or the
obtaining of such insurance coverage as the Collateral Agent in its reasonable
discretion deems appropriate, and all reasonable out-of-pocket expenses
incurred by the Collateral Agent in connection with such action or in obtaining
such insurance and keeping it in effect, together with interest thereon at the
rate of 10% per annum shall be paid by such Company to the Collateral Agent
upon demand and such payment obligations shall be secured hereby. Anything
contained in this Section to the contrary notwithstanding, any and all
insurance which any Company is obligated to carry pursuant to this Section may
be carried under a general coverage "floater" policy, master insurance policy,
"blanket" policy or policies covering other properties or liabilities, provided
that the coverage so provided in accordance with the requirements set forth
herein shall not be diminished or hindered by reason of the inclusion of any
such required insurance under a policy containing aggregate loss limits.
If the Collateral shall be damaged or destroyed, in whole or in part,
by fire or other casualty, the affected Company shall give prompt notice
thereof to the Collateral Agent. No settlement on account of any material loss
covered by insurance shall be made for less than insured value without the
consent of the Collateral Agent. Except with respect to third party liability
insurance, after the occurrence and during the continuance of an Event of
Default, all sums payable to any Company by any insurer with respect to a
casualty relating to all or any part of the Collateral shall be paid to the
Collateral Agent. Unless an Event of Default shall have occurred and be
continuing and subject, in any event, to the terms of the Mortgages and the
Indenture, (i) all insurance proceeds from any insurance policy held by any
Company shall be paid to such Company and (ii) each Company may invest such
proceeds in assets related to the business of such Company or its Subsidiaries
or otherwise apply such proceeds in the ordinary course of its business. If
any Company shall receive any insurance proceeds which are to be paid to the
Collateral Agent pursuant to this Section, such Company shall hold such
proceeds in trust for the Collateral Agent, shall segregate such proceeds from
other funds of such Company, and shall immediately forward such proceeds in the
form received to the Collateral Agent (appropriately indorsed by Company to the
order of the Collateral Agent or in such other manner as shall be satisfactory
to the Collateral Agent). All such insurance proceeds may be retained by the
Collateral Agent in the Collateral Account as Collateral hereunder and/or
applied by the Collateral Agent toward payment of all or part of the Secured
Obligations (whether matured or unmatured) in such order as is provided herein.
If any portion of the insurance proceeds are made available to any Company, the
Collateral Agent shall not be obligated to see to the application of any amount
paid to such Company.
4.11 Warehouse Receipts Non-negotiable. Each Company agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt or other
Document is issued with respect to any of its Inventory, such warehouse receipt
or receipt in the nature thereof or other Document shall not be "negotiable"
(as such term is used in Section 7-104 of the UCC or under other relevant law).
4.12 Motor Vehicles.
(a) Within the number of days permitted by the applicable
jurisdiction for delivery or filing in order to perfect a security interest as
of the time of its creation (but subject to the qualification contained in the
last sentence of Section 4.4 hereof relating to Motor Vehicles and Non-located
Assets), if after the date hereof any Company shall acquire any Motor Vehicle
or any other item of property the title to which is governed by a certificate
of title or ownership, such Company shall file in each office in each
jurisdiction or deliver to each Person which the Collateral Agent shall deem
necessary or advisable to perfect its first priority security interest in such
Motor Vehicles or other property, all applications for certificates of title or
ownership indicating the Collateral Agent's first priority lien on the Motor
Vehicle or other property covered by such certificate, and any other necessary
documentation and thereafter as soon as practicable, such Company shall deliver
to the Collateral Agent originals of the certificates of title or ownership for
such Motor Vehicles or other property with the Collateral Agent listed as
lienholder, together with the manufacturer's statement of origin; provided,
however, if the Motor Vehicle or other property acquired is subject to a
Purchase Money Lien, the Collateral Agent shall be listed as a junior
lienholder to the Person holding such Purchase Money Lien.
No Motor Vehicle or other property shall be removed from the state
which has issued a certificate of title therefor for a period equal to or in
excess of four months except for the purpose of reregistering such Motor
Vehicle or other property, in which case the Company having an interest in
such Motor Vehicle or property shall take all steps necessary to continue the
perfection and priority of the Collateral Agent's Lien on such Motor Vehicle or
other property.
(b) Any certificates of title or ownership delivered pursuant
to the terms hereof shall be accompanied by odometer statements for each Motor
Vehicle covered thereby.
4.13 Compliance with Laws. Each Company will comply in all material
respects with all requirements of law applicable to the Collateral or any part
thereof; provided, however, that any Company may contest any requirement of law
in any reasonable manner which shall not, in the reasonable opinion of the
Collateral Agent, materially and adversely affect the Collateral Agent's or the
Secured Parties' rights in any of the Collateral or adversely affect the
priority of the Liens created hereunder in any of the Collateral.
4.14 Payment of Obligations. Each Company will pay promptly when
due all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials,
supplies and services) against or with respect to the Collateral, except that
no such charge need be paid if (i) the validity thereof is being contested in
good faith by appropriate proceedings, (ii) such proceedings do not involve, in
the reasonable opinion of the Collateral Agent, any material danger of the
sale, forfeiture or loss of any of the Collateral or any interest therein that
could reasonably be expected to have any adverse effect on the Secured Parties
and (iii) such charge is adequately reserved against on the affected Company's
books in accordance with GAAP.
4.15 No Impairment. Except as expressly permitted herein or in the
Indenture, no Company will take or knowingly permit to be taken any action
which could impair the Collateral Agent's or any Secured Party's rights in the
Collateral.
4.16 Negative Pledge. No Company shall create, incur or permit to
exist, will defend the Collateral against, and will take such other action as
is necessary to remove, any Lien or claim on or to the Collateral, other than
the Liens created hereby and other than the Permitted Liens, and will defend
the right, title and interest of the Collateral Agent and the other Secured
Parties in and to any of the Collateral against the claims and demands of all
Persons whomsoever other than holders of Permitted Liens on the Collateral
entitled to priority therein under applicable law.
4.17 Limitations on Dispositions of Collateral. No Company shall
sell, transfer, lease or otherwise dispose of any of the Collateral or any
right or interest therein, or attempt, offer or contract to do so except for
dispositions of Collateral either permitted pursuant to or not prohibited by
the provisions of Section 4.10 of the Indenture and, to the extent provided for
in Section 4.10 of the Indenture the proceeds of which are applied as permitted
or required by such section. In the event of a sale, transfer, lease or other
disposition of any of the Collateral permitted by this Section, the Collateral
Agent shall, subject to the terms of Section 10.3 of the Indenture, at the sole
cost and expense of the Company disposing of the same, execute such documents
as such Company shall reasonably request to evidence the release of the Lien
created by this Security Agreement with respect to such Collateral and, to the
extent such Collateral is in the possession of the Collateral Agent, deliver
such Collateral to such Company or its designee.
4.18 Maintenance of Equipment. Each Company will maintain each item
of Equipment in good operating condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose, unless and to the
extent that the Company owning such Equipment reasonably determines that such
item of Equipment is obsolete, worn out or that repair is not economically
feasible or economically desirable.
4.19 Provisions Regarding Receivables.
(a) Each Company shall perform in all material respects all of
its obligations with respect to the Receivables.
(b) Each Company shall use commercially reasonable efforts
(including, without limitation, prompt and diligent exercise of each material
right it may have under any Receivable (other than any right of termination))
to cause to be collected from each Account Debtor, as and when due (including,
without limitation, amounts which are delinquent, such amounts to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of any Receivable, and apply all collected
amounts to the outstanding balance of such Receivable immediately upon receipt
thereof. Notwithstanding the foregoing, no Company shall be obligated to
exercise any rights with respect to any Receivables to the extent that it
determines in good faith that such exercise would not be commercially
reasonable or, in the exercise of its best business judgment, prudent. The
costs of collection, whether incurred by any Company or the Collateral Agent
shall be borne by the affected Company and if incurred by the Collateral Agent
shall be reimbursed, together with interest thereon at the rate of 10% per
annum, to the Collateral Agent upon demand and such reimbursement obligation
shall be secured hereby.
(c) Upon the occurrence and during the continuance of an Event
of Default, but subject to the terms of any Subordination Agreement, each
Company shall establish such lock-box arrangements for the collection of
Receivables as the Collateral Agent may require in its sole discretion.
(d) Each Company (i) that has granted a Lien on any Working
Capital Collateral to secure Indebtedness owed to a Permitted Working Capital
Financer by Terex or any of its Subsidiaries organized in any jurisdiction the
United States (including, if applicable, such Company) (collectively, "Domestic
Subsidiaries") shall settle all Receivables owing by such Company to Terex or
any other Domestic Subsidiary within ninety days from the date such Receivable
arises unless there is a bona fide dispute as to the amount of any such
Receivable, in which case such Receivable shall be settled promptly after the
resolution of such dispute and (ii) shall apply any payments on any
intercompany Indebtedness received from Terex or any of its other Subsidiaries
first to the payment of intercompany Indebtedness constituting intercompany
Receivables until such intercompany Receivables are paid in full.
4.20 Intellectual Property.
(a) No Company shall do any act or omit to do any act whereby
any of the Intellectual Property Collateral may lapse or become abandoned or
dedicated to the public or unenforceable if the same could reasonably be
expected to have a material adverse effect on the business, operations,
condition (financial or otherwise) or prospects of such Company (a "Material
Adverse Effect").
(b) No Company shall, in each case to the extent that it could
reasonably be expected to have a Material Adverse Effect, (i) cease the use of
any of the Trademarks or (ii) fail to maintain as in the past the level of the
quality of products and services offered under any of the Trademarks.
(c) Each Company shall promptly notify the Collateral Agent if
it knows that any item of the Intellectual Property Collateral that is material
to the business of such Company may become (a) abandoned or dedicated to the
public or placed in the public domain, (b) invalid or unenforceable, or (c)
subject to any adverse determination or development (including the institution
of proceedings) or any adverse determination or development in any proceeding
in the United States Patent and Trademark Office, the United States Copyright
Office, and state registry any foreign counterpart thereof or any court.
(d) Each Company shall take all commercially reasonable steps,
including in the United States Patent and Trademark Office, the United States
Copyright Office, or any state or foreign counterpart thereof, to maintain and
pursue any application and to maintain any registration of each Trademark,
Patent, and Copyright owned by such Company including, but not limited to, the
filing of applications for renewal, affidavits of use, affidavits of
incontestability, the prosecution and defense of opposition, interference, and
cancellation proceedings, and the payment of fees and taxes (except to the
extent that such dedication, abandonment, or invalidation, or the failure to
pursue and maintain the same could reasonably be expected to have a Material
Adverse Effect).
(e) Each Company shall promptly (but in no event more than
ninety days after any such Company obtains knowledge thereof) report to the
Collateral Agent (i) the filing of any application to register any Intellectual
Property Collateral (whether such application is filed by such Company or
through any agent, employee, licensee or designee thereof) with the United
States Patent and Trademark Office, the United States Copyright Office, or any
State or foreign counterpart thereof and (ii) the registration of any
Intellectual Property Collateral by any such office. Upon the request of the
Collateral Agent, each Company shall promptly execute and deliver any and all
agreements, instruments, documents, and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent's security interest in such
Intellectual Property Collateral.
(f) Each Company shall, promptly upon the reasonable request of
the Collateral Agent, execute and deliver to the Collateral Agent any document
required to acknowledge, confirm, register, record or perfect the Collateral
Agent's interest in any part of the Intellectual Property Collateral.
4.21 Notice. Each Company will advise the Collateral Agent
promptly, in reasonable detail, in accordance with the provisions hereof (a) of
any Lien (other than Permitted Liens) on, or claim asserted against, any of the
Collateral and (b) of the occurrence of any other event which could reasonably
be expected to have a material adverse effect on the aggregate value of the
Collateral or any material component thereof or an adverse effect on the Liens
created hereunder.
4.22 Performance by Collateral Agent of Company's Obligations;
Reimbursement. If any Company fails to perform or comply with any of its
agreements contained herein, the Collateral Agent may, without consent by such
Company and upon such notice to such Company as the Collateral Agent reasonably
deems appropriate under the circumstances, perform or comply or cause
performance or compliance therewith and the expenses of the Collateral Agent
incurred in connection with such performance or compliance, together with
interest thereon at a rate equal to 10% per annum, shall be payable by such
Company to the Collateral Agent on demand and such reimbursement obligation
shall be secured hereby.
5. Appointment of Sub-Agents. The Collateral Agent shall have the
right, with the consent of any affected Company (which consent shall not be
unreasonably withheld) if an Event of Default shall not then have occurred and
be continuing, to appoint one or more sub-agents or nominees for the purpose of
retaining physical possession of the Collateral, which may be held (if
applicable and in the discretion of the Collateral Agent) in the name of the
Collateral Agent, indorsed or assigned in blank or in favor of the Collateral
Agent or any nominee or nominees of the Collateral Agent or a sub-agent
appointed by the Collateral Agent. All references to the Collateral Agent
herein shall be deemed to include such sub-agents or nominees acting in their
capacity as such.
6. Voting, etc. Unless and until (i) an Event of Default shall have
occurred and be continuing under Sections 6.1(1) or (2) of the Indenture or
(ii) an Event of Default shall have occurred and be continuing under any other
provision of the Indenture and the obligations of Terex under the Indenture and
the Notes shall have been accelerated pursuant to Section 6.2 of the Indenture
(either, a "Voting Divestiture Event"), each Company shall be entitled to vote
any and all of the Pledged Securities and to give consents, waivers or
ratifications in respect thereof; provided, that no vote shall be cast or any
consent, waiver or ratification given or any action taken which would violate
or be inconsistent with any of the terms of this Security Agreement, the
Purchase Agreement or the Indenture or any other instrument or agreement
relating to the Secured Obligations, or which would have the effect of
impairing the position or interests of the Collateral Agent or any other
Secured Party hereunder or thereunder or which would authorize or effect
actions prohibited under the terms of this Security Agreement, the Purchase
Agreement, the Indenture or any instrument or agreement relating to the Secured
Obligations. All such rights of each Company to vote and to give consents,
waivers and ratifications shall cease in the event that a Voting Divestiture
Event has occurred and is continuing. Each Company hereby grants to the
Collateral Agent an irrevocable proxy to vote the Pledged Securities, which
proxy shall be effective immediately upon the occurrence and during the
continuance of a Voting Divestiture Event. After the occurrence and during the
continuance of a Voting Divestiture Event and upon request of the Collateral
Agent, each Company agrees to deliver to the Collateral Agent such further
evidence of such irrevocable proxy or such further irrevocable proxies to vote
the Pledged Securities as the Collateral Agent may reasonably request.
7. Payments and Other Distributions. Unless an Event of Default
shall have occurred and be continuing, all cash Distributions payable in
respect of the Pledged Securities (other than Exempt Instruments) shall be paid
to the aggregate Company, provided that all cash Distributions payable in
respect of the Pledged Securities which are determined by the Collateral Agent,
in its reasonable discretion, to represent in whole or in part a payment of
principal thereon or an extraordinary, liquidating or other distribution in
return of capital (or which, in the absence of any such determination by the
Collateral Agent, shall constitute such a distribution), shall be paid to the
Collateral Agent, deposited by it in the Collateral Account and retained by it
as part of the Collateral. The Collateral Agent shall at all times be entitled
to receive directly, and to retain as part of the Collateral:
(a) all other or additional stock or securities or property
(other than cash) paid or distributed by way of Distribution in respect of the
Pledged Securities (other than Exempt Instruments);
(b) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the Pledged
Securities (other than Exempt Instruments) by way of stock-split, spin-off,
split-up, reclassification, combination of shares or similar rearrangement; and
(c) all other or additional stock or other securities or
property which may be paid in respect of the Pledged Securities (other than
Exempt Instruments) by reason of any consolidation, merger, exchange of stock,
conveyance of assets, liquidation, bankruptcy or similar corporate
reorganization or other disposition of such Pledged Securities.
All monies and other property which are payable to the Collateral Agent or
which the Collateral Agent is entitled to receive pursuant to this Section 7
and which are received by any Company shall be held by such Company in trust
for the Collateral Agent and the other Secured Parties, segregated from other
monies and other property of such Company and shall forthwith upon receipt by
such Company be turned over to the Collateral Agent in the same form received
by such Company (appropriately indorsed or assigned by such Company to the
order of the Collateral Agent or in such other manner as shall be reasonably
satisfactory to the Collateral Agent).
8. Collateral Account.
8.1 Collateral Account. There is hereby established with the
Collateral Agent the Collateral Account. The Collateral Account shall be under
the sole and exclusive dominion and control of the Collateral Agent and no
Company shall have any rights with respect to the Collateral Account other than
with respect to the receipt of Proceeds of Collateral deposited therein upon
the termination of this Security Agreement and the full and final payment of
all of the Secured Obligations. Without limiting the generality of the
foregoing, no Company shall have any right of withdrawal or transfer from the
Collateral Account.
8.2 Deposit of Proceeds. There shall be deposited in the Collateral
Account from time to time the cash proceeds (as defined in Section 9-306(1) of
the UCC) of, and cash Distributions on, any of the Collateral (including
insurance proceeds thereon) required to be delivered to the Collateral Agent
pursuant hereto or under the Indenture. All amounts and investments and other
items credited to the Collateral Account from time to time shall constitute
Collateral hereunder and shall not constitute payment of the Secured
Obligations until applied as hereinafter provided. So long as no Default or
Event of Default has occurred and is continuing, the Collateral Agent shall,
upon five business days' prior written notice from Terex on behalf of each
Company (which notice shall be accompanied by a certificate (in form and
substance satisfactory to the Collateral Agent) executed by a senior officer of
Terex as to the absence of any such Default or Event of Default) release funds
then credited to the Collateral Account to the appropriate Company or
Companies. At any time following the occurrence and during the continuance of
an Event of Default, the Collateral Agent may in its discretion apply or cause
to be applied (subject to collection) the balance from time to time outstanding
to the credit of the Collateral Account to the payment of the Secured
Obligations in the manner specified herein.
8.3 Investment of Balance in Collateral Account. If an Event of
Default shall not then have occurred and be continuing, substantially all
amounts credited to the Collateral Account shall be invested from time to time
by the Collateral Agent upon the direction of Terex on behalf of each Company
in Cash Equivalents reasonably satisfactory to the Collateral Agent and in
which the Collateral Agent shall have a first priority perfected security
interest, which accounts, investments, instruments and securities shall be held
in the name and be under the control of the Collateral Agent. If an Event of
Default shall have occurred and be continuing, all amounts credited to the
Collateral Account shall be invested by the Collateral Agent in such accounts
(interest-bearing or otherwise), investments, instruments and securities as the
Collateral Agent shall elect in its sole discretion. The Collateral Agent
shall have no responsibility or liability for any losses in connection with any
investment in connection with the Collateral Account, including, without
limitation, losses incurred in connection with the liquidation of any such
investments.
9. Power of Attorney.
9.1 Collateral Agent's Appointment as Attorney-in-Fact.
(a) Each Company hereby irrevocably constitutes and appoints
the Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Company and in name of such
Company or in its own name, from time to time in the Collateral Agent's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement, and, without limiting the generality of
the foregoing, such Company hereby gives the Collateral Agent the power and
right, on behalf of such Company, without assent by such Company and upon such
notice to such Company as the Collateral Agent deems appropriate under the
circumstances, to do the following:
(i) at any time after the occurrence and during the continuance
of an Event of Default, in the name of such Company or its own name, or
otherwise, to take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under, or
with respect to, any Collateral; in the name of such Company or otherwise to
direct any party liable for any payment under any of the Collateral (other
than, until amounts then payable to Permitted Working Capital Financers have
been paid in full, Account Debtors with respect to Receivables in which any
such Permitted Working Capital Financer has a Lien permitted under the
Indenture) to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent shall
direct; to ask or demand for, collect, receive payment of and receipt for, any
and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral;
(ii) after the occurrence and during the continuance of an
Event of Default, to prepare, sign and file any Uniform Commercial Code
financing statements in the name of such Company as debtor;
(iii) after the occurrence and during the continuance of an
Event of Default, to take or cause to be taken all actions necessary to perform
or comply or cause performance or compliance with the terms of this Security
Agreement, including, without limitation, actions to pay or discharge taxes and
Liens levied or placed on or threatened against the Collateral, to effect any
repairs or obtain any insurance called for by the terms of this Security
Agreement and to pay all or any part of the premiums therefor and the costs
thereof; and
(iv) after the occurrence and during the continuance of any
Event of Default (a) to sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (b) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other right in respect
of any Collateral; (c) to defend any suit, action or proceeding brought against
such Company with respect to any Collateral; (d) to settle, compromise or
adjust any suit, action or proceeding described in the preceding clause and, in
connection therewith, to give such discharges or releases as the Collateral
Agent may deem necessary or commercially reasonable under the circumstances;
and (e) generally, to sell or transfer and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
the Collateral Agent were the absolute owner thereof for all purposes, and to
do, at the Collateral Agent's option and such Company's expense, at any time,
or from time to time, all acts and things which the Collateral Agent deems
necessary to protect, preserve or realize upon the Collateral and the Liens of
the Collateral Agent and the other Secured Parties thereon and to effect the
intent of this Security Agreement, all as fully and effectively as such Company
might do; and
(v) after the occurrence and during the continuance of an Event
of Default, at any time and from time to time, to execute, in connection with
any foreclosure, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
Each Company hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
Each Company hereby acknowledges and agrees that in acting pursuant
to this power-of-attorney the Collateral Agent shall be acting in its own
interest and in the interest of the other Secured Parties, and each Company
acknowledges and agrees that the Collateral Agent shall have no fiduciary
duties to any Company and each Company hereby waives any claims to the rights
of a beneficiary of a fiduciary relationship hereunder.
(b) No Duty on the Part of Collateral Agent or Secured Parties.
The powers conferred on the Collateral Agent hereunder are solely to protect
the interests of the Collateral Agent and the other Secured Parties in the
Collateral and shall not impose any duty upon the Collateral Agent or any other
Secured Party to exercise any such powers. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to any
Company for any act or failure to act hereunder unless the same shall result
from the gross negligence or willful misconduct of such Person.
10. Remedies.
10.1 Rights and Remedies Generally. (a) If an Event of Default
shall occur and be continuing, then and in every such case, the Collateral
Agent shall have all the rights of a secured party under the UCC, shall have
all rights now or hereafter existing under all other applicable laws, and,
subject to any mandatory requirements of applicable law then in effect, shall
have all the rights set forth in this Security Agreement and all the rights set
forth with respect to the Collateral or this Security Agreement in any other
agreement between the parties. No enumeration of rights in this Section or
elsewhere in this Security Agreement or in any related document or other
agreement shall be deemed to in any way limit the rights of the Collateral
Agent as described in this Section.
(b) If an Event of Default occurs and is continuing, the
Collateral Agent may, and within three Business Days after instructions from
the Majority Holders and the delivery of such indemnities from such Holders
against loss, liability or expense satisfactory to the Collateral Agent shall,
commence the taking of such actions toward collection or enforcement of this
Security Agreement and the Collateral (or any portion thereof), including,
without limitation, action toward foreclosure upon any Collateral, as the
Collateral Agent deems in its discretion to be appropriate or as otherwise
instructed by the Majority Holders.
10.2 Proceeds. (a) If an Event of Default shall occur and be
continuing, (i) all Proceeds and Distributions received by any Company
consisting of cash, checks and other near-cash items shall be held by such
Company in trust for the Collateral Agent and the other Secured Parties,
segregated from other funds of such Company in a separate deposit account
containing only Proceeds and Distributions, and shall forthwith upon receipt by
such Company, be turned over to the Collateral Agent in the same form received
by such Company (appropriately indorsed or assigned by such Company to the
order of the Collateral Agent or in such other manner as shall be satisfactory
to the Collateral Agent) and (ii) any and all such Proceeds and Distributions
received by the Collateral Agent (whether from a Company or otherwise), or any
part thereof, may, in the sole discretion of the Collateral Agent, be held by
the Collateral Agent in the Collateral Account as Collateral hereunder and/or
then or at any time or from time to time thereafter, be applied by the
Collateral Agent against the Secured Obligations (whether matured or
unmatured), in the order provided for herein.
(b) Except as otherwise provided in Section 10.3 of the
Indenture, the proceeds received by the Collateral Agent in respect of any sale
of, collection from or other realization upon all or any part of the Collateral
shall be applied, together with any other sums then held by the Collateral
Agent pursuant to this Security Agreement (including, without limitation, sums
credited to the Collateral Account), promptly by the Collateral Agent as
follows:
First, to the payment of all costs and expenses, commissions and
taxes of such sale, collection or other realization, including, without
limitation, compensation to the Collateral Agent and its agents and counsel,
and all expenses, liabilities and advances made or incurred by the Collateral
Agent in connection therewith;
Second, to the payment of all other costs and expenses of such
sale, collection or other realization, including, without limitation,
compensation to the Secured Parties and their agents and counsel and all costs,
liabilities and indebtedness made or incurred by the Secured Parties in
connection therewith;
Third, to the payment of the remaining outstanding Secured
Obligations to the Trustee under the Indenture for application in accordance
with the Indenture;
Fourth, (i) if the Secured Obligations have not been paid and
performed in full, the Collateral Agent shall deposit such surplus in the
Collateral Account or (ii) if the Secured Obligations have been paid and
performed in full, the Collateral Agent shall pay such surplus to Terex for
distribution to the Companies entitled thereto, or its successors or assigns,
or to whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
10.3 Direct Companies to Dispose of Collateral. If an Event of
Default shall occur and be continuing:
(a) the Collateral Agent may direct one or more of the
Companies to sell, assign or otherwise liquidate or dispose of all or from time
to time any portion of the Collateral, and each Company so directed shall do
so. The Collateral Agent may direct any Company to direct that all Proceeds of
such Collateral be paid directly to the Collateral Agent or may permit the
Proceeds of such Collateral to be paid to such Company and all such Proceeds
consisting of cash, checks, or near-cash items shall be held by such Company in
trust for the Collateral Agent, segregated from other funds of such Company in
a separate deposit account containing only Proceeds and shall forthwith upon
receipt by such Company, be turned over to the Collateral Agent, in the same
form received by such Company (appropriately indorsed or assigned by such
Company to the order of the Collateral Agent or in such other manner as shall
be satisfactory to the Collateral Agent); and
(b) any and all such Proceeds received by the Collateral Agent
(whether from a Company or otherwise) may, in the sole discretion of the
Collateral Agent, be held by the Collateral Agent in the Collateral Account as
Collateral hereunder and/or then or at any time or from time to time
thereafter, be applied by the Collateral Agent against the Secured Obligations
(whether matured or unmatured) in the order provided for herein.
10.4 Collateral Account. If an Event of Default shall occur and be
continuing, the Collateral Agent may liquidate any investments, instruments and
securities credited to the Collateral Account (without any liability for any
losses sustained in such liquidation) and apply the proceeds thereof and any
other amounts credited to the Collateral Account to the Secured Obligations
(whether matured or unmatured) in the order provided for herein.
10.5 Possession of Collateral.
(a) If an Event of Default shall occur and be continuing, and
subject to mandatory provisions of applicable law, (i) the Collateral Agent
may, personally or by agents or attorneys, immediately take possession of the
Collateral or any part thereof, from any one or more Companies or any other
Person who then has possession of any part thereof with or without notice or
judicial process, and for that purpose may enter upon any Company's premises
where any of the Collateral is located and remove the same and may use in
connection with such removal any and all services, supplies, aids and other
facilities of each Company and (ii) upon 15 days' notice to any Company, such
Company shall, at its own expense, assemble the Collateral (or from time to
time any portion thereof) and make it available to the Collateral Agent at any
place or places designated by the Collateral Agent, whether at such Company's
or the Collateral Agent's premises or elsewhere. Each Company shall, at its
sole expense, store and keep any Collateral so assembled at such place or
places pending further action by the Collateral Agent and while the Collateral
shall be so stored and kept, provide such guards and maintenance services as
shall be necessary to protect the same and to preserve and maintain the
Collateral in good condition. Each Company's obligation so to assemble and
deliver the Collateral is of the essence of this Security Agreement and,
accordingly, upon application to a court of equity having jurisdiction, the
Collateral Agent shall be entitled to a decree requiring specific performance
by any Company of said obligation.
(b) When Collateral is in the Collateral Agent's possession,
(i) each Company shall pay (or reimburse the Collateral Agent on demand for)
all out-of-pocket expenses (including the cost of any insurance and payment of
taxes or other charges) reasonably incurred in the custody, preservation, use
or operation of the Collateral, and the obligation to reimburse all such
expenses shall be secured hereby and (ii) the risk of accidental loss or damage
to the Collateral shall be on the Companies to the extent of any deficiency in
any effective insurance coverage.
10.6 Disposition of the Collateral. If an Event of Default shall
occur and be continuing, the Collateral Agent may sell, assign, lease, give an
option or options to purchase or otherwise dispose of the Collateral (or
contract to do any of the foregoing) under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale of the
property to be sold, at public or private sale or sales, conducted by any
officer, nominee or agent of, or auctioneer or attorney for the Collateral
Agent at any location of any third party conducting or otherwise involved in
such sale or any office of the Collateral Agent or any other Secured Party or
elsewhere and in general in such manner, at such time or times and upon such
terms and conditions and at such price as it may consider commercially
reasonable, for cash or on credit or for future delivery without assumption of
any credit risk. The Collateral Agent may in its discretion restrict
prospective bidders as to their number, nature of their business and investment
intention. Any of the Collateral may be sold, leased, assigned or options or
contracts entered to do so, or otherwise disposed of, in the condition in which
the same existed when taken by the Collateral Agent or after any overhaul or
repair which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other
private proceeding shall be made upon not less than 10 days' written notice to
the affected Company (which such Company agrees to be commercially reasonable)
specifying the time after which such disposition is to be made and the intended
sale price or other consideration therefor. Any such disposition which shall
be a public sale shall be made upon not less than 10 days' written notice to
the affected Company (which such Company agrees to be commercially reasonable)
specifying the time and place of such sale and, in the absence of applicable
requirements of law to the contrary, shall be by public auction (which may, at
the Collateral Agent's option, be subject to reserve), after publication of
notice of such auction for not less than ten days prior thereto in two
newspapers in general circulation in New York City. To the extent permitted by
applicable law, the Collateral Agent and/or any other Secured Party may bid for
and become purchasers of the Collateral or any item thereof, offered for sale
in accordance with this Section without accountability to the affected Company
(except to the extent of surplus money received) as provided below. In the
payment of the purchase price of the Collateral, the purchaser shall be
entitled to have credit on account of the purchase price thereof of amounts
owing to such purchaser on account of any obligations of the affected Company
to it and any such purchaser may deliver notes, claims for interest, or claims
for other payment with respect to such obligations in lieu of cash up to the
amount which would, upon distribution of the net proceeds of such sale, be
payable thereon. Such notes, if the amount payable hereunder shall be less
than the amount due thereon, shall be returned to the holder thereof after
being appropriately stamped to show partial payment. Notwithstanding the
foregoing, if the Collateral or any portion thereof is perishable or threatens
to decline speedily in value or is of a type customarily sold in a recognized
market, no notice of disposition shall be required.
10.7 Voting of Pledged Securities etc. If an Event of Default under
Section 6.1(1) or (2) of the Indenture shall occur and be continuing or if any
other Event of Default shall occur and be continuing and the obligations of
Terex under the Indenture and the Notes shall have been accelerated pursuant to
Section 6.2 of the Indenture with respect to such other Event of Default, (a)
the Collateral Agent shall be entitled to exercise all voting, corporate and
other rights pertaining to all or any portion of the Pledged Securities at any
meeting of the shareholders of the issuer thereof or otherwise pursuant to the
irrevocable proxy granted to it by each Company herein and (b) the Collateral
Agent may register all or any portion of the Pledged Securities in the name of
the Collateral Agent or its nominee, and the Collateral Agent or its nominee
may thereafter exercise (i) all voting, corporate and other rights pertaining
to such Pledged Securities at any meeting of shareholders of the issuer thereof
or otherwise and (ii) any and all rights of conversion, exchange, subscription
and any other rights, privileges or options pertaining to such Pledged
Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of such Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the corporate structure of the issuer thereof, or
upon the exercise by the affected Company or the Collateral Agent of any right,
privilege or option pertaining to such Pledged Securities, and in connection
therewith, the right to deposit and deliver any and all of such Pledged
Securities with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as it may determine), all
without liability except to account for property actually received by it, but
the Collateral Agent shall have no duty to any Company to exercise any such
right, privilege or option and shall not be responsible for any failure to do
so or delay in so doing.
10.8 Registration Rights; Private Sales.
(a) If the Collateral Agent shall determine to exercise its
rights to sell any or all of the Pledged Securities pursuant to this Section
10, and if in the opinion of the Collateral Agent it is necessary or advisable
to have the Pledged Securities, or that portion thereof to be sold, registered
under the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), each Company will use its best efforts to cause the issuer thereof to
(i) execute and deliver, and cause the directors and officers of the issuer
thereof to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts as may be, in the reasonable opinion of
the Collateral Agent, necessary to register the Pledged Securities, or that
portion thereof to be sold, under the provisions of the Securities Act, (ii) to
use its best efforts to cause the registration statement relating thereto to
become effective and to remain effective for a period of one year from the date
of the first public offering of the Pledged Securities, or that portion thereof
to be sold, and (iii) to make all amendments thereto and/or to the related
prospectus which, in the opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission applicable
thereto. Each Company agrees to cause such issuer to comply with the
provisions of the securities or "Blue Sky" laws of any and all jurisdictions
which the Collateral Agent shall designate and to make available to its
security holders, as soon as practicable, an earnings statement (which need not
be audited) which will satisfy the provisions of Section 11(a) of the
Securities Act.
(b) Each Company recognizes that the Collateral Agent may be
unable to effect a public sale of any or all the Pledged Securities, by reason
of certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Company acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged
Securities for the period of time necessary to permit the issuer to register
such securities for public sale under the Securities Act, or under applicable
state securities laws, even if the issuer thereof would agree to do so.
(c) Each Company further agrees to use its best efforts to do
or cause to be done all such other acts as may be reasonably necessary to make
such sale or sales of all or any portion of the Pledged Securities pursuant to
this Section 10.8 valid and binding and in compliance with any and all other
applicable requirements of law. Each Company further agrees that a breach of
any of the covenants contained in this Section 10.8 will cause irreparable
injury to the Collateral Agent and the other Secured Parties, that the
Collateral Agent and the other Secured Parties have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 10.8 shall be specifically enforceable against each
Company, and each Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred.
10.9 Provisions Regarding Receivables.
(a) Anything herein to the contrary notwithstanding (including
without limitation the grant of any rights to the Collateral Agent), each
Company shall remain liable under each of each Receivables to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise to
each such Receivable. Neither the Collateral Agent nor any Secured Party shall
have any obligation or liability under any Receivable (or any agreement giving
rise thereto) by reason of or arising out of this Security Agreement or the
receipt by the Collateral Agent or any of the Secured Parties of any payment
relating to such Receivable pursuant hereto, nor shall the Collateral Agent or
any of the Secured Parties be obligated in any manner to perform any of the
obligations of any Company under or pursuant to any Receivable (or any
agreement giving rise thereto) to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Receivable (or any
agreement giving rise thereto), to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
(b) At any time after an Event of Default shall have occurred
and be continuing (but subject to the terms of any Subordination Agreement),
the Collateral Agent may, and upon request of the Collateral Agent any Company
shall, notify Account Debtors that the Receivables have been assigned to the
Collateral Agent and that payments in respect thereof shall be made directly to
the Collateral Agent. The Collateral Agent may in its own name or in the name
of others communicate with Account Debtors to verify with them to its
satisfaction the existence, amount and terms of any Receivables.
(c) If required by the Collateral Agent at any time that an
Event of Default shall have occurred and be continuing (but subject to the
terms of any Subordination Agreement), any payments of Receivables, when
collected by any Company, shall be forthwith (and, in any event, within two
Business Days) delivered by such Company to the Collateral Agent in the exact
form received, duly indorsed by such Company to the Collateral Agent if
required, for deposit in the Collateral Account, and, until so turned over,
shall be held by such Company in trust for the Collateral Agent and the Secured
Parties, segregated from other funds of such Company. All such Proceeds, while
held by the Collateral Agent (or by any Company in trust for the Collateral
Agent and the Secured Parties), shall continue to be Collateral securing for
all of the Secured Obligations and shall not constitute payment thereof until
applied as hereinafter provided.
10.10 Recourse. Each Company shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to satisfy the Secured Obligations.
10.11 Expenses; Attorneys' Fees. Each Company shall reimburse the
Collateral Agent for all its reasonable out-of-pocket expenses in connection
with the exercise of its rights hereunder, including without limitation all
reasonable attorneys' fees and legal expenses incurred by the Collateral Agent
in connection therewith. Such out-of-pocket expenses including, without
limitation, all reasonable attorneys' fees and legal expenses shall constitute
Second Obligations secured by this Security Agreement.
10.12 Preventing Impairment of the Collateral. Regardless of
whether there shall have occurred any Event of Default, the Collateral Agent
may institute and maintain or cause in the name of one or more Companies or of
the Collateral Agent, or both, to be instituted or maintained, such suits and
proceedings as the Collateral Agent may be advised by counsel shall be
necessary to prevent any impairment of the Collateral in contravention of the
terms hereof of the Securities, of the Purchase Agreement or of the Indenture.
10.13 Limitation on Duties Regarding Preservation of Collateral.
(a) The Collateral Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC or otherwise, shall be to deal with
it in the same manner as the Collateral Agent deals with similar property for
its own account, it being understood that neither the Collateral Agent nor any
Secured Party shall have responsibility for (i) ascertaining or taking action
with respect to calls, conversations, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Collateral Agent or any
Secured Party has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Collateral.
(b) The Collateral Agent shall have no obligation to take any
steps to preserve rights against prior parties to any Collateral.
(c) Neither the Collateral Agent nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Company or otherwise and the rights of the Collateral
Agent and the other Secured Parties hereunder shall not be conditioned or
contingent upon the pursuit by the Collateral Agent or any other Secured Party
of any right or remedy against any Company or against any other Person which
may be or become liable in respect of all or any part of the Secured
Obligations or against any collateral security therefor, guarantee therefore or
right of offset with respect thereto.
10.14 Waiver of Claims. Except as otherwise provided in this
Security Agreement, EACH COMPANY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL
AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH ANY COMPANY
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Company hereby further waives, to the extent
permitted by law:
(a) all damages occasioned by such taking of possession except
any damages which are the sole and direct result of the Collateral Agent's
gross negligence or willful misconduct as determined in a final, non-appealable
judgment of a court of competent jurisdiction;
(b) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the Collateral
Agent's and the other Secured Parties' rights hereunder;
(c) demand of performance or other demand, notice of intent to
demand or accelerate, notice of acceleration presentment, protest,
advertisement or notice of any kind to or upon any Company or any other Person;
and
(d) all rights of redemption, appraisement, valuation,
diligence, stay, extension or moratorium now or hereafter in force under any
applicable law in order to hinder, prevent or delay the enforcement of this
Security Agreement or the absolute sale of the Collateral or any portion
thereof and each Company, for itself and all who may claim under it, insofar as
it or they now or hereafter lawfully may, hereby waives the benefit of all such
laws.
To the extent permitted by applicable law, any sale of, or the
exercise of any options to purchase, or any other realization upon, any
Collateral shall operate to divest all right, title, interest, claim and
demand, at law or in equity, of the affected Company therein and thereto, and
shall be a perpetual bar both at law and in equity against such Company and
against any and all persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, through and under such
Company.
10.15 Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy
under this Security Agreement by foreclosure, sale, entry or otherwise, and
such proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Collateral Agent, then and in every
such case each Company, the Collateral Agent and the other Secured Parties
shall be returned to their former positions and rights hereunder with respect
to the Collateral subject to the security interest created under this Security
Agreement, and all rights, remedies and powers of the Collateral Agent shall
continue as if no such proceeding had been instituted.
10.16 Intellectual Property License. Solely for the purpose of
enabling the Collateral Agent to exercise rights and remedies under this
Section 10 and at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, each Company hereby grants to the
Collateral Agent, to the extent it has the right to do so, an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to any Company), but subject to appropriate rights to quality
control and inspection in favor of such Company, to use, license or sublicense
any Trademark, Trademark License, Patent, Patent License, Copyright, Copyright
License or Trade Secret Collateral, and any license with respect to any of the
foregoing, now owned or hereafter acquired by such Company, and wherever the
same may be located.
11. Additional Collateral; etc. Without notice or consent of any
Company and without impairment of the security interest and rights created by
this Security Agreement, the Collateral Agent may accept from any person or
persons additional collateral or other security for the Secured Obligations.
The creation of the security interest created hereunder shall not prevent the
Collateral Agent from resorting to such additional collateral or security
without affecting the Collateral Agent's rights hereunder. The Collateral
Agent's acceptance of any such additional collateral or security shall not
prevent the Collateral Agent from resorting to the Collateral without affecting
the Collateral Agent's rights in and to such additional collateral or security.
12. Compensation and Indemnification.
12.1 Compensation. Each Company jointly and severally agrees to pay
to the Collateral Agent from time to time reasonable compensation for its
services. The Collateral Agent's compensation shall not be limited by any law
on compensation of a collateral agent pursuant to a security agreement.
12.2 Indemnity, etc.
(a) Each Company jointly and severally agrees to indemnify,
reimburse and hold the Collateral Agent and each other Secured Party, and their
respective officers, directors, employees, representatives, attorneys and
agents (hereinafter in this Section 12 referred to individually as "Indemnitee"
and collectively as "Indemnitees") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses or disbursements (including, without
limitation, reasonable attorneys' fees and expenses) (for the purposes of this
Section the foregoing are collectively called "expenses") of whatsoever kind or
nature which may be imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to or arising out of the Security Documents or
the documents executed in connection therewith or in any other way connected
with the administration of the transactions contemplated thereby or the
enforcement of any of the terms of or the preservation of any rights hereunder,
or in any way relating to or arising out of the manufacture, ownership,
ordering, purchase, delivery, control, acceptance, lease, financing,
possession, operation, condition, sale, return or other disposition or use of
the Collateral (including, without limitation, latent or other defects, whether
or not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or for
property damage) or any contract claim; provided that no Indemnitee shall be
indemnified pursuant to this section for expenses to the extent solely caused
by the gross negligence or wilful misconduct of such Indemnitee as determined
in a final, non-appealable judgment of a court of competent jurisdiction. Each
Company agrees that upon written notice by any Indemnitee of any assertion that
could give rise to an expense, such Company shall, if so requested by such
Indemnitee, assume full responsibility for the defense thereof.
(b) Without limiting the application of subsection (a) above,
each Company jointly and severally agrees to pay, or reimburse the Collateral
Agent for any and all reasonable out-of-pocket fees, costs and expenses of
whatever kind or nature incurred in connection with the creation, preservation
or protection of the Collateral Agent's Liens on, and security interest in, the
Collateral and the acceptance or administration or performance by the
Collateral Agent of its duties under the Security Documents, including, without
limitation, all fees and taxes in connection with the search of the records of,
and the recording or filing of instruments and documents in, public offices,
payment or discharge of any taxes or Liens upon or in respect of the
Collateral, premiums for insurance with respect to the Collateral and all other
reasonable out-of-pocket fees, costs and expenses in connection with
protecting, maintaining or preserving the Collateral and the Collateral Agent's
interest therein, whether through judicial proceedings or otherwise, or in
defending or prosecuting any actions, suits or proceedings arising out of or
relating to the Collateral.
(c) Without limiting the application of subsections (a) or (b),
above, each Company jointly and severally agrees to pay, indemnify and hold
each Indemnitee harmless from and against any expenses which such Indemnitee
may suffer, expend or incur in consequence of or growing solely out of any
misrepresentation by any Company and reliance thereon in this Security
Agreement or in any statement or writing contemplated by or made or delivered
pursuant to or in connection with this Security Agreement.
(d) If and to the extent that the obligations of any Company
under this Section 12 are unenforceable for any reason, each Company hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
12.3 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Secured Obligations secured by the Collateral.
The indemnity obligations of the Companies contained in this Security
Agreement shall continue in full force and effect notwithstanding the full
payment and performance of the Secured Obligations and notwithstanding the
discharge thereof.
13. Governing Law; Submission to Jurisdiction. THIS SECURITY
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. EACH
COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH COMPANY AT
ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
NOTHING SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY COMPANY IN ANY OTHER JURISDICTION.
14. Limitation of Liability. No claim may be made by any Company or
any other Person against the Collateral Agent or any other Secured Party or the
affiliates, directors, officers, employees, attorneys or agent of any of them
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by the Security Documents, or any act,
omission or event occurring in connection therewith except that the same may be
determined by a final, non-appealable judgment of a court of competent
jurisdiction to have resulted solely from such Person's actions taken in bad
faith; and each Company hereby waives, releases and agrees not to sue upon any
claim for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor. Each Company hereby agrees to indemnify the
Collateral Agent, each Secured Party and their affiliates, directors, officers,
employees, attorneys and agents for all of their costs and expenses (including
the attributed costs of internal counsel) incurred in connection with defending
any claim made by any Company or any other Person against any of them for any
special, indirect, consequential or punitive damages if in a final,
non-appealable judgment a court of competent jurisdiction does not award such
special, indirect, consequential or punitive damages or, if such damages are
awarded, the court does not determine that such person took actions in bad
faith. In performing its duties under the Security Documents, the Collateral
Agent shall be entitled to all of the powers, privileges and protections
afforded to the Trustee under the Indenture, including, without limitation, the
provisions contained in Article 7 thereof.
15. Notices. Except as otherwise expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by facsimile, telex, or cable
communication), in the case of each party hereto, at its address specified
opposite its signature below, or to such other address as may be designated by
any party in a written notice to the other party hereto, provided that notices
and communications to the Collateral Agent shall not be effective until
received by the Collateral Agent. All such notices, requests and demands shall
be deemed to have been duly given: when delivered by hand, if personally
delivered; one business day after being timely delivered to a next-day air
courier; five business days after being deposited in the mail, postage prepaid,
if mailed; when answered back if telexed; and when receipt is confirmed, if
sent by facsimile.
16. Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of each Company, the Collateral Agent,
the other Secured Parties, all future Holders of the Secured Obligations and
their respective successors and assigns, except that no Company may assign or
transfer any of its rights or obligations under this Security Agreement without
the prior written consent of the Collateral Agent and each other Secured Party.
17. Waivers and Amendments. None of the terms or provisions of this
Security Agreement may be waived, amended, supplemented or otherwise modified
except in accordance with Article 9 of the Indenture.
18. No Waiver; Remedies Cumulative. No failure or delay on the part
of the Collateral Agent in exercising any right, power or privilege hereunder
and no course of dealing between any Company and the Collateral Agent shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by
the Collateral Agent of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Collateral Agent
would otherwise have on any future occasion. The rights and remedies herein
expressly provided are cumulative, may be exercised singly or concurrently and
as often and in such order as the Collateral Agent deems expedient and are not
exclusive of any rights or remedies which the Collateral Agent would otherwise
have whether by agreement or now or hereafter existing under applicable law.
No notice to or demand on any Company in any case shall entitle any Company to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand.
19. Termination; Release. When the Secured Obligations have been
finally paid and performed in full, this Security Agreement shall terminate,
and the Collateral Agent, at the request and sole expense of the Companies,
will execute and deliver to the Companies the proper instruments (including
Uniform Commercial Code termination statements) acknowledging the termination
of this Security Agreement, and will duly assign, transfer and deliver to the
Companies, without recourse, representation or warranty of any kind whatsoever,
such of the Collateral as may be in possession of the Collateral Agent and has
not theretofore been disposed of, applied or released.
20. Counterparts. This Security Agreement may be executed in any
number of counterparts and by the parties hereto on 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 instrument.
21. Headings Descriptive. The headings in this Security Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning of this Security Agreement.
22. Marshalling. Neither the Collateral Agent nor any other Secured
Party shall be under any obligation to marshall any assets in favor of any
Company or any other Person or against or in payment of any or all of the
Secured Obligations.
23. Severability. If any term, provision, covenant or restriction
of this Security Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
24. Survival. All indemnities set forth herein shall survive the
execution and delivery of this Security Agreement and the making and repayment
of the Secured Obligations.
25. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
26. Authority of Collateral Agent. Each Company acknowledges that
the rights and responsibilities of the Collateral Agent under this Security
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Security Agreement shall, as between the Collateral Agent and the
other Secured Parties, be governed by the Indenture and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Collateral Agent and the Companies, the Collateral Agent shall
be conclusively presumed to be acting as agent for the Secured Parties with
full and valid authority so to act or refrain from acting, to the extent it has
the right to do so and no Company shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
27. Waiver. To the extent permitted by applicable law, each Company
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Secured Obligations and this Security Agreement and
any requirement that the Collateral Agent protect, secure, perfect or insure
any security interest or any property subject thereto or exhaust any right or
take any action against any Company or any other person or entity.
28. Obligations Absolute. The liability and obligations of each
Company hereunder shall be absolute and unconditional in accordance with its
terms and shall remain in full force and effect without regard to, and shall
not be released, suspended, discharged, terminated or otherwise affected by,
any circumstance or occurrence whatsoever, including, without limitation: (a)
any change in the time, place or manner of payment of, or in any other term of,
all or any of the Secured Obligations, (b) any waiver, indulgence, renewal,
extension, amendment or modification of or addition, consent or supplement to
or deletion from or any other action or inaction under or in respect of the
Indenture, the Securities, the Purchase Agreement, any Transaction Security
Document, any Mortgage or any document, instrument or agreement relating to the
Secured Obligations or any other instrument or agreement referred to therein
(collectively, the "Subject Documents") or any assignment or transfer of any
thereof; (c) any lack of validity or enforceability of any of the Subject
Documents or any assignment or transfer of any thereof; (d) any furnishing of
any additional security to the Secured Parties or their assignees or any
acceptance thereof or any release of any security by the Secured Parties, or
their assignees; (e) any limitation on any party's liability or obligations
under any such instrument or agreement or any invalidity or unenforceability,
in whole or in part, of any such instrument or agreement or any term thereof;
(f) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to any Company or
Terex or any other Person, or any action taken with respect to this Security
Agreement by any trustee or receiver, or by any court, in any such proceeding,
whether or not any Company shall have notice or knowledge of any of the
foregoing; (g) any exchange, release or nonperfection of any other collateral,
or any release, or amendment or waiver of or consent to departure from any
guarantee or security, for all or any of the Secured Obligations; or (h) any
other circumstance which might otherwise constitute a defense available to, or
a discharge of, any Company.
29. Limitation on Secured Party Rights. Each Company and the
Collateral Agent, on behalf of the Secured Parties, hereby confirm that it is
the intention of all such parties that the granting of Liens by each Company
pursuant to the terms hereof not constitute a fraudulent transfer or conveyance
for purposes of any Federal or state law. To effectuate the foregoing
intention, the Collateral Agent, on behalf of the Secured Parties, irrevocably
agrees that the obligations of each Company hereunder shall be limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Company and to any collections from or payments made by or
on behalf of any other Company in respect of the obligations of such other
Company hereunder, result in the obligations of such Company hereunder not
constituting a fraudulent conveyance or fraudulent transfer under Federal or
state law.
IN WITNESS WHEREOF, each Company and the Collateral Agent have caused
this Security Agreement to be duly executed and delivered as of the date first
above written.
COMPANIES:
CMH ACQUISITION CORP.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CLARKLIFT OF WESTERN MICHIGAN, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CLARK MATERIAL HANDLING COMPANY
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
CMH ACQUISITION INTERNATIONAL CORP.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
KOEHRING CRANES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
TEREX CRANES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
LEGRIS INDUSTRIES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
PPM CRANES, INC.
By: /s/ Marvin B. Rosenberg
Name: Marvin B. Rosenberg
Title: Secretary
Address for Notices for each Company:
c/o: Terex Corporation
500 Post Road East
Westport, Connecticut 06880
Telex:
Facsimile: 203-222-7976
COLLATERAL AGENT: UNITED STATES TRUST COMPANY
OF NEW YORK, as Collateral Agent
By: /s/ John Guiliano
Name: John Guiliano
Title: Vice President
Address for Notices:
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division and Agency
Telex:
Facsimile: 212-852-1625
Schedules
Schedule I Filing Offices
Schedule II Pledged Securities
Schedule III Chief Executive Offices and Inventory and
Equipment Locations
Schedule IV Inventory in Possession of Bailee
Schedule V Trade Names
Schedule VI Intellectual Property Collateral
Item A: Copyrights
Item B: Copyright Licenses
Item C: Patents
Item D: Patent Licenses
Item E: Trademarks
Item F: Trademark Licenses
Item G: Trade Secret Collateral
Item H: Intellectual Property Collateral Matters
Schedule VII Working Capital Collateral
Exhibits
Exhibit A Transaction Security Documents
EXHIBIT 10.34
Loan and Security Agreement
by and among
CONGRESS FINANCIAL CORPORATION
and
FOOTHILL CAPITAL CORPORATION
as Lenders
and
TEREX CORPORATION
CLARK MATERIAL HANDLING COMPANY
KOEHRING CRANES, INC.
and
PPM CRANES, INC.
as Borrowers
Dated as of: May 9, 1995
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS 1
SECTION 2. CREDIT FACILITIES 19
2.1 Revolving Loans 19
2.2 Letter of Credit Accommodations 21
2.3 Availability Reserves 24
SECTION 3. INTEREST AND FEES 24
3.1 Interest 24
3.2 Closing Fee 26
3.3 Servicing Fee 27
3.4 Unused Line Fee 27
3.5 Changes in Laws and Increased Costs of Loans 27
SECTION 4. CONDITIONS PRECEDENT 28
4.1 Conditions Precedent to Initial Revolving Loans
and Letter of Credit Accommodations 28
4.2 Conditions Precedent to All Revolving Loans and
Letter of Credit Accommodations 32
SECTION 5. GRANT OF SECURITY INTEREST 33
SECTION 6. COLLECTION AND ADMINISTRATION 34
6.1 Borrowers' Loan Accounts 34
6.2 Statements 34
6.3 Collection of Accounts 34
6.4 Payments 36
6.5 Authorization to Make Loans 36
6.6 Use of Proceeds 37
SECTION 7. COLLATERAL REPORTING AND COVENANTS 37
7.1 Collateral Reporting 37
7.2 Accounts Covenants 38
7.3 Inventory Covenants 40
7.4 Power of Attorney 42
7.5 Right to Cure 43
7.6 Access to Premises 43
7.7 Irrevocable License to Use Equipment and
Intellectual Property 44
SECTION 8. REPRESENTATIONS AND WARRANTIES 44
8.1 Corporate Existence, Power and Authority; Subsidiaries 44
8.2 Financial Statements; No Material Adverse Change. 45
8.3 Chief Executive Office; Collateral Locations. 45
8.4 Priority of Liens; Title to Properties 45
8.5 Tax Returns 46
8.6 Litigation 46
8.7 Compliance with Other Agreements and Applicable Laws 46
8.8 Accuracy and Completeness of Information. 47
8.9 Acquisition of Purchased Stock. 47
8.10 Issuance of Senior Secured Notes. 48
8.11 Employee Benefits 48
8.12 Survival of Warranties; Cumulative 49
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS 50
9.1 Maintenance of Existence 50
9.2 New Collateral Locations 50
9.3 Compliance with Laws, Regulations, Etc 51
9.4 Payment of Taxes and Claims 51
9.5 Insurance 51
9.6 Financial Statements and Other Information 52
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc 54
9.8 Encumbrances 56
9.9 Indebtedness 57
9.10 Loans, Investments, Guarantees, Etc. 61
9.11 Dividends and Redemptions 66
9.12 Transactions with Affiliates 68
9.13 Costs and Expenses 68
9.14 Compliance with ERISA 69
9.15 Further Assurances 70
SECTION 10. EVENTS OF DEFAULT AND REMEDIES 70
10.1 Events of Default 70
10.2 Remedies 73
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW 75
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver 75
11.2 Waiver of Notices 77
11.3 Amendments and Waivers 77
11.4 Waiver of Counterclaims 77
11.5 Indemnification 77
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS 78
12.1 Appointment of Lenders' Agent 78
12.2 Appointment of Borrowers' Agent 78
12.3 Term
79
12.4 Notices 81
12.5 Partial Invalidity 81
12.6 Successors 81
12.7 Participant's Security Interest 82
12.8 Entire Agreement 82
12.9 Confidentiality 82
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate of Borrowers
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated as of May 9, 1995 is entered into
by and among (a) Congress Financial Corporation, a California corporation
("Congress") and Foothill Capital Corporation, a California corporation
("Foothill"; Congress and Foothill are each individually a "Lender" and
collectively, "Lenders"), (b) Foothill, in its capacity as agent for Lenders
("Lenders' Agent"; as hereinafter further defined), (c) Terex Corporation, a
Delaware corporation ("Terex"), Clark Material Handling Company, a Kentucky
corporation ("Clark"), Koehring Cranes, Inc., a Delaware corporation
("Koehring") and PPM Cranes, Inc., a Delaware corporation ("PPM US"; Terex,
Clark, Koehring and PPM US are each individually a "Borrower" and collectively,
"Borrowers") and (d) Terex in its capacity as agent for itself as a Borrower
and for the other Borrowers ("Borrowers' Agent"; as hereinafter further
defined).
W I T N E S S E T H:
WHEREAS, Borrowers have requested that Lenders and Lenders' Agent enter
into certain financing arrangements with Borrowers and Borrowers' Agent
pursuant to which Lenders' Agent on behalf of Lenders may make loans and
provide other financial accommodations to Borrowers; and
WHEREAS, Lenders' Agent and Lenders are willing to make such loans and
provide such financial accommodations on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All references to
Borrowers shall, unless the context otherwise expressly provides, mean any one
or more of Borrowers. All references to Lenders shall, unless the context
otherwise expressly provides, mean either or both Lenders. All references to
Borrowers and Borrowers' Agent, Lenders and Lenders' Agent pursuant to the
definitions set forth above, or to any other person herein, shall include their
respective successors and assigns. The words "hereof", "herein", "hereunder",
"this Agreement" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not any particular provision of this
Agreement and as this Agreement now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced. An Event of
Default shall exist or continue or be continuing until such Event of Default is
waived in accordance with Section 11.3. Any accounting term used herein unless
otherwise defined in this Agreement shall have the meanings customarily given
to such term in accordance with GAAP. For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:
1.1 "Accounts" shall mean, individually and collectively, as to a
Borrower, all of such Borrower's now owned and hereafter acquired rights to
payment for the prior, concurrent or future sale, lease or other disposition of
Inventory or rendition of services, whether or not evidenced by an instrument
or chattel paper and whether or not earned by performance, except to the extent
that any such right to payment arises from the rendition by a Borrower to any
of its subsidiaries or any other Borrower or any of its subsidiaries, of
management services, accounting services, administrative services or other
services unrelated to the sale, lease or other disposition of Inventory and not
directly related to the manufacture or maintenance of Inventory.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (1) the Eurodollar Rate for such Interest Period by (2) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining
the reserve requirement which is or would be applicable to deposits of United
States dollars in a non-United States or an international banking office of
Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan
made with the proceeds of such deposit, whether or not the Reference Bank
actually holds or has made any such deposits or loans. The Adjusted Eurodollar
Rate shall be adjusted on and as of the effective day of any change in the
Reserve Percentage.
1.3 "Applicable Inventory Percentage" shall mean, as to any type or
category of Inventory, the lesser of (i) forty-five (45%) percent, or (ii) the
amount, expressed as a percentage of Borrower's cost of such Inventory, as
shall equal eighty (80%) percent of the appraised orderly liquidation value of
such Inventory, as shown in the appraisal report delivered to Lenders' Agent in
compliance with the provisions of Section 4.1(i) hereof.
1.4 "Availability Reserves" shall mean, as of any date of determination,
such amounts as Lenders' Agent may from time to time establish and revise in
good faith reducing the amount of Revolving Loans and Letter of Credit
Accommodations which would otherwise be available to Borrowers under the
lending formula(s) provided for herein: (a) to reflect events, conditions,
contingencies or risks which, as determined by Lenders' Agent or Lenders in
good faith, do or may (i) adversely affect either (A) any Collateral, the
rights of the Lenders' Agent or Lenders in any Collateral of any Borrower or
any other property which is security for the Obligations or its value or (B)
the security interests and other rights of Lenders' Agent or Lenders in the
Collateral of any Borrower (including the enforceability, perfection and
priority thereof) or (ii) adversely affect in any material respect the assets
(other than any Collateral) or business of any Borrower or any Obligor, (b) to
reflect the good faith belief of Lenders' Agent or Lenders that any collateral
report or financial information furnished by or on behalf of any Borrower or
any Obligor to Lenders' Agent or Lenders is or may have been incomplete,
inaccurate or misleading in any material respect or (c) in respect of any state
of facts which Lenders' Agent or Lenders determine in good faith constitutes an
Event of Default or may, with notice or passage of time or both, constitute an
Event of Default.
1.5 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.6 "Board of Directors" shall mean the board of directors or any duly
constituted committee of any corporation or of a corporate general partner of a
partnership and any similar body empowered to direct the affairs of any other
entity.
1.7 "Borrowers' Agent" shall mean Terex Corporation, a Delaware
corporation, in its capacity as agent for Borrowers hereunder, and any
successor or replacement agent for Borrowers appointed by Borrowers and
approved by Lenders' Agent in writing, and its successors and assigns.
1.8 "Business Day" or "business day" shall mean (a) for the Prime Rate
Loans, any day other than a Saturday, Sunday, or other day on which commercial
banks are authorized or required to close under the laws of the State of New
York or the Commonwealth of Pennsylvania, and a day on which the Reference
Bank, Lenders' Agent and both Lenders are open for the transaction of business,
(b) for all Eurodollar Rate Loans, any such day as described in clause (a)
above in this definition of Business Day, excluding any day on which banks are
closed for dealings in dollar deposits in the London interbank market or other
applicable Eurodollar Rate market, and (c) for all other purposes hereof, any
such day as described in clause (a) above.
1.9 "Change of Control" shall mean (i) the liquidation or dissolution of
any Borrower or the adoption of a plan by the stockholders of any Borrower
relating to the dissolution or liquidation of such Borrower, or (ii) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended), except for any Person or
group owning in excess of forty (40%) percent of the voting power of the Voting
Stock of any Borrower on the date hereof, of a direct or indirect majority in
interest (more than fifty (50%) percent) of the voting power of the Voting
Stock of any Borrower by way of purchase, merger or consolidation or otherwise,
or (iii) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of any Borrower
(which includes any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of such Borrower was approved
by a vote of at least 66-2/3% of the directors 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 of such Borrower.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.11 "Co-Lending Agreement" shall mean the Co-Lending and Agency Agreement
dated on or about the date hereof among Lenders and Lenders' Agent as the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.12 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.13 "Commitment Percentage" shall mean, as to a Lender, its pro rata
share of the Maximum Credit, the Revolving Loans and Letter of Credit
Accommodations, equal to the Commitment Percentage set forth for such Lender on
the signature pages hereof, as such percentage may from time to time be amended
or deemed amended in connection with any increase in the Maximum Credit, or
pursuant to the Co-Lending Agreement or otherwise.
1.14 "Confidential Information" shall mean non-public information supplied
by Borrowers to Lenders and Lenders' Agent the disclosure of which is
restricted by the provisions of Section 12.9 hereof.
1.15 "Consolidated Net Income" shall mean, with respect to any person (the
referent person) for any period, the aggregate of the Net Income of such person
and its consolidated subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; provided, however that (i) the Net Income of any
person that is accounted for by the equity method of accounting will be
included only to the extent of the amount of dividends or distributions paid
during such period to the referent person or a consolidated subsidiary of the
referent person, (ii) the Net Income of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition will
be excluded, and (iii) the Net Income of any non-consolidated subsidiary will
not be included to the extent that declarations of dividends or similar
distributions by that subsidiary are not at the time permitted, directly or
indirectly, by operation of the terms of its organization documents or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that non-consolidated subsidiary or its owners.
1.16 "Eligible Accounts" shall mean, as to a Borrower, Accounts created by
such Borrower which are and continue to be acceptable to Lenders' Agent based
on the criteria set forth below. In general, Accounts shall be Eligible
Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto;
(b) such Accounts are not unpaid more than sixty (60) days from the
original due date thereof or more than one hundred and twenty (120) days after
the date of the original invoice for them, except for such longer periods of
reasonable duration as to any Account with respect to which payment is covered
by the terms of an outstanding and unexpired letter of credit that in all other
respects complies with the requirements of Section 1.16(f)(ii)(A) hereof;
(c) such Accounts are not owed by any account debtor as to which
more than fifty (50%) percent of the aggregate amount thereof are unpaid more
than sixty (60) days past the original due date thereof or are unpaid more than
one hundred and twenty (120) days after the date of the original invoice for
them;
(d) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
(e) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent; provided, however, that,
no Account where the account debtor is a dealer of Inventory shall be deemed
ineligible solely because a Borrower has a buy-back arrangement with such
account debtor effective upon the termination by Borrower of such account
debtor as a dealer, but upon such termination (or any other termination of or
by such account debtor as a dealer) such dealer's Accounts shall become
ineligible;
(f) such Accounts are payable in the United States of America in
United States dollars and (i) the chief executive office of the account debtor
with respect to such Accounts is located in the United States of America,
Canada or Puerto Rico, or (ii) at the option of Lenders' Agent (subject to such
lending formula with respect thereto as Lenders' Agent may determine) if
either: (A) the account debtor has delivered to such Borrower an irrevocable
letter of credit issued or confirmed by a bank reasonably satisfactory to
Lenders' Agent, sufficient to cover such Account, in form and substance
satisfactory to Lenders' Agent and, if required by Lenders' Agent, the original
of such letter of credit has been delivered to Lenders' Agent or a bailee for
Lenders' Agent or Lenders and the issuer thereof notified of the assignment of
the proceeds of such letter of credit to Lenders' Agent, or (B) such Account is
subject to credit insurance payable to Lenders' Agent issued by an insurer
reasonably acceptable and on terms and in an amount acceptable to Lenders'
Agent, or (C) such Account is payable under a sight draft against delivery of
documents of title and accepted by a bank reasonably satisfactory to Lenders'
Agent, and on terms and conditions acceptable to Lenders' Agent, or (D) such
Account is otherwise acceptable in all respects to Lenders' Agent with respect
to the creditworthiness of the account debtor and the ability of the Lenders'
Agent to collect such Accounts; provided, however, that the eligibility
criteria described in clauses (A), (B) and (C) will be determined by Lenders'
Agent in a manner substantially consistent with the procedures in effect under
Terex's and Clark's financing arrangements with Foothill being terminated in
connection herewith;
(g) such Accounts do not consist of progress billings, bill and hold
invoices or retainage invoices, except as to bill and hold invoices, if
Lenders' Agent shall have received an agreement in writing from the account
debtor, in form and substance satisfactory to Lenders' Agent, confirming the
unconditional obligation of the account debtor to take the goods related
thereto and pay such invoice;
(h) the account debtor with respect to such Accounts (x) has not
asserted a counterclaim, defense or dispute, and (y) does not engage in
transactions which give rise to, any right of setoff against such Accounts,
unless in the case of clause (y) such account debtor has entered into a written
agreement in favor of Lenders' Agent, for the benefit of Lenders, and in form
and substance reasonably satisfactory to Lenders' Agent, pursuant to which such
account debtor agrees not to assert any setoff against Accounts owed to any
Borrower;
(i) there are no facts, events or occurrences which Lenders' Agent
believes in good faith would impair the validity, enforceability or
collectability of such Accounts or reduce the amount payable or delay payment
thereunder;
(j) such Accounts are subject to the first priority, valid and
perfected security interest of Lenders' Agent for itself as agent and for the
benefit of Lenders, and any goods giving rise thereto are not, and were not at
the time of the sale thereof, subject to any liens or security interests except
those permitted in this Agreement;
(k) neither the account debtor nor any officer or director of the
account debtor with respect to such Accounts is affiliated with any Borrower
directly or indirectly by virtue of family membership, ownership, control or
management;
(l) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, upon
request of Lenders' Agent, the Federal Assignment of Claims Act of 1940, as
amended or any similar State, local or foreign law, if applicable, has been
complied with in a manner reasonably satisfactory to Lenders' Agent;
(m) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(n) such Accounts of a single account debtor or its affiliates do
not constitute more than fifteen (15%) percent of all otherwise Eligible
Accounts (but the portion of such Accounts not in excess of such percentage may
be deemed Eligible Accounts);
(o) such Accounts are owed by account debtors whose total
indebtedness to all Borrowers in the aggregate or to any one Borrower, does not
exceed the applicable credit limit(s) with respect to such account debtors as
established by Lenders' Agent from time to time (but the portion of such
Accounts not in excess of such credit limit may still be deemed Eligible
Accounts);
(p) such Accounts are not Floor Plan Accounts; and
(q) such Accounts are owed by account debtors deemed creditworthy at
all times by Lenders' Agent, as determined by Lenders' Agent in good faith.
General criteria for Eligible Accounts may be established and revised from time
to time by Lenders' Agent in good faith. Any Accounts which are not Eligible
Accounts shall nevertheless be part of the Collateral.
1.17 "Eligible Inventory" shall mean, as to a Borrower, Inventory
consisting of finished goods held for resale in the ordinary course of the
business of such Borrower, parts held for resale or to be incorporated into
finished goods, and raw materials for such finished goods which are deemed
acceptable to Lenders' Agent in its good faith judgment based on the criteria
set forth below. In general, Eligible Inventory shall not include (a)
work-in-process; (b) spare parts for Equipment; (c) packaging and shipping
materials; (d) supplies used or consumed in such Borrower's business; (e)
Inventory at premises other than those located in the United States of America;
(f) Inventory at premises other than those owned and controlled by such
Borrower, except if Lender shall have received an agreement in writing from the
person in possession of such Inventory and/or the owner or operator of such
premises in form and substance satisfactory to Lenders' Agent acknowledging the
first priority security interest of Lenders' Agent, for itself as agent and for
the benefit of Lenders, in the Inventory, waiving or subordinating in favor of
Lenders' Agent and Lenders security interests and claims by such person against
the Inventory and permitting Lenders' Agent and Lenders access to, and, subject
to such limitations and costs reasonably acceptable to Lenders' Agent, the
right to remain on, the premises so as to exercise the rights and remedies of
Lenders and of Lenders' Agent and otherwise deal with the Collateral; (g)
Inventory subject to a security interest or lien in favor of any person other
than Lenders' Agent for itself as agent and for the benefit of Lenders, except
those permitted in this Agreement; (h) bill and hold goods; (i) unserviceable
or obsolete Inventory; (j) slow moving Inventory of parts or raw materials or
any product or category of finished goods which has not been the subject of a
sale in the ordinary course of business of such Borrower within a reasonable
period of time as determined in good faith by Lenders' Agent after consultation
with such Borrower or Borrowers' Agent; (k) Inventory which is not subject to
the first priority, valid and perfected security interest of Lenders' Agent for
itself as agent and for the benefit of Lenders; (l) returned inventory (unless
such inventory is first quality and is unused), damaged and/or defective
Inventory; (m) Inventory purchased or sold on consignment; and (n) Inventory
which Lenders' Agent determines, in good faith, for any other reason, is not
acceptable for lending purposes. General criteria for Eligible Inventory may
be established and revised from time to time by Lenders' Agent in good faith.
Any Inventory which is not Eligible Inventory shall nevertheless be part of the
Collateral.
1.18 "Equipment" shall mean, collectively, as to a Borrower, all of such
Borrower's now owned and hereafter acquired equipment and fixtures used in the
conduct of a Borrower's business and located in the United States, including,
without limitation, all manufacturing, assembly, distribution, data processing
and office equipment and all machinery, furniture, furnishings, appliances and
trade fixtures.
1.19 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.20 "ERISA Affiliate" shall mean any person required to be aggregated
with a Borrower or any of its Subsidiaries under Sections 414(b), 414(c),
414(m) or 414(o) of the Code.
1.21 "Eurodollar Rate Loans" shall mean any Revolving Loans or portion
thereof on which interest is payable based on the Adjusted Eurodollar Rate in
accordance with the terms hereof.
1.22 "Eurodollar Rate" shall mean with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrowers' Agent and approved by
Lenders' Agent) on or about 11:00 a.m. (Pacific Time) two (2) Business Days
prior to the commencement of such Interest Period in amounts substantially
equal to the principal amount of the Eurodollar Rate Loans requested by
Borrowers' Agent on behalf of and available to one or more Borrowers in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by Borrowers' Agent.
1.23 "Event of Default" shall have the meaning set forth in Section 10.1
hereof.
1.24 "Excess Availability" shall mean the amount, as determined by
Lenders' Agent, calculated at any time, equal to:
(a) the lesser of (i) the amount of the Revolving Loans available to
any and all of Borrowers as of such time based on the applicable lending
formulas multiplied by the Net Amount of Eligible Accounts and the Value of
Eligible Inventory as determined by Lenders' Agent, and subject to the
Inventory Loan Limit, any other sublimits and Availability Reserves from time
to time established by Lenders' Agent hereunder and (ii) the Maximum Credit,
plus
(b) the amount of all unrestricted cash balances in deposit accounts
of Borrowers at banks within the United States, less outstanding checks or
other payment instruments or orders, minus
(c) the aggregate amount of Net Asset Sale Proceeds from time to
time realized, less an amount equal to the aggregate amount of funds used by
Terex or its subsidiaries at any time after a transaction giving rise to Net
Asset Sale Proceeds either (A) to make investments or to repay Indebtedness as
described in clauses (iii)(a) or (b) of Section 4.10 of the Note Indenture (as
in effect on the date hereof), to the extent such use of funds relieves Terex
from the obligation to make an Excess Proceeds Offer (as defined in the Note
Indenture as in effect on the date hereof) in respect of such Net Asset Sale
Proceeds, or (B) to purchase Senior Secured Notes pursuant to a Net Proceeds
Purchase; minus
(d) the sum of: (i) the amount of all then outstanding and unpaid
Obligations, plus (ii) the aggregate amount of all then outstanding and unpaid
trade payables of any and all Borrowers, which are past due at such time for a
period in excess of ninety (90) days past the original due date for such trade
payables, unless such past due trade payables are subject to a written
agreement extending the original due date, provided the applicable Borrower is
then current under such agreement.
1.25 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements and other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by any
Borrower or any Obligor in connection with this Agreement, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.26 "Floor Plan Accounts" shall mean all Accounts which are either (i)
owed to a Borrower by a franchise dealer or other purchaser or lessor who has
incurred or is otherwise liable for any Indebtedness covered by a Floor Plan
Guaranty, or (ii) are payable directly to such Borrower by a floor plan lender
or other person who finances the purchase of the Inventory giving rise to such
Account.
1.27 "Floor Plan Guaranty" shall mean the guarantee by a Borrower of, or
other arrangement under which Borrower may be liable, in whole or in part, for
Indebtedness incurred by a franchise dealer, or other purchaser or lessor, for
the purchase or lease of inventory manufactured or sold by any Borrower or any
of its subsidiaries, the proceeds of which Indebtedness is used solely to pay
the purchase price of inventory sold by such Borrower or such subsidiary to
such franchise dealer and any related fees and expenses (including finance
fees); provided, that (i) to the extent commercially practicable, the
Indebtedness so guaranteed is secured by a perfected first priority lien on
such inventory and the proceeds thereof in favor of the holder of such
Indebtedness and (ii) if such Borrower or such subsidiary is required to make
payment with respect to such guarantee, such Borrower or such subsidiary will
have the right to receive either (a) title to such inventory, (b) a valid
assignment of a first priority perfected lien in such inventory and the
proceeds thereof or (c) the net proceeds of any resale of such inventory.
1.28 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date hereof as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances under determination consistently applied.
1.29 "Hedging Obligations" shall mean, with respect to any person, the
obligations of such person under any of the following agreements or
arrangements to the extent that the primary purpose thereof is reduction of
risk to Borrowers of interest rate fluctuations relating to its customary
business and not interest rate speculation: (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such person against fluctuations
in interest rates.
1.30 "Indebtedness" of any person shall mean (without duplication) (i) all
indebtedness of such person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such person to pay the deferred purchase price of
property or services (other than trade payables on customary terms incurred in
the ordinary course of business), (iv) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (v) all obligations of such Person as
lessee under capitalized leases, (vi) all obligations, contingent or otherwise,
of such Person under bankers' acceptance and letter of credit facilities, (vii)
all obligations of such Person in respect of Hedging Obligations, (viii) all
Indebtedness of others guaranteed by such person, including Floor Plan
Guaranties, and (ix) all Indebtedness of the type referred to in clauses (i)
through (viii) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any lien on
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such person has not assumed or become liable for the
payment of such Indebtedness, provided however, that the amount of such
Indebtedness shall (to the extent such person has not assumed or become liable
for the payment of such Indebtedness) be the lesser of (x) the fair market
value of such property at the time of determination and (y) the amount of such
Indebtedness. 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 at
such date; provided, further, that (A) in the case of each of clauses (i), (ii)
(iii) above, the amount of such Indebtedness will be the amount that would
appear as a liability on the balance sheet of such Person prepared in
accordance with GAAP, and (B) obligations of the Borrowers relating to existing
or future common stock appreciation rights, including, without limitation,
obligations evidenced by the Common Stock Appreciation Rights Agreement (as in
effect on the date hereof) entered into by Terex in favor of the original
purchasers of the Senior Secured Notes in connection with their purchase of
Senior Secured Notes, shall not be considered Indebtedness, but for purposes of
Section 9 hereof, such obligations shall be treated as if such obligations
constituted Indebtedness hereunder.
1.31 "Information Certificate" shall mean, the Information Certificate of
Borrowers containing material information with respect to each Borrower, its
business and assets, as such Information Certificate has been provided by or on
behalf of each Borrower to Lenders and Lenders' Agent in connection with the
preparation of this Agreement and the other Financing Agreements and the
financing arrangements provided for herein.
1.32 "Insolvent" shall mean with respect to any person, that such person
(i) is engaged in business or a transaction, or is about to engage in business
or a transaction, for which any property remaining with such person is an
unreasonably small capital, or (ii) has incurred, or intends to incur, or
believes that it will incur, debts that are or would be beyond such person's
ability to pay as such debts mature.
1.33 "Intellectual Property" shall mean, collectively, as to a Borrower,
all of such Borrower's now owned and hereafter acquired (a) common law and
statutory trademarks, service marks, trade names, trademark and service mark
registrations, applications for trademark or service mark registrations,
corporate names, company names, business names, fictitious business names,
trade styles, logos, other source or business identifiers, copyrights, designs
and all registrations and recordings thereof, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office, United States Register of Copyrights, or in any similar
office or agency of the United States, any state thereof, or any county or any
political subdivision thereof, together with all goodwill associated therewith,
(b) United States and foreign patents and patent applications, (c) utility
models, industrial models, designs, know-how, blue prints, drawings and all
other forms of industrial intellectual property, (d) all grants issued by or
applications pending in the United States Patent and Trademark Office or in any
other country or political subdivision thereof, (e) all extensions, reissues,
continuations, continuations-in-part, and divisions thereof, and (f) all
proceeds of the foregoing (including, without limitation, license royalties and
proceeds of infringement suits).
1.34 "Interest Coverage Ratio" shall have the meaning ascribed to such
term as set forth in the Note Indenture, as in effect on the date hereof.
1.35 "Interest Period" shall mean for any Eurodollar Rate Loan, a period
of approximately one (1), two (2), or three (3) months duration as Borrowers'
Agent may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
Borrowers' Agent may not elect an Interest Period which will end after the last
day of the then current term of this Agreement.
1.36 "Interest Rate" shall mean, as to Prime Rate Loans, a rate of one and
three quarter (1.75%) percent per annum in excess of the Prime Rate and, as to
Eurodollar Rate Loans, a rate of three and three-quarters (3.75%) percent per
annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar Rate
applicable for the Interest Period selected by Borrowers' Agent as in effect
three (3) Business Days after the date of receipt by Lenders' Agent of the
request of Borrowers' Agent for such Eurodollar Rate Loans in accordance with
the terms hereof, whether such rate is higher or lower than any rate previously
quoted to Borrowers' Agent or Borrowers); provided, that, the Interest Rate
shall mean the rate of three and three-quarters (3.75%) percent per annum in
excess of the Prime Rate as to Prime Rate Loans and the rate of five and
three-quarters (5.75%) percent per annum in excess of the Adjusted Eurodollar
Rate as to Eurodollar Rate Loans, at the option of Lenders' Agent, without
notice (a) for the period on and after the date of termination or non-renewal
hereof, or the date of the occurrence of any Event of Default, and for so long
as such Event of Default is continuing and until such time as all Obligations
are paid in full (notwithstanding entry of any judgment against any Borrower)
and (b) on the Revolving Loans at any time outstanding in excess of the amounts
available to any Borrower under Section 2 (whether or not such excess(es),
arise or are made with or without knowledge or consent of Lenders or Lenders'
Agent and whether made before or after an Event of Default) and, provided,
further, that, each of the Interest Rates set forth above shall be reduced by
one-quarter of one (.25%) percent per annum if Terex, together with its
subsidiaries, on a consolidated basis, has a positive Net Income for its full
fiscal year ending on or about December 31, 1995, as reported on its audited
financial statements for such period delivered in accordance with, and meeting
the requirements of, Section 9.6(a) hereof. Such Interest Rate changes, if
applicable, to become effective as to Prime Rate Loans, as of the first day of
the month immediately following the month in which Lenders' Agent receives such
audited financial statements, and as to Eurodollar Rate Loans only as to those
Interest Periods commencing on or after the first day of the month immediately
following the month in which Lenders' Agent receives such audited financial
statements.
1.37 "Inventory" shall mean, as to a Borrower, all of such Borrower's now
owned and hereafter acquired goods (including, without limitation, goods in the
possession of such Borrower or of a bailee or other person for sale, storage,
transit, processing, use or otherwise, and supplies, finished goods, parts and
components located in the United States, Canada or Puerto Rico or in transit to
the United States, Canada or Puerto Rico) which are: (a) held for sale or
lease, (b) furnished or to be furnished under contracts of services, or (c) raw
materials, work-in-process or materials used or consumed in its business.
1.38 "Inventory Loan Limit" shall mean, at any time, as to all Borrowers
on an aggregate basis, the amount equal to (A) $55,000,000 minus (B) the
Applicable Inventory Percentage(s) of the cost of Eligible Inventory to be
acquired under then-undrawn Letter of Credit Accommodations for the purpose of
purchasing Eligible Inventory.
1.39 "Investments" shall mean, with respect to any person, all investments
by such person in other persons (including affiliates) in the forms of loans,
guarantees, advances or capital contributions, purchases or other acquisitions
for consideration of Indebtedness, equity interests, common stock appreciation
rights, or other securities, the acquisition of all or a substantial part of
the assets or business of a person, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP
(excluding (i) commission, travel and similar advances to officers and
employees of such person made in the ordinary course of business and (ii) bona
fide accounts receivable arising from the sale of goods or services in the
ordinary course of business on customary terms consistent with past practice).
1.40 "Lenders' Agent" shall mean Foothill Capital Corporation, a
California corporation, in its capacity as agent for Lenders hereunder and
pursuant to the Co-Lending Agreement, and its successors and assigns, and any
successor or replacement agent for the Lenders appointed pursuant to the
Co-Lending Agreement, and its successors and assigns.
1.41 "Letter of Credit Accommodations" shall mean the letters of credit,
acceptances, merchandise purchase or other guaranties which are from time to
time either (a) issued or opened by either of Lenders or Lenders' Agent for the
account of a Borrower or any Obligor or (b) with respect to which Lenders'
Agent or either or both of Lenders has agreed to indemnify the issuer or
guaranteed to the issuer the performance by a Borrower of its obligations to
such issuer. Without limiting the foregoing, all existing letters of credit,
acceptances, merchandise purchase or other guaranties issued, opened or
indemnified by Foothill for the account of Terex or Clark pursuant to
Foothill's financing arrangements with such entities, as in effect immediately
prior to the effectiveness hereof, shall be deemed to be and constitute Letter
of Credit Accommodations issued, opened or indemnified (as the case may be) on
the date hereof, and subject to all provisions hereof applicable to Letter of
Credit Accommodations hereunder.
1.42 "Loans" shall mean the Revolving Loans.
1.43 "Maximum Credit" shall mean, as to all Borrowers on an aggregate
basis, the lesser of (i) $100,000,000 or (ii) the sum of (A) $60,000,000, plus
(B) the aggregate amount of any commitments to participate in the Lenders'
interests in the financing arrangements hereunder obtained by Lenders after the
date hereof from Participants acceptable to a Lender who have entered into
participation agreements with such Lender on terms satisfactory to such Lender.
1.44 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the
amount thereof and (b) returns, discounts, claims, credits and allowances of
any nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto.
1.45 "Net Asset Sale Proceeds" shall have the meaning ascribed to the term
"Net Proceeds" in the Note Indenture, as in effect on the date hereof.
1.46 "Net Income" shall mean, with respect to any person for any period,
the net income (loss) of such Person for such period, determined in accordance
with GAAP, excluding, any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with
any sales of assets and dispositions pursuant to sale and leaseback
transactions, and excluding any extraordinary gain (but not loss), together
with any related provision for taxes on such gain (but not loss).
1.47 "Net Proceeds Purchase" shall mean a purchase by Terex of the Senior
Secured Notes pursuant to a mandatory offer by Terex in respect of Net Asset
Sale Proceeds, as and to the extent required pursuant to Section 4.10 of the
Note Indenture as in effect on the date hereof.
1.48 "Note Indenture" shall mean the Indenture, dated of even date
herewith, by and among Terex, as issuer, the Guarantors named therein and the
Note Trustee, in connection with and governing the rights of the holders of the
Senior Secured Notes, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.49 "Note Trustee" shall mean United States Trust Company of New York, a
New York corporation, acting in its capacity as trustee or as collateral agent
on behalf of the holders of the Senior Secured Notes pursuant to the Note
Indenture and the agreements delivered in connection therewith, and its
successors and assigns (and including, without limitation, any successor,
replacement, assignee or additional person at any time acting as trustee and/or
collateral agent for the benefit of the holders of the Senior Secured Notes).
1.50 "Obligations" shall mean any and all Revolving Loans, Letter of
Credit Accommodations and all other obligations, liabilities and indebtedness
of every kind, nature and description owing by any or all Borrowers to Lenders'
Agent and/or either or both of Lenders arising under or in connection with this
Agreement, including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, arising under or in connection with this Agreement, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to any or all Borrowers under the United States Bankruptcy
Code or any similar statute (including, without limitation, the payment of
interest and other amounts which would accrue and become due but for the
commencement of such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured.
1.51 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than any of
Borrowers.
1.52 "Old Senior Notes" shall mean, individually and collectively, the
following (as the same now exist): (a) the 13% Senior Secured Notes due 1996
issued by Terex pursuant to an Indenture dated as of July 31, 1992, payable to
the order of the holders thereof in the original principal amount of
$160,000,000 and (b) the 13.5% Senior Subordinated Notes due 1997, issued by
Terex pursuant to an Indenture dated as of June 30, 1987, payable to the
holders thereof in the original principal amount of $50,000,000.
1.53 "Old Trustees" shall mean United States Trust Company of New York and
Bank of America Illinois, in their capacity as trustees for the Old Senior
Notes.
1.54 "Participant" shall mean any person which at any time participates
with either or both of Lenders in respect of the Revolving Loans, the Letter of
Credit Accommodations or other Obligations or any portion thereof.
1.55 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.56 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, limited liability company, a limited liability partnership,
corporation (including, without limitation, any corporation which elects
subchapter S status under the Code, business trust, unincorporated association,
joint stock corporation, trust, joint venture or other entity or any government
or any agency or instrumentality or political subdivision thereof.
1.57 "Prime Rate" shall mean the rate from time to time publicly announced
by CoreStates Bank, N.A., or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced rate is the best
rate available at such bank.
1.58 "Prime Rate Loans" shall mean any Revolving Loans or portion thereof
on which interest is payable based on the Prime Rate in accordance with the
terms thereof.
1.59 "Purchase Agreements" shall mean, individually and collectively, the
Share Purchase Agreement, dated October 19, 1994, presently between TCI, as
assignee of New Terex Holdings UK Limited, a corporation formed under the laws
of the United Kingdom, and Seller, as amended through the date hereof, and all
other agreements of transfer as are referred to therein and all side letters
with respect thereto and all agreements, documents and instruments executed
and/or delivered in connection therewith as all of the foregoing now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.60 "Purchased Stock" shall mean all of the issued and outstanding shares
of common stock of Legris Industries, Inc., a Delaware corporation and 99.18%
of the capital shares of P.P.M., S.A., a societe anonyme organized under the
laws of France.
1.61 "Receivables" shall mean, as to a Borrower, all of such Borrower's
now owned and hereafter acquired (a) Accounts, (b) general intangibles for
money due or to become due (including, without limitation, intercompany
obligations) which arise from the sale, lease or other disposition of Inventory
or rendition of services, except to the extent any of the foregoing arise from
rendition by such Borrower to any of its subsidiaries or any other Borrower or
its subsidiaries, of management services, accounting services, administrative
services or other services unrelated to the sale, lease or other disposition of
Inventory and not directly related to the manufacture or maintenance of
Inventory, (c) chattel paper and instruments evidencing indebtedness which
arise from the sale, lease or other disposition of Inventory or rendition of
services, except to the extent any of the foregoing arise from rendition by
such Borrower to any of its subsidiaries or any other Borrower or its
subsidiaries, of management services, accounting services, administrative
services or other services unrelated to the sale, lease or other disposition of
Inventory and not directly related to the manufacture or maintenance of
Inventory, (d) interest, late charges, collection fees and other sums owed in
connection with the foregoing, and (e) interests in Inventory (including,
without limitation, returned, repossessed and reclaimed goods) which give rise
to any of the foregoing.
1.62 "Records" shall mean, as to a Borrower, all of such Borrower's
present and future books of account, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of such Borrower
with respect to the foregoing maintained with or by any other person).
1.63 "Reference Bank" shall mean CoreStates Bank, N.A., or such other bank
as Lenders may from time to time designate.
1.64 "Revolving Loans" shall mean the loans now or hereafter made by
Lenders' Agent for and on behalf of Lenders to or for the benefit of any or all
of Borrowers on a revolving basis (involving advances, repayments and
readvances) as set forth in Section 2.1 hereof.
1.65 "Seller" shall mean either one or both of Legris Industries, S.A., a
societe anonyme organized under the laws of France, and Potain S.A., a societe
anonyme organized under the laws of France, and their successors and assigns.
1.66 "Senior Secured Notes" shall mean, individually and collectively, the
13 1/4% Senior Secured Notes due 2002 issued by Terex pursuant to the Note
Indenture, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.67 "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
(i) any corporation, association or other business entity of which more than
fifty (50%) percent of the total voting power of shares of Voting Stock thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person or a combination thereof
and (ii) any partnership in which such Person or any of its Subsidiaries is a
general partner.
1.68 "TCI" shall mean Terex Cranes, Inc., a Delaware corporation, and its
successors and assigns.
1.69 "Uniform Commercial Code" or "UCC" shall mean the Uniform Commercial
Code of the State of New York.
1.70 "Value" shall mean, as determined by Lenders' Agent in good faith,
with respect to Inventory, the lower of (a) cost computed on a
first-in-first-out basis in accordance with GAAP or (b) market value.
1.71 "Voting Stock" shall mean with respect to any Person, (i) one or more
classes of capital stock of such Person having general voting powers to elect
at least a majority of the board of directors, managers or trustees of such
Person (irrespective of whether or not at the time capital stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency) and (ii) any capital stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
capital stock of such Person described in clause (i) above.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions contained herein,
each of the Lenders severally, but not jointly, agrees to make Revolving Loans
to the respective Borrowers through Lenders' Agent, and authorizes and appoints
Lenders' Agent to make such Revolving Loans to the respective Borrowers, for
the account of and as agent for Lenders, from time to time in an amount equal
to such Lender's pro rata share, based on its Commitment Percentage, of the
amounts requested by each such Borrower or by Borrowers' Agent on behalf of and
as agent for each such Borrower, up to the amount equal to the sum of:
(i) (A) with respect to each of Terex, Koehring and PPM US,
seventy five (75%) percent of its respective Net Amount of Eligible Accounts,
and (B) with respect to Clark, seventy (70%) percent of its Net Amount of
Eligible Accounts, plus
(ii) the Applicable Inventory Percentage(s) of the Value of
Eligible Inventory of such Borrower, less
(iii) any Availability Reserves established as to such Borrower
in accordance with this Agreement.
(b) Lenders' Agent, may, in its discretion, from time to time, upon
not less than five (5) days' prior notice to Borrowers' Agent, (i) reduce the
lending formula with respect to Eligible Accounts for any Borrower to the
extent that Lenders' Agent determines in good faith that: (A) the dilution with
respect to the Accounts for such Borrower for any period (based on the ratio of
(1) the aggregate amount of reductions in Accounts for such Borrower other than
as a result of payments in cash to (2) the aggregate amount of total sales of
such Borrower) has increased in any material respect or may be reasonably
anticipated to increase in any material respect above historical levels, or (B)
the general creditworthiness of account debtors of such Borrower has declined
or (ii) reduce the lending formula(s) with respect to Eligible Inventory for
any Borrower to the extent that Lenders' Agent determines in good faith that:
(A) the number of days of the turnover of the Inventory of such Borrower for
any period has changed in any material adverse respect or (B) the liquidation
value of the Eligible Inventory of such Borrower, or any category thereof, has
decreased, or (C) the nature and quality of the Inventory of such Borrower has
deteriorated in any material respect or the mix of such Inventory has changed
materially and adversely. In determining whether to reduce the lending
formula(s), Lenders' Agent may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts, Eligible
Inventory or in establishing Availability Reserves.
(c) Except in the discretion of Lenders' Agent, the aggregate amount
of the Revolving Loans and the Letter of Credit Accommodations outstanding at
any time to all Borrowers shall not exceed the Maximum Credit and the aggregate
Revolving Loans outstanding at any time to all Borrowers based on the aggregate
Value of Eligible Inventory of all Borrowers shall not exceed the Inventory
Loan Limit at such time. Subject to the terms and conditions of this
Agreement, the respective Borrowers may borrow, shall repay, and may reborrow
such amounts (if any) as are determined in good faith by Lenders' Agent to be
available to them as Revolving Loans and Letter of Credit Accommodations. In
the event that the outstanding amount of any component of the Revolving Loans,
or the aggregate amount of the outstanding Revolving Loans and Letter of Credit
Accommodations, exceed the amounts available under the lending formulas, the
Inventory Loan Limit, the sublimits for Letter of Credit Accommodations set
forth in Section 2.2(c) or the Maximum Credit, as applicable, such event shall
not limit, waive or otherwise affect any rights of Lenders or Lenders' Agent in
that circumstance or on any future occasions and Borrowers shall, upon demand
by Lenders' Agent upon Borrowers' Agent, which may be made at any time or from
time to time, immediately repay to Lenders' Agent the entire amount of any such
excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained herein,
at the request of Borrowers' Agent on behalf of a Borrower, Lenders' Agent
agrees, as agent for Lenders for their several, but not joint, credit risk on a
pro rata basis in accordance with their Commitment Percentages, to provide or
arrange for Letter of Credit Accommodations for the account of such Borrower
containing terms and conditions acceptable to Lenders' Agent and the issuer
thereof. Any payments made by Lenders' Agent to any issuer thereof and/or
related parties in connection with the Letter of Credit Accommodations shall
constitute additional Revolving Loans to such Borrower pursuant to this Section
2.
(b) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, each Borrower
for whose account a Letter of Credit Accommodation is issued shall pay to
Lenders' Agent for the benefit of Lenders a letter of credit fee at a rate
equal to two (2%) percent per annum on the daily outstanding balance of the
Letter of Credit Accommodations for each month (or part thereof), payable in
arrears as of the first day of each month for the immediately preceding month.
Such letter of credit fee shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed and the Obligation of such
Borrower to pay such fee shall survive the termination or non-renewal of this
Agreement.
(c) No Letter of Credit Accommodations shall be available unless on
the date of the proposed issuance of any Letter of Credit Accommodations for
the account of a Borrower, the Revolving Loans available to such Borrower
(subject, without limitation, to the Maximum Credit, the Inventory Loan Limit
and any Availability Reserves) are equal to or greater than: (i) if the
proposed Letter of Credit Accommodation is for the purpose of purchasing
Eligible Inventory, the sum of (A) one hundred (100%) percent minus the
Applicable Inventory Percentage(s), multiplied by the cost of such Eligible
Inventory, plus (B) freight, taxes, duty and other amounts which Lenders' Agent
estimates must be paid in connection with such Inventory upon arrival and for
delivery to one of such Borrower's locations for Eligible Inventory within the
United States and (ii) if the proposed Letter of Credit Accommodation is for
any other purpose, an amount equal to one hundred (100%) percent of the face
amount thereof and all other commitments and obligations made or incurred by
Lenders' Agent or Lenders with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation, the amount of Revolving Loans which might
otherwise be available to such Borrower shall be reduced by the applicable
amount set forth in Section 2.2(c)(i) or Section 2.2(c)(ii).
(d) Except in the discretion of Lenders' Agent, (i) the aggregate
amount of all outstanding Letter of Credit Accommodations to all Borrowers and
all other commitments and obligations made or incurred by Lenders' Agent in
connection therewith, shall not at any time exceed $15,000,000 and (ii) the
amount of all outstanding Letter of Credit Accommodations for the purpose of
purchasing Eligible Inventory for all Borrowers and all other commitments and
obligations made or incurred by Lenders' Agent and Lenders in connection
therewith shall not at any time exceed: (A) the Inventory Loan Limit minus (B)
the amount of the then outstanding Revolving Loans based on Eligible Inventory
pursuant to Section 2.1(a)(ii) hereof. At any time an Event of Default exists
or has occurred and is continuing, upon request by Lenders' Agent, Borrowers
will either furnish cash collateral to secure the reimbursement obligations to
the issuer in connection with any Letter of Credit Accommodations or furnish
cash collateral to Lenders' Agent for the Letter of Credit Accommodations, and
in either case, the Revolving Loans otherwise available to any Borrower shall
not be reduced as provided in Section 2.2(c) to the extent of such cash
collateral.
(e) Borrowers shall indemnify and hold Lenders' Agent and each of
Lenders harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses which Lenders' Agent or either or both Lenders
may suffer or incur in connection with any Letter of Credit Accommodations and
any documents, drafts or acceptances relating thereto, including, but not
limited to, any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent with respect to any Letter of
Credit Accommodation; provided, however, that Borrowers shall have no
obligation to indemnify a Lender or Lenders' Agent for any such losses, claims,
damages, liabilities, costs and expenses to the extent directly caused by the
willful misconduct or gross negligence of such Lender or Lenders' Agent
otherwise entitled to be indemnified and held harmless, as determined by a
final, non-appealable judgment of a court of competent jurisdiction. Borrowers
assume all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed the agent for the Borrowers. Borrowers
assume all risks for, and agree to pay, all foreign, Federal, State and local
taxes, duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Borrowers
hereby release and hold Lenders and Lenders' Agent harmless from and against
any acts, waivers, errors, delays or omissions, whether caused by Lenders or
Lenders' Agent, by any issuer or correspondent or otherwise with respect to or
relating to any Letter of Credit Accommodation, except any of the foregoing
directly caused by the willful misconduct or gross negligence of such Lender or
Lenders' Agent otherwise to be released and held harmless, as determined by a
final, non-appealable judgment of a court of competent jurisdiction. The
provisions of this Section 2.2(e) shall survive the payment of Obligations and
the termination or non-renewal of this Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
Borrowers' Agent or any Borrower any right or authority to pledge the credit of
Lenders' Agent or Lenders in any manner. Neither Lenders' Agent nor either of
Lenders shall have liability of any kind with respect to any Letter of Credit
Accommodation provided by an issuer other than Lenders' Agent or either of
Lenders unless Lenders' Agent or either or both Lenders has, in accordance
herewith, duly executed and delivered to such issuer the application or a
guarantee or indemnification in writing with respect to such Letter of Credit
Accommodation. Borrowers shall be bound by any interpretation made in good
faith by Lenders' Agent or by the issuer or correspondent under or in
connection with any Letter of Credit Accommodation or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of Borrowers or Borrowers' Agent. At any
time an Event of Default exists or has occurred and is continuing, Lenders'
Agent shall have the sole and exclusive right and authority in good faith, to,
and Borrowers and Borrowers' Agent shall not (i) approve or resolve any
questions of non-compliance of documents, (ii) give any instructions as to
acceptance or rejection of any documents or goods, (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery
orders. At any time an Event of Default exists or has occurred and is
continuing, Lenders' Agent shall have the sole and exclusive right and
authority in good faith, to, and Borrowers and Borrowers' Agent shall not at
any time (x) grant any extensions of the maturity of, time of payment for, or
time of presentation of, any drafts, acceptances, or documents, or (y) agree to
any amendments, renewals, extensions, modifications, changes or cancellations
of any of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters
of credit included in the Collateral. Lenders' Agent may take such actions
either in its own name or in any Borrower's name, or in the name of Lenders'
Agent or in the name of Borrowers' Agent.
(g) Nothing herein contained in Section 2.2(f) or elsewhere in this
Agreement shall in any event operate to restrict the rights of any issuer of a
Letter of Credit Accommodation or correspondent thereof at any time or to
render Lenders or Lenders' Agent liable for any exercise of rights by an issuer
or correspondent thereof.
(h) Any rights, remedies, duties or obligations granted or
undertaken by any Borrower or Borrowers' Agent to any issuer or correspondent
in any application for any Letter of Credit Accommodation, or any other
agreement in favor of any issuer or correspondent relating to any Letter of
Credit Accommodation, shall be deemed to have been granted or undertaken by
such Borrower or Borrowers' Agent on behalf of such Borrower, to Lenders'
Agent. Any duties or obligations undertaken by a Lender or Lenders' Agent to
any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by a Lender or Lenders' Agent in favor of
any issuer or correspondent relating to any Letter of Credit Accommodation,
shall be deemed to have also been undertaken in favor of Lenders and Lenders'
Agent by the Borrower for whose account the Letter of Credit Accommodation was
issued and to apply in all respects to such Borrower.
2.3 Availability Reserves. All Revolving Loans otherwise available to
Borrowers pursuant to the lending formulas and subject to the Maximum Credit,
the Inventory Loan Limit and other applicable limits hereunder shall be subject
to the continuing right of Lenders' Agent to establish and revise Availability
Reserves in accordance with this Agreement.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Lenders' Agent, for the benefit of
Lenders, interest on the outstanding principal amount of the non-contingent
Obligations at the Interest Rate. All interest accruing hereunder on and after
the date of, and during the continuance of, any Event of Default, or after
termination or non-renewal hereof, shall be payable on demand.
(b) Borrowers' Agent may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar
Rate Loans continue for an additional Interest Period. Such request from
Borrowers' Agent shall specify the amount of the Prime Rate Loans which will
constitute Eurodollar Rate Loans (subject to the limits set forth below) and
the Interest Period to be applicable to such Eurodollar Rate Loans. Subject to
the terms and conditions contained herein, three (3) Business Days after
receipt by Lenders' Agent of such a request from Borrowers' Agent, such Prime
Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate
Loans shall continue, as the case may be, provided, that, (i) no Event of
Default, or event which with notice or passage of time or both would constitute
an Event of Default, exists or has occurred and is continuing, (ii) no party
hereto shall have sent, pursuant to the terms hereof, any notice of termination
or non-renewal of this Agreement, (iii) Borrowers' Agent shall have complied
with such customary procedures as are established by Lenders' Agent and
specified by Lenders' Agent to Borrowers' Agent from time to time for requests
by Borrowers' Agent for Eurodollar Rate Loans, (iv) no more than five (5)
Interest Periods may be in effect at any one time, (v) the aggregate amount of
the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, (vi) the maximum amount of
the Eurodollar Rate Loans at any time requested by Borrowers' Agent shall not
exceed the amount equal to eighty (80%) percent of the lowest principal amount
of the Revolving Loans which it is anticipated will be outstanding during the
applicable Interest Period, as determined in good faith by Lenders' Agent (but
with no obligation of Lenders' Agent to make such Revolving Loans) and (vii)
Lenders' Agent shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to Lenders' Agent through the Reference Bank and
can be readily determined as of the date of the request for such Eurodollar
Rate Loan by Borrowers' Agent. Any request by Borrowers' Agent to convert
Prime Rate Loans to Eurodollar Rate Loans or to continue any existing
Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the
contrary contained herein, Lenders' Agent and Reference Bank shall not be
required to purchase United States dollar deposits in the London interbank
market or other applicable Eurodollar Rate market to fund any Eurodollar Rate
Loans, but the provisions hereof shall be deemed to apply as if Lender and
Reference Bank had purchased such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Lenders'
Agent has received and approved a request to continue such Eurodollar Rate
Loans at least three (3) Business Days prior to such last day in accordance
with the terms hereof. Any Eurodollar Rate Loans shall, at the option of
Lenders' Agent, upon notice by Lenders' Agent to Borrowers' Agent, convert to
Prime Rate Loans in the event that (i) an Event of Default or event which with
the notice or passage of time or both would constitute an Event of Default,
shall exist and be continuing, (ii) this Agreement shall terminate or not be
renewed, or (iii) the aggregate principal amount of the Prime Rate Loans which
have previously been converted to Eurodollar Rate Loans or existing Eurodollar
Rate Loans continued, as the case may be, at the beginning of an Interest
Period shall at any time during such Interest Period exceed either (A) the
aggregate principal amount of the Revolving Loans then outstanding, or (B) the
amount of the Revolving Loans then available to Borrowers under Section 2
hereof. Borrowers shall pay to Lenders' Agent, upon demand by Lenders' Agent
(or Lenders' Agent may, at its option, charge any loan account of Borrowers)
any amounts required to compensate Lenders' Agent, Lenders, the Reference Bank
or any Participant for any out-of-pocket loss, cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate
Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Lenders' Agent, for
the benefit of Lenders, monthly in arrears, not later than the first day of
each calendar month and shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed. The Interest Rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs. In no event shall charges constituting interest
payable by Borrowers to Lenders' Agent, for the benefit of Lenders, exceed the
maximum amount or the rate permitted under any applicable law or regulation,
and if any such part or provision of this Agreement is in contravention of any
such law or regulation, such part or provision shall be deemed amended to
conform thereto.
3.2 Closing Fee. Borrowers shall pay to Lenders' Agent, for the benefit
of Lenders, as a closing fee, the amount of $1,250,000, which fee, subject to
adjustment below, shall be fully earned as of the date hereof, of which (i) the
sum of $300,000 previously paid to Lenders as a commitment fee shall be
credited against such closing fee, (ii) the sum of $75,000 shall be due and
payable on the date hereof, and (iii) the sum of $875,000 shall be due and
payable in amounts equal to five-eighths of one percent (.625%) of each
increase in the Maximum Credit above $60,000,000 payable upon receipt by
Borrowers' Agent of written advice of such increase by Lenders' Agent, and the
balance thereof shall be due and payable one (1) year from the date hereof;
provided, that the portion of such amount payable under clause (iii) one (1)
year from the date hereof shall be adjusted so that the aggregate closing fee
payable under this Section 3.2 shall equal one and one-quarter (1.25%) percent
of the highest Maximum Credit in effect at any time on or after the date
hereof, and the amount to be paid under clause (iii), as so adjusted, shall
become immediately due and payable without notice or demand, at the option of
Lenders' Agent upon the occurrence of an Event of Default or upon termination
hereof.
3.3 Servicing Fee. Borrowers shall pay to Lenders' Agent, monthly, for
the benefit of Lenders and Lenders' Agent, a servicing fee in an amount equal
to $15,000 in respect of Lenders' and Lenders' Agent's services for each month
(or part thereof) while this Agreement remains in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on the date hereof and on the first day of
each month hereafter.
3.4 Unused Line Fee. Borrowers shall pay to Lenders' Agent monthly, for
the benefit of Lenders, an unused line fee at a rate equal to one-quarter of
one (.25%) percent per annum calculated upon the amount by which the average
daily principal balance of the outstanding Revolving Loans and Letter of Credit
Accommodations during the immediately preceding month (or part thereof) while
this Agreement is in effect and for so long thereafter as any of the
Obligations are outstanding is less than (i) $50,000,000 for all months (or
parts thereof) during the period from the date hereof through the first
anniversary of the date hereof, and (ii) $75,000,000 (or such lesser amount,
not below $60,000,000, as shall equal the Maximum Credit from time to time in
effect) for all months (or parts thereof) during the period after the first
anniversary of the date hereof, which fee under this Section 3.4 shall be
payable on the first day of each month in arrears.
3.5 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lenders' Agent to Borrowers' Agent,
convert to Prime Rate Loans in the event that (i) any change in applicable law
or regulation (or the interpretation or administration thereof) shall either
(A) make it unlawful for any of Lenders' Agent, Lenders, Reference Bank or any
Participant to make or maintain Eurodollar Rate Loans or to comply with the
terms hereof in connection with the Eurodollar Rate Loans, by an amount deemed
in good faith by Lenders' Agent to be material, or (B) shall result in the
increase in the costs to any of Lenders' Agent, Lenders, Reference Bank or any
Participant of making or maintaining any Eurodollar Rate Loans or (C) reduce
the amounts received or receivable by Lenders' Agent or Lenders or any
Participant in respect thereof, by an amount deemed by Lenders' Agent to be
material or (ii) the cost to any of Lenders' Agent, Lenders, Reference Bank or
any Participant, which is determined by Lenders' Agent to be attributable in
good faith to making or maintaining any Eurodollar Rate Loans, shall otherwise
increase by an amount deemed by Lenders' Agent to be material. In the
circumstances described in clauses (i)(B), (i)(C) or (ii), in lieu of
conversion to Prime Rate Loans, Borrowers shall have the option, for the
balance of the Interest Period(s) for then outstanding Eurodollar Rate Loans,
of paying any and all increased costs and expenses incurred in good faith by
any of Lenders' Agent, Lenders, the Reference Bank or any Participant, together
with the aggregate amount received or receivable by Lenders' Agent and Lenders
which has been reduced in respect of such Eurodollar Rate Loans. In the event
of any conversion of Eurodollar Rate Loans to Prime Rate Loans, Borrowers shall
pay to Lenders' Agent, upon demand by Lenders' Agent (or Lenders' Agent may, at
its option, charge any loan account of Borrowers) any amounts determined in
good faith by Lenders' Agent to be required to compensate any of Lenders'
Agent, Lenders, the Reference Bank or any Participant for any out-of-pocket
loss, cost or expense incurred in good faith by such person as a result of the
foregoing, including, without limitation, any such loss, cost or expense
incurred in good faith by reason of the liquidation or reemployment of deposits
or other funds acquired by such person to make or maintain the Eurodollar Rate
Loans or any portion thereof. A certificate of Lenders' Agent setting forth
the basis for the determination of such amount necessary to compensate such
person as aforesaid shall be delivered to Borrowers' Agent and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lenders' Agent other than on the last day of the
applicable Interest Period (whether pursuant to acceleration, upon maturity or
otherwise), including any payments pursuant to the application of collections
under Section 6.3 or any other payments made with the proceeds of Collateral,
Borrowers shall pay to Lenders' Agent for the benefit of Lenders, upon demand
by Lenders' Agent (or Lenders' Agent may, at its option, charge to any loan
account of any Borrower) any amounts determined in good faith by Lenders' Agent
to be required to compensate Lenders' Agent, Lenders, the Reference Bank or any
Participant for any out-of-pocket loss, cost or expense incurred in good faith
by such person as a result of such prepayment or payment, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such person to make or
maintain such Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Revolving Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lenders'
Agent making the initial Revolving Loans and providing the initial Letter of
Credit Accommodations hereunder:
(a) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, all releases, terminations and such
other documents as Lenders' Agent may request to evidence and effectuate the
termination by the existing lender or lenders to Borrowers of their respective
financing arrangements with any Borrowers and the termination and release by it
or them, as the case may be, of any interest in and to any assets and
properties of Borrowers and each Obligor, duly authorized, executed and
delivered by it or each of them, including, but not limited to UCC termination
statements or other lien discharges for all UCC financing statements and other
instruments evidencing or creating any lien previously filed by it or any of
them or their predecessors, as secured party or lien holder and any Borrower,
as debtor or grantor relating to any of the Collateral, or relating to any
other property of Borrowers except for those financing statements and other
instruments creating or evidencing security interests in or liens upon
property, other than the Collateral, evidencing security interests permitted by
the terms hereof;
(b) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, evidence that (i) Terex has
completed the issuance of all of the Senior Secured Notes pursuant to the terms
of the Note Indenture and the Offering Circular with respect thereto previously
delivered to Lenders (except for the non-fulfillment of any terms thereof or
waiver of any conditions precedent contained therein that are disclosed to and
consented to in writing by Lenders and Lenders' Agent), (ii) Terex has received
gross cash proceeds in an amount not less than $250,000,000 from the issuance
of the Senior Secured Notes and the related common stock appreciation rights
and (iii) such cash proceeds received by Terex have been (x) deposited with the
Old Trustees, in trust, for application solely to the defeasance and redemption
of all of the Old Senior Notes, and (y) applied to the purchase price of the
Purchased Stock payable pursuant to the Purchase Agreements, the repayment of
the debt of the Sellers as provided under the Purchase Agreements and a portion
of costs, fees and expenses incurred in connection with such defeasance and
redemption, such repayment of debt and the issuance of the Senior Secured
Notes;
(c) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, a pro-forma consolidated and
consolidating balance sheet of each of the Borrowers and their subsidiaries
reflecting the initial transactions contemplated hereunder, including, but not
limited to, (i) the consummation of the acquisition of the Purchased Stock by
TCI from Seller and the other transactions contemplated by the Purchase
Agreements, (ii) the consummation of the issuance by Terex of the Senior
Secured Notes, (iii) the defeasance and redemption by Terex of the Old Senior
Notes and (iv) the Revolving Loans and Letter of Credit Accommodations provided
by Lenders' Agent to Borrowers on the date hereof and the use of the proceeds
of the Revolving Loans as provided herein, accompanied by a certificate, dated
of even date herewith, of the chief financial officer of Terex, stating that
such pro-forma balance sheet represents the reasonable, good faith opinion of
such officer as to the subject matter thereof as of the date of such
certificate;
(d) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, evidence that Lenders' Agent has,
for itself as agent and for the benefit of Lenders, valid perfected and first
priority security interests in and liens upon the Collateral and any other
property which is intended to be security for the Obligations or the liability
of any Obligor in respect thereof, subject only to the security interests and
liens permitted herein or in the other Financing Agreements;
(e) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, evidence that the Purchase
Agreements have been duly executed and delivered by and to the appropriate
parties thereto and the transactions contemplated under the terms of the
Purchase Agreements have been consummated prior to, or contemporaneously with,
the execution of this Agreement;
(f) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, evidence that Terex has contributed
as an equity capital contribution to TCI all of the assets owned and used by
Terex exclusively in the business of its Koehring Cranes and its Marklift
divisions, which in turn will be contributed by TCI as an equity capital
contribution to Koehring, a wholly owned subsidiary of TCI;
(g) no material adverse change shall have occurred in the assets,
business or prospects of any Borrower since the date of Lenders' latest field
examination and no change or event shall have occurred which would impair the
ability of any Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of
Lenders' Agent or Lenders to enforce the Obligations or realize upon the
Collateral;
(h) Lenders' Agent and Lenders shall have completed a field review
of the Records and such other information with respect to the Collateral as
Lenders' Agent or either Lender may require to determine the amount of
Revolving Loans available to the respective Borrowers, the results of which
shall be satisfactory to Lenders and Lenders' Agent, not more than three (3)
Business Days prior to the date hereof;
(i) Lenders' Agent shall have received a written report of an
appraisal conducted at Borrowers' expense, by an appraiser acceptable to
Lenders, addressed to Lenders or on which Lenders are expressly permitted to
rely, in form, scope and methodology satisfactory to both Lenders, setting
forth the orderly liquidation values of each type or category of Inventory of
Borrowers, and expressing such values as a percentage of Borrowers' cost of
such inventory.
(j) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, all consents, waivers,
acknowledgments and other agreements from third persons which Lenders' Agent or
either Lender may deem necessary or desirable in order to permit, protect and
perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including, without limitation, acknowledgements by lessors,
mortgagees and warehousemen of the security interests of Lenders' Agent and
Lenders in the Collateral, waivers or subordinations in favor of Lenders and
Lenders' Agent by such persons of any security interests, liens or other claims
by such persons to the Collateral and agreements permitting Lenders' Agent and
Lenders access to, and, subject to limitations and costs reasonably acceptable
to Lenders' Agent, the right to remain on, the premises to exercise its rights
and remedies and otherwise deal with the Collateral;
(k) Borrowers shall have, in the aggregate, Excess Availability, as
determined by Lenders' Agent as of the date hereof, in an amount not less than
$25,000,000, after giving effect to the application of the initial Revolving
Loans and Letter of Credit Accommodations hereunder and after provision for
payment of all fees and expenses of the transactions contemplated by this
Agreement, the Purchase Agreements and the Offering Circular relating to the
Senior Secured Notes; provided, however, that in determining Excess
Availability solely for purposes of determining whether the condition set forth
in this Section 4.1(k) is satisfied, the amount calculated under clause (a) of
the definition of Excess Availability shall be the amount calculated under
clause (a)(i) of such definition, even if the Maximum Credit (as referred to in
clause (a)(ii) of such definition) is a lesser amount as of the date hereof;
(l) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, an intercreditor agreement executed
and delivered by Note Trustee in favor of Lenders and Lenders' Agent, as
acknowledged and agreed to by Borrowers, with respect to the relative priority
of the respective security interests and pledges with respect to the property
of Borrowers held by, respectively, the Note Trustee and by Lenders' Agent for
itself as agent and for the benefit of Lenders, and providing for certain
restrictions on the enforcement by the Note Trustee of certain rights and
remedies of Note Trustee on behalf of the holders of the Senior Secured Notes
and related matters, duly authorized, executed and acknowledged by Lenders,
Note Trustee and Borrowers;
(m) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, an absolute and unconditional
continuing guarantee by each of the Borrowers of payment and performance of the
Obligations of each of the other Borrowers, and an absolute and unconditional
continuing guarantee by CMH Acquisition Corp. and Legris-US of payment and
performance of the Obligations of the Borrowers;
(n) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, blocked account or lockbox
agreements with such banks as are acceptable to Lenders' Agent and Lenders;
(o) Lenders' Agent shall have received evidence of insurance and
loss payee endorsements required hereunder and under the other Financing
Agreements, in form and substance satisfactory to Lenders' Agent and Lenders,
and certificates of insurance policies and/or endorsements naming Lenders'
Agent as loss payee for the benefit of Lenders;
(p) Lenders' Agent shall have received, in form and substance
satisfactory to Lenders' Agent and Lenders, such opinion letters of counsel to
Borrowers and Obligors with respect to the Financing Agreements, the Purchase
Agreements, the issuance of the Senior Secured Notes pursuant to the Note
Indenture and such other matters as either Lender or Lenders' Agent may
request; and
(q) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to
Lenders' Agent, in form and substance satisfactory to Lenders and Lenders'
Agent.
4.2 Conditions Precedent to All Revolving Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
Lenders' Agent making Revolving Loans and/or providing Letter of Credit
Accommodations to Borrowers, including the initial Revolving Loans and Letter
of Credit Accommodations and any future Revolving Loans and Letter of Credit
Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been
made on and as of the date of the making of each such Revolving Loan or
providing each such Letter of Credit Accommodation and after giving effect
thereto (except that, if any such representation or warranty is expressly
stated to have been made as of a specified date, such representation or
warranty shall be deemed repeated and shall be true in all material respects as
of such specified date); and
(b) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default, shall exist
or have occurred and be continuing on and as of the date of the making of such
Revolving Loan or providing each such Letter of Credit Accommodation and after
giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, each Borrower hereby
grants to Lenders' Agent, for itself as agent and for the benefit of Lenders, a
continuing security interest in, a lien upon, and a right of set off against,
and hereby assigns as security to Lenders' Agent, for itself as agent and for
the benefit of Lenders, the following property and interests in property,
whether now owned or hereafter acquired or existing, and wherever located
(collectively, the "Collateral"):
5.1 all of such Borrower's Receivables (including, but not limited to,
Accounts);
5.2 all present and future monies, securities, credit balances, cash
collateral, deposits, deposit accounts and other property of such Borrower, to
the extent constituting proceeds of Receivables or Inventory or Loans, now or
hereafter held or received by or in transit to either Lender or Lenders' Agent
or any depository bank or institution;
5.3 all present and future liens, security interests, rights, remedies,
interests and documents of such Borrower in, to and in respect of Receivables
and Inventory, including, without limitation, (a) rights and remedies under or
relating to guaranties, warranties, contracts of suretyship, letters of credit
and credit and other insurance related thereto, (b) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of
such Borrower with respect to the Receivables as an unpaid vendor, lienor or
secured party and (c) deposits by and property of account debtors or other
persons securing the obligations of account debtors with respect to the
Receivables;
5.4 all of such Borrower's present and future agreements or arrangements
with sales agents, sales representatives, distributors, warehousemen and
subcontractors or the like with respect to the sale, lease, disposition,
storage, processing or manufacture of Inventory or with respect to Receivables;
5.5 all Inventory of such Borrower;
5.6 all Records of such Borrower; and
5.7 all products and proceeds of the foregoing, in any form, including,
without limitation, all cash collections and other cash proceeds of any
Receivables, all items or remittances in any form issued in payment of any
Receivables (including, without limitation, checks, drafts and other
instruments), insurance proceeds and all claims against third parties for loss
or damage to or destruction of any or all of the foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Lenders' Agent shall maintain one or more
loan account(s) on its books in which shall be recorded (a) all Revolving
Loans, Letter of Credit Accommodations and other Obligations and the
Collateral, (b) all payments made by or on behalf of Borrowers and (c) all
other appropriate debits and credits as provided in this Agreement, including,
without limitation, fees, charges, costs, expenses and interest. All entries
in the loan account(s) shall be made in accordance with Lenders' Agent's
customary practices as in effect from time to time.
6.2 Statements. Lenders' Agent shall render to Borrowers' Agent each
month a statement setting forth the balance in the Borrowers' loan account(s)
maintained by Lenders' Agent for Borrowers pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each such
statement shall be subject to subsequent adjustment by Lenders' Agent but
shall, absent manifest errors or omissions, be considered correct and deemed
accepted by Borrowers and Borrowers' Agent and conclusively binding upon
Borrowers and Borrowers' Agent as an account stated except to the extent that
Lenders' Agent receives a written notice from Borrowers' Agent on behalf of any
Borrower of any specific exceptions of such Borrower thereto within thirty (30)
days after the date such statement has been mailed by Lenders' Agent. Until
such time as Lenders' Agent shall have rendered to Borrowers' Agent a written
statement as provided above, the balance in Borrowers' loan account(s) shall be
presumptive evidence of the amounts due and owing by Borrowers to Lenders'
Agent for the benefit of Lenders.
6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at their expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lenders' Agent may specify, with such banks as are
reasonably acceptable to Lenders' Agent into which Borrowers shall promptly
deposit and direct their account debtors to directly remit all payments on
Accounts and all payments constituting proceeds of Inventory or other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance satisfactory
to Lenders' Agent, providing that all items received or deposited in the
Blocked Accounts are the property of Lenders, that the depository bank has no
lien upon, or right to setoff against, the Blocked Accounts, the items received
for deposit therein, or the funds from time to time on deposit therein and that
the depository bank will wire, or otherwise transfer, in immediately available
funds, on a daily basis, upon receipt of instructions from Borrowers' Agent (or
the applicable Borrower) or Lenders' Agent, all funds received or deposited
into the Blocked Accounts to such bank account of Lenders' Agent (and only to
such account) as Lenders' Agent may from time to time designate for such
purpose ("Payment Account"). Borrowers agree that all payments made to such
Blocked Accounts or other funds received and collected by Lenders' Agent,
whether on the Accounts or as proceeds of Inventory or other Collateral shall
be the property of Lenders.
(b) For purposes of calculating interest on the Obligations, such
payments or other funds received will be applied (conditional upon final
collection) to the Obligations one (1) Business Day following the date of
receipt of immediately available funds by Lenders' Agent in the Payment
Account. For purposes of calculating the amount of the Revolving Loans
available to Borrowers, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Lenders' Agent
in the Payment Account, if such payments are received within sufficient time
(in accordance with Lenders' Agent's usual and customary practices as in effect
from time to time) to credit the respective Borrowers' loan accounts on such
day, and if not, then on the next Business Day.
(c) Each Borrower and all of its affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lenders, receive, as the property of Lenders, any monies, checks, notes, drafts
or any other payment relating to and/or proceeds of Receivables or other
Collateral which come into their possession or under their control and
immediately upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the same to be
remitted, in kind, to Lenders' Agent. In no event shall the same be commingled
with any Borrower's own funds. Borrowers agree to reimburse Lenders and
Lenders' Agent on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of any payments
by a Lender or Lenders' Agent to or indemnification of such bank or person.
The obligation of Borrowers to reimburse Lenders and Lenders' Agent for such
amounts pursuant to this Section 6.3 shall survive the termination or
non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lenders' Agent may designate
from time to time. Lenders' Agent and Lenders may apply payments received or
collected from Borrowers or for the account of Borrowers (including, without
limitation, the monetary proceeds of collections of or realization upon any
Collateral) to such of the Obligations, whether or not then due, in such order
and manner as Lenders' Agent or Lenders determine. At the option of Lenders'
Agent, all principal, interest, fees, costs, expenses and other charges
provided for in this Agreement or the other Financing Agreements may be charged
directly to the loan account(s) of Borrowers. Borrowers shall make all
payments on the Obligations to Lenders' Agent for the benefit of Lenders, free
and clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, duties, taxes, levies, imposts, fees,
deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Lenders' Agent or a Lender is required to surrender or
return such payment or proceeds to any Person for any reason, then the
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Agreement shall continue in full force and
effect as if such payment or proceeds had not been received by Lenders' Agent
and such Lender. Borrowers shall be liable to pay to Lenders' Agent and
Lenders, and do hereby indemnify and hold Lenders' Agent and Lenders harmless
for, the amount of any payments or proceeds surrendered or returned. This
Section 6.4 shall remain effective notwithstanding any contrary action which
may be taken by Lenders' Agent or Lenders in reliance upon such payment or
proceeds. This Section 6.4 shall survive the payment of the Obligations and
the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans. Lenders' Agent is authorized to make
the Revolving Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions received from anyone purporting to be an
officer of a Borrower or of Borrowers' Agent or other authorized person or, at
the discretion of Lenders' Agent, if such Revolving Loans are necessary to
satisfy any Obligations. All requests for Revolving Loans or Letter of Credit
Accommodations hereunder shall specify the date on which the requested advance
is to be made or Letter of Credit Accommodations established (which day shall
be a Business Day) and the amount of the requested Revolving Loan. Requests
received after 12:00 Noon Pacific Time on any day shall be deemed to have been
made as of the opening of business on the immediately following Business Day.
All Revolving Loans and Letter of Credit Accommodations under this Agreement
shall be conclusively presumed to have been made to, and at the request of and
for the benefit of, Borrowers when deposited to the credit of any Borrower or
otherwise disbursed or established in accordance with the instructions of
Borrowers' Agent or any Borrower or in accordance with the terms and conditions
of this Agreement.
6.6 Use of Proceeds. Borrowers shall use the initial proceeds of the
Revolving Loans provided by Lenders' Agent to Borrowers hereunder only for:
(a) payments to each of the persons listed in the disbursement direction letter
furnished by Borrowers to Lenders' Agent on the date hereof in connection with
the satisfaction of all or a portion of the outstanding obligations of
Borrowers to their existing working capital lender(s), if any, and other
existing creditors arising in the ordinary course of business as of the date
hereof, (b) costs, expenses and fees incurred in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
other Financing Agreements, (c) costs, expenses and fees incurred in connection
with the issuance of the Senior Secured Notes and the defeasance and redemption
of the Old Senior Notes, (d) the deposit of sums with the Old Trustees, in
trust, for application solely to the defeasance and redemption of all of the
Old Senior Notes, but only to the extent that additional sums are necessary to
be deposited for such purposes following the application of the proceeds of
issuance of the Senior Secured Notes to the payments required under the
Purchase Agreements and to deposits with the Old Trustees for such purposes,
and (e) general operating and working capital. All other Revolving Loans made
or Letter of Credit Accommodations provided by Lenders' Agent to Borrowers
pursuant to the provisions hereof shall be used by Borrowers only for general
operating, working capital and other proper corporate purposes of Borrowers not
otherwise prohibited by the terms hereof. None of the proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
security or for the purposes of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or for any other
purpose which might cause any of the Revolving Loans or Letter of Credit
Accommodations to be considered a "purpose credit" within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System, as
amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Borrowers or Borrowers' Agent shall provide
Lenders' Agent with the following documents with respect to each Borrower or
itemized by Borrower, in a form satisfactory to Lenders' Agent and Lenders: (a)
on a regular basis as required by Lenders' Agent, a schedule of Accounts; (b)
on the following periodic bases or, after the occurrence and during the
continuance of an Event of Default, more frequently as Lenders' Agent may
request, (i) monthly perpetual Inventory reports, (ii) monthly reports of all
Inventory by category, (iii) weekly reports of finished goods Inventory, and
(iv) monthly agings of accounts payable, (c) upon reasonable request by
Lenders' Agent, and at all times upon request by Lenders' Agent after the
occurrence and during the continuance of an Event of Default, (i) copies of
customer statements and credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (ii) copies of shipping and
delivery documents, and (iii) copies of purchase orders, invoices and delivery
documents for Inventory acquired by each Borrower; (d) agings of accounts
receivable on a monthly basis or more frequently as Lenders' Agent may request;
and (e) such other reports as to the Collateral as Lenders' Agent shall
reasonably request from time to time. In the case of those of the foregoing
reports that are to be delivered on a monthly basis, such reports shall be
delivered as soon as practicable following the end of each fiscal month, but in
any event within ten (10) Business Days after the end of such month. If any
Borrower's records or reports of the Collateral are prepared or maintained by
an accounting service, contractor, shipper or other agent, such Borrower hereby
irrevocably authorizes such service, contractor, shipper or agent to deliver
such records, reports, and related documents to Lenders' Agent and to follow
instructions from Lenders' Agent with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Each Borrower or Borrowers' Agent shall notify Lenders' Agent
promptly of: (i) any material delay in such Borrower's performance of any of
its obligations to any account debtor or the assertion of any claims, offsets,
defenses or counterclaims by any account debtor, or any disputes with account
debtors, or any settlement, adjustment or compromise thereof, (ii) all material
adverse information known to such Borrower or Borrowers' Agent, relating to the
financial condition of any account debtor of such Borrower and (iii) any event
or circumstance which, to such Borrower's knowledge, would cause Lenders' Agent
to consider any then existing Accounts as no longer constituting Eligible
Accounts. No credit, discount, allowance or extension or agreement for any of
the foregoing shall be granted to any account debtor without consent of
Lenders' Agent, except in the ordinary course of such Borrower's business in
accordance with practices and policies previously disclosed in writing to
Lenders' Agent. So long as no Event of Default exists or has occurred and is
continuing, each Borrower may settle, adjust or compromise any claim, offset,
counterclaim or dispute with its account debtors. At any time that an Event of
Default exists or has occurred and is continuing, Lenders' Agent shall, at its
option, have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with account debtors or grant any credits,
discounts or allowances.
(b) Without limiting the other reporting obligations of Borrowers
hereunder, each Borrower or Borrowers' Agent shall promptly report on a
separate basis to Lenders' Agent any return by an account debtor of such
Borrower of parts having a sales price in excess of $250,000 or of Inventory,
other than parts, having a sales price in excess of $500,000. At any time that
Inventory is returned, reclaimed or repossessed, the related Account shall not
be deemed an Eligible Account. In the event any account debtor of any Borrower
returns Inventory when an Event of Default exists or has occurred and is
continuing, such Borrower shall, upon request by Lenders' Agent, (i) hold the
returned Inventory in trust for Lenders, (ii) segregate all returned Inventory
from all of its other property, (iii) dispose of the returned Inventory solely
according to instructions of Lenders' Agent, and (iv) not issue any credits,
discounts or allowances with respect thereto without prior written consent of
Lenders' Agent.
(c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lenders' Agent or schedule thereof delivered to Lenders'
Agent shall be true and complete, (ii) no payments shall be made thereon except
payments immediately delivered to Lenders' Agent pursuant to the terms of this
Agreement, (iii) no credit, discount, allowance or extension or agreement for
any of the foregoing shall be granted to any account debtor except as reported
to Lenders' Agent in accordance with this Agreement and provided such credits,
discounts, allowances or extensions are made or given in the ordinary course of
the respective Borrowers' business in accordance with past practices or
pursuant to policies previously disclosed to Lenders' Agent, (iv) there shall
be no setoffs, deductions, contracts, defenses, counterclaims or disputes
existing or asserted with respect thereto except as reported to Lenders' Agent
in accordance with the terms of this Agreement, (v) none of the transactions
giving rise thereto will violate any applicable State or Federal laws or
regulations, all documentation relating thereto will be legally sufficient
under such laws and regulations and all such documentation will be legally
enforceable in accordance with its terms, subject to the effect on
enforceability of (A) any bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and (B) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(d) Lenders' Agent shall have the right at any time or times, in the
name of Lenders' Agent or in the name of a nominee of Lenders' Agent, to verify
the validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, facsimile transmission or otherwise.
(e) Borrowers' Agent or Borrowers shall deliver or cause to be
delivered to Lender, with appropriate endorsement and assignment, with full
recourse to Borrowers, all chattel paper and instruments which are part of the
Collateral which any Borrower now owns or may at any time acquire immediately
upon any Borrower's receipt thereof, except as Lenders' Agent may otherwise
agree in writing.
(f) Lenders' Agent may, at any time or times that an Event of
Default exists or has occurred and is continuing, (i) notify any or all account
debtors that the Accounts have been assigned to Lenders' Agent and that
Lenders' Agent has a security interest therein for the benefit of Lenders, and
Lenders' Agent may direct any or all account debtors to make payment of
Accounts directly to Lenders' Agent for the benefit of Lenders, (ii) extend the
time of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any commercially reasonable terms or
conditions, any and all Accounts or other obligations included in the
Collateral and thereby discharge or release the account debtor or any other
party or parties in any way liable for payment thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Accounts or
such other obligations, but without any duty to do so, and neither Lenders nor
Lenders' Agent shall be liable for any failure to collect or enforce the
payment thereof nor for the negligence of its or their agents or attorneys with
respect thereto, provided that such agents or attorneys are selected by the
Lenders or Lenders' Agent with due care, and (iv) take whatever other action
Lenders' Agent may deem necessary or desirable for the protection of its and
Lenders' interests. At any time that an Event of Default exists or has
occurred and is continuing, at the request of Lenders' Agent, all invoices and
statements sent to any account debtor shall state that the Accounts and such
other obligations have been assigned to Lenders' Agent and are payable directly
and only to Lenders' Agent and Borrower shall deliver to Lenders' Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Lenders' Agent may
require.
7.3 Inventory Covenants. With respect to the Inventory: (a) each
Borrower shall at all times maintain inventory records reasonably satisfactory
to Lenders and Lenders' Agent, keeping correct and accurate records itemizing
and describing the kind, type, quality and quantity of Inventory, such
Borrower's cost therefor and daily withdrawals therefrom and additions thereto;
(b) with respect to Inventory counting (i) each Borrower shall conduct a
physical count of its Inventory at least once each year, unless such Borrower's
cycle counts of Inventory during such year are reasonably acceptable to Lender
as to scope, methodology and frequency and are at least ninety-five (95%)
percent accurate when compared with such Borrower's Inventory accounting
records, (ii) Borrowers shall conduct a physical inventory at any time or times
as Lenders' Agent may request after and during the continuance of an Event of
Default, and (iii) promptly following such physical inventory or each cycle
count, upon request by Lenders' Agent, each Borrower shall supply Lenders'
Agent with a report in the form and with such specificity as may be reasonably
satisfactory to Lenders' Agent and Lenders concerning such physical count or
cycle count; (c) no Borrower shall remove any Inventory from the locations set
forth or permitted herein, without the prior written consent of Lenders' Agent,
except for sales of Inventory in the ordinary course of such Borrower's
business and except to move Inventory directly from one location set forth or
permitted herein to another such location; (d) upon request by Lenders' Agent,
each Borrower shall, at its expense, no more than once in any twelve (12) month
period, but at any time or times as Lenders' Agent or either Lender may request
after and during the continuance of an Event of Default, deliver or cause to be
delivered to Lenders' Agent written reports of appraisals as to the Inventory
in form, scope and methodology acceptable to Lenders' Agent and by an appraiser
acceptable to Lenders, addressed to Lenders' Agent and Lenders or upon which
Lenders' Agent and Lenders are expressly permitted to rely; (e) each Borrower
shall produce, use, store and maintain its Inventory, with all reasonable care
and caution and in accordance with applicable standards of any insurance and in
conformity with applicable laws (including, but not limited to, the
requirements of the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders related thereto); (f) each Borrower assumes
all responsibility and liability arising from or relating to the production,
use, sale or other disposition of its Inventory; (g) no Borrower shall sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate any Borrower to repurchase such Inventory,
except in the ordinary course of business in accordance with past practices or
policies previously disclosed in writing to Lenders' Agent; (h) each Borrower
shall keep its Inventory in good and saleable condition except for Inventory,
separately reported to Lender, as to which it is commercially uneconomical to
do so or which is obsolete (all Inventory so reported to be excluded from
Eligible Inventory); and (i) no Borrower shall, without prior written notice to
Lenders' Agent, acquire or accept any Inventory on consignment or approval,
except if the acquisition or acceptance of any such Inventory so acquired is
separately reported in writing to Lenders' Agent upon receipt thereof by such
Borrower, and provided such Inventory is readily identifiable or is segregated
from other Inventory (but Lenders' Agent may, in its discretion, establish
Availability Reserves to cover possible claims by the consignor as to such
consigned Inventory or the products or the proceeds thereof).
7.4 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Lenders' Agent (and all persons designated by Lenders' Agent) as such
Borrower's true and lawful attorney-in-fact, and authorizes Lenders' Agent, in
such Borrower's name or in the name of Lenders' Agent, to: (a) at any time an
Event of Default or event which with notice or passage of time or both would
constitute an Event of Default exists or has occurred and is continuing (i)
demand payment on Accounts or other proceeds of Inventory or other Collateral,
(ii) enforce payment of Accounts by legal proceedings or otherwise, (iii)
exercise all of such Borrower's rights and remedies to collect any Account or
other Collateral, (iv) sell or assign any Account upon such terms, for such
amount and at such time or times as Lenders' Agent deems advisable and
commercially reasonable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Account on commercially reasonable
terms, (vii) prepare, file and sign such Borrower's name on any proof of claim
in bankruptcy or other similar document against an account debtor, (viii)
notify the post office authorities to change the address for delivery of such
Borrower's mail to an address designated by Lenders' Agent, and open and
dispose of all mail addressed to such Borrower, and (ix) do all acts and things
which are necessary, in the determination of Lenders' Agent, to fulfill such
Borrower's Obligations under this Agreement and the other Financing Agreements
and (b) at any time to (i) take control of any item of payment or proceeds
thereof deposited or received for credit to the Blocked Accounts or
constituting part of the Collateral, (ii) have access to any lockbox to which
such Borrower's customer remittances are sent and the contents thereof, (iii)
endorse such Borrower's name upon any items of payment or proceeds thereof
deposited or received for credit to the Blocked Accounts or constituting part
of the Collateral, and transfer the same to or deposit the same in the account
of Lenders' Agent for application to the Obligations, (iv) endorse such
Borrower's name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Account or any goods pertaining
thereto or any other Collateral, (v) sign such Borrower's name on any
verification of Accounts and notices thereof to account debtors and (vi)
execute in such Borrower's name and file any UCC financing statements or
amendments thereto, provided the Collateral covered by any new financing
statement so executed and filed does not include, and the Collateral
description of any existing financing statement, so amended, is not expanded to
include, any property other than the Collateral. Each Borrower hereby releases
Lenders' Agent and Lenders and their officers, employees and, to the extent
selected with due care, their agents, from any liabilities arising from any act
or acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except as a result of their own gross negligence,
wilful misconduct, actual fraud or bad faith, as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
7.5 Right to Cure. Lenders' Agent may, at its option, (a) cure any
default by any Borrower under any agreement with a third party or pay or bond
on appeal any judgment entered against any Borrower if any Event of Default
shall have occurred and be continuing (including, but not limited to, any Event
of Default by reason of such default or judgment), (b) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral and (c) pay any amount, incur any expense or perform
any act which, in the good faith judgment of Lenders' Agent, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Lenders' Agent and Lenders with respect thereto. Lenders' Agent may
add any amounts so expended to the Obligations and charge such Borrower's
account therefor, such amounts to be repayable by such Borrower on demand.
Lenders' Agent shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation or
liability of any Borrower. Any payment made or other action taken by Lenders'
Agent under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
7.6 Access to Premises. From time to time as requested by Lenders' Agent
or either of Lenders, at the cost and expense of Borrowers, (a) Lenders' Agent,
Lenders and their designees shall have complete access to all of Borrowers'
premises during normal business hours and after reasonable notice to Borrowers'
Agent, or at any time and without notice to Borrowers or Borrowers' Agent if an
Event of Default has occurred that is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrowers' books
and records, including, without limitation, the Records, and (b) Borrowers
shall promptly furnish to Lenders and Lenders' Agent such copies of such books
and records or extracts therefrom as a Lender or Lenders' Agent may reasonably
request, and (c) use during normal business hours such of Borrowers' personnel,
equipment, supplies and premises as may be reasonably necessary for the
foregoing and if an Event of Default exists or has occurred that is continuing
for the collection of Accounts and realization of other Collateral; provided,
that in exercising the rights under clauses (b) and (c) of this Section,
Lenders' Agent, Lenders and their designees will, unless an Event of Default
has occurred that is continuing, use reasonable efforts not to unnecessarily
interfere with the conduct of Borrowers' business.
7.7 Irrevocable License to Use Equipment and Intellectual Property. Each
Borrower hereby grants Lenders and Lenders' Agent an irrevocable non-exclusive
license, without charge (a) to use after the occurrence and during the
continuance of an Event of Default, any of the Equipment consisting of
computers or other data processing equipment relating to the storage or
processing of records, documents or files pertaining to the Collateral and use
any other Equipment to handle, deal with or dispose of any Collateral pursuant
to the rights and remedies of Lenders and Lenders' Agent as set forth in this
Agreement and the other Financing Agreements, the Uniform Commercial Code of
any applicable jurisdiction and other applicable law, provided that such use of
Equipment by Lenders or Lenders' Agent shall not damage such Equipment; and (b)
to use after the occurrence and during the continuance of an Event of Default,
any of the Intellectual Property marked or stamped on any Collateral or
otherwise required to collect or realize on any Collateral. Such license shall
be irrevocable and shall continue until the Obligations have been indefeasibly
paid and satisfied and this Agreement and all other Financing Agreements have
been terminated. Solely as between the Lenders and Lenders' Agent, on the one
hand, and the Note Trustee on the other hand, the exercise by Lenders or
Lenders' Agent of their rights pursuant to the license granted in this Section
shall be subject to the terms of the Intercreditor Agreement executed and
delivered pursuant to Section 4.1 hereof.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Borrowers hereby, jointly and severally, represent and warrant to
Lenders' Agent and Lenders the following (which shall survive the execution and
delivery of this Agreement), the truth and accuracy of which are a continuing
condition of the making of Revolving Loans and providing Letter of Credit
Accommodations by Lenders' Agent to Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Each
Borrower is a corporation duly organized and in good standing under the laws of
its state of incorporation and is duly qualified as a foreign corporation and
in good standing in all states or other jurisdictions where the nature and
extent of the business transacted by it or the ownership of assets makes such
qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a material adverse effect on such Borrower's
financial condition, results of operation or business or the rights of Lenders'
Agent or Lenders in or to any of the Collateral. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within each
Borrower's corporate powers, have been duly authorized by all necessary
corporate and shareholder action and are not in contravention of law or the
terms of each Borrower's certificate of incorporation, by-laws, or other
organizational documentation, or any indenture, material agreement or material
undertaking to which any Borrower is a party or by which any Borrower or its
property are bound. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Borrowers enforceable in
accordance with their respective terms, subject to the effect on enforceability
of (a) any bankruptcy, insolvency, reorganization, moratorium or similar laws
effecting enforcement of creditors' rights generally and (b) the application
of general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Borrowers do not have any
subsidiaries except as set forth on the Information Certificate and except for
any inactive subsidiary believed by Borrowers in good faith to have assets and
liabilities of less than $10,000.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers which have been or may hereafter be delivered
by Borrowers to Lenders' Agent or either or both Lenders have been prepared
consistent with GAAP and fairly present the financial condition and the results
of operation of Borrowers as at the dates and for the periods set forth
therein, except for footnotes and any departures from GAAP indicated therein.
Except as disclosed in any interim financial statements furnished by Borrowers
to both Lenders prior to the date of this Agreement, there has been no material
adverse change in the assets, liabilities, properties and condition, financial
or otherwise, of any Borrower, since the date of the most recent audited
financial statements furnished by Borrowers to both Lenders prior to the date
of this Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive
office of each Borrower and each Borrower's Records concerning Accounts are
located only at its address set forth below and its only other places of
business and the only other locations of Collateral, if any, are (i) the
addresses set forth in the Information Certificate, subject to the right of
Borrowers to establish new locations in accordance with Section 9.2 below, (ii)
Inventory which is in transit to one of such addresses or such new locations so
established, and (iii) Inventory located at dealers not reported to Lenders'
Agent under Section 9.2 and not included in any Collateral report delivered at
any time to Lenders' Agent, in amounts not to exceed $25,000 at any one dealer
location or $300,000 for all such unreported dealer locations for all Borrowers
in the aggregate. The Information Certificate correctly identifies for each
Borrower any of such existing locations which are not owned by such Borrower
and sets forth the owners and/or operators thereof.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Lenders' Agent for itself as agent and for the benefit of
Lenders under this Agreement and the other Financing Agreements constitute
valid and perfected first priority liens and security interests in and upon the
Collateral subject only to the liens indicated on the Information Certificate
and the other liens permitted under Section 9.8 hereof. Each Borrower has good
and marketable title to all of its properties and assets subject to no liens,
mortgages, pledges, security interests, encumbrances or charges of any kind,
except those granted to Lenders' Agent for itself as agent and for the benefit
of Lenders and such others as are specifically listed on the Information
Certificate or permitted under Section 9.8 hereof.
8.5 Tax Returns. Borrower has filed, or caused to be filed, in a timely
manner all tax returns, reports and declarations which are required to be filed
by it (without requests for extension except as previously disclosed in writing
to Lenders' Agent). All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
has paid or caused to be paid all taxes due and payable or claimed due and
payable in any assessment received by it, except taxes the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower and with respect to which reserves have been set
aside on its books in accordance with GAAP. Adequate provision has been made
for the payment of all accrued and unpaid Federal, State, county, local,
foreign and other taxes whether or not yet due and payable and whether or not
disputed.
8.6 Litigation. Except as set forth for the respective Borrowers on the
Information Certificate, there is no present investigation by any governmental
agency pending, or to the best of any Borrower's knowledge threatened, against
or affecting any Borrower, its assets or business and there is no action, suit,
proceeding or claim by any Person pending, or to the best of any Borrower's
knowledge threatened, against any Borrower or its assets or goodwill, or
against or affecting any transactions contemplated by this Agreement, which has
a reasonable likelihood of success and which, if adversely determined against
any Borrower, would result in any material adverse change in the assets or
business of such Borrower or would impair the ability of any Borrower to
perform its obligations hereunder or under any of the other Financing
Agreements to which it is a party or of Lenders' Agent or Lenders to enforce
any Obligations or realize upon any Collateral.
8.7 Compliance with Other Agreements and Applicable Laws. No Borrower is
in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound, and each Borrower is in compliance in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits, approvals
and orders of any foreign, Federal, State or local governmental authority,
except where such default, violation or failure to so comply would not have a
material adverse effect on the business or assets of such Borrower or impair
the value of any Collateral or the rights of Lenders' Agent or Lenders therein
or thereto.
8.8 Accuracy and Completeness of Information. All information furnished
by or on behalf of any Borrower in writing to Lenders' Agent or Lenders in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including, without limitation, all
information on the Information Certificate is true and correct in all material
respects on the date as of which such information is dated or certified and
does not omit any material fact necessary in order to make such information not
misleading. No event or circumstance has occurred which has had or could
reasonably be expected to have a material adverse effect on the business,
assets or prospects of any Borrower, which has not been fully and accurately
disclosed to Lenders' Agent in writing.
8.9 Acquisition of Purchased Stock.
(a) The Purchase Agreements and the transactions contemplated
thereunder have been duly executed, delivered and performed in accordance with
their terms by the respective parties thereto in all material respects,
including the fulfillment (not merely the waiver, except as may be disclosed to
Lenders' Agent and consented to in writing by Lenders' Agent) of all conditions
precedent set forth therein, and giving effect to the terms of the Purchase
Agreements and the assignments to be executed and delivered by Seller
thereunder, TCI acquired and has good and marketable title to the Purchased
Stock, free and clear of all claims, liens, pledges and encumbrances of any
kind, except for the security interests and pledges of the Purchased Stock in
favor of the Note Trustee pursuant to the Note Indenture, and except as
disclosed in the Information Certificate.
(b) All actions and proceedings required by the Purchase Agreements,
applicable law or regulation (including, but not limited to, compliance with
the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended) and the
transactions required thereunder have been duly and validly taken and
consummated.
(c) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Purchase Agreements and no governmental or other
action or proceeding has been threatened or commenced, seeking any injunction,
restraining order or other order which seeks to void or otherwise modify the
transactions described in the Purchase Agreements.
(d) Borrowers' Agent has delivered, or caused to be delivered, to
Lender true, correct and complete copies of the Purchase Agreements.
8.10 Issuance of Senior Secured Notes.
(a) The Note Indenture and the transactions contemplated thereunder
and under the Offering Circular with respect thereto have been duly executed,
delivered and performed in accordance with their terms by the respective
parties thereto in all material respects, including the fulfillment (not merely
the waiver, except as may be disclosed to Lenders' Agent and consented to in
writing by Lenders' Agent) of all conditions precedent set forth therein, and
giving effect to the terms of the Note Indenture and the Offering Circular with
respect thereto, Terex has issued all of the Senior Secured Notes and has
applied the cash proceeds received therefrom as provided in Section 4.1(b)
hereof.
(b) All actions and proceedings required by the Note Indenture and
in connection with the Issuance by Terex of the Senior Secured Notes,
applicable law or regulation have been taken and the transactions required
thereunder have been duly and validly taken and consummated.
(c) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Note Indenture and the Offering Circular with
respect thereto and no governmental or other action or proceeding has been
threatened or commenced, seeking any injunction, restraining order or other
order which seeks to void or otherwise modify the transactions described in the
Note Indenture and the Offering Circular with respect thereto.
(d) Borrowers' Agent has delivered, or caused to be delivered, to
Lender true, correct and complete copies of the Offering Circular, Note
Indenture and specimen Senior Secured Notes.
8.11 Employee Benefits. Except as otherwise disclosed on the Information
Certificate:
(a) No Borrower has engaged in any transaction in connection with
which such Borrower or any of its ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, including any accumulated funding deficiency
described in Section 8.11(c) hereof and any deficiency with respect to vested
accrued benefits described in Section 8.11(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected by any Borrower to be incurred with respect to any employee
benefit plan of any Borrower or any of its ERISA Affiliates. There has been no
reportable event (within the meaning of Section 4043(c) of ERISA) for which
reporting was not waived by regulations of the Pension Benefit Guaranty
Corporation or any other event or condition with respect to any employee
benefit plan of any Borrower or any of its ERISA Affiliates which presents a
risk of termination of any such plan by the Pension Benefit Guaranty
Corporation.
(c) Full payment has been made of all amounts which any Borrower or
any of its ERISA Affiliates is required under Section 302 of ERISA and Section
412 of the Code to have paid under the terms of each employee benefit plan as
contributions to such plan as of the last day of the most recent fiscal year of
such plan ended prior to the date hereof, and no accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code), whether or
not waived, exists with respect to any employee benefit plan, including any
penalty or tax described in Section 8.8(a) hereof and any deficiency with
respect to vested accrued benefits described in Section 8.11(d) hereof.
(d) The current value of all vested accrued benefits under all
employee benefit plans maintained by any Borrower that are subject to Title IV
of ERISA does not exceed the current value of the assets of such plans
allocable to such vested accrued benefits. The terms "current value" and
"accrued benefit" have the meanings specified in ERISA.
(e) No Borrower or any of its ERISA Affiliates is obligated to
contribute to any "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA) that is subject to Title IV of ERISA nor has it incurred
or received any notice with respect to withdrawal liability.
8.12 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lenders' Agent and Lenders on the date of each
additional borrowing or other credit accommodation hereunder (except with
respect to any representation or warranty expressly stated to have been made as
of a specified date, which shall nevertheless be deemed to have been repeated
to be true as of that specified date) and shall be conclusively presumed to
have been relied on by Lenders' Agent and Lenders regardless of any
investigation made or information possessed by Lenders' Agent or Lenders. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which any Borrower shall
now or hereafter give, or cause to be given, to Lenders or Lenders' Agent.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each Borrower shall at all times preserve,
renew and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases
and contracts necessary to carry on the business as presently or proposed to be
conducted. Each Borrower shall give Lenders' Agent thirty (30) days prior
written notice of any proposed change in its corporate name, which notice shall
set forth the new name and such Borrower shall deliver to Lenders' Agent a copy
of the amendment to the Certificate of Incorporation of such Borrower providing
for the name change certified by the Secretary of State of the jurisdiction of
incorporation of such Borrower as soon as it is available.
9.2 New Collateral Locations.
(a) Any Borrower may, in the ordinary course of business, open,
maintain or move Inventory to any new location within the continental United
States, Canada or Puerto Rico, provided such Borrower or Borrowers' Agent (i)
gives Lenders' Agent thirty (30) days prior written notice of the intended
opening of any such new location and (ii) the Borrower opening such new
location executes and delivers, or causes to be executed and delivered, to
Lenders and Lenders' Agent such agreements, documents, and instruments as
Lenders' Agent may deem reasonably necessary or desirable to protect their
interests in the Collateral at such location, including, without limitation,
UCC financing statements; and
(b) Any Borrower may, in the ordinary course of business, open,
maintain or move Inventory to a location outside of the continental United
States, Canada and Puerto Rico, provided that (i) in addition to periodic
reporting required elsewhere herein, separate written notice thereof shall be
given by Borrowers or Borrowers' Agent to Lenders' Agent as soon as practicable
after the aggregate cost of Inventory so moved to a location outside the
continental United States, Canada and Puerto Rico exceeds $300,000 since the
last periodic Inventory report, (ii) the amount of Eligible Inventory of the
Borrower(s) that own(s) such Inventory is reduced by the amount of the net
reduction of Eligible Inventory (if any) resulting from such transaction, and
(iii) after giving effect to such reduction (if any), the Loans and Letter of
Credit Accommodations would not exceed the amounts available under the lending
formulas and subject to the sublimits set forth in this Agreement.
9.3 Compliance with Laws, Regulations, Etc. Each Borrower shall, at all
times, comply in all material respects with all laws, rules, regulations,
licenses, permits, approvals and orders of any Federal, State or local
governmental authority applicable to it, the non-compliance with which would
either (i) have a material adverse effect upon the business or assets of such
Borrower, unless being diligently contested in good faith by appropriate
proceedings available to such Borrower and with respect to which adequate
reserves have been set aside on its books, or (ii) have an adverse effect on
the value of any Collateral or the rights of the Lenders' Agent or Lenders
therein or thereto.
9.4 Payment of Taxes and Claims. Each Borrower shall duly pay and
discharge all taxes, assessments, contributions and governmental charges upon
or against it or its properties or assets, except for taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower and with respect to which reserves have
been set aside on its books in accordance with GAAP. Each Borrower shall be
liable for any tax or penalties imposed on either or both Lenders or Lenders'
Agent as a result of the financing arrangements provided for herein and each
Borrower agrees to indemnify and hold Lenders and Lenders' Agent harmless with
respect to the foregoing, and to pay to Lenders' Agent the amount thereof,
within two (2) Business Days after demand, accompanied by a reasonable
description of the claim, and until paid to such Lenders' Agent and Lenders
such amount shall be added to and deemed part of the Revolving Loans, provided,
that, nothing contained herein shall be construed to require any Borrower to
pay any income or franchise taxes attributable to the income of Lenders or
Lenders' Agent from any amounts charged or paid hereunder to Lenders or
Lenders' Agent. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
9.5 Insurance. Each Borrower shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated; provided, that Borrowers may self-insure as to liability or other
insurable risks, other than damage, loss or other casualty risks affecting any
Collateral. Said policies of insurance shall be satisfactory to Lenders' Agent
and Lenders as to form, amount and insurer. Each Borrower shall furnish
certificates, policies or endorsements to Lenders' Agent as Lenders' Agent
shall require as proof of such insurance, and, if any Borrower fails to do so,
Lenders' Agent is authorized, but not required, to obtain such insurance at the
expense of such Borrower. All policies shall provide for at least thirty (30)
days prior written notice to Lenders' Agent of any cancellation or reduction of
coverage and that Lenders' Agent may act as attorney for Borrowers in
obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance. Each
Borrower shall cause Lenders' Agent to be named as a loss payee for the benefit
of Lenders and each Lender and Lenders' Agent as an additional insured (but
without any liability for any premiums) under such insurance policies and each
Borrower shall obtain non-contributory lender's loss payable endorsements to
all insurance policies in form and substance satisfactory to Lenders' Agent and
Lenders. Such lender's loss payable endorsements shall specify that the
proceeds of such insurance relating to casualties to the Collateral shall be
payable to Lenders' Agent, for the benefit of Lenders, as its interests may
appear and further specify that Lenders' Agent shall be paid regardless of any
act or omission by Borrowers or any of their affiliates. At its option,
Lenders' Agent may apply any insurance proceeds received by Lenders' Agent at
any time to the cost of replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as
Lenders' Agent may determine or hold such proceeds as cash collateral for the
Obligations.
9.6 Financial Statements and Other Information.
(a) Each Borrower shall keep proper books and records in which true
and complete entries shall be made of all dealings or transactions of or in
relation to its Collateral and the business of such Borrower and its
subsidiaries (if any) consistent with GAAP and Borrowers' Agent shall furnish
or cause to be furnished to Lenders' Agent: (i) within thirty (30) days after
the end of each calendar month (other than the third, sixth, ninth and twelfth
calendar months), and within forty-five (45) days after the end of each of the
third, sixth, ninth and twelfth calendar months, monthly unaudited consolidated
and consolidating financial statements of Terex and its subsidiaries (including
in each case balance sheets, statements of income and loss, statements of cash
flow and statements of shareholders' equity), all in reasonable detail, fairly
presenting the financial position and the results of the operations of Terex
and its subsidiaries as of the end of and through such fiscal month and (ii)
within ninety (90) days after the end of each fiscal year, audited consolidated
financial statements of Terex and its subsidiaries (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Terex and its subsidiaries as of the end of and for such
fiscal year, together with the opinion, in accordance with generally accepted
auditing standards, of independent certified public accountants, which
accountants shall be an independent accounting firm selected by Terex and
reasonably acceptable to Lenders' Agent and Lenders, stating that such
financial statements have been prepared in accordance with GAAP, and present
fairly in all material respects the results of operations and financial
condition of Terex and its subsidiaries as of the end of and for the fiscal
year then ended (or containing such other expression of the auditor's opinion
from time to time prescribed by generally accepted auditing standards having
essentially the same meaning).
(b) Borrowers' Agent shall promptly notify Lenders' Agent in writing
of the details of (i) any loss, damage, investigation, action, suit, proceeding
or claim of which it or any Borrower has knowledge, relating to the Collateral
or any other property which is security for the Obligations and involving an
amount in excess of $250,000, or which would result in any material adverse
change in any Borrower's business, properties, assets, goodwill or condition,
financial or otherwise and (ii) the occurrence of any Event of Default or event
which, with the passage of time or giving of notice or both, would constitute
an Event of Default.
(c) Borrowers' Agent shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lenders' Agent copies of all
reports which any Borrower sends to its stockholders generally and copies of
all publicly available reports and registration statements which any Borrower
files with the Securities and Exchange Commission, any national securities
exchange or the National Association of Securities Dealers, Inc.
(d) Borrowers' Agent shall furnish or cause to be furnished to
Lenders' Agent such budgets, forecasts, projections and other information
respecting the Collateral of each Borrower and the business of each Borrower,
as Lenders' Agent or either Lender may, from time to time, reasonably request
subject to the provisions of Section 12.9 (as applicable). Lenders' Agent and
Lenders are hereby authorized to deliver a copy of any financial statement or
any other information relating to the business of any Borrower to any court or
other government agency or to any Participant or assignee or prospective
Participant or assignee. Each Borrower hereby irrevocably authorizes and
directs all accountants or auditors to deliver to Lenders' Agent, at Borrowers'
expense, copies of the financial statements of Borrowers (or any of them) and
any reports or management letters prepared by such accountants or auditors on
behalf of Borrowers and to disclose to Lenders' Agent such information as they
may have regarding the business of Borrowers (or any of them). Any documents,
schedules, invoices or other papers delivered to Lenders' Agent may be
destroyed or otherwise disposed of by Lenders' Agent one (1) year after the
same are delivered to Lenders' Agent, except as otherwise designated by
Borrowers' Agent to Lenders' Agent in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. No Borrower
shall, directly or indirectly:
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it, except
that one or more Borrowers or one or more subsidiaries of a Borrower may merge
with and into a Borrower, provided that:
(i) no Event of Default has occurred that is continuing or
would occur as a consequence thereof, and no event has occurred that is
continuing or condition exists or would occur or exist as a consequence
thereof, that would, with notice or passage of time, or both, constitute an
Event of Default, and, without limiting the generality of the foregoing, no
Indebtedness, liens, security, interests or encumbrances shall exist after
giving effect to such merger that are not permitted under Sections 9.8 or 9.9
hereof;
(ii) the surviving entity of such merger shall be an entity
that is a Borrower hereunder prior to such merger;
(iii) the surviving Borrower shall have a net worth, determined
in accordance with GAAP, on a pro forma basis as of the date of such merger and
after giving effect thereto, not less than the net worth, determined in
accordance with GAAP, of such surviving Borrower immediately prior to such
merger;
(iv) Lenders' Agent may, in its sole discretion (with the
consent of both Lenders in their sole discretion), but shall have no obligation
to, consider as Eligible Accounts or Eligible Inventory any Accounts or
Inventory acquired by the surviving Borrower from a merged subsidiary, that is
not a Borrower prior to such merger, as a result of such merger or thereafter
acquired or arising out of the conduct of the business so acquired through such
merger, but all such Accounts or Inventory shall nevertheless be and remain
part of the Collateral, subject to a valid and perfected first priority
perfected lien and security interest securing the Obligations in favor of
Lenders' Agent for itself as agent and for the benefit of Lenders under this
Agreement;
(v) the surviving Borrower shall execute and deliver to
Lenders' Agent such additional agreements, documents and instruments pursuant
to Section 9.15 hereof and of the kind referred to in Section 4.1(j) hereof as
Lenders' Agent shall reasonably request in connection with and upon the
consummation of such merger;
(vi) the merger shall not violate any provision of the Note
Indenture; and
(vii) Lenders' Agent shall receive not less than thirty (30)
days' prior written notice of any such proposed merger, accompanied by a
certificate signed by any one of the Chief Executive Officer, Chief Financial
Officer, Executive Vice President or Senior Vice President of Terex describing
the transaction in reasonable detail and demonstrating compliance through the
date of the certificate, and describing the steps to be taken to comply
thereafter, with all requirements of this Section 9.7(a) (including this
proviso), together with such other matters with respect thereto as Lenders'
Agent shall reasonably require, or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of
any stock or Indebtedness to any other Person or any of its assets to any other
Person, except for (i) sales of Inventory in the ordinary course of business
including sales of Inventory to subsidiaries of Borrowers to the extent
permitted under Section 9.12 hereof, (ii) the disposition or abandonment of
worn-out or obsolete Equipment or Equipment no longer used or useful in the
business of such Borrower, (iii) sales of assets, other than any Collateral,
consistent with past practices, (iv) sales of assets, other than any
Collateral, which would not have a material adverse effect on a Borrower's
ability to perform its Obligations hereunder or upon the value of any
Collateral or the rights of Lenders' Agent or Lenders therein or thereto, (v)
the sale or lease by one Borrower to its subsidiaries or to another Borrower or
its subsidiaries of assets, other than Collateral, for fair consideration, (vi)
the issuance and sale by such Borrower of its own equity securities (subject to
Section 10.1(j) hereof), and (vii) the issuance and sale by such Borrower of
its own debt securities, to the extent such Indebtedness is permitted in
Section 9.9 hereof, or
(c) form or acquire any subsidiaries, except in connection with
transactions and for purposes not prohibited by the terms hereof, or
(d) wind up, liquidate or dissolve, or
(e) agree to do any of the foregoing.
9.8 Encumbrances. No Borrower shall create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including, without limitation, any Collateral, except:
(a) liens and security interests of Lenders' Agent for itself as
agent and for the benefit of Lenders;
(b) liens securing the payment of taxes, either not yet overdue or
the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower and with respect
to which reserves have been set aside on its books in accordance with GAAP;
(c) non-consensual statutory liens (other than liens pursuant to
ERISA or environmental laws or securing the payment of taxes) arising in the
ordinary course of such Borrower's business to the extent:
(i) such liens secure indebtedness which is not overdue for a
period of more than thirty (30) days, or
(ii) such liens secure indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower,
in each case under clauses (i) and (ii), prior to the commencement of
foreclosure or other similar proceedings and with respect to which reserves
have been set aside on its books in accordance with GAAP;
(d) liens on property, other than any Collateral, incurred in the
ordinary course of business in respect of Hedging Obligations;
(e) liens on property, other than any Collateral, securing surety or
appeal bonds, performance bonds, insurance obligations, or other obligations of
a like nature incurred in the ordinary course of business;
(f) liens on property, other than any Collateral, arising by reason
of any judgment, decree or order of any court with respect to which such
Borrower is then in good faith prosecuting an appeal or other proceedings for
review, the existence of which judgment, order or decree is not an Event of
Default under this Agreement;
(g) encumbrances on or with respect to real property consisting of
zoning restrictions, survey exceptions, utility easements, access licenses,
rights of way, easements of ingress or egress over real property of a Borrower
or restrictions of record on the use of real property, minor defects in title
to real property, mechanics' liens and vendors' liens on real property, in each
case to the extent the same do not interfere in any material respect with the
ordinary conduct of the business of such Borrower and do not impair the value
of any Collateral or the rights of Lenders' Agent or Lenders therein or
thereto;
(h) liens upon, or deposits of, property other than any Collateral,
made in connection with or to secure the performance of tenders, bids, and
government contracts and leases and subleases;
(i) pledges or deposits of property, other than any Collateral,
under worker's compensation, unemployment or other social security legislation;
(j) purchase money security interests in Equipment of such Borrower
(including capital leases) and purchase money mortgages on real estate, so long
as such security interests and mortgages do not apply to any property of such
Borrower other than the Equipment of such Borrower or real estate so acquired,
and the indebtedness secured thereby does not exceed the cost of the Equipment
or real estate so acquired, as the case may be;
(k) security interests and liens securing Indebtedness permitted
pursuant to Section 9.9(h) hereof or securing any extension, renewal or
replacement of such Indebtedness to the extent permitted under Section 9.9(k)
hereof; and
(l) the security interests and liens set forth on the Information
Certificate.
9.9 Indebtedness. No Borrower shall incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any Indebtedness,
except:
(a) the Obligations;
(b) performance bonds, surety bonds and insurance premium
obligations, to the extent incurred in the ordinary course of business;
(c) Hedging Obligations;
(d) Indebtedness arising out of sale and leaseback transactions not
involving any property which is part of the Collateral and not otherwise
prohibited by this Agreement;
(e) Indebtedness owed by such Borrower to any of its subsidiaries or
to any other Borrower or any of its subsidiaries, which Indebtedness is
outstanding as of the date hereof or arises after the date hereof to the extent
permitted by Section 9.10 hereof;
(f) Floor Plan Guaranties;
(g) purchase money Indebtedness (including capital leases) to the
extent not incurred or secured by liens (including capital leases) in violation
of any other provision of this Agreement;
(h) Indebtedness of Terex not to exceed the principal amount of
$250,000,000 evidenced by the Senior Secured Notes of Terex, as in effect on
the date hereof, and, to the extent provided for in the Senior Notes or the
Note Indenture as such instruments are in effect on the date hereof, interest
thereon at the rate provided for in the Senior Secured Notes and any penalties
or liquidated damages with respect thereto, Indebtedness of the other Borrowers
as guarantors of such Indebtedness of Terex and obligations of Terex evidenced
by the Common Stock Appreciation Rights Agreement referred to in clause (x)(C)
of the proviso to this Section 9.9(h) and any guarantees thereof by the other
Borrowers; provided, that:
(w) except as permitted in Section 9.10, Terex shall only make
regularly scheduled payments of principal and interest, or other mandatory
payments in respect of such Indebtedness in accordance with the terms of the
Senior Secured Notes and Note Indenture, each as in effect on the date hereof;
(x) Borrowers shall not, directly or indirectly:
(A) amend, modify, alter or change any of the
material terms of the Senior Secured Notes, the Note Indenture or any
agreements, documents or instruments executed and/or delivered in connection
therewith, including, but not limited to, any terms thereof relating to
payments, redemptions or amortization, financial covenants, defaults, or any
collateral therefor, except to the extent any such amendments, modification,
alterations or changes shall make any such terms no less favorable to Borrowers
in the reasonable determination of Lenders' Agent, or
(B) except to the extent permitted under Section 9.10
hereof, redeem, retire, defease, purchase or otherwise acquire any such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, or
(C) make any payment, other than in shares of its
common stock, upon the exercise by the holders thereof, of the common stock
appreciation rights issued to the original purchasers of the Senior Secured
Notes, pursuant to the Common Stock Appreciation Rights Agreement entered into
by such purchasers and Terex in connection with their purchase of the Senior
Secured Notes, except that Terex may make cash payments upon the exercise of
such common stock appreciation rights, provided that (1) no Event of Default
has occurred that is continuing or would occur as a consequence thereof, and no
event has occurred that is continuing or condition exists or would occur or
exist as a consequence thereof that would, with notice or passage of time, or
both, constitute an Event of Default, (2) such cash payments are made following
the delivery to Lenders' Agent of the audited annual financial statements of
Terex and its subsidiaries for the immediately preceding year in the form
required by Section 9.6(a) hereof and do not exceed an amount equal to (I)
fifty (50%) percent of the Consolidated Net Income of Terex for the year ended
immediately preceding the year in which such payment is made, less (II) the
amount of Terex's Consolidated Net Income for such immediately preceding year
previously designated for or used to satisfy a condition of a transaction under
Section 9 of this Agreement that is limited, in whole or in part, by
Consolidated Net Income of Terex, (3) at all times during the period of thirty
(30) consecutive days immediately preceding such cash payment and after giving
effect thereto, Borrowers shall have maintained and shall have Excess
Availability of not less than $25,000,000 in the aggregate, and (4) Lenders'
Agent shall receive not less than ten (10) days' prior written notice of any
proposed cash payment in respect of such common stock appreciation rights,
accompanied by a certificate signed by any of the Chief Executive Officer,
Chief Financial Officer, Executive Vice President or Senior Vice President of
Terex, describing the transaction and demonstrating compliance through the date
of the certificate, and describing the steps to be taken to comply thereafter,
with all requirements of this provision, together with such other matters with
respect thereto as Lenders' Agent shall reasonably require; and
(y) Terex shall furnish to Lenders' Agent copies of all
certificates, required notices, demands, claims, notice of default or
acceleration, requests for amendments, waivers or consents or other material
notices, either received from the Note Trustee or any of the holders of the
Senior Secured Notes, or on their behalf, promptly after receipt thereof, or
sent by Terex or any guarantor thereof, or on its behalf, to any of the holders
of the Senior Secured Notes, or any representative of the holders, (including,
but not limited to, the Note Trustee or other collateral agent or trustee)
promptly after the sending thereof, as the case may be;
(i) Indebtedness incurred by a Borrower for money borrowed by such
Borrower, if the Interest Coverage Ratio for the four full fiscal quarters most
recently ended prior to the date on which such additional Indebtedness is
incurred, as shown on the internal financial statements of Borrowers delivered
to Lenders' Agent in the form required by Section 9.6(a), would have been at
least equal to the ratio set forth below opposite the period in which such
incurrence occurs, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred at the beginning of such four-quarter period:
Period Ratio
The date hereof through May 15, 1996 2.25:1
May 16, 1996 through May 15, 1997 2.50:1
May 16, 1997 and thereafter 2.75:1
provided, however, that, in the case of such additional Indebtedness permitted
by this Section 9.9(i), such Indebtedness has a final scheduled maturity beyond
the term of this Agreement (either initial or renewal, as the case may be) then
in effect at the time that such Indebtedness is incurred;
(j) Indebtedness of a Borrower for intercompany loans from another
Borrower to the extent permitted under Section 9.10 or from a subsidiary of
such Borrower or of another Borrower; and
(k) Indebtedness issued in exchange for, or the proceeds of which
are contemporaneously used to extend, refinance, renew, replace or refund, any
Indebtedness permitted pursuant to the terms of this Agreement, on terms not
materially less favorable to the Borrowers or to the Lender and Lenders' Agent
than the terms of the Indebtedness so extended, refinanced, renewed, replaced
or refunded (including for this purpose in the case of any of the foregoing
with respect to the Indebtedness evidenced by the Senior Secured Notes, the
protections afforded to the Lenders and Lenders' Agent pursuant to an
intercreditor agreement no less favorable to Lenders and Lenders' Agent than
that executed and delivered pursuant to Section 4.1(l) hereof).
9.10 Loans, Investments, Guarantees, Etc. No Borrower shall, directly or
indirectly, make any loans or advance money or property to any person, or
invest in (by capital contribution, dividend or otherwise), or, in the case of
certain subsidiaries as set forth in clause (C) of the proviso to this Section
9.10, continue an existing Investment in any such subsidiary, or purchase or
repurchase the stock, obligations or Indebtedness or all or a substantial part
of the assets or property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the Indebtedness,
performance, obligations or dividends of any Person or make any other
Investment, or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) Investments reported as of the end of each month to Lenders'
Agent in:
(i) 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, in each case having a maturity not beyond one year,
(ii) time deposit accounts, certificates of deposit and money
market deposits, in each case having a maturity not beyond one year, issued by
a bank or trust company which is organized under the laws of the United States
of America or any state thereof whose debt is rated "A" (or such similar
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act of 1933, as
amended) or which is otherwise satisfactory to Lenders' Agent,
(iii) repurchase obligations with a term of not more than thirty
(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) commercial paper with a rating of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher) according to
Standard and Poor's Corporation, and
(v) money-market funds sponsored by any registered broker
dealer or mutual fund distributor, which invest solely in one or more of the
securities referred to in clauses (i), (ii), (iii) or (iv) or that are
otherwise satisfactory to Lenders' Agent;
(c) Investments consisting of:
(i) the redemption, purchase, retirement or other acquisition,
out of legally available funds, of any equity interests in the Borrowers or in
any of their subsidiaries in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Borrower or a subsidiary of a
Borrower) of other equity interests in Borrowers or in any of their
subsidiaries, or
(ii) the redemption, repurchase or repayment of any Indebtedness
permitted to be incurred pursuant to this Agreement (other than the Senior
Secured Notes), concurrently with the receipt by such Borrower of, and out of
the proceeds of, any refinancing, in no greater outstanding amount and on terms
no less favorable to such Borrower than the terms of such Indebtedness
refinanced, or
(iii) the redemption, purchase, retirement or other repayment of
the Senior Secured Notes, and payments, to the extent not prohibited by clause
(x)(C) of the proviso to Section 9.9(h) hereof, to the holders of the common
stock appreciation rights described in such clause (x)(C) upon the exercise
thereof, or
(iv) the purchase or redemption of the Series A Preferred Stock
of Terex outstanding on the date hereof;
(d) Investments in a subsidiary of a Borrower formed primarily for
the purpose of financing purchases and leases of inventory manufactured by the
Borrowers or any of their subsidiaries of up to an aggregate amount so
invested, in cash and/or in property, other than Collateral, having an
aggregate fair market value, not to exceed $3,000,000 so invested on or after
the date hereof in cash or in such property by all Borrowers on a combined
basis;
(e) Investments by Terex in shares of capital stock of Fruehauf
Trailer Corporation in satisfaction of outstanding Indebtedness of Fruehauf
Trailer Corporation to Terex in the aggregate amount of up to $2,000,000;
(f) Investments, not otherwise permitted under this Section 9.10,
that do not exceed, in the aggregate for all Borrowers, on a combined basis,
the sum of (A) $8,000,000 in such Investments made at any time or times on or
after the date hereof, such $8,000,000 amount under this clause (A) to be
reduced by the aggregate amount of dividends paid by Terex as permitted under
Section 9.11(a)(x) hereof, plus (B) in any fiscal year and following the
delivery to Lenders' Agent of the audited annual financial statements of Terex
and its subsidiaries in the form required by Section 9.6(a) hereto for the
preceding fiscal year, an amount equal to (x) fifty (50%) percent of the
Consolidated Net Income of Terex for such immediately preceding fiscal year,
less (y) the amount of Terex's Consolidated Net Income for such immediately
preceding fiscal year previously designated for or used to satisfy a condition
of a transaction under Section 9 of this Agreement that is limited, in whole or
in part, by Consolidated Net Income of Terex;
(g) intercompany loans by a Borrower to Terex, in cash, the proceeds
of which are used to pay interest and liquidated damages (if any) when due, and
principal when due at regularly scheduled maturity on May 15, 2002, in each
case pursuant to the Senior Secured Notes as in effect on the date hereof;
(h) intercompany loans by a Borrower to its subsidiaries or to
another Borrower or its subsidiaries, in cash, made contemporaneously with the
funding of, and the proceeds of which are used to fund, an Investment otherwise
permitted under this Section 9.10 or dividends otherwise permitted under
Section 9.11 hereof;
(i) intercompany loans in cash by one Borrower to any of its
subsidiaries or to another Borrower or any of its subsidiaries for working
capital purposes in the ordinary course of business and consistent with past
practices, including repayment thereof in the ordinary course of business;
(j) Floor Plan Guaranties;
(k) in the case of a Borrower other than Terex, the guarantee by
such Borrower of the Indebtedness and obligations permitted under Section
9.9(h) hereof; and
(l) the guarantees by and other Indebtedness of such Borrower set
forth in the Information Certificate;
Provided, however, that no such loan, advance, guarantee or other Investment
otherwise permitted under any of subsections (c) through (h) of this Section
9.10 shall be made unless:
(A) at the time of such loan, advance, guarantee or other
Investment, other than an Investment in the form of a Net Proceeds Purchase, no
Event of Default has occurred that is continuing or would occur as a
consequence thereof, and no event has occurred that is continuing or condition
exists or would occur or exist as a consequence thereof, that would, with
notice or passage of time, or both, constitute an Event of Default;
(B) in the case of any such advance, loan or other Investment
described in Sections 9.10(c)(iii), (c)(iv), (f) or (h) to be made in cash, at
all times during the period of thirty (30) consecutive days immediately
preceding the disbursement or funding thereof and immediately after giving
effect thereto, Borrowers shall, in the aggregate, have Excess Availability of
not less than $25,000,000, except that:
(1) in the case of Investments by Terex in the form of
redemptions by Terex of the Senior Secured Notes made with the proceeds of the
substantially concurrent sale by Terex or its subsidiaries of capital stock in
any of Terex or its subsidiaries, there shall be no such Excess Availability
requirement under this clause (B),
(2) in the case of Investments by Terex in the form of a
Net Proceeds Purchase, there shall be no such Excess Availability requirement
under this clause (B),
(3) in the case of the first $3,000,000 of Investments
made by any one or more Borrowers in the aggregate as permitted under Section
9.10(f) hereof, the amount of Excess Availability required under this clause
(B) shall be $10,000,000 in lieu of $25,000,000;
(C) in the case of any Investment in a subsidiary of any
Borrower organized under the laws of the United States, Puerto Rico or Canada,
whether existing, acquired or newly formed in connection with such Investment
or as a result thereof, other than a subsidiary which shall be (but only for so
long as such subsidiary shall remain) a Non-Restricted Subsidiary (as defined
in the Note Indenture, as in effect on the date hereof), and expressly
including, for purposes of this clause (C), at the option of Lenders' Agent,
the continuance of any Investment existing on the date hereof in any such
subsidiary, such subsidiary shall execute and deliver to Lenders' Agent an
absolute and unconditional guarantee of payment and performance of the
Obligations of Borrowers (in the form of the guarantees delivered pursuant to
Section 4.1 hereof), together with (i) a general security agreement granting to
Lenders' Agent for itself as agent and on behalf of Lenders, a continuing
security interest in and lien upon all property of the types which would be
Collateral if owned by a Borrower, (ii) UCC financing statements and (iii) such
agreements, document and instruments as Lenders' Agent shall reasonably require
of the kind referred to in Sections 4.1(j) and 9.15 hereof; provided, further,
that such guarantee and/or security interests and liens shall be released or
subordinated by Lenders' Agent in favor of a non-affiliated lender who enters
into a bona fide working capital facility with such subsidiary (w) secured
solely by such subsidiary's Accounts and Inventory, (x) providing loans to such
subsidiary in an amount sufficient to cover all or a substantial portion of
such subsidiary's anticipated working capital requirements, (y) as to which
working capital facility, the Indebtedness incurred thereunder or in connection
therewith and the security interests and liens securing such Indebtedness do
not and shall not violate the terms of the Note Indenture, and (z) as to which
working capital facility, the lender providing such working capital facility
has a bona fide requirement that the Lenders and Lenders' Agent release or
subordinate such guarantee and/or security interests and liens as well as a
requirement for the concurrent release or subordination (on an equivalent
basis) of all guaranties, security interests and liens in the Accounts and
Inventory of such subsidiary held by or for the benefit of the holders of the
Senior Secured Notes;
(D) the loan, advance, guarantee or other Investment will not
violate any of the provisions of the Note Indenture;
(E) in the case of an Investment consisting of the acquisition
by a Borrower of all or a substantial part of the assets or business of a
person (other than a Borrower), Lenders' Agent, may, in its sole discretion
(with the consent of both Lenders in their sole discretion), but shall have no
obligation to consider as Eligible Accounts or Eligible Inventory any Accounts
or Inventory so acquired by a Borrower or thereafter acquired or arising out of
the conduct of the business so acquired, but all such Accounts or Inventory
shall nevertheless be and remain part of the Collateral, subject to a valid and
perfected first priority perfected lien and security interest securing the
Obligations in favor of Lenders' Agent for itself as agent and for the benefit
of Lenders under this Agreement;
(F) in the case of an Investment in the form of a Net Proceeds
Purchase, if, at the time of such Investment, an Event of Default has occurred
and is continuing, no proceeds of the Loans or Letter of Credit Accommodations
shall be used by Terex or the other Borrowers to make such Investment or to
provide funds to Terex to make such Investment; and
(G) Lenders' Agent receives not less than twenty (20) days'
prior written notice of any proposed transaction under subsections (c), (d),
(f) or (h) of this Section 9.10, and not less than five (5) days' prior written
notice of any proposed transaction under subsection (e) of this Section 9.10,
in each case accompanied by a certificate signed by any one of the Chief
Executive Officer, Chief Financial Officer, Executive Vice President or Senior
Vice President of Terex describing the proposed transaction in reasonable
detail and demonstrating compliance through the date of the certificate, and
describing the steps to be taken to comply thereafter, with all requirements of
this Section 9.10, together with such other matters with respect thereto as
Lenders' Agent shall reasonably require.
9.11 Dividends and Redemptions. No Borrower shall, directly or
indirectly:
(a) declare or pay any dividends on account of any shares of class
of capital stock now or hereafter outstanding (or set aside or otherwise
deposit or invest any sums for such purpose), other than (i) dividends payable
solely in the form of capital stock of a Borrower or its subsidiaries, and (ii)
dividends in cash declared and paid, in the same fiscal year, out of legally
available funds therefor, by one Borrower to its parent (if a Borrower
hereunder) or by Terex to its shareholders, limited to dividends declared and
paid after delivery to Lenders' Agent, in the form required pursuant to Section
9.6(a), of the audited annual financial statements of Terex and subsidiaries
and the unaudited consolidating financial statements of Terex and subsidiaries
for the fiscal year most recently ended prior to the date of such declaration
and payment, in an amount or amounts not to exceed in the aggregate the sum of
(x) $3,000,000 of such dividends declared and paid at any time by Terex on or
after the date hereof, such $3,000,000 amount to be reduced (but not below
zero) by the amount of Investments made by any one or more Borrowers as
permitted under Section 9.10(f)(A) hereof, plus (y) fifty (50%) percent of the
respective Consolidated Net Income of the payor for such prior fiscal year,
less (without duplication) (z) the amount of such payor's Consolidated Net
Income for such immediately preceding fiscal year previously designated for or
used to satisfy a condition of a transaction under Section 9 of this Agreement
that is limited, in whole or in part, by Consolidated Net Income of such payor
or Terex, as the case may be; provided, however, that no cash dividends shall
be permitted under this Section 9.11(a), unless:
(A) at the time of declaration and payment of any such
dividend, no Event of Default has occurred that is continuing or would occur as
a consequence thereof, and no event has occurred or condition exists, or would
occur or exist as a consequence thereof, that would, with notice or passage of
time, or both, constitute an Event of Default;
(B) in the case of a cash dividend by Terex, at all times
during the period of thirty (30) consecutive days immediately preceding the
payment of any dividend, and after giving effect thereto, Borrowers shall have
maintained and shall have, in the aggregate, Excess Availability of not less
than $25,000,000; and
(C) Lenders' Agent shall have received not less than thirty
(30) days' prior written notice of any proposed cash dividend under this
Section 9.11, accompanied by a certificate signed by the Chief Executive
Officer, Chief Financial Officer, Executive Vice President or Senior Vice
President of Terex, describing the transaction in reasonable detail and
demonstrating compliance through the date of the certificate, and describing
the steps to be taken to comply thereafter, with all requirements of this
Section 9.11, together with such other matters with respect thereto as Lenders'
Agent shall reasonably require; or
(b) redeem, retire, defease, purchase or otherwise acquire any
shares of any class of capital stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration other than capital
stock of a Borrower or its subsidiaries or apply or set apart any sum, or make
any other distribution (by reduction of capital or otherwise) in respect of any
such shares or agree to do any of the foregoing, other than as permitted under
Section 9.10(c) (including the satisfaction of the conditions contained in the
proviso to Section 9.10);
9.12 Transactions with Affiliates.
(a) No Borrower shall enter into any transaction for the purchase,
sale or exchange of property or the rendering of any service to or by any
affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's business in accordance with past practices and
upon fair and reasonable terms no less favorable to such Borrower than such
Borrower would obtain in a comparable arm's length transaction with an
unaffiliated person; provided, however, that no sales, transfers or deliveries
of Inventory to any affiliate that is not a Borrower shall be made unless (i)
prior written notice thereof is given by Borrowers or Borrowers' Agent to
Lenders' Agent, who shall thereupon reduce the amount of Eligible Inventory of
the selling Borrower(s) by the amount of the net reduction of Eligible
Inventory resulting from such transaction, and (ii) after giving effect to such
reduction, the Loans and Letter of Credit Accommodations would not exceed the
amounts available under the lending formulas and subject to the sublimits set
forth in this Agreement.
(b) Nothing in Section 9.12(a) shall prohibit Borrowers from
entering into employment agreements in the ordinary course of business.
9.13 Costs and Expenses. Borrowers shall pay to Lenders' Agent and
Lenders on demand all filing fees, taxes and all reasonable costs and expenses
paid or payable in connection with the preparation, negotiation, execution,
delivery, recording, administration, collection, liquidation, enforcement and
defense of the Obligations, and the rights of Lender and Lenders' Agent in the
Collateral, this Agreement, the other Financing Agreements and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including, but not limited to: (a)
all out-of-pocket costs and expenses of filing or recording (including Uniform
Commercial Code financing statement filing taxes and fees, documentary taxes,
intangibles taxes and mortgage recording taxes and fees, if applicable); (b)
all insurance premiums, appraisal fees and search fees; (c) reasonable costs
and expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
customary and reasonable charges and fees of Lenders' Agent with respect
thereto; (d) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (e) costs and expenses of
preserving and protecting the Collateral; (f) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lenders' Agent for itself as agent and for the
benefit of Lenders, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Lenders' Agent or
either or both Lenders arising out of the transactions contemplated hereby and
thereby (including, without limitation, preparations for and consultations
concerning any such matters); provided, that Borrowers shall not be liable for
the costs of defending claims asserted (x) by a Borrower against Lenders' Agent
or either or both Lenders which claims are successfully established pursuant to
a final, non-appealable judgment of a court of competent jurisdiction rendered
in favor of such Borrower against a Lender or Lenders' Agent, or (y) by a
person, other than a Borrower, against Lenders' Agent or either or both
Lenders, which claims result in a final, non-appealable judgment rendered in
favor of such person against a Lender or Lenders' Agent, and which judgment
clearly sets forth the basis for liability as the willful misconduct, bad faith
or gross negligence of such Lender or Lenders' Agent; (g) all reasonable
out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Lenders or Lenders' Agent during the course of periodic field
examinations of the Collateral and Borrowers' operations, plus a per diem
charge at the rate of $600 per person per day for examiners of Lenders' Agent
and of Lenders in the field and office; (h) the reasonable fees and
disbursements of outside counsel (including legal assistants) to Lenders' Agent
in connection with any of the foregoing and (i) the reasonable fees and
disbursements of outside counsel (including legal assistants) to either or both
Lenders or any Participant in connection with any of the foregoing (other than
legal fees and disbursements of counsel (including legal assistants) of a
Participant incurred to become a Participant.
9.14 Compliance with ERISA. No Borrower shall with respect to any
"employee benefit plans" maintained by such Borrower or any of its ERISA
Affiliates:
(a) (i) terminate any of such employee benefit plans so as to incur
any liability to the Pension Benefit Guaranty Corporation established pursuant
to ERISA, (ii) allow or suffer to exist any prohibited transaction involving
any of such employee benefit plans or any trust created thereunder which would
subject any Borrower or such ERISA Affiliates to a tax or penalty or other
liability on prohibited transactions imposed under Section 4975 of the Code or
ERISA, (iii) fail to pay to any such employee benefit plan any contribution
which it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such plan, (iv) allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such employee
benefit plan, (v) allow or suffer to exist any occurrence of a reportable event
or any other event or condition which presents a material risk of termination
by the Pension Benefit Guaranty Corporation of any such employee benefit plan
that is a single employer plan, which termination could result in any liability
to the Pension Benefit Guaranty Corporation or (vi) incur any withdrawal
liability with respect to any multiemployer pension plan.
(b) As used in this Section 9.14, the term "employee benefit plans",
"accumulated funding deficiency" and "reportable event" shall have the
respective meanings assigned to them in ERISA, and the term "prohibited
transaction" shall have the meaning assigned to it in Section 4975 of the Code
and ERISA.
9.15 Further Assurances. At the request of Lenders' Agent at any time and
from time to time, each Borrower shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise
effectuate the provisions or purposes of this Agreement or any of the other
Financing Agreements. Lenders' Agent or either Lender may at any time and from
time to time request a certificate from an officer of any or all Borrowers
representing that all conditions precedent to the making of Revolving Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In
the event of such request by Lenders' Agent or either Lender, Lenders' Agent
may, at its option, cease to make any further Revolving Loans or provide any
further Letter of Credit Accommodations until Lenders' Agent has received such
certificate and, in addition, Lenders' Agent has determined that such
conditions are satisfied. Where permitted by law, each Borrower hereby
authorizes Lenders' Agent to execute and file one or more UCC financing
statements with respect to the Collateral signed only by Lenders' Agent.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Borrower fails to pay when due any of the Obligations or
(ii) Borrower fails to perform any of the terms, covenants, conditions or
provisions contained in this Agreement or any of the other Financing Agreements
other than as described in Section 10.1(a)(i), and, in the case of a failure to
comply with the terms, covenants, conditions or provisions contained in:
(1) Section 9.1, to the extent such failure consists
solely of a failure to be qualified as a foreign corporation to do business in
a jurisdiction, such failure shall continue for a period of sixty (60) days, or
(2) Section 9.2(a), Lenders' Agent shall fail to receive
notice of such new location within twenty (20) days after the opening or
establishment thereof (but such twenty (20) day period shall not apply if any
of the Inventory at such new location is included in any Collateral report
delivered to Lenders' Agent), or
(3) the first sentence of Section 9.4, such failure shall
continue for a period of thirty (30) days, or
(4) Section 9.6(a)(i), to the extent such failure consists
solely of a failure to deliver timely financial statements for the third,
sixth, ninth or twelfth calendar months, such failure shall continue for a
period of five (5) days, or
(5) Section 9.6(a)(ii), to the extent such failure
consists solely of a failure to deliver timely the annual audited financial
statements of Terex and its subsidiaries, such failure shall continue for a
period of ten (10) days, or
(6) Section 9.14, such failure shall continue for a period
of thirty (30) days;
provided, that, such specified periods in clauses (1) through (6) above shall
not apply in the case of: (A) any failure to observe any such term, covenant,
condition or provision which is not capable of being cured at all or within
such specified periods or which has been the subject of a prior failure within
a six (6) month period or (B) an intentional breach by Borrower or any Obligor
of any such term, covenant, condition or provision or (C) any failure which
adversely affects any Collateral or its value or the rights or interests of
Lenders' Agent and Lenders therein or thereto; or
(b) any representation, warranty or statement of fact made by any
Borrower to either or both Lenders or Lenders' Agent in this Agreement, the
other Financing Agreements or any other agreement, schedule, confirmatory
assignment or otherwise shall when made or deemed made be false or misleading
in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lenders;
(d) (i) any judgment for the payment of money is rendered against
any Borrower or any Obligor in excess of $1,000,000 for any one Borrower or
Obligor in any one case, or in excess of $2,000,000 in the aggregate for all
Borrowers and Obligors, and shall remain undischarged or unvacated for a period
in excess of forty-five (45) days or execution shall at any time not be
effectively stayed, or (ii) any judgment other than for the payment of money,
or injunction, attachment, garnishment or execution is rendered against any
Borrower or any Obligor or any of their assets which would either (A) have a
material adverse effect upon the business or assets of such Borrower or Obligor
or (B) have an adverse effect on the value of any Collateral or the rights of
Lenders' Agent or the Lenders therein or thereto;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or any Borrower or any Obligor, which is a
partnership or corporation, dissolves or suspends or discontinues doing
business;
(f) any Borrower or any Obligor becomes Insolvent, makes an
assignment for the benefit of creditors or makes or sends notice of a bulk
transfer;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law
or in equity) is filed against any Borrower or any Obligor or all or any part
of its properties and such petition or application is not dismissed within
forty (45) days after the date of its filing or any Borrower or any Obligor
shall file any answer admitting or not contesting such petition or application
or indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or any Obligor or for all or any part of
its property;
(i) (A) any default by any Borrower or any Obligor under any
agreement, document or instrument relating to any indebtedness for borrowed
money owing to any person other than Lenders (including but not limited to the
Senior Secured Notes and the Note Indenture), or any capitalized lease
obligations, contingent indebtedness in connection with any guarantee, letter
of credit, indemnity or similar type of instrument in favor of any person other
than Lenders, in any case where such indebtedness, obligations or contingent
indebtedness is in an amount in excess of $4,000,000, which default results in
a demand for payment or acceleration of any of the foregoing indebtedness,
obligations, or contingent indebtedness, or (B) any default by any Borrower or
any Obligor under any material contract, lease, license or other obligation to
any person other than Lenders and other than under an agreement, document or
instrument referred to in clause (A), which default continues for more than the
applicable cure period, if any, with respect thereto;
(j) any Change of Control;
(k) the indictment or threatened indictment of any Borrower or any
Obligor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings against any Borrower or any Obligor, pursuant
to which statute or proceedings the penalties or remedies sought or available
include forfeiture of any material portion of the property of any Borrower or
any Obligor or any Collateral;
(l) there shall be a material adverse change in the business or
assets of any Borrower or any Obligor after the date hereof; or
(m) there shall be an event of default under any of the other
Financing Agreements.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lenders' Agent and Lenders shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the Uniform
Commercial Code and other applicable law, all of which rights and remedies may
be exercised without notice to or consent by any Borrower or any Obligor,
except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to Lenders
and Lenders' Agent hereunder, under any of the other Financing Agreements, the
Uniform Commercial Code or other applicable law, are cumulative, not exclusive
and enforceable, in Lenders' and Lenders' Agent's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction
to restrain a breach or threatened breach by any Borrower of this Agreement or
any of the other Financing Agreements. Lenders' Agent or Lenders may, at any
time or times, proceed directly against any Borrower or any Obligor to collect
the Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lenders' Agent may, in its discretion
and without limitation, (i) by notice to Borrowers' Agent accelerate the
payment of all Obligations and demand immediate payment thereof to Lenders'
Agent, for the benefit of Lenders, by any or all Borrowers or Obligors
(provided, that, upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or the aid
or assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(iii) require any Borrower, at such Borrower's expense, to assemble and make
available to Lenders any part or all of the Collateral at any place and time
designated by Lenders or Lenders' Agent, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of either Lender or Lenders' Agent or
elsewhere) at such prices or terms as Lenders or Lenders' Agent may deem
reasonable, for cash, upon credit or for future delivery, with the Lenders
having the right to purchase the whole or any part of the Collateral at any
such public sale, all of the foregoing being free from any right or equity of
redemption of any Borrower, which right or equity of redemption is hereby
expressly waived and released by each Borrower and/or (vii) terminate this
Agreement. If any of the Collateral is sold or leased by either or both
Lenders or Lenders' Agent upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefor is
finally collected by Lenders or Lenders' Agent. Unless the Collateral involved
in a sale or other disposition by Lenders or Lenders' Agent is perishable or
threatens to decline speedily in value or is of a type customarily sold in a
recognized market, ten (10) days prior notice of disposition of such Collateral
by Lenders or Lenders' Agent, designating the time and place of any public sale
or the time after which any private sale or other intended disposition of any
Collateral is to be made, shall be given to Borrowers' Agent and shall be
deemed to be reasonable notice thereof and Borrowers waive any other notice.
In the event either or both Lenders or Lenders' Agent institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, Borrowers waive the posting of any bond which might
otherwise be required.
(c) Lenders' Agent and Lenders may apply the cash proceeds of
Collateral actually received by Lenders' Agent or Lenders from any collection
of Receivables, sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in such order as
Lenders' Agent or the recipient Lender may elect, whether or not then due.
Borrowers shall remain liable to Lenders' Agent and Lenders for the payment of
any deficiency with interest at the highest rate provided for herein and all
costs and expenses of collection or enforcement, including attorneys' fees and
legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an Event
of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lenders' Agent may, at its option, without
notice, (i) cease making Revolving Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Revolving Loans and
Letter of Credit Accommodations available to any or all Borrowers and/or (ii)
terminate any provision of this Agreement providing for any future Revolving
Loans or Letter of Credit Accommodations to be made by Lenders' Agent to any or
all Borrowers.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Each of Borrower, Lenders' Agent and Lenders irrevocably
consents and submits to the non-exclusive jurisdiction of the Supreme Court of
the State of New York and the United States District Court for the Southern
District of New York and waives any objection based on venue or forum non
conveniens with respect to any action instituted therein arising under this
Agreement or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of the parties hereto in respect of
this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Lenders' Agent and each Lender shall have the
right to bring any action or proceeding against any Borrower or its property in
the courts of any other jurisdiction which Lenders' Agent or such Lender deems
necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against any Borrower or its property).
(c) Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at the option of Lenders' Agent or either Lender, by service upon Borrower
in any other manner provided under the rules of any such courts. Within thirty
(30) days after such service, such Borrower shall appear in answer to such
process, failing which Borrower shall be deemed in default and judgment may be
entered against such Borrower for the amount of the claim and other relief
requested.
(d) EACH BORROWER, LENDERS' AGENT AND EACH LENDER HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i)
ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii)
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. EACH BORROWER, LENDERS' AGENT AND EACH LENDER HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDERS' AGENT OR
EITHER LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Lenders' Agent nor Lenders shall have any liability to
any Borrower (whether in tort, contract, equity or otherwise) for losses
suffered by any Borrower in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
such Lender or Lenders' Agent, that the losses were the result of acts or
omissions constituting such Lenders' or Lenders' Agent's own gross negligence,
willful misconduct or bad faith. In any such litigation, each of Lenders'
Agent and Lenders shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement.
11.2 Waiver of Notices. Each Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the
Collateral and this Agreement, except such as are expressly provided for
herein. No notice to or demand on any Borrower which Lenders' Agent or either
Lender may elect to give shall entitle such Borrower or any other Borrower to
any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement, signed, in the case of amendments or
modifications, by authorized officers of Borrowers or Borrowers' Agent, both
Lenders and Lenders' Agent, and signed, in the case of waivers or discharges in
favor of Borrowers, by authorized officers of both Lenders and Lenders' Agent.
Neither the Lenders nor Lenders' Agent shall, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights,
powers and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of such person. Any such waiver shall be enforceable only
to the extent specifically set forth therein. A waiver by Lenders' Agent or by
Lenders of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power and/or remedy which
Lenders' Agent or the Lenders would otherwise have on any future occasion,
whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Each Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom
relating hereto or thereto.
11.5 Indemnification. Each Borrower shall indemnify and hold each of the
Lenders and Lenders' Agent, and their directors, agents, employees and counsel,
harmless from and against any and all losses, claims, damages, liabilities,
costs or expenses imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including, without limitation, amounts paid in
settlement, court costs, and the reasonable fees and expenses of counsel, but
excluding any such losses, claims, damages, liabilities, costs and expenses
directly caused to be incurred by reason of the gross negligence, willful
misconduct or bad faith of the person otherwise to be indemnified and held
harmless under this Section, as determined by a final, non-appealable judgment
of a court of competent jurisdiction. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, each Borrower shall pay the
maximum portion which it is permitted to pay under applicable law to Lenders'
Agent and Lenders in satisfaction of indemnified matters under this Section.
The foregoing indemnity shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 Appointment of Lenders' Agent. Each of the Lenders hereby appoints
the Lenders' Agent hereunder and the Lenders' Agent hereby agrees to act in
such capacity as agent for the Lenders under this Agreement and the other
Financing Agreements. Lenders' Agent shall have and may exercise such powers
as are delegated to the Lenders' Agent by the terms hereof, subject to the
Co-Lending Agreement. Borrowers acknowledge that the rights, powers, duties
and liabilities of Lenders' Agent set forth herein are subject to the
provisions of the Co-Lending Agreement. Subject to the Co-Lending Agreement,
each of the Lenders hereby authorizes, consents and directs each of the
Borrowers and Borrowers' Agent to deal with the Lenders' Agent as the true and
lawful agent of such Lenders to the extent set forth herein and in any other
circumstances where directed by both Lenders in writing.
12.2 Appointment of Borrowers' Agent.
(a) Each Borrower hereby irrevocably appoints Terex as Borrowers'
Agent hereunder, and Terex hereby agrees to act in such capacity as agent for
such Borrower hereunder. Each Borrower further irrevocably authorizes
Borrowers' Agent to take such action on such Borrowers' behalf and to exercise
such rights and powers hereunder as are delegated to Borrowers' Agent by the
terms hereof, together with such rights and powers as are reasonably incidental
thereto.
(b) Borrowers' Agent is hereby expressly and irrevocably authorized
by each Borrower, without hereby limiting any implied or express authority, (i)
to give and receive on behalf of such Borrower all notices and other materials
delivered or provided to be delivered by Lenders' Agent or Lenders to such
Borrower or by such Borrower to Lenders' Agent or Lenders pursuant to the
Financing Agreements, (ii) to request Revolving Loans and Letter of Credit
Accommodations on behalf of such Borrower, and (iii) to pay, on behalf of such
Borrower, all Obligations at any time due Lenders' Agent for the benefit of
Lenders pursuant to the terms of this Agreement.
12.3 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date three (3) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof; provided, that, Lenders and
Lenders' Agent may, at their joint option, extend the Renewal Date to the date
four (4) years from the date hereof by giving Borrowers' Agent notice signed by
Lenders' Agent and both Lenders at least sixty (60) days prior to the third
anniversary of this Agreement. Either of Lenders or all (but not less than
all) Borrowers (subject to the right of Lenders and Lenders' Agent to extend
the Renewal Date as provided above) may terminate this Agreement and the other
Financing Agreements effective on the Renewal Date or on the anniversary of the
Renewal Date in any year by giving to the other parties at least sixty (60)
days prior written notice; provided, that, this Agreement and all other
Financing Agreements must be terminated simultaneously. Upon the effective
date of termination or non-renewal of the Financing Agreements, Borrowers shall
pay to Lenders' Agent, in full, for the benefit of Lenders, all outstanding and
unpaid Obligations and shall furnish cash collateral to Lenders' Agent in such
amounts as Lenders' Agent determines are reasonably necessary to secure Lenders
and Lenders' Agent from loss, cost, damage or expense, including reasonable
attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or
as to which Lenders' Agent or Lenders have not yet received final and
indefeasible payment. Such cash collateral shall be remitted by wire transfer
in Federal funds to such bank account of Lenders' Agent, as Lenders' Agent may,
in its discretion, designate in writing to Borrowers' Agent for such purpose.
Interest shall be due until and including the next business day, if the amounts
so paid by Borrowers to the bank account designated by Lenders' Agent are
received in such bank account later than 12:00 noon, Pacific Time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and the continuing security interest of Lenders' Agent for itself and for
the benefit of Lenders in the Collateral of each Borrower and the rights and
remedies of Lenders' Agent and Lenders hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all such
Obligations have been fully and finally discharged and paid. Thereupon,
Lenders and Lenders' Agent shall, at the request of Borrowers or Borrowers'
Agent, execute and deliver to Borrowers' Agent or Borrowers, at Borrowers' cost
and expense, such UCC termination statements as are necessary to evidence the
discharge and release of any then remaining Collateral.
(c) If for any reason this Agreement is terminated prior to the end
of the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lenders' lost
profits as a result thereof, Borrowers, jointly and severally, agree to pay to
Lenders' Agent for the benefit of Lenders, upon the effective date of such
termination, an early termination fee in the amount set forth below if such
termination is effective in the period indicated:
Amount Period
(i) 3% of Maximum Credit May 9, 1995 to and including May 9,
1996
(ii) 2% of Maximum Credit May 10, 1996 to and including May 9,
1997
(iii) 1% of Maximum Credit May 10, 1997 to and including the
ninety-first day preceding the third
anniversary of the date hereof ("Third
Anniversary")
(iv) 1/2 of 1% of Maximum the ninetieth day prior
Credit to the Third Anniversary to and
including the sixty-first day prior to
the Third Anniversary
(v) 1/4 of 1% of Maximum the sixtieth day prior
Credit to the Third Anniversary to and
including the thirty-first day prior
to the Third Anniversary
(vi) 0% the thirtieth day prior to the Third
Anniversary to and including the Third
Anniversary
Such early termination fee shall be presumed to be the amount of damages
sustained by Lenders as a result of such early termination and Borrowers agree
that it is reasonable under the circumstances currently existing. The early
termination fee provided for in this Section 12.3 shall be deemed included in
the Obligations.
12.4 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lenders or Lenders' Agent by sending it to Lenders'
Agent at its address set forth below and to Borrowers or Borrowers' Agent by
sending it to Borrowers' Agent at its chief executive office set forth below,
or to such other address as either party may designate by written notice to the
other in accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex, telegram
or facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
12.5 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.6 Successors.
(a) This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon and inure to the
benefit of and be enforceable by Lenders, Lenders' Agent, Borrowers, Borrowers'
Agent and their respective successors and assigns, except that no Borrower may
assign its rights under this Agreement, the other Financing Agreements and any
other document referred to herein or therein without the prior written consent
of Lenders and Lenders' Agent. Subject to the Co-Lending Agreement, Lenders'
Agent or Lenders may, after notice to Borrowers' Agent, assign their rights and
delegate their obligations under this Agreement and the other Financing
Agreements and further may assign, or sell participations in, all or any part
of the Loans, the Letter of Credit Accommodations or any other interest herein
to another financial institution or other person, in which event, the assignee
or Participant shall have, to the extent of such assignment or participation,
the same rights and benefits as it would have if it were a Lender hereunder,
except as otherwise provided by the terms of such assignment or participation.
(b) Notwithstanding anything to the contrary contained in Section
12.6(a), Lenders will not, without the consent of Borrowers' Agent, provide
Confidential Information to a prospective Participant or grant a participation
in the Financing Agreements to a prospective Participant who is engaged in a
business directly competitive with the business of any Borrower, provided,
however, that if a Lender discloses to Borrowers' Agent its intention to
provide Confidential Information to a prospective Participant and Borrowers'
Agent fails to notify such Lender within two (2) Business Days following such
disclosure that such proposed Participant is engaged in a business directly
competitive with the business of a specified Borrower, such Lender shall be
free to furnish Confidential Information and grant a participation in the
Financing Agreements to such prospective Participant to the extent and on such
terms as such Lender shall determine.
12.7 Participant's Security Interest. If a Participant shall at any time
participate with Lenders in the Revolving Loans, Letter of Credit
Accommodations or other Obligations, each Borrower hereby grants to such
Participant and such Participant shall have and is hereby given, a continuing
lien on and security interest in any money, securities and other property of
each Borrower in the custody or possession of the Participant, including the
right of setoff, to the extent of the Participant's participation in the
Obligations, and such Participant shall be deemed to have the same right of
setoff to the extent of its participation in the Obligations, as it would have
if it were a direct lender.
12.8 Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered
or to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written.
12.9 Confidentiality.
(a) Lenders and Lenders' Agent shall use all reasonable efforts to
keep confidential, in accordance with their customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrowers pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information
is furnished by Borrowers to Lenders and Lenders' Agent, provided, that,
nothing contained herein shall restrict the disclosure of any such information:
(i) to the extent required by statute, rule, regulation, subpoena or court
order, (ii) to bank examiners and other regulators, auditors and/or
accountants, (iii) in connection with any litigation to which a Lender or
Lenders' Agent is a party, (iv) to any assignee or Participant (or prospective
assignee or Participant) so long as such assignee or Participant (or
prospective assignee or Participant) shall have first agreed in writing to
treat such information as confidential in accordance with this Section 12.9, or
(v) to counsel for a Lender or Lenders' Agent or any Participant or assignee
(or prospective Participant or assignee).
(b) In no event shall this Section 12.9 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by any Borrower or
any third party without breach of this Section 12.9 or otherwise become
generally available to the public other than as a result of a disclosure in
violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to a Lender or Lenders' Agent on a non-confidential
basis from a person other than a Borrower, (iii) require either Lender or
Lenders' Agent to return any materials furnished by a Borrower to Lenders or
Lenders' Agent, or (iv) prevent a Lender or Lenders' Agent from responding to
routine informational requests in accordance with the Code of Ethics for the
Exchange of Credit Information promulgated by The Robert Morris Associates or
other applicable industry standards relating to the exchange of credit
information. The obligations of Lenders and Lenders' Agent under this Section
12.9 shall supersede and replace the obligations (if any) of Lenders or
Lenders' Agent under any confidentiality letter signed prior to the date
hereof.
IN WITNESS WHEREOF, Lenders, Lenders' Agent, Borrowers and Borrowers'
Agent have caused these presents to be duly executed as of the day and year
first above written.
LENDERS BORROWERS
CONGRESS FINANCIAL CORPORATION TEREX CORPORATION, individually as a
Borrower and as Borrowers' Agent
By: Dan Wolf By: Marvin B. Rosenberg
Title: Senior Vice President Title: Secretary
Commitment Percentage: 58.3333%
Address: Chief Executive Office:
1133 Avenue of the Americas 500 Post Road East, Suite 320
New York, New York 10036 Westport, Connecticut 06880
FOOTHILL CAPITAL CORPORATION, CLARK MATERIAL HANDLING
individually as a Lender and COMPANY
as Lenders' Agent
By: Kenneth Dahl By: Marvin B. Rosenberg
Title: Senior Vice President Title: Secretary
Commitment Percentage: 41.6667%
Address: Chief Executive Office:
11111 Santa Monica Boulevard 333 West Vine Street, Suite 1700
Suite 1500 Lexington, Kentucky 40507
Los Angeles, California 90025-3333
KOEHRING CRANES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office:
106 12th Street, S.E.
Waverly, Iowa 50677
PPM CRANES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office:
Highway 501 East
Atlantic Center for Business
and Industry
Conway, South Carolina 29526
GUARANTEE
May 9, 1995
Foothill Capital Corporation
as agent for itself and
Congress Financial Corporation
11111 Santa Monica Boulevard
Los Angeles, California 90025-3333
Re: Clark Material Handling Company ("Borrower")
Gentlemen:
Congress Financial Corporation and Foothill Capital Corporation, in its
individual capacity (individually and collectively, "Lenders"), Foothill
Capital Corporation, as agent for Lenders (in such capacity, "Lenders' Agent"),
and Borrower have entered into certain financing arrangements pursuant to which
Lender may make loans and advances and provide other financial accommodations
to Borrower as set forth in the Loan and Security Agreement, dated as of May 9,
1995, by and among Borrower, certain subsidiaries of Borrower, Lenders and
Lenders, Agent (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and other agreements, documents and instruments referred to therein or at any
time executed and/or delivered in connection therewith or related thereto,
including, but not limited to, this Guarantee (all of the foregoing, together
with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the "Financing Agreements").
Due to the close business and financial relationships between Borrower and
each and all of the undersigned (individually and collectively, "Guarantors"),
in consideration of the benefits which will accrue to Guarantors and as an
inducement for and in consideration of Lenders' Agent and Lenders making loans
and advances and providing other financial accommodations to Borrower pursuant
to the Loan Agreement and the other Financing Agreements, each of Guarantors
hereby jointly and severally agrees in favor of each of Lenders' Agent and
Lenders as follows:
1. Guarantee.
(a) Each of Guarantors absolutely and unconditionally, jointly and
severally, guarantees and agrees to be liable for the full and indefeasible
payment and performance when due of the following (all of which are
collectively referred to herein as the "Guaranteed Obligations"): (i) all
obligations, liabilities and indebtedness of any kind, nature and description
of Borrower to each of Lenders' Agent, Lenders and/or their respective
affiliates, including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under the Loan Agreement, or any other Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of the Loan Agreement or after
the commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts, which would accrue and become due but
for the commencement of such case and including loans, interest, fees, charges
and expenses related thereto and all other obligations under the Financing
Agreements of Borrower or its successors to each of Lenders' Agent and Lenders
arising after the commencement of such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured and (ii) all expenses
(including, without limitation, reasonable attorneys' fees and legal expenses)
incurred by each of Lenders' Agent and Lenders in connection with the
preparation, execution, delivery, recording, administration, collection,
liquidation, enforcement and defense of Borrower's obligations, liabilities and
indebtedness as aforesaid to each of Lenders' Agent and Lenders' the rights of
Lenders' Agent or Lenders in any collateral or under this Guarantee and all
other Financing Agreements or in any way involving claims by or against
Lenders' Agent or Lenders directly or indirectly arising out of or related to
the relationships between Borrower, any of Guarantors or any other Obligor (as
hereinafter defined) and Lenders' Agent or Lenders under the Financing
Agreements, whether such expenses are incurred before, during or after the
initial or any renewal term of the Loan Agreement and the other Financing
Agreements or after the commencement of any case with respect to Borrower or
any of Guarantors under the United States Bankruptcy Code or any similar
statute.
(b) This Guarantee is a guaranty of payment and not of collection.
Each of Guarantors agrees that Lenders' Agent need not attempt to collect any
Guaranteed Obligations from Borrower, any one of Guarantors or any other
Obligor or to realize upon any collateral, but, in the event that any of the
Guaranteed Obligations shall not be paid in full when the same becomes due and
payable whether by maturity, acceleration or otherwise, or at any time
thereafter, may require any one of Guarantors to make immediate payment of such
Guaranteed Obligations to Lenders' Agent or Lenders. Lenders' Agent and each
of Lenders may apply any amounts received in respect of the Guaranteed
Obligations to any of the Guaranteed Obligations, in whole or in part
(including reasonable attorneys' fees and legal expenses incurred by each of
Lenders' Agent or Lenders with respect thereto or otherwise chargeable to
Borrower or Guarantors) and in such order as Lenders' Agent or Lenders may
elect.
(c) Payment by Guarantors shall be made to Lenders' Agent at the
office of Lenders' Agent from time to time on demand as Guaranteed Obligations
become due. Guarantors shall make all payments to Lenders' Agent and Lenders on
the Guaranteed obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. One or more successive or concurrent actions may be
brought hereon against any of Guarantors either in the same action in which
Borrower or any of the other Guarantors or any other Obligor is sued or in
separate actions. In the event any claim or action, or action on any judgment,
based on this Guarantee is brought against any of Guarantors, each of
Guarantors agrees not to deduct, set off, or seek any counterclaim for or
recoup any amounts which are or may be owed by Lenders' Agent or Lenders to any
of Guarantors.
2. Waivers and Consents.
(a) Notice of acceptance of this Guarantee, the making of loans and
advances and providing other financial accommodations to Borrower and
presentment, demand, protest, notice of protest, notice of nonpayment or
default and all other notices to which Borrower or any of Guarantors are
entitled are hereby waived by each of Guarantors. Each of Guarantors also
waives notice of and hereby consents to (i) any amendment, modification,
supplement, extension, renewal, or restatement of the Loan Agreement and any of
the other Financing Agreements, including, without limitation, extensions of
time of payment of or increase or decrease in the amount of any of the
Guaranteed Obligations or any collateral, and the guarantee made herein shall
apply to the Loan Agreement and the other Financing Agreements and the
Guaranteed Obligations as so amended, modified, supplemented, renewed, restated
or extended, increased or decreased, (ii) the taking, exchange, surrender and
releasing of collateral or guarantees now or at any time held by or available
to Lenders' Agent or either of Lenders for the obligations of Borrower or any
other party at any time liable on or in respect of the Guaranteed Obligations
or who is the owner of any property which is security for the Guaranteed
Obligations (individually, an "Obligor" and collectively, the "Obligors"),
including, without limitation, the surrender or release by Lenders' Agent of
any one of Guarantors hereunder, (iii) the exercise of, or refraining from the
exercise of any rights against Borrower, any of Guarantors or any other obligor
or any collateral, (iv) the settlement, compromise or release of, or the waiver
of any default with respect to, any of the Guaranteed Obligations and (v) any
financing by Lenders' Agent or Lenders of Borrower under Section 364 of the
United States Bankruptcy Code or consent to the use of cash collateral by
Lenders' Agent or Lenders under Section 363 of the United States Bankruptcy
Code. Each of Guarantors agrees that the amount of the Guaranteed Obligations
shall not be diminished and the liability of Guarantors hereunder shall not be
otherwise impaired or affected by any of the foregoing.
(b) No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations shall affect, impair or be a defense to this
Guarantee, nor shall any other circumstance which might otherwise constitute a
defense available to or legal or equitable discharge of Borrower in respect of
any of the Guaranteed Obligations, or any one of Guarantors in respect of this
Guarantee, affect, impair or be a defense to this Guarantee. Without
limitation of the foregoing, the liability of Guarantors hereunder shall not be
discharged or impaired in any respect by reason of any failure by Lenders'
Agent or Lenders to perfect or continue perfection of any lien or security
interest in any collateral or any delay by Lenders' Agent or Lenders in
perfecting any such lien or security interest. As to interest, fees and
expenses, whether arising before or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any similar
statute, Guarantors shall be liable therefor, even if Borrower's liability for
such amounts does not, or ceases to, exist by operation of law.
(c) Until the Loan Agreement and all other Financing Agreements have
been terminated and all Obligations (as defined in the Loan Agreement) have
been indefeasibly paid and satisfied in full, each of Guarantors hereby
subordinates in favor of Lenders' Agent and Lenders and irrevocably and
unconditionally agrees that it shall not assert or enforce (i) statutory,
contractual, common law, equitable and all other claims against Borrower, any
collateral for the Guaranteed Obligations or other assets of Borrower or any
other Obligor, for subrogation, reimbursement, exoneration, contribution,
indemnification, setoff or other recourse in respect to sums paid or payable to
Lenders' Agent or Lenders by each of Guarantors hereunder and (ii) any and all
other benefits which Guarantors might otherwise directly or indirectly receive
or be entitled to receive by reason of any amounts paid by or collected or due
from Guarantors, Borrower or any other Obligor upon the Guaranteed Obligations
or realized from their property.
3. Subordination. Payment of all amounts now or hereafter owed to
Guarantors by Borrower or any other Obligor is hereby subordinated in right of
payment to the indefeasible payment in full to Lenders' Agent and Lenders of
the Guaranteed Obligations and all such amounts and any security and guarantees
therefor are hereby assigned to Lenders' Agent and Lenders as security for the
Guaranteed Obligations.
4. Acceleration. Notwithstanding anything to the contrary contained
herein or any of the terms of any of the other Financing Agreements, the
liability of Guarantors for the entire Guaranteed Obligations shall mature and
become immediately due and payable, even if the liability of Borrower or any
other Obligor therefor does not, upon the occurrence of any act, condition or
event which constitutes an Event of Default as such term is defined in the Loan
Agreement.
5. Account Stated. The books and records of Lenders' Agent showing the
account between Lenders' Agent and each of Lenders and Borrower shall be
admissible in evidence in any action or proceeding against or involving
Guarantors as prima facie proof of the items therein set forth, and the monthly
statements of Lenders' Agent rendered to Borrower, to the extent to which no
written objection is made within thirty (30) days from the date of sending
thereof to Borrower, shall be deemed conclusively correct and constitute an
account stated between Lenders' Agent and Borrower and be binding on
Guarantors, absent manifest errors or omissions.
6. Termination. This Guarantee is continuing, unlimited, absolute and
unconditional. All Guaranteed Obligations shall be conclusively presumed to
have been created in reliance on this Guarantee. Each of Guarantors shall
continue to be liable hereunder until receipt by Lenders' Agent of a written
termination notice from a Guarantor sent to Lenders' Agent at its address set
forth above by certified mail, return receipt requested and thereafter as set
forth below. Such notice received by Lenders' Agent from any one of Guarantors
shall not constitute a revocation or termination of this Guarantee as to any of
the other Guarantors. Revocation or termination hereof by any of Guarantors
shall not affect, in any manner, the rights of Lenders' Agent or each of
Lenders or any obligations or duties of any of Guarantors (including the
Guarantor which may have sent such notice) under this Guarantee with respect to
(a) Guaranteed Obligations which have been created, contracted, assumed or
incurred prior to the receipt by Lenders' Agent of such written notice of
revocation or termination as provided herein, including, without limitation,
(i) all amendments, extensions, renewals and modifications of such Guaranteed
Obligations (whether or not evidenced by new or additional agreements,
documents or instruments executed on or after such notice of revocation or
termination), (ii) all interest, fees and similar charges accruing or due on
and after revocation or termination, and (iii) all reasonable attorneys' fees
and legal expenses, costs and other expenses paid or incurred on or after such
notice of revocation or termination in attempting to collect or enforce any of
the Guaranteed Obligations against Borrower, Guarantors or any other Obligor
(whether or not suit be brought), or (b) Guaranteed Obligations which have been
created, contracted, assumed or incurred after the receipt by Lenders' Agent of
such written notice of revocation or termination as provided herein pursuant to
any contract entered into by Lenders' Agent or Lenders prior to receipt of such
notice. The sole effect of such revocation or termination by any of Guarantors
shall be to exclude from this Guarantee the liability of such Guarantor for
those Guaranteed Obligations arising after the date of receipt by Lenders'
Agent of such written notice which are unrelated to Guaranteed Obligations
arising or transactions entered into prior to such date. Without limiting the
foregoing, this Guarantee may not be terminated and shall continue so long as
the Loan Agreement shall be in effect (whether during its original term or any
renewal, substitution or extension thereof).
7. Reinstatement. If after receipt of any payment of, or proceeds of
collateral applied to the payment of, any of the Guaranteed Obligations,
Lenders' Agent or either of Lenders is required to surrender or return such
payment or proceeds to any Person for any reason, then the Guaranteed
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Guarantee shall continue in full force and
effect as if such payment or proceeds had not been received by Lenders' Agent
or Lenders. Each of Guarantors shall be liable to pay to Lenders' Agent or
each Lender, and does indemnify and hold Lenders' Agent or Lenders harmless for
the amount of any payments or proceeds surrendered or returned. This Section 7
shall remain effective notwithstanding any contrary action which may be taken
by Lenders' Agent or Lenders in reliance upon such payment or proceeds. This
Section 7 shall survive the termination or revocation of this Guarantee.
8. Amendments and Waivers. Neither this Guarantee nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lenders' Agent. Lenders' Agent and Lenders shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of
their rights, powers and/or remedies unless such waiver shall be in writing and
signed by an authorized officer of Lenders' Agent. Any such waiver shall be
enforceable only to the extent specifically set forth therein. A waiver by
Lenders' Agent or any Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lenders' Agent or such Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
9. Corporate Existence, Power and Authority. Each of Guarantors is a
corporation duly organized and in good standing under the laws of its state or
other jurisdiction of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a material adverse effect on the financial
condition, results of operation or businesses of any of Guarantors or the
rights of Lenders' Agent and Lenders hereunder or under any of the other
Financing Agreements. The execution, delivery and performance of this
Guarantee is within the corporate powers of each of Guarantors, have been duly
authorized by all necessary corporate and shareholder action and are not in
contravention of law or the terms of the certificates of incorporation,
by-laws, or other organizational documentation of each of Guarantors, or any
indenture, material agreement or material undertaking to which any of
Guarantors is a party or by which any of Guarantors or its property are bound.
This Guarantee constitutes the legal, valid and binding obligation of each of
Guarantors enforceable in accordance with its terms, subject to the effect on
enforceability of (a) any bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Any one of
Guarantors signing this Guarantee shall be bound hereby whether or not any of
the other Guarantors or any other person signs this Guarantee at any time.
10. Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Guarantee
and any dispute arising out of the relationship between any of Guarantors and
Lenders' Agent or Lenders, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of New York (without giving
effect to principles of conflicts of law).
(b) Each of Guarantors hereby irrevocably consents and submits to
the non-exclusive jurisdiction of the Supreme Court of the State of New York
and the United States District Court for the Southern District of New York and
waives any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Guarantee or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of any of Guarantors and Lenders' Agent and Lenders in respect of
this Guarantee or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising and whether in contract, tort, equity or otherwise, and agrees that any
dispute arising out of the relationship between any of Guarantors or Borrower
and Lenders' Agent or Lenders or the conduct of any such persons in connection
with this Guarantee, the other Financing Agreements or otherwise shall be heard
only in the courts described above (except that Lenders' Agent and each Lender
shall have the right to bring any action or proceeding against any of
Guarantors or its property in the courts of any other jurisdiction which
Lenders' Agent or such Lender deems necessary or appropriate in order to
realize on collateral at any time granted by Borrower or any of Guarantors to
Lenders' Agent and Lenders or to otherwise enforce its rights against any of
Guarantors or its property).
(c) Each of Guarantors hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail, return receipt requested, directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at the option of Lenders' Agent, by service upon any of Guarantors in any
other manner provided under the rules of any such courts. Within thirty (30)
days after such service, any of Guarantors so served shall appear in answer to
such process, failing which such Guarantors shall be deemed in default and
judgment may be entered against Guarantors for the amount of the claim and
other relief requested.
(d) EACH OF GUARANTORS HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS GUARANTEE
OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF ANY OF GUARANTORS AND LENDERS' AGENT
OR EITHER OF LENDERS IN RESPECT OF THIS GUARANTEE OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. EACH OF GUARANTORS HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY AND THAT ANY OF GUARANTORS OR LENDERS' AGENT OR EITHER OF LENDERS MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF GUARANTORS AND LENDERS' AGENT AND SUCH LENDER TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Lenders' Agent nor either of Lenders shall have any
liability to Guarantors (whether in tort, contract, equity or otherwise) for
losses suffered by Guarantors in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Guarantee, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and nonappealable judgment or court order binding on each
of Lenders and Lenders' Agent that the losses were the result of acts or
omissions constituting gross negligence, willful misconduct or bad faith. In
any such litigation, each of Lenders' Agent and Lenders shall be entitled to
the benefit of the rebuttable presumption that it acted in good faith and with
the exercise of ordinary care in the performance by it of the terms of the Loan
Agreement and the other Financing Agreements.
11. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lenders' Agent at its address set forth above and to
each of Guarantors at its chief executive office set forth below, or to such
other address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
12. Partial Invalidity. If any provision of this Guarantee is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Guarantee as a whole, but this Guarantee shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13. Entire Agreement. This Guarantee represents the entire agreement and
understaffing of this parties concerning the subject matter hereof, and
supersedes all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written.
14. Successors and Assigns. This Guarantee shall be binding upon
Guarantors and their respective successors and assigns and shall inure to the
benefit of each of Lenders and Lenders' Agent and their respective successors,
endorsees, transferees and assigns. The liquidation, dissolution or
termination of any of Guarantors shall not terminate this Guarantee as to such
entity or as to any of the other Guarantors.
15. Construction. All references to the term "Guarantors" wherever used
herein shall mean each and all of Guarantors and their respective successors
and assigns, individually and collectively, jointly and severally (including,
without limitation, any receiver, trustee or custodian for any of Guarantors or
any of their respective assets or any of Guarantors in its capacity as debtor
or debtor-in-possession under the United States Bankruptcy Code). All
references to the term "Lenders" and "Lenders' Agent" wherever used herein
shall mean each of Lenders, Lenders' Agent and their respective successors and
assigns and all references to the term "Borrower" wherever used herein shall
mean Borrower and its successors and assigns (including, without limitation,
any receiver, trustee or custodian for Borrower or any of its assets or
Borrower in its capacity as debtor or debtor-in-possession under the United
States Bankruptcy Code). All references to the term "Person" or "person"
wherever used herein shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as
amended), business trust, unincorporated association, joint stock corporation,
trust, joint venture or other entity or any government or any agency or
instrumentality of political subdivision thereof. All references to the plural
shall also mean the singular and to the singular shall also mean the plural.
IN WITNESS WHEREOF, each of Guarantors has executed and delivered this
Guarantee as of the day and year first above written.
ATTEST: Ronald M. DeFeo TEREX CORPORATION
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
500 Post Road East
Westport, Connecticut 06880
ATTEST: Ronald M. DeFeo KOEHRING CRANES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
106 12th Street, N.E.
Waverly, Iowa 50671
ATTEST: Ronald M. DeFeo PPM CRANES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
Hwy 501 East
Atlantic Center for Business
and Industry
P.O. Box 26002
Conway, South Carolina 29526
ATTEST: Ronald M. DeFeo CMH ACQUISITION CORP.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
ATTEST: Ronald M. DeFeo LEGRIS INDUSTRIES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
Hwy 501 East
Atlantic Center for Business
and Industry
P.O. Box 26002
Conway, South Carolina 29526
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of TEREX
CORPORATION, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of KOEHRING CRANES,
INC., the corporation described in and which executed the foregoing instrument;
and that he signed his name thereto by order of the Board of Directors of said
corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg to me known, who stated that he is the Secretary of PPM CRANES, INC.,
the corporation described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of CMH ACQUISITION
CORP., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of LEGRIS
INDUSTRIES, INC., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
GUARANTEE
May 9, 1995
Foothill Capital Corporation
as agent for itself and
Congress Financial Corporation
11111 Santa Monica Boulevard
Los Angeles, California 90025-3333
Re: Koehring Cranes, Inc. ("Borrower")
Gentlemen:
Congress Financial Corporation and Foothill Capital Corporation, in its
individual capacity (individually and collectively, "Lenders"), Foothill
Capital Corporation, as agent for Lenders (in such capacity, "Lenders' Agent"),
and Borrower have entered into certain financing arrangements pursuant to which
Lender may make loans and advances and provide other financial accommodations
to Borrower as set forth in the Loan and Security Agreement, dated as of May 9,
1995, by and among Borrower, certain subsidiaries of Borrower, Lenders and
Lenders, Agent (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and other agreements, documents and instruments referred to therein or at any
time executed and/or delivered in connection therewith or related thereto,
including, but not limited to, this Guarantee (all of the foregoing, together
with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the "Financing Agreements").
Due to the close business and financial relationships between Borrower and
each and all of the undersigned (individually and collectively, "Guarantors"),
in consideration of the benefits which will accrue to Guarantors and as an
inducement for and in consideration of Lenders' Agent and Lenders making loans
and advances and providing other financial accommodations to Borrower pursuant
to the Loan Agreement and the other Financing Agreements, each of Guarantors
hereby jointly and severally agrees in favor of each of Lenders' Agent and
Lenders as follows:
1. Guarantee.
(a) Each of Guarantors absolutely and unconditionally, jointly and
severally, guarantees and agrees to be liable for the full and indefeasible
payment and performance when due of the following (all of which are
collectively referred to herein as the "Guaranteed Obligations"): (i) all
obligations, liabilities and indebtedness of any kind, nature and description
of Borrower to each of Lenders' Agent, Lenders and/or their respective
affiliates, including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under the Loan Agreement, or any other Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of the Loan Agreement or after
the commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts, which would accrue and become due but
for the commencement of such case and including loans, interest, fees, charges
and expenses related thereto and all other obligations under the Financing
Agreements of Borrower or its successors to each of Lenders' Agent and Lenders
arising after the commencement of such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured and (ii) all expenses
(including, without limitation, reasonable attorneys' fees and legal expenses)
incurred by each of Lenders' Agent and Lenders in connection with the
preparation, execution, delivery, recording, administration, collection,
liquidation, enforcement and defense of Borrower's obligations, liabilities and
indebtedness as aforesaid to each of Lenders' Agent and Lenders' the rights of
Lenders' Agent or Lenders in any collateral or under this Guarantee and all
other Financing Agreements or in any way involving claims by or against
Lenders' Agent or Lenders directly or indirectly arising out of or related to
the relationships between Borrower, any of Guarantors or any other Obligor (as
hereinafter defined) and Lenders' Agent or Lenders under the Financing
Agreements, whether such expenses are incurred before, during or after the
initial or any renewal term of the Loan Agreement and the other Financing
Agreements or after the commencement of any case with respect to Borrower or
any of Guarantors under the United States Bankruptcy Code or any similar
statute.
(b) This Guarantee is a guaranty of payment and not of collection.
Each of Guarantors agrees that Lenders' Agent need not attempt to collect any
Guaranteed Obligations from Borrower, any one of Guarantors or any other
Obligor or to realize upon any collateral, but, in the event that any of the
Guaranteed Obligations shall not be paid in full when the same becomes due and
payable whether by maturity, acceleration or otherwise, or at any time
thereafter, may require any one of Guarantors to make immediate payment of such
Guaranteed Obligations to Lenders' Agent or Lenders. Lenders' Agent and each
of Lenders may apply any amounts received in respect of the Guaranteed
Obligations to any of the Guaranteed Obligations, in whole or in part
(including reasonable attorneys' fees and legal expenses incurred by each of
Lenders' Agent or Lenders with respect thereto or otherwise chargeable to
Borrower or Guarantors) and in such order as Lenders' Agent or Lenders may
elect.
(c) Payment by Guarantors shall be made to Lenders' Agent at the
office of Lenders' Agent from time to time on demand as Guaranteed Obligations
become due. Guarantors shall make all payments to Lenders' Agent and Lenders on
the Guaranteed obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. One or more successive or concurrent actions may be
brought hereon against any of Guarantors either in the same action in which
Borrower or any of the other Guarantors or any other Obligor is sued or in
separate actions. In the event any claim or action, or action on any judgment,
based on this Guarantee is brought against any of Guarantors, each of
Guarantors agrees not to deduct, set off, or seek any counterclaim for or
recoup any amounts which are or may be owed by Lenders' Agent or Lenders to any
of Guarantors.
2. Waivers and Consents.
(a) Notice of acceptance of this Guarantee, the making of loans and
advances and providing other financial accommodations to Borrower and
presentment, demand, protest, notice of protest, notice of nonpayment or
default and all other notices to which Borrower or any of Guarantors are
entitled are hereby waived by each of Guarantors. Each of Guarantors also
waives notice of and hereby consents to (i) any amendment, modification,
supplement, extension, renewal, or restatement of the Loan Agreement and any of
the other Financing Agreements, including, without limitation, extensions of
time of payment of or increase or decrease in the amount of any of the
Guaranteed Obligations or any collateral, and the guarantee made herein shall
apply to the Loan Agreement and the other Financing Agreements and the
Guaranteed Obligations as so amended, modified, supplemented, renewed, restated
or extended, increased or decreased, (ii) the taking, exchange, surrender and
releasing of collateral or guarantees now or at any time held by or available
to Lenders' Agent or either of Lenders for the obligations of Borrower or any
other party at any time liable on or in respect of the Guaranteed Obligations
or who is the owner of any property which is security for the Guaranteed
Obligations (individually, an "Obligor" and collectively, the "Obligors"),
including, without limitation, the surrender or release by Lenders' Agent of
any one of Guarantors hereunder, (iii) the exercise of, or refraining from the
exercise of any rights against Borrower, any of Guarantors or any other obligor
or any collateral, (iv) the settlement, compromise or release of, or the waiver
of any default with respect to, any of the Guaranteed Obligations and (v) any
financing by Lenders' Agent or Lenders of Borrower under Section 364 of the
United States Bankruptcy Code or consent to the use of cash collateral by
Lenders' Agent or Lenders under Section 363 of the United States Bankruptcy
Code. Each of Guarantors agrees that the amount of the Guaranteed Obligations
shall not be diminished and the liability of Guarantors hereunder shall not be
otherwise impaired or affected by any of the foregoing.
(b) No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations shall affect, impair or be a defense to this
Guarantee, nor shall any other circumstance which might otherwise constitute a
defense available to or legal or equitable discharge of Borrower in respect of
any of the Guaranteed Obligations, or any one of Guarantors in respect of this
Guarantee, affect, impair or be a defense to this Guarantee. Without
limitation of the foregoing, the liability of Guarantors hereunder shall not be
discharged or impaired in any respect by reason of any failure by Lenders'
Agent or Lenders to perfect or continue perfection of any lien or security
interest in any collateral or any delay by Lenders' Agent or Lenders in
perfecting any such lien or security interest. As to interest, fees and
expenses, whether arising before or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any similar
statute, Guarantors shall be liable therefor, even if Borrower's liability for
such amounts does not, or ceases to, exist by operation of law.
(c) Until the Loan Agreement and all other Financing Agreements have
been terminated and all Obligations (as defined in the Loan Agreement) have
been indefeasibly paid and satisfied in full, each of Guarantors hereby
subordinates in favor of Lenders' Agent and Lenders and irrevocably and
unconditionally agrees that it shall not assert or enforce (i) statutory,
contractual, common law, equitable and all other claims against Borrower, any
collateral for the Guaranteed Obligations or other assets of Borrower or any
other Obligor, for subrogation, reimbursement, exoneration, contribution,
indemnification, setoff or other recourse in respect to sums paid or payable to
Lenders' Agent or Lenders by each of Guarantors hereunder and (ii) any and all
other benefits which Guarantors might otherwise directly or indirectly receive
or be entitled to receive by reason of any amounts paid by or collected or due
from Guarantors, Borrower or any other Obligor upon the Guaranteed Obligations
or realized from their property.
3. Subordination. Payment of all amounts now or hereafter owed to
Guarantors by Borrower or any other Obligor is hereby subordinated in right of
payment to the indefeasible payment in full to Lenders' Agent and Lenders of
the Guaranteed Obligations and all such amounts and any security and guarantees
therefor are hereby assigned to Lenders' Agent and Lenders as security for the
Guaranteed Obligations.
4. Acceleration. Notwithstanding anything to the contrary contained
herein or any of the terms of any of the other Financing Agreements, the
liability of Guarantors for the entire Guaranteed Obligations shall mature and
become immediately due and payable, even if the liability of Borrower or any
other Obligor therefor does not, upon the occurrence of any act, condition or
event which constitutes an Event of Default as such term is defined in the Loan
Agreement.
5. Account Stated. The books and records of Lenders' Agent showing the
account between Lenders' Agent and each of Lenders and Borrower shall be
admissible in evidence in any action or proceeding against or involving
Guarantors as prima facie proof of the items therein set forth, and the monthly
statements of Lenders' Agent rendered to Borrower, to the extent to which no
written objection is made within thirty (30) days from the date of sending
thereof to Borrower, shall be deemed conclusively correct and constitute an
account stated between Lenders' Agent and Borrower and be binding on
Guarantors, absent manifest errors or omissions.
6. Termination. This Guarantee is continuing, unlimited, absolute and
unconditional. All Guaranteed Obligations shall be conclusively presumed to
have been created in reliance on this Guarantee. Each of Guarantors shall
continue to be liable hereunder until receipt by Lenders' Agent of a written
termination notice from a Guarantor sent to Lenders' Agent at its address set
forth above by certified mail, return receipt requested and thereafter as set
forth below. Such notice received by Lenders' Agent from any one of Guarantors
shall not constitute a revocation or termination of this Guarantee as to any of
the other Guarantors. Revocation or termination hereof by any of Guarantors
shall not affect, in any manner, the rights of Lenders' Agent or each of
Lenders or any obligations or duties of any of Guarantors (including the
Guarantor which may have sent such notice) under this Guarantee with respect to
(a) Guaranteed Obligations which have been created, contracted, assumed or
incurred prior to the receipt by Lenders' Agent of such written notice of
revocation or termination as provided herein, including, without limitation,
(i) all amendments, extensions, renewals and modifications of such Guaranteed
Obligations (whether or not evidenced by new or additional agreements,
documents or instruments executed on or after such notice of revocation or
termination), (ii) all interest, fees and similar charges accruing or due on
and after revocation or termination, and (iii) all reasonable attorneys' fees
and legal expenses, costs and other expenses paid or incurred on or after such
notice of revocation or termination in attempting to collect or enforce any of
the Guaranteed Obligations against Borrower, Guarantors or any other Obligor
(whether or not suit be brought), or (b) Guaranteed Obligations which have been
created, contracted, assumed or incurred after the receipt by Lenders' Agent of
such written notice of revocation or termination as provided herein pursuant to
any contract entered into by Lenders' Agent or Lenders prior to receipt of such
notice. The sole effect of such revocation or termination by any of Guarantors
shall be to exclude from this Guarantee the liability of such Guarantor for
those Guaranteed Obligations arising after the date of receipt by Lenders'
Agent of such written notice which are unrelated to Guaranteed Obligations
arising or transactions entered into prior to such date. Without limiting the
foregoing, this Guarantee may not be terminated and shall continue so long as
the Loan Agreement shall be in effect (whether during its original term or any
renewal, substitution or extension thereof).
7. Reinstatement. If after receipt of any payment of, or proceeds of
collateral applied to the payment of, any of the Guaranteed Obligations,
Lenders' Agent or either of Lenders is required to surrender or return such
payment or proceeds to any Person for any reason, then the Guaranteed
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Guarantee shall continue in full force and
effect as if such payment or proceeds had not been received by Lenders' Agent
or Lenders. Each of Guarantors shall be liable to pay to Lenders' Agent or
each Lender, and does indemnify and hold Lenders' Agent or Lenders harmless for
the amount of any payments or proceeds surrendered or returned. This Section 7
shall remain effective notwithstanding any contrary action which may be taken
by Lenders' Agent or Lenders in reliance upon such payment or proceeds. This
Section 7 shall survive the termination or revocation of this Guarantee.
8. Amendments and Waivers. Neither this Guarantee nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lenders' Agent. Lenders' Agent and Lenders shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of
their rights, powers and/or remedies unless such waiver shall be in writing and
signed by an authorized officer of Lenders' Agent. Any such waiver shall be
enforceable only to the extent specifically set forth therein. A waiver by
Lenders' Agent or any Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lenders' Agent or such Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
9. Corporate Existence, Power and Authority. Each of Guarantors is a
corporation duly organized and in good standing under the laws of its state or
other jurisdiction of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a material adverse effect on the financial
condition, results of operation or businesses of any of Guarantors or the
rights of Lenders' Agent and Lenders hereunder or under any of the other
Financing Agreements. The execution, delivery and performance of this
Guarantee is within the corporate powers of each of Guarantors, have been duly
authorized by all necessary corporate and shareholder action and are not in
contravention of law or the terms of the certificates of incorporation,
by-laws, or other organizational documentation of each of Guarantors, or any
indenture, material agreement or material undertaking to which any of
Guarantors is a party or by which any of Guarantors or its property are bound.
This Guarantee constitutes the legal, valid and binding obligation of each of
Guarantors enforceable in accordance with its terms, subject to the effect on
enforceability of (a) any bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Any one of
Guarantors signing this Guarantee shall be bound hereby whether or not any of
the other Guarantors or any other person signs this Guarantee at any time.
10. Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Guarantee
and any dispute arising out of the relationship between any of Guarantors and
Lenders' Agent or Lenders, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of New York (without giving
effect to principles of conflicts of law).
(b) Each of Guarantors hereby irrevocably consents and submits to
the non-exclusive jurisdiction of the Supreme Court of the State of New York
and the United States District Court for the Southern District of New York and
waives any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Guarantee or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of any of Guarantors and Lenders' Agent and Lenders in respect of
this Guarantee or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising and whether in contract, tort, equity or otherwise, and agrees that any
dispute arising out of the relationship between any of Guarantors or Borrower
and Lenders' Agent or Lenders or the conduct of any such persons in connection
with this Guarantee, the other Financing Agreements or otherwise shall be heard
only in the courts described above (except that Lenders' Agent and each Lender
shall have the right to bring any action or proceeding against any of
Guarantors or its property in the courts of any other jurisdiction which
Lenders' Agent or such Lender deems necessary or appropriate in order to
realize on collateral at any time granted by Borrower or any of Guarantors to
Lenders' Agent and Lenders or to otherwise enforce its rights against any of
Guarantors or its property).
(c) Each of Guarantors hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail, return receipt requested, directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at the option of Lenders' Agent, by service upon any of Guarantors in any
other manner provided under the rules of any such courts. Within thirty (30)
days after such service, any of Guarantors so served shall appear in answer to
such process, failing which such Guarantors shall be deemed in default and
judgment may be entered against Guarantors for the amount of the claim and
other relief requested.
(d) EACH OF GUARANTORS HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS GUARANTEE
OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF ANY OF GUARANTORS AND LENDERS' AGENT
OR EITHER OF LENDERS IN RESPECT OF THIS GUARANTEE OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. EACH OF GUARANTORS HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY AND THAT ANY OF GUARANTORS OR LENDERS' AGENT OR EITHER OF LENDERS MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF GUARANTORS AND LENDERS' AGENT AND SUCH LENDER TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Lenders' Agent nor either of Lenders shall have any
liability to Guarantors (whether in tort, contract, equity or otherwise) for
losses suffered by Guarantors in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Guarantee, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and nonappealable judgment or court order binding on each
of Lenders and Lenders' Agent that the losses were the result of acts or
omissions constituting gross negligence, willful misconduct or bad faith. In
any such litigation, each of Lenders' Agent and Lenders shall be entitled to
the benefit of the rebuttable presumption that it acted in good faith and with
the exercise of ordinary care in the performance by it of the terms of the Loan
Agreement and the other Financing Agreements.
11. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lenders' Agent at its address set forth above and to
each of Guarantors at its chief executive office set forth below, or to such
other address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
12. Partial Invalidity. If any provision of this Guarantee is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Guarantee as a whole, but this Guarantee shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13. Entire Agreement. This Guarantee represents the entire agreement and
understaffing of this parties concerning the subject matter hereof, and
supersedes all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written.
14. Successors and Assigns. This Guarantee shall be binding upon
Guarantors and their respective successors and assigns and shall inure to the
benefit of each of Lenders and Lenders' Agent and their respective successors,
endorsees, transferees and assigns. The liquidation, dissolution or
termination of any of Guarantors shall not terminate this Guarantee as to such
entity or as to any of the other Guarantors.
15. Construction. All references to the term "Guarantors" wherever used
herein shall mean each and all of Guarantors and their respective successors
and assigns, individually and collectively, jointly and severally (including,
without limitation, any receiver, trustee or custodian for any of Guarantors or
any of their respective assets or any of Guarantors in its capacity as debtor
or debtor-in-possession under the United States Bankruptcy Code). All
references to the term "Lenders" and "Lenders' Agent" wherever used herein
shall mean each of Lenders, Lenders' Agent and their respective successors and
assigns and all references to the term "Borrower" wherever used herein shall
mean Borrower and its successors and assigns (including, without limitation,
any receiver, trustee or custodian for Borrower or any of its assets or
Borrower in its capacity as debtor or debtor-in-possession under the United
States Bankruptcy Code). All references to the term "Person" or "person"
wherever used herein shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as
amended), business trust, unincorporated association, joint stock corporation,
trust, joint venture or other entity or any government or any agency or
instrumentality of political subdivision thereof. All references to the plural
shall also mean the singular and to the singular shall also mean the plural.
IN WITNESS WHEREOF, each of Guarantors has executed and delivered this
Guarantee as of the day and year first above written.
ATTEST: Ronald M. DeFeo TEREX CORPORATION
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
500 Post Road East
Westport, Connecticut 06880
ATTEST: Ronald M. DeFeo CLARK MATERIAL HANDLING
COMPANY
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
333 West Vine Street
Suite 1700
Lexington, Kentucky 40507
ATTEST: Ronald M. DeFeo PPM CRANES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
Hwy 501 East
Atlantic Center for Business
and Industry
P.O. Box 26002
Conway, South Carolina 29526
ATTEST: Ronald M. DeFeo CMH ACQUISITION CORP.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
ATTEST: Ronald M. DeFeo LEGRIS INDUSTRIES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
Hwy 501 East
Atlantic Center for Business
and Industry
P.O. Box 26002
Conway, South Carolina 29526
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of TEREX
CORPORATION, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of CLARK MATERIAL
HANDLING COMPANY, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg to me known, who stated that he is the Secretary of PPM CRANES, INC.,
the corporation described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of CMH ACQUISITION
CORP., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of LEGRIS
INDUSTRIES, INC., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
GUARANTEE
May 9, 1995
Foothill Capital Corporation
as agent for itself and
Congress Financial Corporation
11111 Santa Monica Boulevard
Los Angeles, California 90025-3333
Re: Koehring Cranes, Inc. ("Borrower")
Gentlemen:
Congress Financial Corporation and Foothill Capital Corporation, in its
individual capacity (individually and collectively, "Lenders"), Foothill
Capital Corporation, as agent for Lenders (in such capacity, "Lenders' Agent"),
and Borrower have entered into certain financing arrangements pursuant to which
Lender may make loans and advances and provide other financial accommodations
to Borrower as set forth in the Loan and Security Agreement, dated as of May 9,
1995, by and among Borrower, certain subsidiaries of Borrower, Lenders and
Lenders, Agent (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and other agreements, documents and instruments referred to therein or at any
time executed and/or delivered in connection therewith or related thereto,
including, but not limited to, this Guarantee (all of the foregoing, together
with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the "Financing Agreements").
Due to the close business and financial relationships between Borrower and
each and all of the undersigned (individually and collectively, "Guarantors"),
in consideration of the benefits which will accrue to Guarantors and as an
inducement for and in consideration of Lenders' Agent and Lenders making loans
and advances and providing other financial accommodations to Borrower pursuant
to the Loan Agreement and the other Financing Agreements, each of Guarantors
hereby jointly and severally agrees in favor of each of Lenders' Agent and
Lenders as follows:
1. Guarantee.
(a) Each of Guarantors absolutely and unconditionally, jointly and
severally, guarantees and agrees to be liable for the full and indefeasible
payment and performance when due of the following (all of which are
collectively referred to herein as the "Guaranteed Obligations"): (i) all
obligations, liabilities and indebtedness of any kind, nature and description
of Borrower to each of Lenders' Agent, Lenders and/or their respective
affiliates, including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under the Loan Agreement, or any other Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of the Loan Agreement or after
the commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts, which would accrue and become due but
for the commencement of such case and including loans, interest, fees, charges
and expenses related thereto and all other obligations under the Financing
Agreements of Borrower or its successors to each of Lenders' Agent and Lenders
arising after the commencement of such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured and (ii) all expenses
(including, without limitation, reasonable attorneys' fees and legal expenses)
incurred by each of Lenders' Agent and Lenders in connection with the
preparation, execution, delivery, recording, administration, collection,
liquidation, enforcement and defense of Borrower's obligations, liabilities and
indebtedness as aforesaid to each of Lenders' Agent and Lenders' the rights of
Lenders' Agent or Lenders in any collateral or under this Guarantee and all
other Financing Agreements or in any way involving claims by or against
Lenders' Agent or Lenders directly or indirectly arising out of or related to
the relationships between Borrower, any of Guarantors or any other Obligor (as
hereinafter defined) and Lenders' Agent or Lenders under the Financing
Agreements, whether such expenses are incurred before, during or after the
initial or any renewal term of the Loan Agreement and the other Financing
Agreements or after the commencement of any case with respect to Borrower or
any of Guarantors under the United States Bankruptcy Code or any similar
statute.
(b) This Guarantee is a guaranty of payment and not of collection.
Each of Guarantors agrees that Lenders' Agent need not attempt to collect any
Guaranteed Obligations from Borrower, any one of Guarantors or any other
Obligor or to realize upon any collateral, but, in the event that any of the
Guaranteed Obligations shall not be paid in full when the same becomes due and
payable whether by maturity, acceleration or otherwise, or at any time
thereafter, may require any one of Guarantors to make immediate payment of such
Guaranteed Obligations to Lenders' Agent or Lenders. Lenders' Agent and each
of Lenders may apply any amounts received in respect of the Guaranteed
Obligations to any of the Guaranteed Obligations, in whole or in part
(including reasonable attorneys' fees and legal expenses incurred by each of
Lenders' Agent or Lenders with respect thereto or otherwise chargeable to
Borrower or Guarantors) and in such order as Lenders' Agent or Lenders may
elect.
(c) Payment by Guarantors shall be made to Lenders' Agent at the
office of Lenders' Agent from time to time on demand as Guaranteed Obligations
become due. Guarantors shall make all payments to Lenders' Agent and Lenders on
the Guaranteed obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. One or more successive or concurrent actions may be
brought hereon against any of Guarantors either in the same action in which
Borrower or any of the other Guarantors or any other Obligor is sued or in
separate actions. In the event any claim or action, or action on any judgment,
based on this Guarantee is brought against any of Guarantors, each of
Guarantors agrees not to deduct, set off, or seek any counterclaim for or
recoup any amounts which are or may be owed by Lenders' Agent or Lenders to any
of Guarantors.
2. Waivers and Consents.
(a) Notice of acceptance of this Guarantee, the making of loans and
advances and providing other financial accommodations to Borrower and
presentment, demand, protest, notice of protest, notice of nonpayment or
default and all other notices to which Borrower or any of Guarantors are
entitled are hereby waived by each of Guarantors. Each of Guarantors also
waives notice of and hereby consents to (i) any amendment, modification,
supplement, extension, renewal, or restatement of the Loan Agreement and any of
the other Financing Agreements, including, without limitation, extensions of
time of payment of or increase or decrease in the amount of any of the
Guaranteed Obligations or any collateral, and the guarantee made herein shall
apply to the Loan Agreement and the other Financing Agreements and the
Guaranteed Obligations as so amended, modified, supplemented, renewed, restated
or extended, increased or decreased, (ii) the taking, exchange, surrender and
releasing of collateral or guarantees now or at any time held by or available
to Lenders' Agent or either of Lenders for the obligations of Borrower or any
other party at any time liable on or in respect of the Guaranteed Obligations
or who is the owner of any property which is security for the Guaranteed
Obligations (individually, an "Obligor" and collectively, the "Obligors"),
including, without limitation, the surrender or release by Lenders' Agent of
any one of Guarantors hereunder, (iii) the exercise of, or refraining from the
exercise of any rights against Borrower, any of Guarantors or any other obligor
or any collateral, (iv) the settlement, compromise or release of, or the waiver
of any default with respect to, any of the Guaranteed Obligations and (v) any
financing by Lenders' Agent or Lenders of Borrower under Section 364 of the
United States Bankruptcy Code or consent to the use of cash collateral by
Lenders' Agent or Lenders under Section 363 of the United States Bankruptcy
Code. Each of Guarantors agrees that the amount of the Guaranteed Obligations
shall not be diminished and the liability of Guarantors hereunder shall not be
otherwise impaired or affected by any of the foregoing.
(b) No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations shall affect, impair or be a defense to this
Guarantee, nor shall any other circumstance which might otherwise constitute a
defense available to or legal or equitable discharge of Borrower in respect of
any of the Guaranteed Obligations, or any one of Guarantors in respect of this
Guarantee, affect, impair or be a defense to this Guarantee. Without
limitation of the foregoing, the liability of Guarantors hereunder shall not be
discharged or impaired in any respect by reason of any failure by Lenders'
Agent or Lenders to perfect or continue perfection of any lien or security
interest in any collateral or any delay by Lenders' Agent or Lenders in
perfecting any such lien or security interest. As to interest, fees and
expenses, whether arising before or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any similar
statute, Guarantors shall be liable therefor, even if Borrower's liability for
such amounts does not, or ceases to, exist by operation of law.
(c) Until the Loan Agreement and all other Financing Agreements have
been terminated and all Obligations (as defined in the Loan Agreement) have
been indefeasibly paid and satisfied in full, each of Guarantors hereby
subordinates in favor of Lenders' Agent and Lenders and irrevocably and
unconditionally agrees that it shall not assert or enforce (i) statutory,
contractual, common law, equitable and all other claims against Borrower, any
collateral for the Guaranteed Obligations or other assets of Borrower or any
other Obligor, for subrogation, reimbursement, exoneration, contribution,
indemnification, setoff or other recourse in respect to sums paid or payable to
Lenders' Agent or Lenders by each of Guarantors hereunder and (ii) any and all
other benefits which Guarantors might otherwise directly or indirectly receive
or be entitled to receive by reason of any amounts paid by or collected or due
from Guarantors, Borrower or any other Obligor upon the Guaranteed Obligations
or realized from their property.
3. Subordination. Payment of all amounts now or hereafter owed to
Guarantors by Borrower or any other Obligor is hereby subordinated in right of
payment to the indefeasible payment in full to Lenders' Agent and Lenders of
the Guaranteed Obligations and all such amounts and any security and guarantees
therefor are hereby assigned to Lenders' Agent and Lenders as security for the
Guaranteed Obligations.
4. Acceleration. Notwithstanding anything to the contrary contained
herein or any of the terms of any of the other Financing Agreements, the
liability of Guarantors for the entire Guaranteed Obligations shall mature and
become immediately due and payable, even if the liability of Borrower or any
other Obligor therefor does not, upon the occurrence of any act, condition or
event which constitutes an Event of Default as such term is defined in the Loan
Agreement.
5. Account Stated. The books and records of Lenders' Agent showing the
account between Lenders' Agent and each of Lenders and Borrower shall be
admissible in evidence in any action or proceeding against or involving
Guarantors as prima facie proof of the items therein set forth, and the monthly
statements of Lenders' Agent rendered to Borrower, to the extent to which no
written objection is made within thirty (30) days from the date of sending
thereof to Borrower, shall be deemed conclusively correct and constitute an
account stated between Lenders' Agent and Borrower and be binding on
Guarantors, absent manifest errors or omissions.
6. Termination. This Guarantee is continuing, unlimited, absolute and
unconditional. All Guaranteed Obligations shall be conclusively presumed to
have been created in reliance on this Guarantee. Each of Guarantors shall
continue to be liable hereunder until receipt by Lenders' Agent of a written
termination notice from a Guarantor sent to Lenders' Agent at its address set
forth above by certified mail, return receipt requested and thereafter as set
forth below. Such notice received by Lenders' Agent from any one of Guarantors
shall not constitute a revocation or termination of this Guarantee as to any of
the other Guarantors. Revocation or termination hereof by any of Guarantors
shall not affect, in any manner, the rights of Lenders' Agent or each of
Lenders or any obligations or duties of any of Guarantors (including the
Guarantor which may have sent such notice) under this Guarantee with respect to
(a) Guaranteed Obligations which have been created, contracted, assumed or
incurred prior to the receipt by Lenders' Agent of such written notice of
revocation or termination as provided herein, including, without limitation,
(i) all amendments, extensions, renewals and modifications of such Guaranteed
Obligations (whether or not evidenced by new or additional agreements,
documents or instruments executed on or after such notice of revocation or
termination), (ii) all interest, fees and similar charges accruing or due on
and after revocation or termination, and (iii) all reasonable attorneys' fees
and legal expenses, costs and other expenses paid or incurred on or after such
notice of revocation or termination in attempting to collect or enforce any of
the Guaranteed Obligations against Borrower, Guarantors or any other Obligor
(whether or not suit be brought), or (b) Guaranteed Obligations which have been
created, contracted, assumed or incurred after the receipt by Lenders' Agent of
such written notice of revocation or termination as provided herein pursuant to
any contract entered into by Lenders' Agent or Lenders prior to receipt of such
notice. The sole effect of such revocation or termination by any of Guarantors
shall be to exclude from this Guarantee the liability of such Guarantor for
those Guaranteed Obligations arising after the date of receipt by Lenders'
Agent of such written notice which are unrelated to Guaranteed Obligations
arising or transactions entered into prior to such date. Without limiting the
foregoing, this Guarantee may not be terminated and shall continue so long as
the Loan Agreement shall be in effect (whether during its original term or any
renewal, substitution or extension thereof).
7. Reinstatement. If after receipt of any payment of, or proceeds of
collateral applied to the payment of, any of the Guaranteed Obligations,
Lenders' Agent or either of Lenders is required to surrender or return such
payment or proceeds to any Person for any reason, then the Guaranteed
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Guarantee shall continue in full force and
effect as if such payment or proceeds had not been received by Lenders' Agent
or Lenders. Each of Guarantors shall be liable to pay to Lenders' Agent or
each Lender, and does indemnify and hold Lenders' Agent or Lenders harmless for
the amount of any payments or proceeds surrendered or returned. This Section 7
shall remain effective notwithstanding any contrary action which may be taken
by Lenders' Agent or Lenders in reliance upon such payment or proceeds. This
Section 7 shall survive the termination or revocation of this Guarantee.
8. Amendments and Waivers. Neither this Guarantee nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lenders' Agent. Lenders' Agent and Lenders shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of
their rights, powers and/or remedies unless such waiver shall be in writing and
signed by an authorized officer of Lenders' Agent. Any such waiver shall be
enforceable only to the extent specifically set forth therein. A waiver by
Lenders' Agent or any Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lenders' Agent or such Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
9. Corporate Existence, Power and Authority. Each of Guarantors is a
corporation duly organized and in good standing under the laws of its state or
other jurisdiction of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a material adverse effect on the financial
condition, results of operation or businesses of any of Guarantors or the
rights of Lenders' Agent and Lenders hereunder or under any of the other
Financing Agreements. The execution, delivery and performance of this
Guarantee is within the corporate powers of each of Guarantors, have been duly
authorized by all necessary corporate and shareholder action and are not in
contravention of law or the terms of the certificates of incorporation,
by-laws, or other organizational documentation of each of Guarantors, or any
indenture, material agreement or material undertaking to which any of
Guarantors is a party or by which any of Guarantors or its property are bound.
This Guarantee constitutes the legal, valid and binding obligation of each of
Guarantors enforceable in accordance with its terms, subject to the effect on
enforceability of (a) any bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Any one of
Guarantors signing this Guarantee shall be bound hereby whether or not any of
the other Guarantors or any other person signs this Guarantee at any time.
10. Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Guarantee
and any dispute arising out of the relationship between any of Guarantors and
Lenders' Agent or Lenders, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of New York (without giving
effect to principles of conflicts of law).
(b) Each of Guarantors hereby irrevocably consents and submits to
the non-exclusive jurisdiction of the Supreme Court of the State of New York
and the United States District Court for the Southern District of New York and
waives any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Guarantee or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of any of Guarantors and Lenders' Agent and Lenders in respect of
this Guarantee or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising and whether in contract, tort, equity or otherwise, and agrees that any
dispute arising out of the relationship between any of Guarantors or Borrower
and Lenders' Agent or Lenders or the conduct of any such persons in connection
with this Guarantee, the other Financing Agreements or otherwise shall be heard
only in the courts described above (except that Lenders' Agent and each Lender
shall have the right to bring any action or proceeding against any of
Guarantors or its property in the courts of any other jurisdiction which
Lenders' Agent or such Lender deems necessary or appropriate in order to
realize on collateral at any time granted by Borrower or any of Guarantors to
Lenders' Agent and Lenders or to otherwise enforce its rights against any of
Guarantors or its property).
(c) Each of Guarantors hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail, return receipt requested, directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at the option of Lenders' Agent, by service upon any of Guarantors in any
other manner provided under the rules of any such courts. Within thirty (30)
days after such service, any of Guarantors so served shall appear in answer to
such process, failing which such Guarantors shall be deemed in default and
judgment may be entered against Guarantors for the amount of the claim and
other relief requested.
(d) EACH OF GUARANTORS HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS GUARANTEE
OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF ANY OF GUARANTORS AND LENDERS' AGENT
OR EITHER OF LENDERS IN RESPECT OF THIS GUARANTEE OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. EACH OF GUARANTORS HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY AND THAT ANY OF GUARANTORS OR LENDERS' AGENT OR EITHER OF LENDERS MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF GUARANTORS AND LENDERS' AGENT AND SUCH LENDER TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Lenders' Agent nor either of Lenders shall have any
liability to Guarantors (whether in tort, contract, equity or otherwise) for
losses suffered by Guarantors in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Guarantee, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and nonappealable judgment or court order binding on each
of Lenders and Lenders' Agent that the losses were the result of acts or
omissions constituting gross negligence, willful misconduct or bad faith. In
any such litigation, each of Lenders' Agent and Lenders shall be entitled to
the benefit of the rebuttable presumption that it acted in good faith and with
the exercise of ordinary care in the performance by it of the terms of the Loan
Agreement and the other Financing Agreements.
11. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lenders' Agent at its address set forth above and to
each of Guarantors at its chief executive office set forth below, or to such
other address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
12. Partial Invalidity. If any provision of this Guarantee is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Guarantee as a whole, but this Guarantee shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13. Entire Agreement. This Guarantee represents the entire agreement and
understaffing of this parties concerning the subject matter hereof, and
supersedes all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written.
14. Successors and Assigns. This Guarantee shall be binding upon
Guarantors and their respective successors and assigns and shall inure to the
benefit of each of Lenders and Lenders' Agent and their respective successors,
endorsees, transferees and assigns. The liquidation, dissolution or
termination of any of Guarantors shall not terminate this Guarantee as to such
entity or as to any of the other Guarantors.
15. Construction. All references to the term "Guarantors" wherever used
herein shall mean each and all of Guarantors and their respective successors
and assigns, individually and collectively, jointly and severally (including,
without limitation, any receiver, trustee or custodian for any of Guarantors or
any of their respective assets or any of Guarantors in its capacity as debtor
or debtor-in-possession under the United States Bankruptcy Code). All
references to the term "Lenders" and "Lenders' Agent" wherever used herein
shall mean each of Lenders, Lenders' Agent and their respective successors and
assigns and all references to the term "Borrower" wherever used herein shall
mean Borrower and its successors and assigns (including, without limitation,
any receiver, trustee or custodian for Borrower or any of its assets or
Borrower in its capacity as debtor or debtor-in-possession under the United
States Bankruptcy Code). All references to the term "Person" or "person"
wherever used herein shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as
amended), business trust, unincorporated association, joint stock corporation,
trust, joint venture or other entity or any government or any agency or
instrumentality of political subdivision thereof. All references to the plural
shall also mean the singular and to the singular shall also mean the plural.
IN WITNESS WHEREOF, each of Guarantors has executed and delivered this
Guarantee as of the day and year first above written.
ATTEST: Ronald M. DeFeo TEREX CORPORATION
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
500 Post Road East
Westport, Connecticut 06880
ATTEST: Ronald M. DeFeo CLARK MATERIAL HANDLING
COMPANY
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
333 West Vine Street
Suite 1700
Lexington, Kentucky 40507
ATTEST: Ronald M. DeFeo PPM CRANES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
Hwy 501 East
Atlantic Center for Business
and Industry
P.O. Box 26002
Conway, South Carolina 29526
ATTEST: Ronald M. DeFeo CMH ACQUISITION CORP.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
ATTEST: Ronald M. DeFeo LEGRIS INDUSTRIES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
Hwy 501 East
Atlantic Center for Business
and Industry
P.O. Box 26002
Conway, South Carolina 29526
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of TEREX
CORPORATION, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of CLARK MATERIAL
HANDLING COMPANY, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg to me known, who stated that he is the Secretary of PPM CRANES, INC.,
the corporation described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of CMH ACQUISITION
CORP., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of LEGRIS
INDUSTRIES, INC., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
GUARANTEE
May 9, 1995
Foothill Capital Corporation
as agent for itself and
Congress Financial Corporation
11111 Santa Monica Boulevard
Los Angeles, California 90025-3333
Re: Terex Corporation ("Borrower")
Gentlemen:
Congress Financial Corporation and Foothill Capital Corporation, in its
individual capacity (individually and collectively, "Lenders"), Foothill
Capital Corporation, as agent for Lenders (in such capacity, "Lenders' Agent"),
and Borrower have entered into certain financing arrangements pursuant to which
Lender may make loans and advances and provide other financial accommodations
to Borrower as set forth in the Loan and Security Agreement, dated as of May 9,
1995, by and among Borrower, certain subsidiaries of Borrower, Lenders and
Lenders, Agent (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement"),
and other agreements, documents and instruments referred to therein or at any
time executed and/or delivered in connection therewith or related thereto,
including, but not limited to, this Guarantee (all of the foregoing, together
with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the "Financing Agreements").
Due to the close business and financial relationships between Borrower and
each and all of the undersigned (individually and collectively, "Guarantors"),
in consideration of the benefits which will accrue to Guarantors and as an
inducement for and in consideration of Lenders' Agent and Lenders making loans
and advances and providing other financial accommodations to Borrower pursuant
to the Loan Agreement and the other Financing Agreements, each of Guarantors
hereby jointly and severally agrees in favor of each of Lenders' Agent and
Lenders as follows:
1. Guarantee.
(a) Each of Guarantors absolutely and unconditionally, jointly and
severally, guarantees and agrees to be liable for the full and indefeasible
payment and performance when due of the following (all of which are
collectively referred to herein as the "Guaranteed Obligations"): (i) all
obligations, liabilities and indebtedness of any kind, nature and description
of Borrower to each of Lenders' Agent, Lenders and/or their respective
affiliates, including principal, interest, charges, fees, costs and expenses,
however evidenced, whether as principal, surety, endorser, guarantor or
otherwise, whether arising under the Loan Agreement, or any other Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of the Loan Agreement or after
the commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts, which would accrue and become due but
for the commencement of such case and including loans, interest, fees, charges
and expenses related thereto and all other obligations under the Financing
Agreements of Borrower or its successors to each of Lenders' Agent and Lenders
arising after the commencement of such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured and (ii) all expenses
(including, without limitation, reasonable attorneys' fees and legal expenses)
incurred by each of Lenders' Agent and Lenders in connection with the
preparation, execution, delivery, recording, administration, collection,
liquidation, enforcement and defense of Borrower's obligations, liabilities and
indebtedness as aforesaid to each of Lenders' Agent and Lenders' the rights of
Lenders' Agent or Lenders in any collateral or under this Guarantee and all
other Financing Agreements or in any way involving claims by or against
Lenders' Agent or Lenders directly or indirectly arising out of or related to
the relationships between Borrower, any of Guarantors or any other Obligor (as
hereinafter defined) and Lenders' Agent or Lenders under the Financing
Agreements, whether such expenses are incurred before, during or after the
initial or any renewal term of the Loan Agreement and the other Financing
Agreements or after the commencement of any case with respect to Borrower or
any of Guarantors under the United States Bankruptcy Code or any similar
statute.
(b) This Guarantee is a guaranty of payment and not of collection.
Each of Guarantors agrees that Lenders' Agent need not attempt to collect any
Guaranteed Obligations from Borrower, any one of Guarantors or any other
Obligor or to realize upon any collateral, but, in the event that any of the
Guaranteed Obligations shall not be paid in full when the same becomes due and
payable whether by maturity, acceleration or otherwise, or at any time
thereafter, may require any one of Guarantors to make immediate payment of such
Guaranteed Obligations to Lenders' Agent or Lenders. Lenders' Agent and each
of Lenders may apply any amounts received in respect of the Guaranteed
Obligations to any of the Guaranteed Obligations, in whole or in part
(including reasonable attorneys' fees and legal expenses incurred by each of
Lenders' Agent or Lenders with respect thereto or otherwise chargeable to
Borrower or Guarantors) and in such order as Lenders' Agent or Lenders may
elect.
(c) Payment by Guarantors shall be made to Lenders' Agent at the
office of Lenders' Agent from time to time on demand as Guaranteed Obligations
become due. Guarantors shall make all payments to Lenders' Agent and Lenders on
the Guaranteed obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind. One or more successive or concurrent actions may be
brought hereon against any of Guarantors either in the same action in which
Borrower or any of the other Guarantors or any other Obligor is sued or in
separate actions. In the event any claim or action, or action on any judgment,
based on this Guarantee is brought against any of Guarantors, each of
Guarantors agrees not to deduct, set off, or seek any counterclaim for or
recoup any amounts which are or may be owed by Lenders' Agent or Lenders to any
of Guarantors.
2. Waivers and Consents.
(a) Notice of acceptance of this Guarantee, the making of loans and
advances and providing other financial accommodations to Borrower and
presentment, demand, protest, notice of protest, notice of nonpayment or
default and all other notices to which Borrower or any of Guarantors are
entitled are hereby waived by each of Guarantors. Each of Guarantors also
waives notice of and hereby consents to (i) any amendment, modification,
supplement, extension, renewal, or restatement of the Loan Agreement and any of
the other Financing Agreements, including, without limitation, extensions of
time of payment of or increase or decrease in the amount of any of the
Guaranteed Obligations or any collateral, and the guarantee made herein shall
apply to the Loan Agreement and the other Financing Agreements and the
Guaranteed Obligations as so amended, modified, supplemented, renewed, restated
or extended, increased or decreased, (ii) the taking, exchange, surrender and
releasing of collateral or guarantees now or at any time held by or available
to Lenders' Agent or either of Lenders for the obligations of Borrower or any
other party at any time liable on or in respect of the Guaranteed Obligations
or who is the owner of any property which is security for the Guaranteed
Obligations (individually, an "Obligor" and collectively, the "Obligors"),
including, without limitation, the surrender or release by Lenders' Agent of
any one of Guarantors hereunder, (iii) the exercise of, or refraining from the
exercise of any rights against Borrower, any of Guarantors or any other obligor
or any collateral, (iv) the settlement, compromise or release of, or the waiver
of any default with respect to, any of the Guaranteed Obligations and (v) any
financing by Lenders' Agent or Lenders of Borrower under Section 364 of the
United States Bankruptcy Code or consent to the use of cash collateral by
Lenders' Agent or Lenders under Section 363 of the United States Bankruptcy
Code. Each of Guarantors agrees that the amount of the Guaranteed Obligations
shall not be diminished and the liability of Guarantors hereunder shall not be
otherwise impaired or affected by any of the foregoing.
(b) No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations shall affect, impair or be a defense to this
Guarantee, nor shall any other circumstance which might otherwise constitute a
defense available to or legal or equitable discharge of Borrower in respect of
any of the Guaranteed Obligations, or any one of Guarantors in respect of this
Guarantee, affect, impair or be a defense to this Guarantee. Without
limitation of the foregoing, the liability of Guarantors hereunder shall not be
discharged or impaired in any respect by reason of any failure by Lenders'
Agent or Lenders to perfect or continue perfection of any lien or security
interest in any collateral or any delay by Lenders' Agent or Lenders in
perfecting any such lien or security interest. As to interest, fees and
expenses, whether arising before or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any similar
statute, Guarantors shall be liable therefor, even if Borrower's liability for
such amounts does not, or ceases to, exist by operation of law.
(c) Until the Loan Agreement and all other Financing Agreements have
been terminated and all Obligations (as defined in the Loan Agreement) have
been indefeasibly paid and satisfied in full, each of Guarantors hereby
subordinates in favor of Lenders' Agent and Lenders and irrevocably and
unconditionally agrees that it shall not assert or enforce (i) statutory,
contractual, common law, equitable and all other claims against Borrower, any
collateral for the Guaranteed Obligations or other assets of Borrower or any
other Obligor, for subrogation, reimbursement, exoneration, contribution,
indemnification, setoff or other recourse in respect to sums paid or payable to
Lenders' Agent or Lenders by each of Guarantors hereunder and (ii) any and all
other benefits which Guarantors might otherwise directly or indirectly receive
or be entitled to receive by reason of any amounts paid by or collected or due
from Guarantors, Borrower or any other Obligor upon the Guaranteed Obligations
or realized from their property.
3. Subordination. Payment of all amounts now or hereafter owed to
Guarantors by Borrower or any other Obligor is hereby subordinated in right of
payment to the indefeasible payment in full to Lenders' Agent and Lenders of
the Guaranteed Obligations and all such amounts and any security and guarantees
therefor are hereby assigned to Lenders' Agent and Lenders as security for the
Guaranteed Obligations.
4. Acceleration. Notwithstanding anything to the contrary contained
herein or any of the terms of any of the other Financing Agreements, the
liability of Guarantors for the entire Guaranteed Obligations shall mature and
become immediately due and payable, even if the liability of Borrower or any
other Obligor therefor does not, upon the occurrence of any act, condition or
event which constitutes an Event of Default as such term is defined in the Loan
Agreement.
5. Account Stated. The books and records of Lenders' Agent showing the
account between Lenders' Agent and each of Lenders and Borrower shall be
admissible in evidence in any action or proceeding against or involving
Guarantors as prima facie proof of the items therein set forth, and the monthly
statements of Lenders' Agent rendered to Borrower, to the extent to which no
written objection is made within thirty (30) days from the date of sending
thereof to Borrower, shall be deemed conclusively correct and constitute an
account stated between Lenders' Agent and Borrower and be binding on
Guarantors, absent manifest errors or omissions.
6. Termination. This Guarantee is continuing, unlimited, absolute and
unconditional. All Guaranteed Obligations shall be conclusively presumed to
have been created in reliance on this Guarantee. Each of Guarantors shall
continue to be liable hereunder until receipt by Lenders' Agent of a written
termination notice from a Guarantor sent to Lenders' Agent at its address set
forth above by certified mail, return receipt requested and thereafter as set
forth below. Such notice received by Lenders' Agent from any one of Guarantors
shall not constitute a revocation or termination of this Guarantee as to any of
the other Guarantors. Revocation or termination hereof by any of Guarantors
shall not affect, in any manner, the rights of Lenders' Agent or each of
Lenders or any obligations or duties of any of Guarantors (including the
Guarantor which may have sent such notice) under this Guarantee with respect to
(a) Guaranteed Obligations which have been created, contracted, assumed or
incurred prior to the receipt by Lenders' Agent of such written notice of
revocation or termination as provided herein, including, without limitation,
(i) all amendments, extensions, renewals and modifications of such Guaranteed
Obligations (whether or not evidenced by new or additional agreements,
documents or instruments executed on or after such notice of revocation or
termination), (ii) all interest, fees and similar charges accruing or due on
and after revocation or termination, and (iii) all reasonable attorneys' fees
and legal expenses, costs and other expenses paid or incurred on or after such
notice of revocation or termination in attempting to collect or enforce any of
the Guaranteed Obligations against Borrower, Guarantors or any other Obligor
(whether or not suit be brought), or (b) Guaranteed Obligations which have been
created, contracted, assumed or incurred after the receipt by Lenders' Agent of
such written notice of revocation or termination as provided herein pursuant to
any contract entered into by Lenders' Agent or Lenders prior to receipt of such
notice. The sole effect of such revocation or termination by any of Guarantors
shall be to exclude from this Guarantee the liability of such Guarantor for
those Guaranteed Obligations arising after the date of receipt by Lenders'
Agent of such written notice which are unrelated to Guaranteed Obligations
arising or transactions entered into prior to such date. Without limiting the
foregoing, this Guarantee may not be terminated and shall continue so long as
the Loan Agreement shall be in effect (whether during its original term or any
renewal, substitution or extension thereof).
7. Reinstatement. If after receipt of any payment of, or proceeds of
collateral applied to the payment of, any of the Guaranteed Obligations,
Lenders' Agent or either of Lenders is required to surrender or return such
payment or proceeds to any Person for any reason, then the Guaranteed
Obligations intended to be satisfied by such payment or proceeds shall be
reinstated and continue and this Guarantee shall continue in full force and
effect as if such payment or proceeds had not been received by Lenders' Agent
or Lenders. Each of Guarantors shall be liable to pay to Lenders' Agent or
each Lender, and does indemnify and hold Lenders' Agent or Lenders harmless for
the amount of any payments or proceeds surrendered or returned. This Section 7
shall remain effective notwithstanding any contrary action which may be taken
by Lenders' Agent or Lenders in reliance upon such payment or proceeds. This
Section 7 shall survive the termination or revocation of this Guarantee.
8. Amendments and Waivers. Neither this Guarantee nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lenders' Agent. Lenders' Agent and Lenders shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of
their rights, powers and/or remedies unless such waiver shall be in writing and
signed by an authorized officer of Lenders' Agent. Any such waiver shall be
enforceable only to the extent specifically set forth therein. A waiver by
Lenders' Agent or any Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lenders' Agent or such Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
9. Corporate Existence, Power and Authority. Each of Guarantors is a
corporation duly organized and in good standing under the laws of its state or
other jurisdiction of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a material adverse effect on the financial
condition, results of operation or businesses of any of Guarantors or the
rights of Lenders' Agent and Lenders hereunder or under any of the other
Financing Agreements. The execution, delivery and performance of this
Guarantee is within the corporate powers of each of Guarantors, have been duly
authorized by all necessary corporate and shareholder action and are not in
contravention of law or the terms of the certificates of incorporation,
by-laws, or other organizational documentation of each of Guarantors, or any
indenture, material agreement or material undertaking to which any of
Guarantors is a party or by which any of Guarantors or its property are bound.
This Guarantee constitutes the legal, valid and binding obligation of each of
Guarantors enforceable in accordance with its terms, subject to the effect on
enforceability of (a) any bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Any one of
Guarantors signing this Guarantee shall be bound hereby whether or not any of
the other Guarantors or any other person signs this Guarantee at any time.
10. Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Guarantee
and any dispute arising out of the relationship between any of Guarantors and
Lenders' Agent or Lenders, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of New York (without giving
effect to principles of conflicts of law).
(b) Each of Guarantors hereby irrevocably consents and submits to
the non-exclusive jurisdiction of the Supreme Court of the State of New York
and the United States District Court for the Southern District of New York and
waives any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Guarantee or any of the other
Financing Agreements or in any way connected with or related or incidental to
the dealings of any of Guarantors and Lenders' Agent and Lenders in respect of
this Guarantee or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising and whether in contract, tort, equity or otherwise, and agrees that any
dispute arising out of the relationship between any of Guarantors or Borrower
and Lenders' Agent or Lenders or the conduct of any such persons in connection
with this Guarantee, the other Financing Agreements or otherwise shall be heard
only in the courts described above (except that Lenders' Agent and each Lender
shall have the right to bring any action or proceeding against any of
Guarantors or its property in the courts of any other jurisdiction which
Lenders' Agent or such Lender deems necessary or appropriate in order to
realize on collateral at any time granted by Borrower or any of Guarantors to
Lenders' Agent and Lenders or to otherwise enforce its rights against any of
Guarantors or its property).
(c) Each of Guarantors hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail, return receipt requested, directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails,
or, at the option of Lenders' Agent, by service upon any of Guarantors in any
other manner provided under the rules of any such courts. Within thirty (30)
days after such service, any of Guarantors so served shall appear in answer to
such process, failing which such Guarantors shall be deemed in default and
judgment may be entered against Guarantors for the amount of the claim and
other relief requested.
(d) EACH OF GUARANTORS HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS GUARANTEE
OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF ANY OF GUARANTORS AND LENDERS' AGENT
OR EITHER OF LENDERS IN RESPECT OF THIS GUARANTEE OR ANY OF THE OTHER FINANCING
AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. EACH OF GUARANTORS HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY AND THAT ANY OF GUARANTORS OR LENDERS' AGENT OR EITHER OF LENDERS MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF GUARANTORS AND LENDERS' AGENT AND SUCH LENDER TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Neither Lenders' Agent nor either of Lenders shall have any
liability to Guarantors (whether in tort, contract, equity or otherwise) for
losses suffered by Guarantors in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Guarantee, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and nonappealable judgment or court order binding on each
of Lenders and Lenders' Agent that the losses were the result of acts or
omissions constituting gross negligence, willful misconduct or bad faith. In
any such litigation, each of Lenders' Agent and Lenders shall be entitled to
the benefit of the rebuttable presumption that it acted in good faith and with
the exercise of ordinary care in the performance by it of the terms of the Loan
Agreement and the other Financing Agreements.
11. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lenders' Agent at its address set forth above and to
each of Guarantors at its chief executive office set forth below, or to such
other address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.
12. Partial Invalidity. If any provision of this Guarantee is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Guarantee as a whole, but this Guarantee shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13. Entire Agreement. This Guarantee represents the entire agreement and
understaffing of this parties concerning the subject matter hereof, and
supersedes all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written.
14. Successors and Assigns. This Guarantee shall be binding upon
Guarantors and their respective successors and assigns and shall inure to the
benefit of each of Lenders and Lenders' Agent and their respective successors,
endorsees, transferees and assigns. The liquidation, dissolution or
termination of any of Guarantors shall not terminate this Guarantee as to such
entity or as to any of the other Guarantors.
15. Construction. All references to the term "Guarantors" wherever used
herein shall mean each and all of Guarantors and their respective successors
and assigns, individually and collectively, jointly and severally (including,
without limitation, any receiver, trustee or custodian for any of Guarantors or
any of their respective assets or any of Guarantors in its capacity as debtor
or debtor-in-possession under the United States Bankruptcy Code). All
references to the term "Lenders" and "Lenders' Agent" wherever used herein
shall mean each of Lenders, Lenders' Agent and their respective successors and
assigns and all references to the term "Borrower" wherever used herein shall
mean Borrower and its successors and assigns (including, without limitation,
any receiver, trustee or custodian for Borrower or any of its assets or
Borrower in its capacity as debtor or debtor-in-possession under the United
States Bankruptcy Code). All references to the term "Person" or "person"
wherever used herein shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as
amended), business trust, unincorporated association, joint stock corporation,
trust, joint venture or other entity or any government or any agency or
instrumentality of political subdivision thereof. All references to the plural
shall also mean the singular and to the singular shall also mean the plural.
IN WITNESS WHEREOF, each of Guarantors has executed and delivered this
Guarantee as of the day and year first above written.
ATTEST: Ronald M. DeFeo CLARK MATERIAL HANDLING
COMPANY
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
333 West Vine Street
Suite 1700
Lexington, Kentucky 40507
ATTEST: Ronald M. DeFeo KOEHRING CRANES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
106 12th Street, N.E.
Waverly, Iowa 50671
ATTEST: Ronald M. DeFeo PPM CRANES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
Hwy 501 East
Atlantic Center for Business
and Industry
P.O. Box 26002
Conway, South Carolina 29526
ATTEST: Ronald M. DeFeo CMH ACQUISITION CORP.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
ATTEST: Ronald M. DeFeo LEGRIS INDUSTRIES, INC.
By: Marvin B. Rosenberg
Title: Secretary
Chief Executive Office
Hwy 501 East
Atlantic Center for Business
and Industry
P.O. Box 26002
Conway, South Carolina 29526
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of CLARK MATERIAL
HANDLING COMPANY, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of KOEHRING CRANES,
INC., the corporation described in and which executed the foregoing instrument;
and that he signed his name thereto by order of the Board of Directors of said
corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg to me known, who stated that he is the Secretary of PPM CRANES, INC.,
the corporation described in and which executed the foregoing instrument; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of CMH ACQUISITION
CORP., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ninth day of May, 1995, before me personally came Marvin B.
Rosenberg, to me known, who stated that he is the Secretary of LEGRIS
INDUSTRIES, INC., the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
Susan Chun
Notary Public
EXHIBIT 11.1
(Page 1 of 2)
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
In Thousands except per share amounts
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
PRIMARY:
Income (loss) before
extraordinary item (7,786) 1,209 (26,087) 639
Less: Accretion of
Preferred Stock (1,853) (1,517) (5,200) (4,341)
Income (loss) before
extraordinary item
applicable to common stock (9,639) (308) (31,287) (3,702)
Extraordinary gain (loss)
on retirement of debt --- (164) (7,452) (397)
Net income applicable to
common stock (9,639) (472) (38,739) (4,099)
Weighted average shares
outstanding during the
period (in millions) 10.3 10.3 10.3 10.3
Assumed exercise of warrants
at ratio determined as of
September 30, 1994 0 (a) 0 (a) 0 (a) 0 (a)
Assumed exercise of stock options 0 (a) 0 (a) 0 (a) 0 (a)
Primary shares outstanding
(in millions) 10.3 10.3 10.3 10.3
Primary income (loss) per
common share
Income (loss) before
extraordinary item $(0.93) $(0.03) $(3.02) ($0.36)
Extraordinary gain (loss) --- (0.02) (0.73) (0.04)
Net income (loss) $(0.93) $(0.05) $(3.75) ($0.40)
(a) Excluded from the computation because the effect is anti-dilutive.
EXHIBIT 11.1
(Page 2 of 2)
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
In Thousands except per share amounts
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
FULLY DILUTED:
Income (loss) before
extraordinary item (7,786) 1,209 (26,087) 639
Income (loss) before
extraordinary item (7,786) 1,209 (26,087) 639
Less: Accretion of
Preferred Stock (1,853) (1,517) (5,200) (4,341)
Income (loss) before
extraordinary item applicable
to common stock (9,639) (308) (31,287) (3,702)
Add: Accretion of Preferred
stock assumed converted at
beginning of period 0 0 0 0
Extraordinary gain (loss)
on retirement of debt --- (164) (7,452) (397)
Net income (loss) applicable
to common stock (9,639) (472) (38,739) (4,099)
Weighted average shares
outstanding during the
period (in millions) 10.3 10.3 10.3 10.3
Assumed exercise of warrants
at ratio reflecting maximum
dilution 0 (a) 0 (a) 0 (a) 0 (a)
Assumed conversion of
Preferred Stock 0 (a) 0 (a) 0 (a) 0 (a)
Assumed exercise of stock options 0 (a) 0 (a) 0 (a) 0 (a)
Fully diluted shares
outstanding (in millions) 10.3 10.3 10.3 10.3
Fully diluted income (loss)
per common share
Income (loss) before
extraordinary item $(0.93) ($0.03) $(3.02) ($0.36)
Extraordinary gain (loss) --- (0.02) (0.73) (0.04)
Net income (loss) $(0.93) $(0.05) $(3.75) ($0.40)
(a) Excluded from the computation because the effect is anti-dilutive.
Exhibit 12.1
TEREX CORPORATION
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
Pro Forma
9 months 9 months
Ended Ended
Sept 30. Sept 30. Year Ended December 31,
1995* 1995* 1994* 1993 1992* 1991 1990*
EARNINGS
Income before
taxes and
minority
interest (25,954) (51,164) 1,956 (64,922) 2,982 (41,863) (39,705)
Adjustments:
Minority
interest
in losses of
consolidated
subsidiaries 0 0 0 0
Undistributed
(income) loss
of less than
50% owned
investments 0 0 0 677 3,714 (5,839) (8,605)
Distributions
from less
than 50%
owned
investments 0 0 1,681 732
Fixed charges 35,905 43,051 41,189 34,798 27,214 36,191 54,214
--------------------------------------------------------------
Earnings 9,951 (8,113) 43,145 (29,447)
COMBINED FIXED CHARGES
INCLUDING PREFERRED ACCRETION
Interest expense,
including debt
discount
amortization 28,416 34,607 30,492 31,246 23,320 31,457 45,824
Accretion of
redeemable
convertible
preferred
stock 5,200 5,994 5,929 152 0 0 0
Amortization/
writeoff of
debt issuance
costs 1,672 1,833 2,300 1,304 1,694 1,618 5,786
Portion of
rental expense
representative
of interest
factor (assumed
to be 33%) 617 617 2,468 2,096 2,200 3,116 2,604
---------------------------------------------------------------
Fixed charges 35,905 43,051 41,189 34,798 27,214 36,191 54,214
---------------------------------------------------------------
RATIO OF
EARNINGS TO
COMBINED FIXED
CHARGES (1) (1) 1.0 (1) 1.2 (1) (1)
AMOUNT OF EARNINGS
DEFICIENCY FOR
COVERAGE OF
COMBINED
FIXED CHARGES 25,954 51,164 0 64,245 0 46,021 47,578
(1) Less than 1.0x.
* Fruehauf deconsolidated as of January 1, 1992
EXHIBIT 21.1
CONSOLIDATED SUBSIDIARIES OF TEREX CORPORATION
Name of Subsidiary Jurisdiction of Incorporation
CMH Acquisition Corporation Delaware
Clark Material Handling Michigan
Clark Forklift Korea Korea
Clarklift of Western Michigan, Inc. Michigan
Clark Material Handling Company Kentucky
Clark Material Handling GmbH Germany
Clark France Manutention S.A. France
Clark Maquinaria S.A. Spain
CMH Acquisition International Corporation Delaware
New Terex Holdings Corporation Delaware
Terex Equipment Limited Scotland
Imaco England
Bucyrus Construction Products Delaware
Unit Rig Australia (Pty) Limited New South Wales,
Australia
Terex International Exports, Inc. Delaware
Unit Rig South Africa (Pty) Limited South Africa
Unit Rig (Canada) Limited Delaware
Terex Cranes, Inc. Delaware
PPM S.A. (France) France
Bendini SPA (Italy) Italy
Brimont Engine (France) France
Brimont Agaire (France) France
PPM Krane (Germany) Germany
Baulift (Germany) Germany
Koehring Cranes Inc. Delaware
Legris Industries Inc. Delaware (Liquidated)
PPM Cranes, Inc. Delaware
PPM PTY Ltd. (Australia) Australia
PPM Far East Ltd. (Singapore) Singapore
Century II Foreign Sales Corp. Virgin Islands
Potain Tower Cranes, Inc. New York
North West International, Ltd. Virgin Islands
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of
this Registration Statement on Form S-1 of our report dated March 28,
1995, relating to the financial statements of Terex Corporation, which
appears in such Prospectus. We also consent to the application of
such report to the Financial Statement Schedule for the three years
ended December 31, 1994 listed under Item 16(b) of this Registration
Statement when such schedule is read in conjunction with the financial
statements referred to in our report. The audits referred to in such
report also included this schedule. We also consent to the references
to us under the headings "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Stamford, CT
December 6, 1995
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
and to the use of our report dated August 22, 1995, in Amendment No. 1
to the Registration Statement (Form S-1 No. 33-52711) and related
Prospectus of Terex Corporation for the Registration of 1,200,000
shares of its Series A Cumulative Redeemable Convertible Preferred
Stock (the "Preferred Stock") and the shares of its common stock
issuable upon the conversion of the Preferred Stock.
ERNST & YOUNG LLP
Greenville, South Carolina
December 6, 1995
